LOAN AGREEMENT
AMONG
BANK ONE, TEXAS, NATIONAL ASSOCIATION,
Lender
AND
INDEPENDENT BANKSHARES, INC.,
Borrower
AND
INDEPENDENT FINANCIAL CORP.
FIRST STATE BANK, NATIONAL ASSOCIATION,
Subsidiaries
$6,500,000.00 REVOLVING LOAN
Dated
September 21, 1998
TABLE OF CONTENTS
ARTICLE PAGE
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RECITALS 1
ARTICLE I CERTAIN DEFINITIONS 1
ARTICLE II COMMITMENT TO LEND, TERMS OF PAYMENT 11
Section 2.1. Loans 11
Section 2.2. Note 12
Section 2.3. Notice and Manner of Borrowing 12
Section 2.4. Rollover; Conversion of Loans 13
Section 2.5. Payment of Principal of Loans 13
Section 2.6. Interest on Loans 13
Section 2.7. Interest Periods for Loans 14
Section 2.8. Payments 14
Section 2.9. Voluntary Prepayments 14
Section 2.10 Yield Protection; Taxes 15
Section 2.11. Purpose of Loan 17
Section 2.12. Interest 17
Section 2.13. Sale of Participations 17
Section 2.14. Order of Application 17
ARTICLE III COLLATERAL 18
Section 3.1. Stock 18
ARTICLE IV CONDITIONS PRECEDENT TO LENDING 18
Section 4.1. Delivery of Items 18
Section 4.2. Conditions for Loan 20
ARTICLE V REPRESENTATIONS AND WARRANTIES 22
Section 5.1. Corporate Existence 22
Section 5.2. Authorization 22
Section 5.3. Properties; Permitted Liens 22
Section 5.4. Compliance with Laws and Documents 23
Section 5.5. Material Agreements 23
Section 5.6. Indebtedness 23
Section 5.7. Litigation 23
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Section 5.8. Compliance by Subsidiaries 23
Section 5.9. Taxes 23
Section 5.10. General 23
Section 5.11. Enforceability of Loan Documents 24
Section 5.12. Securities Laws 24
Section 5.13. Financial Statements 24
Section 5.14. Regulation U 24
Section 5.15. Contractual Obligations 24
Section 5.16. Subsidiaries 24
Section 5.17. Other Obligations 25
Section 5.18. ERISA 25
Section 5.19. Regulatory Acts 25
Section 5.20. Relationship with Lender 25
Section 5.21. Location of Properties and Records 25
Section 5.22. Ineligible Securities. 25
Section 5.23. Year 2000 Compliance. 26
ARTICLE VI CERTAIN AFFIRMATIVE COVENANTS 27
Section 6.1. Incumbency 27
Section 6.2. Material Adverse Effect 27
Section 6.3. Payment of Debts 27
Section 6.4. Expenses of Lender 27
Section 6.5. Insurance 27
Section 6.6. Maintenance of Corporate Existence 27
Section 6.7. Taxes 27
Section 6.8. Comply with Agreement 28
Section 6.9. Maintenance of Assets and Business 28
Section 6.10. Withholding Taxes 28
Section 6.11. Books and Records 28
Section 6.12. Annual Financial Statements 28
Section 6.13. Form 10-K Report 29
Section 6.14. Call Reports 29
Section 6.15. Quarterly Reports of Borrower 29
Section 6.16. Quarterly Reports of IFC 29
Section 6.17. Reports of Criticized Assets 29
Section 6.18. Form 10-Q Reports 30
Section 6.19. Examination Reports 30
Section 6.20. Information and Inspection 30
Section 6.21. Additional Information 30
Section 6.22. Use of Advances 30
Section 6.23. Changes in Fact 30
Section 6.24. Comply with ERISA 30
Section 6.25. Continuance of Present Business 31
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Section 6.26. Compliance with Applicable Laws 31
Section 6.27. Notice of Event of Default and Suits 31
Section 6.28. Subordination of Debt 31
Section 6.29. Additional Subsidiaries 31
Section 6.30. Notice of Regulatory Agreement 32
Section 6.31. Change in Management 32
Section 6.32. FDIC Membership 32
Section 6.33. Examination by Lender 32
Section 6.34. Debt Service Coverage Ratio 32
Section 6.35. Tangible Equity to Total Assets Ratio 32
Section 6.36. Non-Performing Assets to Total Capital Ratio32
Section 6.37. Classified Assets to Total Capital Ratio 33
Section 6.38. Regulatory Requirements 33
Section 6.39. Year 2000 Compliance. 33
ARTICLE VII CERTAIN NEGATIVE COVENANTS 33
Section 7.1. Merger or Sale of Assets 33
Section 7.2. Purchase of Stock 34
Section 7.3. Leases 34
Section 7.4. Loans 34
Section 7.5. Contingent Liabilities 34
Section 7.6. Investments 34
Section 7.7. Permitted Businesses 34
Section 7.8. Sale and Leaseback 35
Section 7.9. Assignment 35
Section 7.10. Indebtedness 35
Section 7.11. Liens 35
Section 7.12. Judgments 35
Section 7.13. Payment of Subordinated Debt 36
Section 7.14. Sale of Stock 36
Section 7.15. Compliance with ERISA 36
Section 7.16. Transactions with Affiliates 36
Section 7.17. Sale of Subsidiary 36
Section 7.18. Termination of Trust 37
Section 7.19. Redemption of Subordinated Debentures 37
ARTICLE VIII DEFAULT 37
Section 8.1. Payment of Obligations 37
Section 8.2. Certain Negative Covenants 37
Section 8.3. Other Covenants 37
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Section 8.4. Voluntary Debtor Relief 37
Section 8.5. Involuntary Proceedings 38
Section 8.6. Attachment 38
Section 8.7. Payment of Judgments 38
Section 8.8. Other Obligations 38
Section 8.9. Dissolution 38
Section 8.10. Misrepresentation 38
Section 8.11. Committed Sum 38
Section 8.12. ERISA 38
Section 8.13. Change in Ownership 39
Section 8.14. Material Adverse Change 39
Section 8.15. Regulatory Action 39
Section 8.16. Capital Forbearance 39
Section 8.17. Purchase Agreement 39
Section 8.18. Termination of Trust 39
Section 8.19. Default under Trust Agreement 39
Section 8.20. Redemption of Subordinated Debentures. 39
Section 8.21. Default under Indenture 39
ARTICLE IX CERTAIN RIGHTS OF LENDER 39
Section 9.1. Rights Upon Default 39
Section 9.2. Offset 40
Section 9.3. Performance by Lender 41
Section 9.4. Use or Operation by Lender 41
Section 9.5. Diminution in Collateral Value 41
Section 9.6. Lender Not in Control 41
Section 9.7. Waivers 41
Section 9.8. Cumulative Rights 42
Section 9.9. Indemnification of Lender 42
Section 9.10. Application of Proceeds 42
Section 9.11. Expenditures by Lender 42
ARTICLE X MISCELLANEOUS 42
Section 10.1. Headings 42
Section 10.2. Articles, Sections, and Exhibits 42
Section 10.3. Number and Gender of Words 43
Section 10.4. Accounting Terms 43
Section 10.5. Notices 43
Section 10.6. Form and Number of Documents 43
Section 10.7. Exceptions to Covenants 44
Section 10.8. Survival 44
Section 10.9. Governing Law; Place of Performance 44
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Section 10.10. Maximum Interest Rate 44
Section 10.11. Invalid Provisions 45
Section 10.12. Entirety and Amendments 45
Section 10.13. Multiple Counterparts 45
Section 10.14. Parties Bound 45
Section 10.15. Further Assurances 46
Section 10.16. Arbitration. 46
Section 10.17. Jury Waiver. 46
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LIST OF EXHIBITS
EXHIBIT A - Permitted Liens
EXHIBIT B - Tribunal Proceedings
EXHIBIT C - Existing Litigation
EXHIBIT D - Unpaid Judgments
EXHIBIT E - Existing Contractual Obligations
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LOAN AGREEMENT
This Loan Agreement (this "Agreement") is made and
entered into as of September 21, 1998, by and among BANK ONE,
TEXAS, NATIONAL ASSOCIATION, a national banking association,
("Lender"), INDEPENDENT BANKSHARES, INC., a Texas corporation
("Borrower"), INDEPENDENT FINANCIAL CORP., a Delaware corporation
("IFC"), and FIRST STATE BANK, NATIONAL ASSOCIATION, a national
banking association ("Bank").
RECITALS:
A. Borrower, as purchaser, and Azle Bancorp ("ABC"),
acting for and on behalf of all of the owners (collectively
"Seller") of all of the issued and outstanding capital stock in
ABC (the "ABC Stock"), as seller, have entered into that certain
Agreement and Plan of Reorganization dated May 29, 1998 (the
"Purchase Agreement"), whereby Seller has agreed to sell to
Borrower and Borrower has agreed to purchase from Seller all of
the ABC Stock.
B. Subject to the terms and conditions of this
Agreement, Lender has agreed to lend to Borrower the amounts
herein described to provide working capital for Borrower and the
Subsidiaries and to finance a portion of the acquisition costs to
be incurred by Borrower to purchase all of the ABC Stock.
NOW, THEREFORE, in consideration of the mutual
covenants, representations, warranties and agreements contained
herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
hereby covenant and agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
The following terms, as used in this Agreement, shall
have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms
defined), unless the context indicates otherwise:
"AAA" has the meaning set forth in Section 10.16.
"ABC" has the meaning set forth in Recital A.
"ABC Stock" has the meaning set forth in Recital A.
"Advance" means any disbursement of an amount or
amounts to be loaned by Lender to Borrower hereunder.
"Affiliate" means any Person who (a) would be an
"affiliate" within the meaning of the regulations promulgated
pursuant to the Securities Act of 1933, as such regulations and
act are amended and in effect on the date in question, if such
Person were subject to such act and regulations, or (b) owns any
legal or beneficial interest in Borrower or any Subsidiary, is a
director or officer of Borrower or any Subsidiary, or is a
relative of any of the Persons described in this clause (b).
"Agreed Interest" means, with respect to any Quarterly
Date, the amount of interest which would have accrued had the
unpaid principal of any Domestic Loan from time to time
outstanding during the period from the Closing Date to but not
including such Quarterly Date borne interest each day during such
period at the Domestic Rate in effect for such Domestic Loan on
each such day.
"Amortization" means at any time the quotient obtained
from dividing the Principal Debt by seven (7).
"Approved Purposes" mean (a) the payment of expenses
incurred in the operation by Borrower and the Subsidiaries of the
Permitted Businesses and (b) the payment of a portion of the
acquisition costs to be incurred by Borrower to purchase all of
the issued and outstanding capital stock in ABC.
"Article" and "Articles" have the meanings set forth in
Section 10.2.
"ASB" means Azle State Bank.
"Bank" means First State Bank, National Association, a
national banking association.
"Bank Loans" mean loans made by Bank as lender
(including, without limitation, participation interests in loans
made by other lenders which are purchased by Bank) and leases
intended as financing devices in which Bank is the lessor, in
each case net of any unearned interest or other income but before
deducting any Loan Loss Reserve.
"Banking Subsidiary" means any bank (whether state or
national) more than fifty percent (50%) of whose capital stock
now or hereafter is owned directly or indirectly by Borrower or
any Subsidiary or may be voted by Borrower or any Subsidiary. At
the date of this Agreement, the only Banking Subsidiary is Bank.
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"Borrower" means Independent Bankshares, Inc., a Texas
corporation.
"Business Day" means every day which is not a
Nonbusiness Day.
"Call Report" means Consolidated Reports of Condition
and Income (currently designated as FFIEC 033) and any successor
or replacement report or reports required by the FDIC to be
prepared by an insured by the FDIC or required by the Federal
Reserve System for a bank which is a member of the Federal
Reserve System.
"Change in Circumstances" has the meaning set forth in
Section 6.39.
"Classified Assets" mean all assets of Bank identified
by any Tribunal, by Bank's internal loan review, by any outside
or independent loan review, or by any auditors as having some
doubt as to their full value, including, without limitation, all
Foreclosed Assets and those assets of Bank identified, rated, or
classified as either substandard, doubtful, or loss.
"Closing Date" means the date of this Agreement.
"Code" means the Uniform Commercial Code of Texas or
other applicable jurisdiction.
"Collateral" means all property (and any and all
interest therein) of Borrower and all property (and any interest
therein) of any other Person which secures, either directly or
indirectly, the Loan and the Obligations, including, but not
limited to, the Stock.
"Commitment" means the obligation of Lender to make the
Loans in an amount not to exceed in the aggregate the Committed
Sum in effect from time to time.
"Committed Sum" means (a) $6,500,000.00 for the period
beginning on the Closing Date and ending on January 9, 1999, (b)
$1,500,000.00 for the period beginning on January 5, 1999 and
ending on October 4, 1999, and (c) $1,000,000.00 at all times
after October 4, 1999.
"Contractual Obligations" means the unpaid balance of,
or the maximum aggregate potential obligations on, all
indebtedness for borrowed money, all liabilities for the deferred
payment of the purchase price of property, and all other
obligations and liabilities for the payment of money, including,
but not limited to, obligations evidenced by promissory notes,
chattel paper, leases, or other contractual obligations which are
not
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cancelable by Borrower or a Subsidiary on notice of ninety (90)
days or less without liability for further payment other than
normal penalty.
"Current Date" means any date which is not more than
thirty (30) days prior to the Closing Date.
"Current Financial Statements" mean financial
statements heretofore delivered to Lender for Borrower and the
Subsidiaries as of June 30, 1998.
"Debenture Trustee" means the trustee under the
Indenture. As of the Closing Date, the Debenture Trustee is U.S.
Trust Company of Texas, N.A.
"Debtor Relief Laws" means the Bankruptcy Code of the
United States and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement,
insolvency, reorganization, or similar debtor relief Laws
affecting the rights of creditors generally from time to time in
effect.
"Default" has the meaning set forth in Article VIII.
"Dividends" mean, with respect to the four (4) calendar
quarters immediately preceding any date of computation of
Dividends, the total amount of all dividends and other
distributions paid by Borrower during such four (4) calendar
quarters upon Borrower's capital stock of any class (other than
dividends paid in Borrower's common stock).
"Dollars" and the sign "$" means lawful money of the
United States of America.
"Domestic Loans" mean Loans which bear interest at the
Domestic Rate.
"Domestic Rate" means the Prime Rate as in effect from
day to day.
"Eurodollar Loans" mean Loans which bear interest at
the Eurodollar Rate.
"Eurodollar Rate" means a per annum rate of interest
equal to the sum of (i) the Libor Rate in effect for each
applicable Interest Period and (ii) two and one-half percent
(2.5%).
"Equity Capital" means the stockholders' equity in Bank
(including capital
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stock, surplus, retained earnings, and capital reserves, but
excluding treasury stock, the Loan Loss Reserve and any
deductions for market valuation changes due to applicable
regulatory guidelines in effect from time to time), all
determined in accordance with applicable regulatory accounting
principles.
"ERISA" means the Employees' Retirement Income Security
Act of 1974 as now in force or hereafter amended.
"Existing Contractual Obligations" has the meaning set
forth in Section 5.15.
"Existing Litigation" has the meaning set forth in
Section 5.7.
"FDIC" means the Federal Deposit Insurance Corporation,
or any successor thereof.
"Foreclosed Assets" mean real or personal property
acquired by Bank (a) through purchases at sales under judgments,
decrees, or mortgages where the property was security for debts
previously contracted, (b) through conveyance in satisfaction or
partial satisfaction of debts previously contracted, or (c)
through purchases to secure debts previously contracted.
"Foreign Taxes" has the meaning set forth in
Section 2.10.
"GAAP" means generally accepted accounting principles,
applied on a consistent basis, set forth in Opinions of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and/or in statements of the
Financial Accounting Standards Board which are applicable in the
circumstances as of the date in question; and the requisite that
such principles be applied on a consistent basis means that the
accounting principles observed in a current period are comparable
in all material respects to those applied in a preceding period.
"Highest Lawful Rate" means the maximum non-usurious
rate of interest (or, if the context so requires, an amount
calculated at such rate) which Lender is allowed to contract for,
charge, take, reserve, or receive in this transaction under
applicable federal or state (whichever is higher) Law from time
to time in effect after taking into account, to the extent
required by applicable federal or state (whichever is higher) Law
from time to time in effect, any and all relevant payments or
charges under the Loan Documents.
"IFC" means Independent Financial Corp., a Delaware
corporation.
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"Inchoate Lien" means any Tax Lien for Taxes not yet
due and payable and any mechanic's Lien and materialman's Lien
for services or materials for which payment is not yet due.
"Increased Cost" has the meaning set forth in
Section 2.10.
"Indebtedness" means all obligations and liabilities of
Borrower or a Subsidiary for borrowed money, whether now existing
or hereafter arising, direct or indirect, joint or several,
secured or unsecured.
"Indenture" means that certain Indenture dated
September 22, 1998, between Borrower and Debenture Trustee.
"Interest Expense" means, with respect to the four (4)
calendar quarters immediately preceding any date of computation
of Interest Expense, the total amount of all interest which has
accrued on the Indebtedness during such four (4) calendar
quarters.
"Interest Payment Date" means the last day of an
Interest Period, which shall always be a Business Day.
"Interest Period" means, (i) with respect to any
Eurodollar Loan, the period beginning on the date the Eurodollar
Loan is made or continued as a Eurodollar Loan and ending ninety
(90) days thereafter, and (ii) with respect to any Domestic Loan,
the period beginning on the date the Domestic Loan is made or
continued as a Domestic Loan and ending on a date selected by
Borrower; provided that no Interest Period for any Eurodollar
Loan or any Domestic Loan may extend past the Termination Date.
"Laws" means all statutes, laws, ordinances,
regulations, orders, writs, injunctions, or decrees of the United
States, any city or municipality, state, commonwealth, nation,
country, territory, possession, or any Tribunal.
"Lender" means Bank One, Texas, National Association, a
national banking association.
"LIBOR Rate" means the offered rate for U.S. Dollar
deposits of not less than $1,000,000.00 for a period of time
equal to each Interest Period as of 11:00 A.M. City of London,
England time two (2) London Business Days prior to the first date
of each Interest Period as shown on the display designated as
"British Bankers Assoc. Interest Settlement Rates" on Telerate,
Page 3750 or Page 3740, or such other page or pages as may
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replace such pages on Telerate for the purpose of displaying such
rate; provided, however, that if such rate is not available on
Telerate then such offered rate shall be otherwise independently
determined by Lender from an alternate, substantially similar
independent source available to Lender or shall be calculated by
Lender by a substantially similar methodology as that theretofore
used to determine such offered rate in Telerate. The Libor Rate
is a general reference rate of interest and may or may not be the
lowest rate charged by Lender from time to time. Lender may
extend credit to other borrowers at rates of interest varying
from and having no relationship to, the Libor Rate.
"Lien" means any lien, security interest, Tax lien,
mechanic's lien, materialman's lien, or other encumbrance,
whether arising by contract or under Law.
"Litigation" means any proceeding, claim, lawsuit,
and/or investigation conducted or threatened by or before any
Tribunal, including, but not limited to, proceedings, claims,
lawsuits, and/or investigations under or pursuant to any
environmental, occupational safety and health, antitrust, unfair
competition, securities, Tax, or other Law, or under or pursuant
to any agreement, document, or instrument.
"Loan" and "Loans" have the meanings set forth in
Section 2.1 and include Domestic Loans and Eurodollar Loans.
"Loan Loss Reserve" means the allowance of Bank for
loan and lease losses.
"Loan Documents" means this Agreement, the Note, the
Security Agreements, the Stock Powers, and any and all other
agreements, documents, and instruments executed and delivered
pursuant to the terms of this Agreement, and any future
amendments hereto, or restatements hereof, or pursuant to the
terms of any of the other Loan Documents, together with any and
all renewals, extensions, and restatements of, and amendments and
modifications to, any such agreements, documents, and
instruments.
"Loan Rate" means the Domestic Rate or the Eurodollar
Rate.
"London Business Day" means any day other than a
Saturday, Sunday or a day on which banking institutions are
generally authorized or obligated by law or executive order to
close in the City of London, England.
"Management Fees" mean, with respect to the four (4)
calendar quarters immediately preceding any date of computation
of Management Fees, the net amount of all management fees paid by
Bank to IFC during such four (4) calendar quarters.
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"Material Adverse Effect" means any set of
circumstances or event which (a) could have any adverse effect
whatsoever upon the validity, performance, or enforceability of
any Loan Paper, (b) is or could reasonably be expected to become
material and adverse to the financial condition, properties, or
business operations of the Person in question, (c) could impair
the ability of the Person in question to fulfill its obligations
under the terms and conditions of the Loan Documents, or (d)
could cause a Default.
"Material Agreement" means any material written or oral
agreement, contract, lease, commitment, or understanding to which
Borrower or any Subsidiary is a party, by which Borrower or any
Subsidiary is directly or indirectly bound, or to which any of
the assets of Borrower or any Subsidiary may be subject.
"Maximum Amount" means the maximum amount of interest
which, under applicable Law, Lender is permitted to charge on the
Obligations.
"Maximum Interest" means, with respect to any Quarterly
Date, the amount of interest which would have accrued had the
unpaid principal of each Domestic Loan from time to time
outstanding during the period from the Closing Date to but not
including such Quarterly Date borne interest each day during such
period at the Highest Lawful Rate in effect on each such day.
"Net Income" means, with respect to the four (4)
calendar quarters immediately preceding any date of computation
of Net Income, the net income of each Banking Subsidiary,
determined in accordance with applicable regulatory accounting
principles, for such four (4) calendar quarters.
"Non-Accruals" mean all Bank Loans on non-accrual
status.
"Nonbusiness Day" means each day upon which commercial
banks in the State of Texas are authorized by Law to remain
closed.
"Note" means that certain Promissory Note in a form
acceptable to Lender delivered pursuant to Subsection 4.1(c),
together with all modifications, extensions, renewals, or
rearrangements thereof.
"Notice" has the meaning set forth in Section 6.39.
"OAEM" means other assets especially mentioned.
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"Obligations" mean all present and future indebtedness,
obligations, and liabilities, and all renewals and extensions
thereof, or any part thereof, now or hereafter owed to Lender by
Borrower, and all interest accruing thereon and costs, expenses,
and attorneys' fees incurred in the enforcement or collection
thereof, regardless of whether such indebtedness, obligations,
and liabilities are direct, indirect, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several,
including, but not limited to, the indebtedness, obligations, and
liabilities evidenced, secured, or arising pursuant to any of the
Loan Documents, and all renewals and extensions thereof, or any
part thereof, and all present and future amendments thereto.
"Operating Expenses" mean, with respect to the four (4)
calendar quarters immediately preceding any date of computation
of Operating Expenses, the total amount of all operating expenses
paid by Borrower and by IFC during such four (4) calendar
quarters.
"OREO" means (a) real property acquired by Bank (l)
through purchases at sales under judgments, decrees, or mortgages
where the real property was security for debts previously
contracted, (2) through conveyance in satisfaction or partial
satisfaction of debts previously contracted, or (3) through
purchases to secure debts previously contracted, (b) former
banking premises beginning on the date of relocation to new
banking quarters, (c) property originally acquired for future
expansion for which banking use is no longer contemplated, and
(d) any real estate sold and financed by Bank for which the
purchaser's equity down payment was less than ten percent (10%)
or for which the financing was provided at a rate of interest
less than the Prime Rate, but only during such time as the equity
ownership remains less than ten percent (10%) or the financing
remains at a rate of interest less than the Prime Rate. "OREO"
shall not include any building or contiguous property which is
used by Bank for banking services, for storage, for operations
services, or for parking for customers or employees.
"Participant" means any bank to which a participation
in the Obligations is sold by Lender.
"Past Dues" mean all Bank Loans that are past due
ninety (90) days or more, but excluding any Non-Accruals.
"PBGC" means the Pension Benefit Guaranty Corporation,
or any successor thereof, established under ERISA.
"Permitted Businesses" mean, with respect to Borrower
and IFC, all
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business authorized to be conducted by a bank holding company,
and with respect to Bank, all business authorized to be conducted
by a national banking association organized and existing under
the Laws of the United States.
"Permitted Liens" mean all (a) Inchoate Liens; (b)
Liens created by or pursuant to the Loan Documents in favor of
Lender; and (c) all Liens described in Exhibit A attached hereto.
"Person" means any individual, firm, corporation,
association, partnership, joint venture, trust, other entity, or
a Tribunal.
"Plan" means any employee plan which is subject to
Title IV of ERISA and which is maintained for employees of
Borrower and/or any Subsidiary, or of any member of a controlled
group of corporations, as the term "controlled group of
corporations" is defined in the Internal Revenue Code, of which
Borrower or any Subsidiary is a part.
"Preferred Securities" mean at least 1,000,000 of the
Trust's eight and one-half percent (8.5%) cumulative trust
preferred securities, liquidation amount $10.00 per preferred
security, representing preferred beneficial interests in the
assets of the Trust.
"Prime Rate" means at any time the rate of interest per
annum then most recently established by Lender as being the prime
rate. The Prime Rate is a general reference rate of interest and
may or may not be the lowest rate charged by Lender from time to
time. Lender may extend credit to other borrowers at rates of
interest varying from, and having no relationship to, the Prime
Rate.
"Principal Debt" means the aggregate unpaid principal
balance of the Note at the time in question.
"Property Trustee" means the institutional trustee
under the Trust Agreement. As of the Closing Date, the Property
Trustee is U.S. Trust Company of Texas, N.A.
"Purchase Agreement" has the meaning set forth in
Recital A.
"Quarterly Date" means the last Business Day of each
March, June, September, and December, commencing with the first
such day after the date hereof.
"Regulatory Change" has the meaning set forth in
Section 2.10.
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"Reportable Event" means any reportable event as
defined in Section 4043(b) of Title IV of ERISA.
"Rights" mean any remedies, powers, and privileges
exercisable by Lender under the Loan Documents, at Law, equity,
or otherwise.
"Sale" means the sale of the ABC Stock by Seller to
Borrower contemplated by the Purchase Agreement.
"Section" and "Sections" have the meanings set forth in
Section 10.2.
"Security Agreement" means that certain Pledge
Agreement in a form acceptable to Lender delivered pursuant to
Subsection 4.1(d) and Subsection 4.1(g).
"Seller" has the meaning set forth in Recital A.
"Stock" means the issued and outstanding capital stock
of any Subsidiary.
"Stock Power" means that certain Irrevocable Stock
Power in a form acceptable to Lender delivered pursuant to
Subsection 4.1(e) and Subsection 4.1(h).
"Subordinated Debenture Interest" means, with respect
to the four (4) calendar quarters immediately preceding any date
of computation of Subordinated Debenture Interest, the total
amount of all interest which has accrued on the Subordinated
Debentures during such four (4) calendar quarters.
"Subordinated Debentures" mean the eight and one-half
percent (8.5%) subordinated debentures of Borrower, dated as of
September 22, 1998 and initially maturing on September 22, 2028,
issued as unsecured debt under the Indenture.
"Subordinated Debt" means all Indebtedness whether now
existing or hereafter incurred which is subordinate and junior in
right of payment to the Obligations, including, without
limitation, the Subordinated Debentures.
"Subsection" and "Subsections" have the meanings set
forth in Section 10.2.
"Subsidiary(ies)" mean any corporation more than fifty
percent (50%) of whose capital stock now or hereafter is owned
directly or indirectly by Borrower or any
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Subsidiary or may be voted by Borrower or any Subsidiary. At the
date hereof, the only Subsidiary of Borrower is IFC and the only
Subsidiary of IFC is Bank.
"Systems" has the meaning set forth in Section 5.22.
"Tangible Capital" means Equity Capital less goodwill.
"Taxes" means all taxes, assessments, fees, levies,
imposts, duties, deductions, withholdings, or other charges of
any nature whatsoever from time to time or at any time imposed by
any Laws or by any Tribunal.
"Telerate" means the Telerate System.
"Term" means the period of time from the date hereof
through and including October 5, 2000.
"Termination Date" means October 5, 2000.
"Total Assets" mean the sum of the book values (for
GAAP and Call Report purposes) of all of the assets of Bank as
reflected on page RC-l of the current Call Report.
"Total Capital" means the sum of Tangible Equity and
the Loan Loss Reserve.
"Tribunal" means any state, commonwealth, federal,
foreign, territorial, or other court or governmental department,
commission, board, bureau, agency, or instrumentality.
"Tribunal Proceedings" has the meaning set forth in
Section 5.4.
"Trust" means Independent Capital Trust, a statutory
business trust formed under the laws of the State of Delaware.
"Trust Agreement" means that certain trust agreement,
dated as of July 29, 1998, executed by Borrower, as depositor,
and the trustees of the Trust, as such trust agreement may have
been or may be amended or restated from time to time.
"Unpaid Judgments" has the meaning set forth in
Section 5.7.
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"Year 2000 Compliant" has the meaning set forth in
Section 5.22.
ARTICLE II
----------
COMMITMENT TO LEND, TERMS OF PAYMENT
------------------------------------
Section 2.1. LOANS. Subject to and upon the terms,
covenants, and conditions of this Agreement, Lender agrees to
make loans (hereinafter called, individually, a "Loan" and,
collectively, the "Loans") to Borrower for Approved Purposes in
an aggregate principal amount at any one time outstanding up to
but not exceeding the Committed Sum. Within the limit of the
Committed Sum, Borrower may borrow, repay, and reborrow at any
time and from time to time from the Closing Date to the earlier
of (a) the Termination Date or (b) the termination of Lender's
Commitment hereunder. Except for the initial Loan, each Loan
shall be in the principal amount of $50,000.00 or any whole
number multiple thereof. If, by virtue of payments made on the
Note, the principal amount owed on the Note during its term
reaches zero at any point, Borrower agrees that all of the
Collateral and all of the Loan Documents shall remain in full
force and effect to secure any Advances made thereafter, and
Lender shall be fully entitled to rely on all of the Collateral
and all of the Loan Documents unless an appropriate release of
all or any part of the Collateral or all or any part of the Loan
Documents has been executed by Lender. Each Loan shall be either
a Domestic Loan or Eurodollar Loan, as Borrower shall specify in
the related notice of borrowing or conversion. Domestic Loans
and Eurodollar Loans may be outstanding at the same time.
However, no more than four (4) Eurodollar Loans may be
outstanding at any time. No Loan shall have a maturity date
subsequent to the Termination Date.
Section 2.2. NOTE. The Loans shall be evidenced by,
and be repayable in accordance with, the Note. The Note shall be
dated the Closing Date and shall be payable on or before the
Termination Date. The Note shall be executed and delivered by
Borrower to Lender on the Closing Date and shall be payable to
the order of Lender in the original principal amount of the
Committed Sum.
Section 2.3. NOTICE AND MANNER OF BORROWING. Borrower
shall give Lender written or telephonic notice (if telephonic, to
be confirmed in writing within three (3) Business Days subsequent
to the proposed date of borrowing) by 11:00 a.m. on the date of
any requested Domestic Loan and at least two (2) Business Days
prior to the date of any requested Eurodollar Loan specifying (a)
the particular Loan Rate to be applicable to each Loan, (b)
stating the principal amount of each Loan which is to bear
interest at such Loan Rate, and (c) specifying the first day of
the Interest Period for such Loan; provided,
-13-
however, that no Interest Period with respect to the Eurodollar
Rate shall extend beyond the Termination Date; and provided
further that if such Interest Period does not end on a Business
Day, Borrower shall be deemed to have selected an Interest Period
ending on the next succeeding day which is a Business Day or, if
the result of such extension would be to extend such Interest
Period to the next month, the next preceding day which is a
Business Day. If Borrower fails to give such notice, the rate of
interest payable on the Loans for the succeeding Interest Period
shall be the Domestic Rate. If Borrower elects to have the
Eurodollar Rate apply for a particular Interest Period to a
portion of the Loans as of the first day of such Interest Period,
the Eurodollar Rate shall be in effect for each day during such
Interest Period and for not less than the full Interest Period.
Unless Borrower notifies Lender at least two (2) Business Days
prior to the expiration of any applicable Interest Period that it
desires to have the Eurodollar Rate apply to a particular Loan
for another Interest Period, at the expiration of such Interest
Period such Loan will bear interest at the Domestic Rate. In the
event that Borrower timely elects to have the Eurodollar Rate
apply for another Interest Period to a particular Loan, the
Eurodollar Rate for such new Interest Period will be determined
by Lender as herein provided as of the first day of such new
Interest Period. If the Eurodollar Rate is in effect for a
particular Interest Period with respect to a particular Loan, the
Eurodollar Rate may not be changed to the Domestic Rate for such
Loan until after the end of such Interest Period. On the date
specified for each Loan, and upon the condition that Borrower has
timely complied with all of the terms, covenants, and conditions
of this Agreement, Lender shall credit the amount of the Loan to
the general deposit account of Borrower with Lender in
immediately available funds.
Section 2.4. ROLLOVER; CONVERSION OF LOANS. Provided
that no Default and no event which, with the lapse of time or
notice or both, could become a Default shall have occurred and be
continuing, Borrower may, before the Termination Date, on any
Business Day with respect to any Domestic Loan and on Business
Day which is the last day of an Interest Period with respect to
any Eurodollar Loan, continue or convert all or any portion of
Domestic Loans or Eurodollar Loans (whichever shall then be
outstanding) as or into Loans of the same or another type.
Borrower shall give Lender at least two (2) Business Days prior
notice of each such continuance or conversion, specifying the
date of continuation or conversion. Unless such notice is given
by Borrower, each outstanding Eurodollar Loan shall automatically
become a Domestic Loan on its Interest Payment Date. No Domestic
Loan may be converted into a Eurodollar Loan if the Agreed
Interest as of the date on which conversion is requested is
higher than the Maximum Interest as of such date.
Section 2.5. PAYMENT OF PRINCIPAL OF LOANS. Borrower
shall pay to Lender on or before the Termination Date the
principal amount of each Loan outstanding. In addition and
notwithstanding the foregoing, if the Principal Debt is in excess
of
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$1,500,000.00 on January 5, 1999, Borrower shall pay to Lender on
January 5, 1999 principal in an amount not less than the amount
by which the Principal Debt exceeds $1,500,000.00, and if the
Principal Debt is in excess of $1,000,000.00 on October 5, 1999,
Borrower shall pay to Lender on October 5, 1999 principal in an
amount not less than the amount by which the Principal Debt
exceeds $1,000,000.00.
Section 2.6. INTEREST ON LOANS.
(a) DOMESTIC LOANS. Borrower agrees to pay
interest (calculated on the basis of the actual number of days
elapsed but computed as if each year consisted of 360 days) on
the unpaid principal balance from time to time owing on the
Domestic Loans computed from the date of each Domestic Loan until
maturity at a per annum rate which from day to day shall be the
lesser of the Domestic Rate in effect from day to day or the
Highest Lawful Rate in effect from day to day. After maturity,
whether by acceleration or otherwise, and until paid, Borrower
agrees to pay interest on all unpaid amounts of principal of and
interest which has accrued on the Domestic Loans, payable on
demand and accruing on a daily basis, at a per annum rate which
from day to day shall be equal to the Highest Lawful Rate in
effect from day to day. Interest on the Domestic Loans shall be
due and payable quarter-annually as it accrues on the fifth (5th)
day of January, April, July, and October of each calendar year
during the term of the Note and at the Termination Date, with the
first interest payment being due and payable on January 5, 1999.
(b) EURODOLLAR LOANS. Borrower agrees to pay
interest (calculated on the basis of the actual number of days
elapsed but computed as if each year consisted of 360 days) on
the unpaid principal balance from time to time owing on the
Eurodollar Loans computed from the date of each Eurodollar Loan
until maturity at a per annum rate which from day to day shall be
the lesser of the Eurodollar Rate in effect for each applicable
Interest Period or the Highest Lawful Rate in effect from day to
day. After maturity, whether by acceleration or otherwise, and
until paid, Borrower agrees to pay interest on all unpaid amounts
of principal of and interest which has accrued on the Eurodollar
Loans, payable on demand and accruing on a daily basis, at a per
annum rate which from day to day shall be equal to the Highest
Lawful Rate in effect from day to day. Interest on the
Eurodollar Loans shall be due and payable on each Interest
Payment Date and at the Termination Date.
Section 2.7. INTEREST PERIODS FOR LOANS. Each
Interest Period for a Eurodollar Loan shall commence on the day
such Eurodollar Loan was made or converted from a Domestic Loan
or on the expiration of the immediately preceding Interest Period
for such Eurodollar Loan and shall end on a date ninety (90) days
thereafter; provided that (i)
-15-
each Interest Period which commences before, and would otherwise
end after, the Termination Date shall end on the Termination
Date, and (ii) each such Interest Period shall end on a Business
Day. Each Interest Period for a Domestic Loan shall commence on
the date such Domestic Loan was made or converted from a
Eurodollar Loan or the expiration of the immediately preceding
Interest Period for such Domestic Loan and shall end on a date
selected by Borrower; provided that (i) each Interest Period
which commences before, and would otherwise end after, the
Termination Date shall end on the Termination Date, (ii) each
such Interest Period shall end on the fifth (5th) day of the
month of January, April, July, or October next following the
commencement date of such Interest Period, and (iii) each such
Interest Period shall end on a Business Day.
Section 2.8. PAYMENTS. All payments of principal of
and interest on the Loan and all other amounts payable by
Borrower to Lender under this Agreement or under the Note shall
be paid to Lender when due at the principal office of Lender or
at such other place or places as Lender may from time to time
designate and shall be made in lawful money of the United States
of America in immediately available funds. If any payment of
principal of or interest on the Note shall become due on a Non-
Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in each such case
be included in computing interest in connection with such
payment. Lender is hereby authorized by Borrower to debit the
amount of any such payments from the general deposit account of
Borrower with Lender.
Section 2.9. VOLUNTARY PREPAYMENTS.
(a) DOMESTIC LOANS. Borrower shall have the
right at any time, and from time to time, to prepay any Domestic
Loan in whole or in part without premium or penalty, provided
that (a) Borrower shall give notice to Lender not later than
11:00 a.m. Fort Worth, Texas time (if telephonic, to be confirmed
in writing, on or before the date of prepayment), which shall
notify Lender of each prepayment, (b) interest on the amount
prepaid, accrued to the prepayment date, shall be paid on such
prepayment date, and (c) each prepayment shall be in an aggregate
amount of not less than $50,000.00.
(b) EURODOLLAR LOANS. Borrower shall be
permitted to prepay each Eurodollar Loan in whole (but not in
part) only upon payment to Lender of (y) all loss and expense
which Lender may sustain or incur as reasonably determined by
Lender as a result (before or after any Default) of any
prepayment of any Eurodollar Loan on a day other than the last
day of an Interest Period for such Eurodollar Loan including,
without limitation, any losses and expenses arising from the
liquidation or reemployment of deposits acquired to fund or
maintain the principal amount prepaid plus (z) an amount equal to
the earnings Lender would have received on such Eurodollar Loan
had such Eurodollar Loan not been prepaid; otherwise, Eurodollar
Loans may not be prepaid, in
-16-
whole or in part. Such payment shall be calculated as though
Lender funded the principal amount prepaid through the purchase
of U.S. Dollar deposits in the London, England interbank market
having a maturity corresponding to such Interest Period and
bearing an interest rate equal to the LIBOR Rate for such
Interest Period, whether in fact that is the case or not.
Lender's determination of the amount of such payment shall be
conclusive in the absence of manifest error.
Section 2.10. YIELD PROTECTION; TAXES.
(a) EURODOLLAR LOANS.
(i) CHANGES IN LAW. Notwithstanding
anything in this Agreement to the contrary, if Lender shall have
reasonably determined that any Regulatory Change (as defined
below) shall make it unlawful for Lender to make or maintain any
Eurodollar Loan, Lender shall forthwith give notice thereof to
Borrower. After such notice and until such time as Lender shall
determine that such adverse conditions no longer exist, (A) no
Eurodollar Loan shall be made by Lender, and (B) each Eurodollar
Loan outstanding shall be converted into a Domestic Loan on the
last day of the then current Interest Period with respect to each
Eurodollar Loan.
(ii) INCREASED COST. If, as a result of any
Regulatory Change,
(A) the basis of taxation of payments to Lender of the
principal of or interest on any Eurodollar Loan or any other
amounts payable under this Agreement in respect thereof
(other than taxes imposed on the overall net income of
Lender) is changed; or
(B) any reserve, special deposit or similar
requirements relating to any extensions of credit or other
assets of, or any deposits with or other liabilities of,
Lender are imposed, modified or deemed applicable; or
(C) any other condition affecting this Agreement or
any Eurodollar Loan is imposed on Lender;
and Lender reasonably determines that, by reason thereof, the
cost to Lender of making or maintaining any Eurodollar Loan is
increased by an amount deemed by Lender to be material, or any
amount receivable by Lender hereunder in respect of any
Eurodollar Loan is reduced by an amount deemed by Lender to be
material (such increases in cost and reductions in amounts
receivable being herein called "Increased Cost"), then Borrower
shall pay to Lender upon demand such additional amount or amounts
as Lender
-17-
reasonably determines will compensate it for such Increased Cost,
but not in excess of the Maximum Amount (such demand to be
accompanied by a written statement setting forth the basis for
the calculation thereof); provided, however, notwithstanding any
prohibition against prepayment to the contrary in Section 2.9,
Borrower shall have the right on the last Business Day of an
Interest Period, upon such notice as agreed upon by Borrower and
Lender, to convert any such Eurodollar Loan which is subject to
an Increased Cost into a Domestic Loan, provided Borrower shall
have paid Lender such additional amount or amounts for such
conversion and Increased Cost through the date of conversion.
(b) REGULATORY CHANGE. As used in this Section,
"Regulatory Change" shall mean, as to Lender, any change after
the date of this Agreement in the United States federal, state,
or foreign Laws (including the introduction of any new Law) or
the adoption or making after such date of any interpretations,
directives or requests applying to a class of banks including
Lender of or under any United States federal, state or foreign
Laws (whether or not having the force of Law) by any court or
governmental authority charged with the interpretation or
administration thereof.
(c) INDEMNITY. Without prejudice to any
provisions of this Section, Borrower hereby agrees to indemnify
Lender against any loss or expense, except for any loss or
expense caused by Lender's gross negligence or willful
misconduct, which Lender may sustain or incur as reasonably
determined by Lender as a result (before or after Default) of (i)
any principal payment, prepayment, or conversion of any
Eurodollar Loan on a day other than the last day of an Interest
Period for such Eurodollar Loan, or (ii) any failure of Borrower
to borrow or convert on a date specified therefor in a notice of
borrowing or conversion pursuant to Section 2.3 hereof.
(d) CONCLUSIVE DETERMINATION. Provided that
notice shall have been given to Borrower of the reasons therefor,
determinations by Lender for purposes of this Section shall be
conclusive, provided that such determinations are made reasonably
and in good faith.
(e) TAXES. All payments made by Borrower under
this Agreement shall be made free and clear of and without
deduction for or on account of any present or future income,
stamp or other Taxes, levies, imposts, duties, charges, fees,
deductions, withholdings or restrictions or conditions of any
nature whatsoever now or hereafter imposed, levied, collected,
withheld or assessed by any non-United States national Person or
any political subdivision or taxing authority thereof or therein,
excluding, however, any such Tax imposed by any such foreign
Person, political subdivision or taxing authority thereof or
therein on or measured by the overall net income of Lender whose
principal office or lending office is located within such foreign
Person, political subdivision or taxing
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authority thereof or therein (all such non-excluded Taxes,
levies, imports, duties, charges, fees, deductions, withholdings
or restrictions being herein collectively called "Foreign
Taxes"). In the event that any Foreign Tax is deducted or
withheld from any amounts payable to Lender under this Agreement
or the Note, Borrower shall pay, at the time of such payments,
such additional amounts in Dollars as are necessary to yield to
Lender interest, or any other amount payable hereunder, at the
rates specified in this Agreement and the Note, after giving
effect to any Foreign Tax and after giving effect to any Foreign
Taxes required to be paid by Lender in respect of the receipt of
such additional amounts. Borrower, as promptly as possible,
shall send to Lender a certified official receipt for payment of
all Foreign Taxes and other amounts paid by Borrower hereunder,
together with such additional documentary evidence as may be
required from time to time by Lender. Notwithstanding the
foregoing, Lender may assume, but shall not be required to
assume, liability for all or part of any Foreign Tax. If Lender
does agree to be so bound, Lender will be bound only as to the
amount specified and for the time period specified in such
agreement.
Section 2.11. PURPOSE OF LOAN. Borrower represents
that the purpose of the Loan is, and that the proceeds of the
Loan will only be used, to pay expenses incurred in the operation
by Borrower and the Subsidiaries of the Permitted Businesses and
to pay a portion of the acquisition costs to be incurred by
Borrower to purchase all of the issued and outstanding capital
stock in ABC.
Section 2.12. INTEREST. Notwithstanding anything
contained herein to the contrary (except the provisions of
Section 10.10 to the extent such provisions may be inconsistent
herewith), if at any time during the term of the Note, the
Highest Lawful Rate has been charged Borrower in lieu of the Loan
Rate because the Loan Rate has exceeded the Highest Lawful Rate
on one or more days during the term of the Note, and if, as a
result, on any date during the term of the Note the aggregate
amount of interest which has accrued on the Note up to, but not
including, such date is less than the aggregate amount of
interest which otherwise would have accrued on the Note up to,
but not including, such date had the Loan Rate been charged for
every day during the term of the Note up to, but not including,
such date, then on such date the unpaid principal balance of the
Note shall bear interest at the Highest Lawful Rate even though
the Highest Lawful Rate is in excess of the Loan Rate for such
date. Any change in either the Prime Rate or the Highest Lawful
Rate or both shall, automatically and without notice to Borrower,
be effective for purposes of changing the rate of interest which
the Note bears as of the opening of business on the date of any
such change in the Prime Rate or the Highest Lawful Rate.
Section 2.13. SALE OF PARTICIPATIONS. Lender reserves
the right to sell participations in the Loan to Participants at
any time and from time to time.
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Section 2.14. ORDER OF APPLICATION. Except as
otherwise provided in the Loan Documents or otherwise agreed by
Lender, all payments and prepayments of the Obligations,
including proceeds from the exercise of any Rights under the Loan
Documents or proceeds of any of the Collateral, shall be applied
to the Obligations in the following order, any instructions from
Borrower to the contrary notwithstanding: (a) to expenses for
which Lender shall not have been reimbursed under the Loan
Documents, and then to all indemnified amounts due under the Loan
Documents; (b) to any fees then owed Lender hereunder; (c) to
accrued interest on the portion of the Obligations being paid or
prepaid; (d) to the portion of the principal being paid or
prepaid; (e) to the remaining accrued interest on the
Obligations; (f) to the remaining principal; and (g) to the
remaining Obligations. All amounts remaining after the foregoing
application of funds shall be paid to Borrower.
ARTICLE III
-----------
COLLATERAL
----------
Section 3.1. STOCK. In order to secure payment of the
Obligations, Borrower shall grant to Lender a security interest
in all of the Stock of the Subsidiaries (whether now or hereafter
issued) owned by Borrower (including, without limitation, all of
the Stock in IFC) by executing and delivering to Lender a
Security Agreement and a Stock Power and by delivering to Lender
the certificates representing all of the Stock of the
Subsidiaries owned by Borrower. In order to induce Lender to
make the Loans to Borrower and in order to further secure payment
of the Obligations, IFC shall grant to Lender a security interest
in all of the Stock of the Subsidiaries (whether now or hereafter
issued) owned by IFC (including, without limitation, all of the
Stock in Bank) by executing and delivering to Lender appropriate
Security Agreements and appropriate Stock Powers and by
delivering to Lender the certificates representing all of the
Stock of the Subsidiaries owned by IFC.
ARTICLE IV
----------
CONDITIONS PRECEDENT TO LENDING
-------------------------------
Section 4.1. DELIVERY OF ITEMS. Lender shall not be
obligated to make the initial Loan or any Advance unless and
until Borrower has delivered to Lender, or Lender otherwise
receives on or prior to the Closing Date, each of the following:
(a) For Borrower, each of the following documents
and
-20-
certificates:
(i) A certificate of incumbency of all
officers of Borrower who will be authorized to execute or attest
any of the Loan Documents on behalf of Borrower, dated the
Closing Date, executed by the President and by the Secretary of
Borrower; and
(ii) A copy of resolutions approving the Loan
Documents and authorizing the transactions contemplated in this
Agreement, duly adopted by the Board of Directors of Borrower,
accompanied by a certificate of the Secretary of Borrower, dated
the Closing Date, that such copy is a true and correct copy of
resolutions duly adopted at a meeting of the Board of Directors
of Borrower, and that such resolutions have not been amended,
modified, or revoked in any respect and are in full force and
effect as of the Closing Date.
(b) For each Subsidiary, each of the following
documents and certificates:
(i) A certificate of incumbency of all
officers of such Subsidiary who will be authorized to execute or
attest any of the Loan Documents on behalf of such Subsidiary,
dated the Closing Date, executed by the President and by the
Secretary of such Subsidiary; and
(ii) A copy of resolutions approving the Loan
Documents to be executed by such Subsidiary and authorizing the
transactions contemplated in this Agreement, duly adopted by the
Board of Directors of such Subsidiary, accompanied by a
certificate of the Secretary of such Subsidiary, dated the
Closing Date, that such copy is a true and correct copy of
resolutions duly adopted at a meeting of the Board of Directors
of such Subsidiary, and that such resolutions have not been
amended, modified, or revoked in any respect and are in full
force and effect as of the Closing Date.
(c) The Note, dated the Closing Date and with all
blanks appropriately completed, duly executed by Borrower.
(d) A Security Agreement, dated the Closing Date
and with all blanks appropriately completed, duly executed by
Borrower covering all of the Stock of the Subsidiaries owned by
Borrower.
(e) A Stock Power, dated the Closing Date and
with all blanks appropriately completed, duly executed by
Borrower covering all of the Stock of the Subsidiaries owned by
Borrower.
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(f) Stock certificates representing all of the
Stock of the Subsidiaries owned by Borrower.
(g) A Security Agreement, dated the Closing Date
and with all blanks appropriately completed, duly executed by IFC
covering all of the Stock of the Subsidiaries owned by IFC.
(h) A Stock Power, dated the Closing Date and
with all blanks appropriately completed, duly executed by IFC
covering all of the Stock of the Subsidiaries owned by IFC.
(i) Stock certificates representing all of the
Stock of the Subsidiaries owned by IFC.
(j) Evidence satisfactory to Lender that the
representations and warranties made in Article V are true and
correct on and as of the Closing Date.
(k) Evidence satisfactory to Lender that the
Liens created by the Loan Documents are, collectively, first and
prior to all of the Collateral.
(l) A copy of the Purchase Agreement, duly
executed by Borrower and ABC.
(m) Copies of all documents executed or otherwise
furnished in connection with the transactions contemplated by the
Purchase Agreement.
(n) Copies of all approvals and consents required
by applicable Laws to be issued as a condition to Seller being
authorized to sell the ABC Stock to Borrower and to Borrower
being authorized to purchase the ABC Stock from Seller.
(o) A copy of the Trust Agreement, duly executed
by all of the parties thereto.
(p) Copies of all documents executed or otherwise
furnished in connection with the issuance of the Preferred
Securities.
(q) A copy of the Indenture, duly executed by all
of the parties thereto.
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(r) Copies of all documents executed or otherwise
furnished in connection with the issuance of the Subordinated
Debentures.
(s) All other evidences, certificates, opinions,
agreements, documents, and instruments as Lender may reasonably
request.
Section 4.2. CONDITIONS FOR LOAN. In addition to the
conditions precedent stated elsewhere herein, Lender shall not be
obligated to make the initial Loan or any Advance during the Term
hereof unless:
(a) The representations and warranties made in
Article V of this Agreement are true and correct at and as of the
time the Advance is to be made, and the request for an Advance
shall constitute the representation and warranty by Borrower that
such representations and warranties are true and correct at such
time.
(b) On the date of, and upon receipt of, the
Advance, no Default, and no event which, with the lapse of time
or notice or both, could become a Default, shall have occurred
and be continuing.
(c) The Advance will not contravene any
applicable Law.
(d) Lender has received a written or telephonic
request for each Domestic Loan by 11:00 a.m. on the date of any
requested Domestic Loan and Lender has received a written or
telephonic request for each Eurodollar Loan at least two (2)
Business Days prior to the date of any requested Eurodollar Loan,
as well as such other documents, opinions, certificates,
agreements, instruments and evidences as Lender may reasonably
request.
(e) The Principal Debt prior to such Advance plus
the amount of the requested Advance will not exceed the Committed
Sum in effect at the date of the requested Advance.
(f) All proceeds of previous Advances shall have
been spent or used only for Approved Purposes.
(g) Lender has reviewed and approved the sources
and form of the capital to be raised by Borrower in connection
with the acquisition by Borrower of ABC.
(h) Lender has reviewed and approved the sources
and form of the trust preferred capital to be raised by or on
behalf of Borrower in connection with the
-23-
acquisition by Borrower of ABC.
(i) Borrower has received, not more than five (5)
days prior to the Closing Date, not less than a total of
$12,525,000.00 in cash from the sale by Borrower of additional
capital stock in Borrower and from the issuance by Borrower of
the Subordinated Debentures.
(j) Lender has completed and approved the results
of an on-site audit and review by Lender of Borrower and the
Subsidiaries.
(k) All conditions precedent to the obligations
of ABC and Seller to close the Sale contemplated by the Purchase
Agreement have been satisfied or have been waived in writing by
ABC and Seller.
(l) All conditions precedent to the obligations
of Borrower to close the sale contemplated by the Purchase
Agreement have been satisfied or have been waived in writing by
Borrower with the prior written consent of Lender.
(m) The sale contemplated by the Purchase
Agreement has closed.
(n) Lender has approved the Purchase Agreement,
all documents required to be executed in connection with the
Sale, and all aspects of the Sale.
(o) On the date of the Advance, neither Borrower
nor ABC is in default under the Purchase Agreement.
(p) All approvals and consents required by
applicable Laws to be issued as a condition to Seller being
authorized to sell the ABC Stock to Borrower or as a condition to
Borrower being authorized to purchase the ABC Stock from Seller
have been issued by the applicable Tribunals and received by
Borrower, ABC, and/or Seller.
(q) The Preferred Securities have been issued and
the proceeds of the issuance of the Preferred Securities have
been used to purchase the Subordinated Debentures.
(r) The Subordinated Debentures have been issued.
(s) The Indenture has been executed and delivered
by all of the parties thereto.
(t) Not more than five (5) days prior to the
Closing Date, not less
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than 200,000 additional shares of common stock in Borrower have
been sold by Borrower and the proceeds of such sale received by
Borrower.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower and each Subsidiary jointly and severally
represent and warrant to Lender as follows:
Section 5.1. CORPORATE EXISTENCE. Borrower is a
corporation duly organized, validly existing, and in good
standing under the laws of the State of Texas, and is duly
qualified to transact business as a foreign corporation in each
jurisdiction where the nature and extent of its business and
property requires the same. Each Subsidiary is a corporation
duly organized, validly existing, and in good standing under the
laws of the State of its incorporation or is a national banking
association duly organized, validly existing, and in good
standing under the laws of the United States or is a state bank
duly organized, validly existing, and in good standing under the
laws of the State of Texas.
Section 5.2. AUTHORIZATION. Borrower and each
Subsidiary possess all requisite authority, power, licenses,
permits, and franchises to conduct their respective businesses
and execute, deliver, and comply with the terms of the Loan
Documents. The execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and
compliance with the terms and provisions hereof, the making of
the Loan, and the execution, issuance, and delivery of the Loan
Documents have been duly authorized and approved by all necessary
corporate action on the part of Borrower and the Subsidiaries.
No consent or approval of any Tribunal is required in order for
Borrower or the Subsidiaries to legally execute, deliver, and
comply with the terms of the Loan Documents.
Section 5.3. PROPERTIES; PERMITTED LIENS. Borrower
and the Subsidiaries each have good and marketable title to all
their respective properties and assets and to the Collateral
subject to no Liens except the Permitted Liens. All material
leases under which Borrower or any Subsidiary is lessee are in
full force and effect, and neither Borrower nor any Subsidiary is
in default thereunder.
Section 5.4. COMPLIANCE WITH LAWS AND DOCUMENTS.
Borrower is not, nor will the execution, delivery, and
performance of and compliance with the terms of the Loan
Documents cause Borrower to be, in violation of any Laws or in
default (nor has any event occurred which, with notice or lapse
of time or both, could constitute such a default) under
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any Material Agreement in any respect which could have a Material
Adverse Effect. During the past five (5) years, there have been
no proceedings, claims, or investigations against or involving
Borrower or any Subsidiary by any Tribunal under or pursuant to
any environmental, occupational safety and health, antitrust,
unfair competition, securities, or other Laws which could have a
Material Adverse Effect, except those described on Exhibit B
attached hereto (the "Tribunal Proceedings").
Section 5.5. MATERIAL AGREEMENTS. There are no
Material Agreements except those which are specifically described
in the Loan Documents.
Section 5.6. INDEBTEDNESS. Except as disclosed to
Lender, neither Borrower nor any Subsidiary is directly,
indirectly, or contingently obligated with respect to any
Indebtedness as of the date of this Agreement.
Section 5.7. LITIGATION. Except for Litigation in
which Borrower or any Subsidiary is exclusively a plaintiff
without a counterclaim, crossclaim, or similar action asserted
against Borrower or any Subsidiary and except as set forth on
Exhibit C attached hereto (the "Existing Litigation"), neither
Borrower nor any Subsidiary is involved in, nor is Borrower or
any Subsidiary aware of the threat of, any Litigation which could
have a Material Adverse Effect, and there are no outstanding or
unpaid judgments against Borrower or any Subsidiary except as
described on Exhibit D attached hereto (the "Unpaid Judgments").
Section 5.8. COMPLIANCE BY SUBSIDIARIES. None of the
Subsidiaries is, nor will the execution, delivery, and
performance of and compliance with the terms of the Loan
Documents cause any Subsidiary to be, in violation of any Laws or
in default under any Material Agreement to which any Subsidiary
is a party or by which any Subsidiary is bound, other than such
violations or defaults which will not, individually or
collectively, cause a Material Adverse Effect.
Section 5.9. TAXES. All federal, state, foreign, and
other Tax returns of Borrower and of each Subsidiary required to
be filed have been filed, all federal, state, foreign, and other
Taxes imposed upon Borrower or any Subsidiary which are due and
payable have been paid, and no material amounts of Taxes not
reflected on such returns are payable by Borrower or any
Subsidiary, other than Taxes being contested in good faith by
appropriate legal proceedings.
Section 5.10. GENERAL. There is no significant
material fact or condition relating to the financial condition
and business of Borrower, any Subsidiary or the Collateral which
has not been related in writing to Lender, and all writings or
oral
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statements heretofore or hereafter exhibited, made, or delivered
to Lender by or on behalf of Borrower or any Subsidiary are and
will be genuine and in all respects what they purport and appear
to be.
Section 5.11. ENFORCEABILITY OF LOAN DOCUMENTS. All
Loan Documents when duly executed and delivered by Borrower will
constitute legal, valid, and binding obligations of Borrower
enforceable in accordance with their terms. All Loan Documents
when duly executed and delivered by a Subsidiary will constitute
legal, valid, and binding obligations of such Subsidiary
enforceable in accordance with their terms.
Section 5.12. SECURITIES LAWS. Borrower has not, nor
has any Person acting or purporting to act on behalf of Borrower,
directly or indirectly, offered the Note for sale to, or
solicited any offer to buy the Note from, or otherwise negotiated
in respect thereof with, any Person, other than Lender, or done
(or omitted to do) any other act, so as to bring the issuance or
sale thereof to Lender within the registration requirements of
the Securities Act of 1933, as amended, and Borrower has complied
with or is exempt from the registration provisions of all state
securities or "blue sky" Laws applicable to the issuance or sale
of the Note to Lender.
Section 5.13. FINANCIAL STATEMENTS. All financial
statements of Borrower and of the Subsidiaries heretofore and
hereafter to be delivered to Lender have been and shall continue
to be prepared in accordance with GAAP and applicable regulatory
accounting principles, and do and shall accurately represent the
financial condition of Borrower and of the Subsidiaries as of the
date of each such financial statement. There are and shall be no
material liabilities, direct or indirect, fixed or contingent, as
of the date of each such financial statement which are not
reflected therein or in the notes thereto. Except for
transactions directly related to, or specifically contemplated
by, this Agreement and transactions heretofore disclosed in
writing to Lender, there has been no material adverse change in
the financial condition of Borrower or any Subsidiary as shown by
the Current Financial Statement for Borrower and each Subsidiary
between the date of such Current Financial Statement and the date
hereof, nor has Borrower or any Subsidiary incurred any material
liability, direct or indirect, fixed, or contingent, except as
otherwise disclosed to and approved in writing by Lender.
Section 5.14. REGULATION U. The proceeds of the
Advances are not and will not be used directly or indirectly for
the purpose of purchasing or carrying, or for the purpose of
extending credit to others for the purpose of purchasing or
carrying, any "margin stock" as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve
System.
Section 5.15. CONTRACTUAL OBLIGATIONS. Except as
described on Exhibit E
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attached hereto (the "Existing Contractual Obligations"), neither
Borrower nor any Subsidiary is directly, indirectly, or
contingently obligated with respect to any material Contractual
Obligations.
Section 5.16. SUBSIDIARIES. The only Subsidiary of
Borrower as of the date of this Agreement is IFC. As of the date
of this Agreement, IFC has 1,000 shares of capital stock issued
and outstanding, all of which are owned by Borrower. The only
Subsidiary of IFC as of the date of this Agreement is Bank. As
of the date of this Agreement, Bank has 250,000 shares of capital
stock issued and outstanding, all of which are owned by IFC.
Bank has no Subsidiaries as of the date of this Agreement.
Section 5.17. OTHER OBLIGATIONS. To the best of
Borrower's knowledge and belief, neither Borrower nor any
Subsidiary is in default in the payment of the principal of or
interest on any Indebtedness nor is Borrower or any Subsidiary in
default under any instrument or agreement under or subject to
which any Indebtedness has been issued, and no event has occurred
under the provisions of any such instrument which, with or
without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
Section 5.18. ERISA. Neither Borrower nor any
Subsidiary has incurred any liability to the PBGC in connection
with any Plan established or maintained by Borrower and/or any
Subsidiary. No (a) Plan of Borrower and/or any Subsidiary has
incurred any material accumulated funding deficiency within the
meaning of ERISA, (b) Reportable Event has occurred with respect
to any Plan, or (c) prohibited transaction (as such term is
defined in ERISA) has occurred.
Section 5.19. REGULATORY ACTS. Neither Borrower nor
any Subsidiary is an "investment company" within the meaning of
the Investment Company Act of 1940, as amended, or is subject to
regulation under the Public Utility Holding Act of 1935, the
Federal Power Act, the Interstate Commerce Act, or any other Law
(other than Regulation X of the Board of Governors of the Federal
Reserve System) which regulates the incurring by Borrower or any
Subsidiary of debt, including, but not limited to, Laws
regulating common or contract carriers or the sale of
electricity, gas, steam, water, or other public utility services.
Section 5.20. RELATIONSHIP WITH LENDER. No Person who
may be deemed to have "control" of Borrower or any Subsidiary is
an "executive officer", "director", or "person who directly or
indirectly or in concert with one or more persons, owns,
controls, or has the power to vote more than ten percent (10%) of
any class of voting securities" of Lender. Terms appearing in
quotations in this section are used herein as defined in Section
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215.2 of Regulation O of the Board of Governors of the Federal
Reserve System, as amended.
Section 5.21. LOCATION OF PROPERTIES AND RECORDS.
Borrower's chief executive office is where Borrower and each
Subsidiary is entitled to receive notices hereunder,
notwithstanding that Borrower or any Subsidiary may maintain
other places of business; the present and foreseeable location of
Borrower's and each Subsidiary's books and records is its chief
executive office; and all such books and records of Borrower and
each Subsidiary are in its possession.
Section 5.22. INELIGIBLE SECURITIES. No portion of
any Advance shall be used directly or indirectly to purchase
ineligible securities, as defined by applicable regulations of
the Federal Reserve Board, underwritten by any affiliate of Banc
One Corporation during the underwriting period and for thirty
(30) days thereafter.
Section 5.23. YEAR 2000 COMPLIANCE. As of the date of
any request for an Advance, as of the date of any renewal,
extension or modification of any of the Loan documents, and at
all times that Lender's commitment to make Advances under this
Agreement is outstanding:
(a) All devices, systems, machinery, information
technology, computer software and hardware, and other date
sensitive technology (jointly and severally the "Systems")
necessary for Borrower and the Subsidiaries to carry on their
respective businesses as presently conducted and as contemplated
to be conducted in the future are Year 2000 Compliant or will be
Year 2000 Compliant within a period of time calculated to result
in no material disruption of any of Borrower's and the
Subsidiaries' business operations. For purposes of these
provisions, "Year 2000 Compliant" means that such Systems are
designed to be used prior to, during and after the Gregorian
calendar year 2000 A.D. and will operate during each such time
period without error relating to date data, specifically
including any error relating to, or the product of, date data
which represents or references different centuries or more than
one century.
(b) Borrower and the Subsidiaries have (i)
undertaken a detailed inventory, review, and assessment of all
areas within their respective businesses and operations that
could be adversely affected by the failure of Borrower or any of
the Subsidiaries to be Year 2000 Compliant on a timely basis;
(ii) developed a detailed plan and time line for becoming Year
2000 Compliant on a timely basis, and (iii) to date, implemented
that plan in accordance with that timetable in all material
respects.
(c) Borrower and the Subsidiaries have made
written inquiry of
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each of their key suppliers, vendors, and customers, and have
obtained in writing confirmations from all such persons, as to
whether such persons have initiated programs to become Year 2000
Compliant and on the basis of such confirmations, Borrower and
the Subsidiaries reasonably believe that all such persons will be
or become so compliant. For purposes hereof, "key suppliers,
vendors, and customers" refers to those suppliers, vendors, and
customers of Borrower and the Subsidiaries whose business failure
would, with reasonable probability, result in a material adverse
change in the business, properties, condition (financial or
otherwise), or prospects of Borrower or any of the Subsidiaries.
For purposes of this paragraph, Lender, as a lender of funds
under the terms of this Agreement, confirms to Borrower and the
Subsidiaries that Lender has initiated its own corporate-wide
Year 2000 program with respect to its lending activities.
(d) The fair market value of all real and
personal property, if any, pledged to Lender as Collateral to
secure the Obligations is not and shall not be less than
currently anticipated or subject to substantial deterioration in
value because of the failure of such Collateral to be Year 2000
Compliant.
ARTICLE VI
----------
CERTAIN AFFIRMATIVE COVENANTS
-----------------------------
So long as Lender is committed to make Advances
hereunder, and thereafter until payment and performance in full
of the Obligations, unless Borrower receives from Lender a prior
written statement that Lender does not object to a deviation,
Borrower and each Subsidiary jointly and severally covenant and
agree that:
Section 6.1. INCUMBENCY. Borrower and each Subsidiary
will from time to time, at the request of Lender, certify to
Lender the names, signatures, and positions of all persons
authorized to execute and deliver any Loan Documents.
Section 6.2. MATERIAL ADVERSE EFFECT. Borrower will
promptly give written notice to Lender of any matter (including
Litigation) which has resulted in, or might result in, a Material
Adverse Effect, and advise Lender from time to time of the status
thereof.
Section 6.3. PAYMENT OF DEBTS. Borrower and each
Subsidiary will pay or cause to be paid all of their respective
Indebtedness prior to the date on which penalties attach thereto
(except to the extent and so long as the payment thereof is being
properly contested in good faith by appropriate proceedings and
adequate reserves have been established therefor).
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Section 6.4. EXPENSES OF LENDER. Borrower will
reimburse Lender for all reasonable out-of-pocket costs, fees,
and expenses incident to the Loan Documents or any transactions
contemplated thereby, including, without limitation, all
recording fees, all recording taxes, and the reasonable fees and
disbursements of special counsel for the Lender for negotiation
and preparation of the Loan Documents, preparation and review of
other documents, and providing of other legal services, from time
to time, in connection herewith up through the Closing Date, and
thereafter for services (a) in connection with any subsequent
Advance, (b) in connection with or in anticipation of a Default,
(c) in connection with any amendment or waiver to any of the Loan
Documents, or (d) in connection with any request or action
initiated by Borrower, all of which shall be and become a part of
the Obligations.
Section 6.5. INSURANCE. Borrower shall cause each
Banking Subsidiary to keep all property of a character usually
insured by Persons engaged in the same or similar businesses
adequately insured by financially sound and reputable insurers
and shall furnish Lender evidence of such insurance immediately
upon request in form satisfactory to Lender.
Section 6.6. MAINTENANCE OF CORPORATE EXISTENCE.
Borrower and each Subsidiary will maintain its respective
corporate existence and authority to transact business in good
standing under the Laws of the State in which incorporated and in
all jurisdictions where the same may be necessary.
Section 6.7. TAXES. Borrower and each Subsidiary will
promptly pay or cause to be paid when due (for the account of
Lender, where appropriate) any and all Taxes due by Borrower or
such Subsidiary, including, without limitation, all taxes,
duties, fees, levies and other charges of whatsoever nature which
have been or may be imposed by any government or by any
department, agency, state, other political subdivision or taxing
authority thereof or therein, including, without limitation,
those due on or in connection with the execution, issuance,
delivery or registration of this Agreement or the Note; provided
that neither Borrower nor any Subsidiary shall be required to pay
and discharge any such Taxes or charges so long as the validity
thereof shall be contested in good faith by appropriate
proceedings and Borrower or such Subsidiary shall set aside on
its books adequate reserves with respect thereto and shall pay
any such Taxes or charge before the property subject thereto
shall be sold to satisfy any lien which has attached as security
therefor.
Section 6.8. COMPLY WITH AGREEMENT. Borrower and
each Subsidiary will fully comply with the terms, provisions and
conditions of this Agreement and of all documents executed
pursuant hereto.
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Section 6.9. MAINTENANCE OF ASSETS AND BUSINESS.
Borrower and each Subsidiary will at all times conduct or cause
to be conducted Borrower's and each Subsidiary's business in an
orderly, efficient, and regular manner, will keep or cause to be
kept all of Borrower's and each Subsidiary's assets which are
useful and necessary in their respective businesses in good
repair, working order and condition, and will make or cause to be
made all necessary repairs, renewals and replacements as may be
reasonably required.
Section 6.10. WITHHOLDING TAXES. Borrower and each
Subsidiary will make timely payment or deposit of all amounts of
Tax required to be withheld and paid to or deposited with the
United States pursuant to the provisions of Title C of the
Internal Revenue Code of 1986, as from time to time amended, with
respect to any and all wages paid to employees of Borrower or any
Subsidiary.
Section 6.11. BOOKS AND RECORDS. Borrower and each
Subsidiary will keep, in Abilene, Texas, in accordance with GAAP,
or applicable regulatory accounting principles, proper and
complete books of records and accounts and permit an agent of
Lender to inspect the same from time to time and make and take
away copies thereof provided such inspection is made with
reasonable notice to Borrower and during normal business hours.
Section 6.12. ANNUAL FINANCIAL STATEMENTS. Borrower
will deliver to Lender, within one hundred twenty (120) days
after the last day of each fiscal year of Borrower, audited (by a
recognized firm of certified public accountants acceptable to
Lender) consolidating financial statements showing the
consolidated financial position, results of operations, statement
of cash flows, and reconciliation of stockholders' equity of
Borrower and the Subsidiaries as of, and for the year ended on,
such last day, together with (a) the unqualified opinion of such
firm of certified public accountants that such financial
statements present fairly, in all material respects, the
consolidated financial position of Borrower and the Subsidiaries
as of the last day of such fiscal year and the results of
operations and the cash flow of Borrower and the Subsidiaries for
the fiscal year then ended in conformity with GAAP and applicable
regulatory accounting principles and with no exceptions,
inconsistencies, or uncertainties described or disclosed therein;
(b) if such financial statements have disclosed the existence of
any condition or event at the end of the fiscal year which
constitutes a Default under this Agreement, or which, after
notice or lapse of time, or both, could constitute a Default, a
statement from such firm of certified public accountants
specifying the nature and period of existence of any such
condition or event disclosed by such examination; (c) any
management letter or report, asset quality report, reserve
adequacy report, or other written report of such firm of
certified public
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accountants which accompanies or is issued in connection with
such financial statements or such opinion; and (d) the
certificate of the chief financial officer of Borrower that all
of such financial statements present fairly the consolidated
financial position of Borrower and the Subsidiaries as of the
last day of such fiscal year and the results of the operations
and the cash flow of Borrower and the Subsidiaries for the fiscal
year then ended in conformity with GAAP and applicable regulatory
accounting principles. Each such audited financial statement
shall contain at least a consolidated balance sheet of Borrower
and the Subsidiaries as at the end of such fiscal year and a
statement of profit and loss and surplus for such fiscal year,
setting forth in each case, in comparative form, the
corresponding figures from the preceding fiscal year.
Section 6.13. FORM 10-K REPORT. Borrower will deliver
to Lender as soon as available and in any event within one
hundred twenty (120) days after the last day of each fiscal year
of Borrower, a copy of Borrower's Annual Report on Form 10-K for
such fiscal year as filed with the United States Securities and
Exchange Commission.
Section 6.14. CALL REPORTS. Borrower will cause to be
delivered to Lender, and each Banking Subsidiary will deliver to
Lender, as soon as available and in any event within forty-five
(45) days after the last day of each calendar quarter, a copy of
the Call Report for such Banking Subsidiary for such calendar
quarter.
Section 6.15. QUARTERLY REPORTS OF BORROWER. Borrower
will deliver to Lender as soon as available and in any event
within forty-five (45) days after the last day of each calendar
quarter, copies of Borrower's Parent Only Financial Statement (FR-
Y9LP or any successor or replacement report) for such quarter as
filed with the Board of Governors of the Federal Reserve System
and Borrower's Consolidated Financial Statements (FR-Y9C or any
successor or replacement report) for such quarter as filed with
the Board of Governors of the Federal Reserve System.
Section 6.16. QUARTERLY REPORTS OF IFC. Borrower will
deliver to Lender as soon as available and in any event within
forty-five (45) days after the last day of each calendar quarter,
a copy of IFC's Parent Only Financial Statement (FR-Y9LP or any
successor or replacement report) for such quarter as filed with
the Board of Governors of the Federal Reserve System.
Section 6.17. REPORTS OF CRITICIZED ASSETS. Borrower
will cause to be delivered to Lender, and each Banking Subsidiary
will deliver to Lender, as soon as available and in any event
within forty-five (45) days after the last day of each calendar
quarter, a summary report of the totals of all assets of each
Banking Subsidiary classified or rated, in whole or in part, as
Classified Assets, Foreclosed Assets, OAEM, or OREO as
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of the last day of each calendar quarter, summarized according to
the amount of assets of each Banking Subsidiary in each rating
category; and upon request of Lender, a detailed listing of such
assets. Such report shall be in such form as Lender may
reasonably require.
Section 6.18. FORM 10-Q REPORTS. Borrower will cause
to be delivered to Lender, and IFC will deliver to Lender, as
soon as available and in any event within forty-five (45) days
after the last day of each calendar quarter, a copy of IFC's
Quarterly Report on Form 10-Q for such quarter as filed with the
United States Securities and Exchange Commission.
Section 6.19. EXAMINATION REPORTS. Borrower will
deliver to Lender or cause to be delivered to Lender, and each
Subsidiary will deliver to Lender, as soon as available and in
any event within thirty (30) days after receipt by Borrower or
any Subsidiary, a copy of each examination report on Borrower or
any Subsidiary and all correspondence from any banking regulatory
agency reflecting negatively on Borrower or any Subsidiary.
Section 6.20. INFORMATION AND INSPECTION. Borrower
and each Subsidiary will furnish to Lender as soon as available
copies of all (a) materials filed pursuant to the Securities Act
of 1933, or 1934, as amended, by Borrower or any Subsidiary with
the Securities and Exchange Commission, (b) reports to
stockholders, and (c) press releases, and at any reasonable time
any other information pertinent to any provision of this
Agreement or to Borrower's business or to any Subsidiary's
business which Lender may reasonably request. Borrower and each
Subsidiary shall permit an authorized representative or
representatives of Lender to visit and inspect at reasonable
times any of the properties of Borrower or of any Subsidiary and
to discuss the affairs, finances, and accounts of Borrower and
the Subsidiaries with the officers and employees of Borrower or
of any Subsidiary.
Section 6.21. ADDITIONAL INFORMATION. Borrower will
promptly furnish, or cause to be furnished, to Lender such other
information, not otherwise required herein, respecting the
business affairs, assets and liabilities of Borrower, the
Subsidiaries and the Collateral as Lender shall from time to time
request, including, but not limited to, such opinions,
certificates, and documents, in addition to those heretofore
mentioned, as Lender may reasonably request.
Section 6.22. USE OF ADVANCES. Borrower will use the
proceeds of the Loan solely as set forth in Section 2.11.
Section 6.23. CHANGES IN FACT. Borrower will promptly
notify Lender of any
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change in any material fact or circumstances represented or
warranted by Borrower or any Subsidiary in the Loan Documents or
in any other documents furnished to Lender in connection with
this Agreement.
Section 6.24. COMPLY WITH ERISA. Borrower and each
Subsidiary will comply with all requirements of ERISA as now in
force or hereafter amended and maintain and keep in full force
and effect any and all Plans which have been adopted under and
pursuant to ERISA which are presently in existence, if any, or
from time to time hereafter may come into existence, make
contributions to such Plans in a timely manner and in an amount
sufficient to comply with the requirements of ERISA, and acquire
and maintain in amounts satisfactory to Lender from either the
PBGC or an authorized private insurer, when available, the
contingent employer liability coverage insurance provided for
under Section 4023 (or any amendments thereof or successors
thereto) of ERISA. Borrower and each Subsidiary will notify
Lender, within ten (10) days after Borrower or any Subsidiary
knows or has reason to know, of the occurrence of a Reportable
Event with respect to any Plan of Borrower or any Subsidiary
subject to ERISA, or the complete or partial withdrawal from
participation in a Plan by Borrower or any Subsidiary (or the
intention of Borrower or any Subsidiary to do so), or that the
PBGC or Borrower or any Subsidiary has instituted or will
institute proceedings under ERISA to terminate any such Plan, or
that any event has occurred or condition exists which might
constitute grounds for termination of any such Plan under ERISA.
Section 6.25. CONTINUANCE OF PRESENT BUSINESS.
Borrower and each Subsidiary will carry on and conduct its
respective business in substantially the same fields as such
business is now and has heretofore been carried on.
Section 6.26. COMPLIANCE WITH APPLICABLE LAWS.
Borrower and each Subsidiary will comply with the requirements of
all applicable Laws, rules, regulations and orders of any
governmental authority, except where contested in good faith and
by proper proceedings.
Section 6.27. NOTICE OF EVENT OF DEFAULT AND SUITS.
Upon discovery, Borrower or the appropriate Subsidiary will
promptly notify Lender of any breach of any of the covenants
contained in Article VI or Article VII and of the occurrence of
any Default hereunder, or of the filing of any claim, action,
suit or proceeding before any Tribunal agency against Borrower or
any Subsidiary in which an adverse decision could have a Material
Adverse Effect upon Borrower or any Subsidiary and advise Lender
from time to time of the status thereof.
Section 6.28. SUBORDINATION OF DEBT. Borrower will
cause any and all
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Indebtedness (other than the Obligations) owing by Borrower or by
any Subsidiary to be subordinated to the Obligations by causing
each holder of any part of the Indebtedness (other than the
Obligations) to execute and deliver to Lender appropriate
subordination agreements or other instruments satisfactory to
Lender subordinating to the Obligations that portion of the
Indebtedness owing to such holder.
Section 6.29. ADDITIONAL SUBSIDIARIES. Borrower and
each Subsidiary will cause each Subsidiary hereafter formed or
acquired to duly execute and deliver to Lender, within five (5)
days after the date such Subsidiary is formed or acquired, such
documents as Lender shall require in order to make such
Subsidiary a party to, and bound by, this Agreement.
Section 6.30. NOTICE OF REGULATORY AGREEMENT.
Borrower and Bank will immediately notify Lender if any Tribunal
gives notice to Bank that Bank must enter into any type of
regulatory agreement with such Tribunal.
Section 6.31. CHANGE IN MANAGEMENT. Borrower and Bank
each will immediately notify Lender of each and every change in
the executive management (whether by change in position, Person,
title, or responsibility) and each and every change in the
membership of the board of directors of Borrower or Bank.
Section 6.32. FDIC MEMBERSHIP. Borrower will cause
Bank to at all times be, and Bank will at all times be, a member
of the FDIC and have all of the deposit accounts of Bank's
depositors insured by the FDIC in the maximum amount permitted by
applicable Law.
Section 6.33. EXAMINATION BY LENDER. At any time
during the continuance of a Default, Borrower and each Subsidiary
will, and Borrower will cause each Subsidiary to, permit any
representatives of Lender and any independent auditors or
consultants selected by Lender to visit, review and/or inspect
any of Borrower's and the Subsidiaries' properties and assets at
any reasonable time and to examine all books of account, records,
reports, examinations and other papers, to make copies thereof,
to discuss the affairs, finances and accounts of Borrower and
each Subsidiary with its employees and officers, to perform loan
portfolio reviews of each Banking Subsidiary, and to review the
asset quality, reserve adequacy, and accounting practices of
Borrower and the Subsidiaries, all at Borrower's expense and at
such reasonable times and as often as may be reasonably requested
during the continuance of a Default. In addition, if Lender, in
Lender's sole discretion, should have any cause for concern about
the financial condition of Borrower or any of the Subsidiaries
due to apparent deterioration in Borrower's or any Subsidiary's
financial condition, then, upon at least forty-five (45) days
prior notice from Lender to Borrower, Borrower and each
Subsidiary will, and Borrower will cause each Subsidiary to,
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permit any representatives of Lender and any independent auditors
or consultants selected by Lender to take all of the actions
described in the immediately preceding sentence, all at Lender's
expense.
Section 6.34. DEBT SERVICE COVERAGE RATIO. Borrower
will maintain or cause to be maintained as of the last day of
each calendar quarter and as of the last day of each fiscal year
of Borrower the ratio of (a) the sum of (i) Net Income, plus (ii)
Management Fees, less (iii) Operating Expenses, less (iv)
Subordinated Debenture Interest, and less (v) Dividends to (b)
the sum of (i) Interest Expense plus (ii) Amortization at not
less than 1.25 to 1.
Section 6.35. TANGIBLE EQUITY TO TOTAL ASSETS RATIO.
Borrower will cause Bank to maintain, and Bank will maintain, the
ratio of Tangible Equity to Total Assets at not less than 0.0575
to 1 at all times.
Section 6.36. NON-PERFORMING ASSETS TO TOTAL CAPITAL
RATIO. Borrower will cause Bank to maintain, and Bank will
maintain, the ratio of the sum of (a) the amount of all Past
Dues, (b) the amount of all Non-Accruals, and (c) the amount of
all Foreclosed Assets (less any duplication in these categories)
to Total Capital at not more than 0.15 to l at any time.
Section 6.37. CLASSIFIED ASSETS TO TOTAL CAPITAL
RATIO. Borrower will cause Bank to maintain, and Bank will
maintain, the ratio of Classified Assets to Total Capital at not
more than 0.4 to 1 at any time.
Section 6.38. REGULATORY REQUIREMENTS. Borrower and
each Subsidiary will maintain and comply with all capital ratios
and all other financial standards applicable to Borrower or such
Subsidiary that are promulgated, established, or required by any
Tribunal having jurisdiction over Borrower or such Subsidiary.
Section 6.39. YEAR 2000 COMPLIANCE. Borrower and each
Subsidiary will:
(a) Furnish such additional information,
statements and other reports with respect to Borrower's and the
Subsidiaries' activities, course of action and progress towards
becoming Year 2000 Compliant as Lender may request from time to
time.
(b) In the event of any change in circumstances
that causes or will likely cause any of Borrower's or any
Subsidiary's representations and warranties with respect to its
or their being or becoming Year 2000 Compliant to no longer be
true (hereinafter, referred to as a "Change in Circumstances")
then Borrower and the
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Subsidiaries will promptly, and in any event within ten (10) days
of receipt of information regarding a Change in Circumstances,
provide Lender with written notice (the "Notice") that describes
in reasonable detail the Change in Circumstances and how such
Change in Circumstances caused or will likely cause Borrower's
and the Subsidiaries' representations and warranties with respect
to being or becoming Year 2000 Compliant to no longer be true.
Borrower and the Subsidiaries will, within ten (10) days of a
request, also provide Lender with any additional information
Lender requests of Borrower and the Subsidiaries in connection
with the Notice and/or a Change in Circumstances.
(c) Permit any representatives of Lender to
inspect any of the properties and Systems of Borrower and the
Subsidiaries and to project test the Systems to determine if they
are Year 2000 Compliant in an integrated environment, all at the
sole cost and expense of Lender.
ARTICLE VII
-----------
CERTAIN NEGATIVE COVENANTS
--------------------------
So long as Lender is committed to make Advances
hereunder, and thereafter until payment and performance in full
of the Obligations, Borrower and each Subsidiary covenant and
agree that, without the prior written consent of Lender:
Section 7.1. MERGER OR SALE OF ASSETS. Neither
Borrower nor any Subsidiary will merge or consolidate with or
into any other Person (other than Borrower or a Subsidiary) or
lease or sell all, or substantially all, of its property, assets
or business to any other Person (other than Borrower or a
Subsidiary), or dispose of or sell any substantial portion of its
assets, property or business.
Section 7.2. PURCHASE OF STOCK. Neither Borrower nor
any Subsidiary will purchase, redeem, retire, or otherwise
acquire for value or pledge any of its stock of any class.
Section 7.3. LEASES. Neither Borrower nor any
Subsidiary, as lessee, will create, incur, assume, or suffer to
exist any lease obligation other than lease obligations incurred
in the ordinary course of business of Borrower or any Subsidiary
as such business is presently conducted, which lease obligations
will not exceed $250,000.00 in aggregate amount in any one fiscal
year.
Section 7.4. LOANS. Except for loans and other
extensions of credit made by Bank in the ordinary course of its
banking business, neither Borrower nor any Subsidiary
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will, directly or indirectly, make any loans or advances to any
Person (other than Borrower or any Subsidiary).
Section 7.5. CONTINGENT LIABILITIES. Except for
letters of credit issued by Bank in the ordinary course of its
banking business and except for the guarantee by Borrower of all
of the obligations of the Trust under the Preferred Securities,
neither Borrower nor any Subsidiary will assume, guarantee,
endorse, contingently agree to purchase or otherwise become
liable upon the obligation of any Person (other than Borrower or
any Subsidiary) except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in
the ordinary course of business.
Section 7.6. INVESTMENTS. Except for the purchase of
all of the issued and outstanding capital stock in other banks or
other bank holding companies or the purchase of other banking
assets, neither Borrower nor any Subsidiary will purchase or
acquire any assets, stock, obligations, notes, or other
securities of, or any other interest in, any Person (other than
Borrower or any existing Subsidiary), or form or acquire any new
Subsidiary, or make any expenditures on behalf of any Person
(other than Borrower or any Subsidiary), except for the purchase
of certificates of deposit issued by commercial banks, bankers
acceptances, United States government securities, United States
government agency securities, repurchase agreements, or other
similar short term investments and except for the receipt by Bank
of promissory notes evidencing loans made by Bank in the ordinary
course of its banking business.
Section 7.7. PERMITTED BUSINESSES. Neither Borrower
nor any Subsidiary will discontinue the Permitted Businesses in
which it is presently engaged, or cause or permit to be
terminated or surrendered any license, franchise or other
agreement necessary to the conduct of the Permitted Businesses,
nor will Borrower or any Subsidiary substantially change the
nature of its Permitted Businesses or engage in any businesses
other than the Permitted Businesses.
Section 7.8. SALE AND LEASEBACK. Neither Borrower nor
any Subsidiary will directly or indirectly enter into any
contract or arrangement whereby Borrower or any Subsidiary shall
sell or transfer all or any substantial part of its fixed assets
then owned by it and shall thereafter upon or within one year
thereafter rent or lease the assets so sold or transferred.
Section 7.9. ASSIGNMENT. Neither Borrower nor any
Subsidiary will assign this Agreement or any of Borrower's or any
Subsidiary's rights or obligations under this Agreement.
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Section 7.10. INDEBTEDNESS. Neither Borrower nor any
Subsidiary will create, incur, assume, or suffer to exist any
liability for borrowed money or incur any liabilities, contingent
or otherwise, except (a) indebtedness to Lender under this
Agreement, (b) indebtedness existing as of the date of this
Agreement which is secured by the Permitted Liens, (c) current
accounts payable or accruals incurred by Borrower or any
Subsidiary in the ordinary course of business, provided that the
same shall be paid when due in accordance with customary trade
terms unless contested in good faith by appropriate proceedings,
(d) Subordinated Debt in such amounts and under such terms as may
be approved in writing by Lender, (e) with respect to Bank,
indebtedness to depositors of Bank under deposit agreements
governing deposit accounts maintained by such depositors at Bank
or under certificates of deposit issued by Bank, liabilities
under letters of credit issued by Bank in the ordinary course of
its banking business, liabilities with respect to federal funds
transactions, and other indebtedness incurred by Bank in the
ordinary course of its banking business, and (f) with respect to
Borrower, indebtedness in excess of $250,000.00 in the aggregate
outstanding at any time.
Section 7.11. LIENS. Neither Borrower nor any
Subsidiary will in any way, directly or indirectly, xxxxx x Xxxx
on any of its assets to any Person, or enter into or permit to
exist any agreement or arrangement (other than the Loan
Documents) which prohibits Borrower or any Subsidiary from
creating or incurring any Lien on any of its assets, or create,
incur, assume or suffer to exist any mortgage, pledge, Lien or
other encumbrance of any kind (including the charge upon property
purchased under conditional sales or other title retention
agreements) upon, or any security interest in, any of its
property or assets, whether now owned or hereafter acquired,
except (a) Liens for Taxes not delinquent or being contested in
good faith and by appropriate proceedings, (b) Liens in
connection with workmen's compensation, unemployment insurance or
other social security obligations, (c) deposits or pledges to
secure bids, tenders, deposits of public funds, contracts (other
than contracts for the payment of money), statutory obligations,
surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business, (d) mechanics',
workmen's, materialmen's, landlords', carriers', or other like
Liens arising in the ordinary course of business with respect to
obligations which are not due or which are being contested in
good faith, (e) the Permitted Liens, and (f) Liens in favor of or
for the benefit of Lender.
Section 7.12. JUDGMENTS. Neither Borrower nor any
Subsidiary will allow any judgment for the payment of money in
excess of $100,000.00 rendered against it to remain undischarged
or unsuperseded for a period of thirty (30) days during which
execution shall not be effectively stayed.
Section 7.13. PAYMENT OF SUBORDINATED DEBT. Except
for the payment of
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interest (only) on the Subordinated Debentures in an amount not
to exceed $300,000.00 in the aggregate during any calendar
quarter and only so long as a Default has not occurred, neither
Borrower nor any Subsidiary will make or cause to be made,
directly or indirectly, in whole or in part, any payments of
principal or interest on any Subordinated Debt until after the
Obligations have been paid in full.
Section 7.14. SALE OF STOCK. Neither Borrower nor any
Subsidiary will, directly or indirectly, sell, issue, or dispose
of (a) any of its shares of capital stock or other investment
securities of any class, (b) any securities convertible into or
exchangeable for any such shares, or (c) any carrying rights,
warrants, options, or other rights to subscribe for or purchase
any such shares.
Section 7.15. COMPLIANCE WITH ERISA. Neither Borrower
nor any Subsidiary will, directly or indirectly, (a) terminate,
within the meaning of Title IV of ERISA, any Plan so as to result
in any material liability to PBGC, (b) suffer a Reportable Event
with respect to any Plan that could result in any material
liability, (c) engage in any "prohibited transaction" (as defined
in Section 4975 of the Internal Revenue Code) involving any Plan
that would result in a material liability for an excise tax or
civil penalty in connection therewith, (d) incur or suffer to
exist any "accumulated funding deficiency" (as defined in Section
302 of ERISA) that could result in any material liability,
whether or not waived, involving any Plan, or (e) permit any Plan
to ever be subject to involuntary termination proceedings.
Section 7.16. TRANSACTIONS WITH AFFILIATES. Neither
Borrower nor any Subsidiary will enter into any transaction,
including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate
except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon
fair and reasonable terms no less favorable to Borrower or such
Subsidiary than Borrower or such Subsidiary could obtain or could
become entitled to in a comparable arm's-length transaction with
a person not an Affiliate. This above covenant respecting
transactions with an Affiliate does not pertain to transactions
of an immaterial nature or to transactions which would not,
directly or indirectly, affect Borrower's good faith compliance
with the terms and intent of the Loan Documents.
Section 7.17. SALE OF SUBSIDIARY. Neither Borrower
nor any Subsidiary will, directly or indirectly, sell, transfer,
or dispose of (a) any of the Stock of any Subsidiary, (b) any
other shares of capital stock in any Subsidiary or other
investment securities in any Subsidiary which are at any time
owned by Borrower or any Subsidiary, (c) any securities issued by
any Subsidiary to Borrower or any Subsidiary which are
convertible into or exchangeable for any such shares, or (d) any
carrying rights, warrants, options, or other
-41-
rights to subscribe for or purchase any such shares.
Section 7.18. TERMINATION OF TRUST. Borrower will not
cause or permit the Trust to be terminated.
Section 7.19. REDEMPTION OF SUBORDINATED DEBENTURES.
Borrower will not cause or permit the Subordinated Debentures to
be redeemed in whole or in part.
ARTICLE VIII
------------
DEFAULT
-------
The term "Default" as used herein shall mean the
occurrence of any one or more of the following events (including
the passage of time, if any, specified therefor):
Section 8.1. PAYMENT OF OBLIGATIONS. The failure or
refusal of Borrower to punctually pay the Obligations, or any
part thereof, as the same become due in accordance with the terms
of the Loan Documents, including, without limitation, the failure
or refusal of Borrower to punctually pay the principal of or the
interest on any Loan.
Section 8.2. CERTAIN NEGATIVE COVENANTS. The failure
or refusal of Borrower or any Subsidiary to punctually and
properly perform, observe, and comply with any covenant,
agreement, or condition contained in Article VII of this
Agreement in accordance with its terms.
Section 8.3. OTHER COVENANTS. The failure or refusal
of Borrower or any Subsidiary to properly perform, observe, and
comply with any covenant or agreement contained in any of the
Loan Documents (other than covenants to pay the Obligations and
covenants contained in Article VII of this Agreement), and such
failure or refusal continues for a period of ten (10) days after
Borrower has, or with exercise of reasonable investigation should
have, notice thereof.
Section 8.4. VOLUNTARY DEBTOR RELIEF. Borrower or any
Subsidiary shall (a) execute an assignment for the benefit of
creditors or (b) become or be adjudicated as bankrupt or
insolvent, or (c) admit in writing its inability to pay its debts
generally as they become due, or (d) apply for or consent to the
appointment of a conservator, receiver, trustee, or liquidator of
it or all or a substantial part of its assets, or (e) file a
voluntary petition seeking reorganization or an arrangement with
creditors or to take advantage or seek any other relief under any
Debtor Relief Law now or hereafter existing, or (f) file an
answer admitting the material allegations of or consenting to, or
default in, a petition
-42-
filed against it in any liquidation, conservatorship, bankruptcy,
reorganization, rearrangement, debtor's relief, or other
insolvency proceedings, or (g) institute or voluntarily be or
become a party to any other judicial proceedings intended to
effect a discharge of its debts, in whole or in part, or a
postponement of the maturity or the collection thereof, or a
suspension of any of the Rights or powers of Lender granted in
any of the Loan Documents, or (h) take any corporate action to
effectuate any of the foregoing.
Section 8.5. INVOLUNTARY PROCEEDINGS. Borrower or any
Subsidiary shall involuntarily (a) have an order, judgment, or
decree entered against it by any Tribunal pursuant to any Debtor
Relief Law that could suspend or otherwise affect any of the
Rights granted to Lender in any of the Loan Documents, and such
order, judgment, or decree is not permanently stayed, vacated, or
reversed within thirty (30) days after the entry thereof, or (b)
have a petition filed against it or any of its property seeking
the benefit or benefits provided for by any Debtor Relief Law
that would suspend or otherwise affect any of the Rights granted
to Lender in any of the Loan Documents, and such petition is not
discharged within thirty (30) days after the filing thereof.
Section 8.6. ATTACHMENT. The failure to have
discharged within a period of thirty (30) days after the
commencement thereof any attachment, sequestration, or similar
proceedings against any of the assets of Borrower or any
Subsidiary.
Section 8.7. PAYMENT OF JUDGMENTS. Borrower or any
Subsidiary fails to pay any money judgment against it at least
ten (10) days prior to the date on which assets of Borrower or
any Subsidiary may be lawfully sold to satisfy such judgment.
Section 8.8. OTHER OBLIGATIONS. Borrower or any
Subsidiary shall default in the due and punctual payment of the
principal of or the interest on any indebtedness, secured or
unsecured, or in the due performance or observance of any
covenant or condition of any indenture or other agreement
executed in connection therewith, and such default shall have
continued beyond any period of grace provided with respect
thereto.
Section 8.9. DISSOLUTION. The dissolution of Borrower
or any Subsidiary for any reason whatsoever.
Section 8.10. MISREPRESENTATION. Any statement,
representation, or warranty heretofore or hereafter made in the
Loan Documents or in any writing or in any other communication
ever delivered to Lender pursuant to the Loan Documents, or any
statement or representation made in any certificate, report, or
opinion delivered to Lender pursuant to the Loan Documents, is
false, calculated to mislead, misleading, or erroneous in any
material respect at the time made.
-43-
Section 8.11. COMMITTED SUM. The Principal Debt at
any time exceeds the Committed Sum then in effect and Borrower
fails to reduce the Principal Debt to an amount equal to or less
than the Committed Sum then in effect immediately after notice
thereof from Bank to Borrower.
Section 8.12. ERISA. Any Reportable Event (other than
a failure to pay benefits when due) under any Plan, or the
appointment by an appropriate Tribunal of a trustee to administer
any Plan, or the termination of any Plan within the meaning of
Title IV of ERISA, or any material accumulated funding deficiency
within the meaning of ERISA under any Plan, or proceedings shall
be instituted by the PBGC to terminate any Plan or to appoint a
trustee to administer any Plan.
Section 8.13. CHANGE IN OWNERSHIP. Borrower shall
cease to own or to have voting control of all of the issued and
outstanding common stock and/or preferred stock of each
Subsidiary of Borrower, or IFC shall cease to own or to have
voting control of all of the issued and outstanding common stock
and/or preferred stock of each Subsidiary of IFC.
Section 8.14. MATERIAL ADVERSE CHANGE. The occurrence
of a material adverse change to the financial condition,
properties, or business operations of Borrower or any Subsidiary.
Section 8.15. REGULATORY ACTION. Borrower or any
Subsidiary becomes subject to (a) any cease and desist order
issued by any Tribunal, (b) any memorandum of understanding
issued by or entered into with any Tribunal, (c) any ongoing on-
site regulatory supervision by any Tribunal, or (d) any other
formal adverse action by any Tribunal.
Section 8.16. CAPITAL FORBEARANCE. Borrower or any
Subsidiary shall apply for any capital forbearance from any
Tribunal.
Section 8.17. PURCHASE AGREEMENT. Borrower shall
default in the due and punctual performance or observance of any
covenant or condition on the part of Borrower to be performed or
observed under the Purchase Agreement.
Section 8.18. TERMINATION OF TRUST. The termination
of the Trust for any reason whatsoever.
Section 8.19. DEFAULT UNDER TRUST AGREEMENT. The
occurrence of any default or event of default under the Trust
Agreement.
-44-
Section 8.20. REDEMPTION OF SUBORDINATED DEBENTURES.
The redemption of all or any part of the Subordinated Debentures
for any reason whatsoever.
Section 8.21. DEFAULT UNDER INDENTURE. The occurrence
of any default or event of default under the Indenture.
ARTICLE IX
----------
CERTAIN RIGHTS OF LENDER
------------------------
Section 9.1. RIGHTS UPON DEFAULT. If a Default shall
occur, at any time thereafter, and in each such case, unless such
Default shall have been remedied to the satisfaction of Lender or
waived in writing by Lender, Lender may, at its election, do any
one or more of the following:
(a) ACCELERATION. Declare the entire unpaid
balance of the Obligations, or any part thereof, immediately due
and payable, whereupon they shall be due and payable without
notice of nonpayment, demand for payment, presentment for
payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest, notice of protest, or any
other notice or demand of any kind, all of which are hereby
waived by Borrower and all of the Subsidiaries.
(b) TERMINATION. Terminate the Commitment and
any other commitment to lend hereunder.
(c) POSSESSION AND PERFORMANCE. Without notice
to Borrower or the Subsidiaries, which is hereby waived, take
possession of any of the Collateral not already in possession of
Lender.
(d) RECEIVERS. Apply for and obtain, by
appropriate judicial action, appointment of a receiver or
receivers for all or any part of the Collateral as a matter of
right, without regard to the sufficiency of the security, without
any showing of insolvency, fraud, or mismanagement on the part of
Borrower or any Subsidiary, and without the necessity of filing
judicial proceedings (other than the proceedings for the
appointment of the receiver or receivers) to protect or enforce
the Rights of Lender; and Borrower and the Subsidiaries hereby
consent to any such appointment.
(e) JUDGMENT. Reduce any claim to judgment.
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(f) FORECLOSURE. Foreclose or otherwise enforce
any and all Liens granted to Lender to secure payment and
performance of the Obligations, and, at Lender's option, buy all
or any part of the Collateral at any public sale, it being
understood that Lender may, at its option, foreclose or enforce
all such Liens simultaneously or individually on the same or
difference dates or foreclose or enforce one or more of such
Liens without foreclosing or enforcing any other such Liens.
(g) RIGHTS. Exercise any and all Rights afforded
by the Laws of the State of Texas or any other jurisdiction, or
by the Loan Documents or any and all other instruments,
documents, and agreements made to secure or assure payment and
performance of the Obligations or any other indebtedness of
Borrower or executed in connection therewith, or by law or
equity, or otherwise.
Provided, however, that upon the occurrence of a Default under
Section 8.4 or Section 8.5, the entire unpaid balance of the
Obligations shall automatically become immediately due and
payable and the commitment of Lender to lend hereunder shall
automatically be immediately terminated, all without any
declaration, election, or other action by Lender and without any
notice of nonpayment, demand for payment, presentment for
payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, protest, notice of protest, or any
other notice or demand of any kind whatsoever, all of which are
hereby waived by Borrower and all of the Subsidiaries.
Section 9.2. OFFSET. For purposes of exercising the
Rights of offset and/or banker's lien, Borrower shall be deemed
directly obligated and indebted to Lender and each Participant,
if any, in the full amount of the total Obligations, and Lender
and each Participant shall be entitled to exercise the Rights of
offset and/or banker's Lien against the interest of Borrower in
and to each and every account and other property of Borrower
which are in the possession of Lender or any Participant to the
extent of the full amount of the Obligations.
Section 9.3. PERFORMANCE BY LENDER. Should any
covenant, duty, or agreement of Borrower or any Subsidiary fail
to be performed in accordance with the terms of the Loan
Documents, Lender may, at its option, perform or attempt to
perform, such covenant, duty, or agreement on behalf of Borrower
or any Subsidiary. In such event, Borrower shall, at the request
of Lender, promptly pay to Lender any amount expended by Lender
in such performance or attempted performance, together with
interest thereon at the Highest Lawful Rate from the date of such
expenditure by Lender until paid. Notwithstanding the foregoing,
it is expressly understood that Lender does not assume any
liability or responsibility for the performance of any duties of
Borrower or any Subsidiary hereunder or in connection with all or
any part of the Collateral.
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Section 9.4. USE OR OPERATION BY LENDER. Should all
or any part of the Collateral come into the possession of Lender,
Lender may use or operate the same for the purpose of preserving
it or its value, or pursuant to the order of a court of
appropriate jurisdiction, or in accordance with any other Rights
held by Lender in respect thereof. The risk of accidental loss
or damage to the Collateral is on Borrower and the Subsidiaries,
and Lender shall have no liability whatsoever for failure to
obtain or maintain insurance, or to determine whether any
insurance ever in force is adequate as to amounts or as to the
risks insured.
Section 9.5. DIMINUTION IN COLLATERAL VALUE. Lender
does not assume, and shall never have, any liability or
responsibility for any loss or diminution in the value of all or
any part of the Collateral.
Section 9.6. LENDER NOT IN CONTROL. None of the
covenants or other provisions contained in this Agreement shall,
or shall be deemed to, give Lender the Right to exercise control
over the affairs and/or management of Borrower or any Subsidiary,
the power of Lender being limited to the Right to exercise the
remedies provided in the other Sections of this Article; provided
that, if Lender becomes the owner of any stock of any Person,
whether through foreclosure or otherwise, Lender shall be
entitled to exercise such legal Rights as it may have by virtue
of being a shareholder of such Person.
Section 9.7. WAIVERS. The acceptance of Lender at any
time and from time to time of part payment on the Obligations
shall not be deemed to be a waiver of any Default then existing.
No waiver by Lender of any Default shall be deemed to be a waiver
of any other then-existing or subsequent Default. No delay or
omission by Lender in exercising any Right under the Loan
Documents shall impair such Right or be construed as a waiver
thereof or any acquiescence therein, nor shall any single or
partial exercise of any such Right preclude other or further
exercise thereof, or the exercise of any other Right under the
Loan Documents or otherwise.
Section 9.8. CUMULATIVE RIGHTS. All Rights available
to Lender under the Loan Documents shall be cumulative of and in
addition to all other Rights granted to Lender at Law or in
equity, whether or not the Obligations be due and payable and
whether or not Lender shall have instituted any suit for
collection, foreclosure, or other action under or in connection
with the Loan Documents.
Section 9.9. INDEMNIFICATION OF LENDER. Borrower and
each Subsidiary shall indemnify and hold harmless Lender against
any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses, and
disbursements of
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any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against Lender, in any way relating to, or
arising out of, the Loan Documents or any of the transactions
contemplated therein, to the extent that any such indemnified
liabilities result, directly or indirectly, from any claims made
or actions, suits, or proceedings commenced by or on behalf of
any Person other than Lender; provided that Lender shall not have
the Right to be indemnified hereunder for its own gross
negligence or willful misconduct, it being the intention hereby
that Lender shall be indemnified for the consequences of its own
negligence.
Section 9.10. APPLICATION OF PROCEEDS. Lender shall
be entitled to apply the proceeds of any sale of all or any part
of the Collateral toward payment of the Obligations in such order
and manner as Lender, in its discretion, may deem advisable.
Borrower shall remain liable as to any deficiency, if any, and
Lender shall account to Borrower for any surplus remaining after
payment in full of the Obligations.
Section 9.11. EXPENDITURES BY LENDER. Any sums spent
by Lender pursuant to the exercise of any Right provided herein
shall become part of the Obligations and shall bear interest at
the Highest Lawful Rate from the date spent until the date repaid
by Borrower.
ARTICLE X
---------
MISCELLANEOUS
-------------
Section 10.1. HEADINGS. The headings, captions, and
arrangements used in any of the Loan Documents are, unless
specified otherwise, for convenience only and shall not be deemed
to limit, amplify, or modify the terms of the Loan Documents, nor
affect the meaning thereof.
Section 10.2. ARTICLES, SECTIONS, AND EXHIBITS. All
references to "Article," "Articles," "Section," "Sections,"
"Subsection," or "Subsections" contained herein are, unless
specifically indicated otherwise, references to articles,
sections, and subsections of this Agreement. All references to
"Exhibits" contained herein are references to exhibits attached
hereto, all of which are made a part hereof for all purposes, the
same as if set forth herein verbatim, it being understood that if
any exhibit attached hereto, which is to be executed and
delivered, contains blanks, the same shall be completed correctly
and in accordance with the terms and provisions contained and as
contemplated herein prior to or at the time of the execution and
delivery thereof.
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Section 10.3. NUMBER AND GENDER OF WORDS. Whenever
herein the singular number is used, the same shall include the
plural where appropriate, and vice versa; and words of any gender
shall include each other gender where appropriate.
Section 10.4. ACCOUNTING TERMS. All accounting and
financial terms used herein, and the compliance with each
covenant contained herein which relates to financial matters,
shall be determined in accordance with GAAP, consistently
applied, as set forth in the opinions of Accounting Principles
Board of the American Institute of Certified Public Accountants
and/or in the Statements of the Financial Accounting Standards
Board which are applicable under the circumstances as of the date
in question, or, in the alternative and if appropriate under the
circumstances, in accordance with and as prescribed by applicable
Call Report manuals, and the requisite that such principles be
applied on a consistent basis means that the accounting
principles being observed in a current period are comparable in
all material respects to those applied in a preceding period,
except to the extent that a deviation therefrom is expressly
stated herein.
Section 10.5. NOTICES. Whenever this Agreement
requires or permits any consent, approval, notice, request, or
demand from one party to another, the consent, approval, notice,
request, or demand must be in writing to be effective and shall
be deemed to have been given on the second Business Day after it
is enclosed in an envelope, addressed to the party to be notified
at the address stated below (or at such other address as may have
bean designated by written notice), properly stamped, sealed, and
deposited in the United States mail, certified mail, return
receipt requested. The address of each party for the purposes
hereof is as follows:
BORROWER INDEPENDENT BANKSHARES, INC.
AND SUBSIDIARIES: 000 Xxxxxxxx
X. X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
LENDER: BANK ONE, TEXAS, NATIONAL ASSOCIATION
P. X. Xxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Section 10.6. FORM AND NUMBER OF DOCUMENTS. Each
agreement, document, instrument, or other writing to be furnished
to Lender under any provision of this
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Agreement must be in form and substance and in such number of
counterparts as may be satisfactory to Lender and its counsel.
Section 10.7. EXCEPTIONS TO COVENANTS. Neither
Borrower nor any Subsidiary shall be deemed to be permitted to
take any action or fail to take any action which is permitted as
an exception to any of the covenants contained herein if such
action or omission would result in the breach of any other
covenant contained herein.
Section 10.8. SURVIVAL. All covenants, agreements,
undertakings, representations, and warranties made in any of the
Loan Documents shall survive all closings under the Loan
Documents and shall continue in full force and effect so long as
any part of the Obligations remain and, except as otherwise
indicated, shall not be affected by any investigation made by any
party.
Section 10.9. GOVERNING LAW; PLACE OF PERFORMANCE.
The Loan Documents are being executed and delivered, and are
intended to be performed, in the State of Texas, and the Laws of
such state and of the United States shall govern the Rights and
duties of the parties hereto and the validity, construction,
enforcement, and interpretation of the Loan Documents, except to
the extent otherwise specified in any of the Loan Documents.
This Agreement, all of the other Loan Documents, and all of the
obligations of Borrower and/or the Subsidiaries under any of the
Loan Documents are performable in Tarrant County, Texas. The
parties to this Agreement hereby consent that venue of any action
brought under this Agreement or under any of the other Loan
Documents shall be in Tarrant County, Texas.
Section 10.10. MAXIMUM INTEREST RATE. Regardless of
any provision contained in any of the Loan Documents, Lender
shall never be entitled to contract for, charge, take, reserve,
receive, collect, or apply as interest on all or any part of the
Obligations, any amount in excess of the Highest Lawful Rate in
effect from day to day, and, in the event Lender ever contracts
for, charges, takes, reserves, receives, collects, or applies as
interest any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of the principal of
the Obligations owed to Lender and treated hereunder as such;
and, if the entire principal amount of the Obligations owed to
Lender is paid in full, any remaining excess shall be repaid to
Borrower. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Highest
Lawful Rate in effect from day to day, Borrower and Lender shall,
to the maximum extent permitted under applicable Law, (a) treat
all Advances as but a single extension of credit (and Lender and
Borrower agree that such is the case and that any provision
herein for multiple Advances or multiple promissory notes is for
convenience only), (b) characterize any nonprincipal payment as
an expense, fee, or premium rather
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than as interest, (c) exclude voluntary prepayments and the
effects thereof, and (d) spread the total amount of interest
throughout the entire contemplated term of the Obligations;
provided that, if the Obligations are paid and performed in full
prior to the end of the full contemplated term thereof, and if
the interest received by Lender for the actual period of
existence thereof exceeds the Highest Lawful Rate in effect from
day to day, Lender shall refund to Borrower the amount of such
excess, and, in such event, Lender shall not be subject to any
penalties provided by any Laws for contracting for, charging,
taking, reserving, or receiving interest in excess of the Highest
Lawful Rate in effect from day to day. To the extent the Laws of
the State of Texas are applicable for purposes of determining the
"Highest Lawful Rate," such term shall mean the "weekly ceiling"
from time to time in effect under Chapter 303 of the Texas
Finance Code, as amended and as supplemented by Texas Credit
Title, as amended, or, if permitted by applicable Law and
effective upon the giving of the notices required by such
Chapter 303 (or effective upon any other date otherwise specified
by applicable Law), the "monthly ceiling," the "quarterly
ceiling," or "annualized ceiling" from time to time in effect
under such Chapter 303, whichever that Lender shall elect to
substitute for the "weekly ceiling," and vice versa, each such
substitution to have the effect provided in such Chapter 303; and
Lender shall be entitled to make such election from time to time
and one or more times and, without notice to Borrower, to leave
any such substitute rate in effect for subsequent periods in
accordance with such Chapter 303. Lender and Borrower hereby
agree that the provisions of Chapter 346 of the Texas Finance
Code, as amended (regulating certain revolving credit loans and
revolving tri-party accounts), shall not apply to the Loan
Documents. The provisions of this Section shall be deemed to be
incorporated into all Loan Documents whether or not any
provisions of this Section are referred to therein.
Section 10.11. INVALID PROVISIONS. If any provision
of any of the Loan Documents is held to be illegal, invalid, or
unenforceable under present or future Laws effective during the
term thereof, such provision shall be fully severable, the
appropriate Loan Paper shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised
a part thereof; and the remaining provisions thereof shall remain
in full force and effect and shall not be effected by the
illegal, invalid, or unenforceable provision or by its severance
therefrom. Furthermore, in lieu of such illegal, invalid, or
unenforceable provision, there shall be added automatically as a
part of such Loan Paper a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible
and be legal, valid, and enforceable.
Section 10.12. ENTIRETY AND AMENDMENTS. This
instrument embodies the entire agreement between the parties
relating to the subject matter hereof (except documents,
agreements and instruments delivered or to be delivered in
accordance with the express terms hereof), supersedes all prior
agreements and understandings, if any, relating
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to the subject matter hereof, and may be amended only by an
instrument in writing executed jointly by Borrower, the
Subsidiaries and Lender and supplemented only by documents
delivered or to be delivered in accordance with the express terms
hereof.
Section 10.13. MULTIPLE COUNTERPARTS. This Agreement
has been executed in a number of identical counterparts, each of
which constitutes an original and all of which constitute,
collectively, one agreement; but in making proof of this
Agreement, it shall not be necessary to produce or account for
more than one such counterpart.
Section 10.14. PARTIES BOUND. This Agreement shall be
binding upon and inure to the benefit of Borrower, the
Subsidiaries, and Lender and their respective successors and
assigns; provided that neither Borrower nor any Subsidiary may,
without the prior written consent of Lender, assign any of its
Rights, duties, or obligations hereunder. No term or provision
of this Agreement shall inure to the benefit of any Person other
than Borrower, the Subsidiaries, and Lender and their respective
successors and assigns; consequently, no Person other than
Borrower, the Subsidiaries, and Lender and their respective
successors and assigns, shall be entitled to rely upon, or to
raise as a defense, in any manner whatsoever, the failure of
Borrower, the Subsidiaries, or Lender to perform, observe, or
comply with any such term or provision.
Section 10.15. FURTHER ASSURANCES. Borrower and each
Subsidiary agree that at any time and from time to time, upon the
written request of Lender, they will execute and deliver such
further documents and do such further acts and things as Lender
may reasonably request in order to fully effect the purpose of
this Agreement and the other Loan Documents and to provide for
the payment of the principal and interest on the Obligations in
accordance with the terms and provisions of the Loan Documents.
Section 10.16. ARBITRATION. Lender, Borrower and each
Subsidiary agree that upon the written demand of any party,
whether made before or after the institution of any legal
proceedings, but prior to the rendering of any judgment in that
proceeding, all disputes, claims and controversies between or
among any of them, whether individual, joint, or class in nature,
arising from any of the Loan Documents or otherwise, including
without limitation contract disputes and tort claims, shall be
resolved by binding arbitration pursuant to the Commercial Rules
of the American Arbitration Association ("AAA"). Any arbitration
proceeding held pursuant to this arbitration provision shall be
conducted in the city nearest Borrower's address having an AAA
regional office, or at any other place selected by mutual
agreement of the parties. No act to take or dispose of any
Collateral shall constitute a waiver of this arbitration
agreement or be prohibited by this arbitration agreement. This
arbitration provision shall not limit the right of either party
during any dispute, claim or controversy to seek, use, and employ
ancillary or preliminary
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rights and/or remedies, judicial or otherwise, for the purposes
of realizing upon, preserving, protecting, foreclosing upon or
proceeding under forcible entry and detainer for possession of,
any real or personal property, and any such action shall not be
deemed an election of remedies. Such remedies include, without
limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of
trust or mortgage, obtaining a writ of attachment or imposition
of a receivership, or exercising any rights relating to personal
property, including exercising the right of set-off, or taking or
disposing of such property with or without judicial process
pursuant to the Uniform Commercial Code. Any disputes, claims or
controversies concerning the lawfulness or reasonableness of an
act, or exercise of any right or remedy concerning any
Collateral, including any claim to rescind, reform, or otherwise
modify any agreement relating to the Collateral, shall also be
arbitrated; provided, however, that no arbitrator shall have the
right or the power to enjoin or restrain any act of any party.
Judgment upon any award rendered by any arbitrator may be entered
in any court having jurisdiction. The statute of limitations,
estoppel, waiver, laches and similar doctrines which would
otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of
an arbitration proceeding shall be deemed the commencement of any
action for these purposes. The Federal Arbitration Act (Title 9
of the United States Code) shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
Section 10.17. JURY WAIVER. BORROWER, EACH
SUBSIDIARY, AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN
RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) BETWEEN OR AMONG BORROWER, ANY SUBSIDIARY, AND LENDER
ARISING OUT OF OR IN ANY WAY RELATED TO ANY OF THE LOAN
DOCUMENTS, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP
BETWEEN OR AMONG LENDER, BORROWER, AND/OR ANY OF THE
SUBSIDIARIES. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER
TO PROVIDE THE FINANCING DESCRIBED IN THIS AGREEMENT.
Section 10.18. STATUTE OF FRAUDS NOTICE. THIS WRITTEN
LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered as of the date first
hereinabove written.
LENDER: BANK ONE, TEXAS,
NATIONAL ASSOCIATION
By:
---------------------------
Name:
-------------------------
Title:
------------------------
BORROWER: INDEPENDENT BANKSHARES, INC.
By: /s/ XXXXX X. XXXXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxxxx,
President and Chief
Executive Officer
IFC: INDEPENDENT FINANCIAL CORP.
By: /s/ XXXXX X. XXXXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxxxx,
President
BANK: FIRST STATE BANK,
NATIONAL ASSOCIATION
By: /s/ XXXXX X. XXXXXXXXXX
--------------------------------
Xxxxx X. Xxxxxxxxxx,
Chief Executive Officer
PROMISSORY NOTE
---------------
DATE OF NOTE: PRINCIPAL AMOUNT: MATURITY DATE:
SEPTEMBER 21, 1998 $6,500,000.00 OCTOBER 5, 2000
FOR VALUE RECEIVED, the undersigned, INDEPENDENT
BANKSHARES, INC. ("Borrower"), on or before October 5, 2000 (the
"Maturity Date"), unconditionally hereby promises to pay to the
order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Lender") at its
office at 000 Xxxxxxxxxxxx Xxxxxx, Xxxx Xxxxx, Tarrant County,
Texas, or at such other place as the holder of this Promissory
Note (this "Note") may hereafter designate, the principal sum of
SIX MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($6,500,000.00), or so much thereof as may be advanced, in lawful
money of the United States of America in immediately available
funds, together with interest (calculated on the basis of the
actual number of days elapsed but computed as if each year
consisted of 360 days) on the unpaid principal balance from time
to time owing hereon computed from the date hereof until maturity
at a per annum rate which from day to day shall be, except as
otherwise provided in this Note, the lesser of (a) the applicable
Loan Rate (hereinafter defined) or Loan Rates in effect from day
to day or (b) the Highest Lawful Rate (hereinafter defined) in
effect from day to day. The term "Loan Rate" shall mean either
one of (a) the Domestic Rate (hereinafter defined) in effect from
day to day or (b) the Eurodollar Rate (hereinafter defined) in
effect for each applicable Interest Period (hereinafter defined),
as may be elected by Borrower from time to time as herein
provided. The term "Domestic Rate" shall mean the Prime Rate
(hereinafter defined) in effect from day to day. The term "Prime
Rate" shall mean at any time the rate of interest per annum then
most recently established by Lender as being the prime rate. The
Prime Rate is a general reference rate of interest and may or may
not be the lowest rate charged by Lender from time to time.
Lender may extend credit to other borrowers at rates of interest
varying from, and having no relationship to, the Prime Rate. The
term "Eurodollar Rate" shall mean a per annum rate of interest
equal to the sum of (i) the LIBOR Rate (hereinafter defined) in
effect for each applicable Interest Period and (ii) two and one-
half percent (2.5%). The term "LIBOR Rate" shall mean the
offered rate for U.S. Dollar deposits of not less than
$1,000,000.00 for a period of time equal to each Interest Period
as of 11:00 a.m. City of London, England time two (2) London
Business Days (hereinafter defined) prior to the first date of
each Interest Period as shown on the display designated as
"British Bankers Assoc. Interest Settlement Rates" on the
Telerate System ("Telerate"), Page 3750 or Page 3740, or such
other page or pages as may replace such pages on Telerate for the
purpose of displaying such rate; provided, however, that if such
rate is not available on Telerate
-1-
then such offered rate shall be otherwise independently
determined by Lender from an alternate, substantially similar
independent source available to Lender or shall be calculated by
Lender by a substantially similar methodology as that theretofore
used to determine such offered rate in Telerate. The Libor Rate
is a general reference rate of interest and may or may not be the
lowest rate charged by Lender from time to time. Lender may
extend credit to other borrowers at rates of interest varying
from and having no relationship to, the Libor Rate. The term
"London Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions are generally
authorized or obligated by law or executive order to close in the
City of London, England. The term "Domestic Business Day" shall
mean any day on which Lender is open to carry on its normal
banking business, and "Business Day" shall mean a Domestic
Business Day and, if a Eurodollar Rate is specified by Borrower,
also a London Business Day. The term "Interest Period", except
for a period when advances under this Note bear interest at the
Domestic Rate, shall mean the period from the last day of the
immediately preceding Interest Period to and including the date
which is ninety (90) days thereafter. With respect to any period
of time during which advances under this Note bear interest
pursuant hereto at the Domestic Rate, the term "Interest Period"
shall mean the period commencing on the date when such rate of
interest becomes payable on the portion of the unpaid principal
balance of this Note which is to bear interest at the Domestic
Rate and ending on whatever date may be selected by Borrower, but
not later than the Maturity Date. Each determination of the
Domestic Rate and of the Eurodollar Rate by Lender shall, in the
absence of manifest error, be conclusive and binding. The term
"Highest Lawful Rate," as used herein, shall mean at the
particular time in question the maximum rate of interest which,
under applicable law, may then be charged on this Note. If
applicable law ceases to provide for such a maximum rate of
interest, the Highest Lawful Rate shall be equal to eighteen
percent (18%) per annum.
Notwithstanding anything contained herein to the contrary,
if at any time during the term of this Note the Highest Lawful
Rate has been charged Borrower in lieu of the Loan Rate because
the Loan Rate has exceeded the Highest Lawful Rate on one or more
days during the term of this Note, and if, as a result, on any
date during the term of this Note the aggregate amount of
interest that has accrued on this Note up to, but not including
such date is less than the aggregate amount of interest that
otherwise would have accrued on this Note up to, but not
including, such date had the Loan Rate been charged for every day
during the term of this Note up to, but not including, such date,
then on such date the unpaid principal balance of this Note shall
bear interest at the Highest Lawful Rate even though the Highest
Lawful Rate is in excess of the Loan Rate for such date.
Any change in either the Prime Rate or the Highest Lawful
Rate or both shall, automatically and without notice to Borrower,
be effective for purposes of determining
-2-
the rate of interest that advances under this Note bear as of the
opening of business on the date of any such change in the Prime
Rate or the Highest Lawful Rate. Any change in the Eurodollar
Rate shall, automatically and without notice to Borrower, be
effective for purposes of changing the rate of interest which
advances under this Note bear as of the opening of business on
the first day of any Interest Period for which the Eurodollar
Rate is to apply.
All matured principal, whether by acceleration or otherwise,
and accrued interest as of maturity shall, at the option of the
holder of this Note, bear interest at the Highest Lawful Rate
until paid.
Borrower shall give Lender at least two (2) Business Days'
written notice prior to the commencement of each Interest Period
specifying (a) the particular Loan Rate to be applicable to each
advance under this Note, (b) stating the principal amount of each
advance under this Note which is to bear interest at such Loan
Rate, and (c) specifying the first day of such Interest Period;
provided, however, that no Interest Period with respect to the
Eurodollar Rate shall extend beyond the Maturity Date; and
provided further that if such Interest Period does not end on a
Business Day, Borrower shall be deemed to have selected an
Interest Period ending on the next succeeding day which is a
Business Day or, if the result of such extension would be to
extend such Interest Period to the next month, the next preceding
day which is a Business Day. If Borrower fails to give such
notice, the rate of interest payable on this Note for the
succeeding Interest Period shall be the Domestic Rate. If
Borrower elects to have the Eurodollar Rate apply for a
particular Interest Period to a portion of the unpaid principal
balance owing on this Note as of the first day of such Interest
Period, the Eurodollar Rate shall be in effect for each day
during such Interest Period and for not less than the full
Interest Period. Unless Borrower notifies Lender at least two
(2) Business Days prior to the expiration of any applicable
Interest Period that it desires to have the Eurodollar Rate apply
for another Interest Period, at the expiration of such Interest
Period the unpaid principal balance of this Note will bear
interest at the Domestic Rate. In the event that Borrower timely
elects to have the Eurodollar Rate apply for another Interest
Period, the Eurodollar Rate for such new Interest Period will be
determined by Lender as herein provided as of the first day of
such new Interest Period. The type of Loan Rate in effect for a
particular Interest Period with respect to a particular advance
(whether the Domestic Rate or the Eurodollar Rate) may not be
changed to any other type of Loan Rate for such advance until
after the end of such Interest Period.
This Note is payable as follows: The principal of this Note
shall be due and payable on or before October 5, 2000. In
addition and notwithstanding the foregoing, if the unpaid
principal balance of this Note is in excess of $1,500,000.00 on
January 5, 1999, Borrower shall pay to Lender on January 5, 1999
principal in an amount not less
-3-
than the amount by which the unpaid principal balance of this
Note exceeds $1,500,000.00, and if the unpaid principal balance
of this Note is in excess of $1,000,000.00 on October 5, 1999,
Borrower shall pay to Lender on October 5, 1999 principal in an
amount not less than the amount by which the unpaid principal
balance of this Note exceeds $1,000,000.00. Interest on each
advance under this Note which bears interest at the Domestic Rate
shall be due and payable quarter-annually as it accrues on the
fifth (5th) day of January, April, July, and October of each
calendar year and at maturity, beginning January 5, 1999, and
continuing regularly and quarter-annually thereafter until and
including October 5, 2000, on which latter date the entire amount
of all advances under this Note which bear interest at the
Domestic Rate (including all principal and interest then
remaining unpaid) shall be then due and payable. Interest on
each advance under this Note which bears interest at the
Eurodollar Rate shall be due and payable on the last day of the
Interest Period for such advance.
Payments, whether full or partial, will be applied first to
accrued interest and then to the reduction of principal.
Notwithstanding anything contained herein to the contrary, in the
event that the Eurodollar Rate is in effect for a particular
advance under this Note for a particular Interest Period,
Borrower may not prepay the principal balance of such advance or
any part thereof except on the last day of such Interest Period
or except as otherwise permitted by the Loan Agreement
(hereinafter defined).
Notwithstanding any other provision contained herein, in the
event that any change in applicable law, rule or regulation or in
the interpretation thereof by any governmental authority charged
with the interpretation or administration thereof shall make it
unlawful for Lender to maintain the loan evidenced by this Note
or any part thereof, the principal amount of this Note then
outstanding, together with interest accrued thereon and any other
amounts payable to Lender under this Note, shall be repaid on the
last day of the then current Interest Period or, if requested by
Lender, upon ten (10) days' prior written notice to Borrower, on
a date specified in such notice prior to such last day; provided
that Borrower shall not be liable for any loss or cost incurred
by Lender by reason of such repayment prior to such day. Upon
the effective date of any such change making it unlawful for
Lender to maintain the loan evidenced by this Note as aforesaid,
Lender shall promptly forward to Borrower evidence certified by
Lender as to any such change.
If at any time (a) any change in applicable law or
regulations or in the interpretation or administration thereof by
any governmental authority charged with the interpretation or
administration thereof shall subject Lender to any tax, duty or
other charge (including, but not limited to, any tax designed to
discourage the purchase or acquisition of foreign securities or
debt instruments by United States nationals) with respect to this
Note or shall change the basis of taxation of payment to Lender
of the
-4-
principal of or interest on this Note or in respect of any other
amounts due hereunder or thereunder (except for changes in the
rate of tax on the overall net income of Lender imposed by the
jurisdiction in which it has its principal office, or by any
political subdivision or taxing authority in such jurisdiction)
or shall impose, modify or deem applicable any reserve, special
deposit or similar requirements against assets of, deposits with
or for the account of, or credit extended by, Lender or shall
impose on Lender or the London Interbank Eurodollar Market any
other conditions affecting this Note or (b) if Lender complies
with any direction from or requirement of any governmental
authority (whether or not having the force of law) and (c) the
result of any of the foregoing is to increase the cost to Lender
of making or maintaining the loan evidenced by this Note or to
reduce the amount of any sum receivable by Lender hereunder by an
amount deemed by Lender to be material, then, upon demand to
Borrower by Lender, Borrower shall pay as additional interest
such additional amount or amounts as will compensate Lender for
such additional cost or reduction. Such amount or amounts shall
be paid on the last day of each Interest Period to which such
cost or reduction relates. A certificate of Lender setting forth
the basis for the determination of the amount necessary to
compensate Lender as aforesaid shall be conclusive and binding
(except for any error manifest from the face of such certificate)
as to the determination of such amount. After any demand for
such compensation, Borrower may, upon ten (10) days' prior
written notice to Lender, prepay the outstanding unpaid principal
amount of this Note on the last day of the then current Interest
Period. Borrower may elect to prepay this Note on a date other
than such last day of an Interest Period only if it shall also
pay all accrued interest on this Note to the date of prepayment
together with such additional amount, if any (in each case as
specified by Lender in a certificate setting forth the basis of
such computation), as is necessary to compensate Lender for any
loss or cost incurred by it as a consequence of such prepayment.
The provisions of this paragraph shall survive the termination of
this Note.
Anything herein to the contrary notwithstanding, if at any
time Lender shall determine (which determination shall be binding
and conclusive) that by reason of circumstances affecting the
London Interbank Eurodollar Market, adequate and reasonable means
do not exist for ascertaining the applicable Eurodollar Rate for
any reason whatsoever, then so long as such circumstances shall
continue, this Note shall bear interest at the Domestic Rate, or
Borrower shall repay the entire unpaid principal amount of this
Note, together with accrued interest thereon.
This Note evidences obligations and indebtedness from time
to time owing by Borrower to Lender pursuant to that certain Loan
Agreement of even date herewith by and among Lender, Borrower,
Independent Financial Corp. ("IFC"), and First State Bank,
National Association ("Loan Agreement"), and is secured by, inter
alia, the following:
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(a) a Pledge Agreement of even date herewith, by
Borrower for the benefit of Lender, covering certain
collateral as more particularly described therein; and
(b) a Pledge Agreement of even date herewith by IFC
for the benefit of Lender covering certain collateral as
more particularly described therein.
This Note, the Loan Agreement and all other documents evidencing,
securing, governing, guaranteeing and/or pertaining to this Note,
including but not limited to those documents described above, are
hereinafter collectively referred to as the "Loan Documents."
The holder of this Note is entitled to the benefits and security
provided in the Loan Documents.
Under the Loan Agreement, Borrower may request advances and
make payments hereunder from time to time, provided that it is
understood and agreed that the aggregate principal amount
outstanding from time to time hereunder shall not at any time
exceed the Committed Sum (as such term is defined in the Loan
Agreement). The unpaid balance of this Note shall increase and
decrease with each new advance or payment hereunder, as the case
may be. This Note shall not be deemed terminated or canceled
prior to the Maturity Date, although the entire principal balance
hereof may from time to time be paid in full. Borrower may
borrow, repay and reborrow hereunder if and to the extent
permitted by the Loan Agreement. Unless otherwise agreed to in
writing, or otherwise required by applicable law, payments will
be applied first to unpaid accrued interest, then to principal,
and any remaining amount to any unpaid collection costs,
delinquency charges and other charges; provided, however, upon
delinquency or other Event of Default, Lender reserves the right
to apply payments among principal, interest, delinquency charges,
collection costs and other charges, at its discretion. All
payments of principal of or interest on this Note shall be made
in lawful money of the United States of America in immediately
available funds, at the address of Lender indicated above, or
such other place as the holder of this Note shall designate in
writing to Borrower. If any payment of principal of or interest
on this Note shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business
Day and any such extension of time shall be included in computing
interest in connection with such payment. The books and records
of Lender shall be prima facie evidence of all outstanding
principal of and accrued and unpaid interest on this Note.
Borrower agrees that all advances hereunder shall be used
solely for the purposes permitted by the Loan Agreement.
-6-
Borrower agrees that upon the occurrence of any one or more
of the following events of default ("Event of Default"):
(a) failure of Borrower to pay any installment of
principal of or interest on this Note or on any other
indebtedness of Borrower to Lender when due; or
(b) the occurrence of any Default under the Loan
Agreement or of any default or event of default specified in
any of the other Loan Documents; or
(c) the bankruptcy or insolvency of, the assignment
for the benefit of creditors by, or the appointment of a
receiver for any of the property of, or the liquidation,
termination, dissolution or death or legal incapacity of,
any party liable for the payment of this Note, whether as
maker, endorser, guarantor, surety or otherwise;
the holder of this Note may, at its option, without further
notice or demand, (i) declare the outstanding principal balance
of and accrued but unpaid interest on this Note at once due and
payable, (ii) refuse to advance any additional amounts under this
Note, (iii) foreclose all liens securing payment hereof, (iv)
pursue any and all other rights, remedies and recourses available
to the holder hereof, including but not limited to any such
rights, remedies or recourses under the Loan Documents, at law or
in equity, or (v) pursue any combination of the foregoing.
The failure to exercise the option to accelerate the
maturity of this Note or any other right, remedy or recourse
available to the holder hereof upon the occurrence of an Event of
Default hereunder shall not constitute a waiver of the right of
the holder of this Note to exercise the same at that time or at
any subsequent time with respect to such Event of Default or any
other Event of Default. The rights, remedies and recourses of
the holder hereof, as provided in this Note and in any of the
other Loan Documents, shall be cumulative and concurrent and may
be pursued separately, successively or together as often as
occasion therefore shall arise, at the sole discretion of the
holder hereof. The acceptance by the holder hereof of any
payment under this Note which is less than the payment in full of
all amounts due and payable at the time of such payment shall not
(i) constitute a waiver of or impair, reduce, release or
extinguish any right, remedy or recourse of the holder hereof, or
nullify any prior exercise of any such right, remedy or recourse,
or (ii) impair, reduce, release or extinguish the obligations of
any party liable under any of the Loan Documents as originally
provided herein or therein.
This Note and all of the other Loan Documents are intended
to be performed in accordance with, and only to the extent
permitted by, all applicable usury laws. If any provision hereof
or of any of the other Loan Documents or the application thereof
to any person or circumstance shall, for any reason and to any
extent, be invalid or
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unenforceable, neither the application of such provision to any
other person or circumstance nor the remainder of the instrument
in which such provision is contained shall be affected thereby
and shall be enforced to the greatest extent permitted by law.
It is expressly stipulated and agreed to be the intent of the
holder hereof to at all times comply with the usury and other
applicable laws now or hereafter governing the interest payable
on the indebtedness evidenced by this Note. If the applicable
law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under this Note or under
any of the other Loan Documents, or contracted for, charged,
taken, reserved or received with respect to the indebtedness
evidenced by this Note, or if Lender's exercise of the option to
accelerate the maturity of this Note, or if any prepayment by
Borrower results in Borrower having paid any interest in excess
of that permitted by law, then it is the express intent of
Borrower and Lender that all excess amounts theretofore collected
by Lender be credited on the principal balance of this Note (or,
if this Note and all other indebtedness arising under or pursuant
to the other Loan Documents have been paid in full, refunded to
Borrower), and the provisions of this Note and the other Loan
Documents immediately be deemed reformed and the amounts
thereafter collectable hereunder and thereunder reduced, without
the necessity of the execution of any new document, so as to
comply with the then applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or
thereunder. All sums paid, or agreed to be paid, by Borrower for
the use, forbearance, detention, taking, charging, receiving or
reserving of the indebtedness of Borrower to Lender under this
Note or arising under or pursuant to the other Loan Documents
shall, to the maximum extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full
term of such indebtedness until payment in full so that the rate
or amount of interest on account of such indebtedness does not
exceed the usury ceiling from time to time in effect and
applicable to such indebtedness for so long as such indebtedness
is outstanding. To the extent federal law permits Lender to
contract for, charge or receive a greater amount of interest,
Lender will rely on federal law instead of the Texas Finance
Code, as supplemented by Texas Credit Title for the purpose of
determining the Highest Lawful Rate. Additionally, to the
maximum extent permitted by applicable law now or hereafter in
effect, Lender may, at its option and from time to time,
implement any other method of computing the Highest Lawful Rate
under the Texas Finance Code, as supplemented by Texas Credit
Title, or under other applicable law by giving notice, if
required, to Borrower as provided by applicable law now or
hereafter in effect. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, it is not
the intention of Lender to accelerate the maturity of any
interest that has not accrued at the time of such acceleration or
to collect unearned interest at the time of such acceleration.
In no event shall Chapter 346 of the Texas Finance Code
(which regulates certain revolving loan accounts and revolving
tri-party accounts) apply to this Note. To the
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extent that Chapter 303 of the Texas Finance Code is applicable
to this Note, the "weekly ceiling" specified in Chapter 303 is
the applicable ceiling; provided that, if any applicable law
permits greater interest, the law permitting the greatest
interest shall apply.
If this Note is placed in the hands of an attorney for
collection, or is collected in whole or in part by suit or
through probate, bankruptcy or other legal proceedings of any
kind, Borrower agrees to pay, in addition to all other sums
payable hereunder, all costs and expenses of collection,
including but not limited to reasonable attorneys' fees.
Borrower and any and all endorsers and guarantors of this
Note severally waive presentment for payment, notice of
nonpayment, protest, demand, notice of protest, notice of intent
to accelerate, notice of acceleration and dishonor, diligence in
enforcement and indulgences of every kind and without further
notice hereby agree to renewals, extensions, exchanges or
releases of collateral, taking of additional collateral,
indulgences or partial payments, either before or after maturity.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS,
EXCEPT AS SUCH LAWS ARE PREEMPTED BY APPLICABLE FEDERAL LAWS.
INDEPENDENT BANKSHARES, INC.
By: /s/ XXXXX X. XXXXXXXXXX
--------------------------
Xxxxx X. Xxxxxxxxxx,
President and Chief
Executive Officer
Address of Borrower:
Independent Bankshares, Inc.
000 Xxxxxxxx
X. X. Xxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxxx Xxxxxxxxxx
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of September
21, 1998, by INDEPENDENT BANKSHARES, INC. (hereinafter called
"Pledgor", whether one or more), in favor of BANK ONE, TEXAS,
NATIONAL ASSOCIATION ("Lender"). Pledgor hereby agrees with
Lender as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings indicated below:
(a) The term "Borrower" shall mean Pledgor.
(b) The term "Code" shall mean the Uniform Commercial
Code as in effect in the State of Texas on the date of this
Agreement or as it may hereafter be amended from time to
time.
(c) The term "Collateral" shall mean all property
specifically described on Schedule "A" attached hereto and
made a part hereof. The term Collateral, as used herein,
shall also include (i) all certificates, instruments and/or
other documents evidencing the foregoing, (ii) all renewals,
replacements and substitutions of all of the foregoing,
(iii) all Additional Property (as hereinafter defined), and
(iv) all PRODUCTS and PROCEEDS of all of the foregoing. The
designation of proceeds does not authorize Pledgor to sell,
transfer or otherwise convey any of the foregoing property.
The delivery at any time by Pledgor to Secured Party of any
property as a pledge to secure payment or performance of any
indebtedness or obligation whatsoever shall also constitute
a pledge of such property as Collateral hereunder.
(d) The term "Indebtedness" shall mean (i) all
indebtedness, obligations and liabilities of Borrower to
Secured Party of any kind or character, now existing or
hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several, and regardless of
whether such indebtedness, obligations and liabilities may,
prior to their acquisition by Secured Party, be or have been
payable to or in favor of a third party and subsequently
acquired by Secured Party (it being contemplated that
Secured Party may make such acquisitions from third
parties), including without limitation all indebtedness,
obligations and liabilities of Borrower to Secured Party
now existing or hereafter arising by note, draft,
acceptance, guaranty, endorsement, letter of credit,
assignment, purchase, overdraft, discount, indemnity
agreement or otherwise, (ii) all accrued but unpaid interest
on any of the indebtedness described in (i) above, (iii) all
obligations of Borrower to Secured Party under any documents
-1-
evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) and (ii)
above, (iv) all costs and expenses incurred by Secured Party
in connection with the collection and administration of all
or any part of the indebtedness and obligations described in
(i), (ii) and (iii) above or the protection or preservation
of, or realization upon, the collateral securing all or any
part of such indebtedness and obligations, including without
limitation all reasonable attorneys' fees, and (v) all
renewals, extensions, modifications and rearrangements of
the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above.
(e) The term "Loan Documents" shall mean all
instruments and documents evidencing, securing, governing,
guaranteeing and/or pertaining to the Indebtedness.
(f) The term "Obligated Party" shall mean any party
other than Borrower who secures, guarantees and/or is
otherwise obligated to pay all or any portion of the
Indebtedness.
(g) The term "Secured Party" shall mean Lender, its
successors and assigns, including without limitation, any
party to whom Lender, or its successors or assigns, may
assign its rights and interests under this Agreement.
All words and phrases used herein which are expressly defined in
Section 1.201, Chapter 8 or Chapter 9 of the Code shall have the
meaning provided for therein. Other words and phrases defined
elsewhere in the Code shall have the meaning specified therein
except to the extent such meaning is inconsistent with a
definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.
2. SECURITY INTEREST. As security for the Indebtedness,
Pledgor, for value received, hereby grants to Secured Party a
continuing security interest in the Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also include the
following property (collectively, the "Additional Property")
which Pledgor becomes entitled to receive or shall receive in
connection with any other Collateral: (a) any stock certificate,
including without limitation, any certificate representing a
stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation,
conversion, sale of assets, combination of shares, stock split or
spin-off; (b) any option, warrant, subscription or right, whether
as an addition to or in substitution of any other Collateral; (c)
any dividends or distributions of any kind whatsoever, whether
distributable in cash, stock or other property; (d) any interest,
premium or principal payments; and (e) any conversion or
redemption proceeds; provided, however, that until the occurrence
of an Event of Default (as hereinafter defined), Pledgor shall be
entitled to all cash dividends and all interest paid
-2-
on the Collateral (except interest paid on any certificate
of deposit pledged hereunder) free of the security interest
created under this Agreement. All Additional Property received
by Pledgor shall be received in trust for the benefit of Secured
Party. All Additional Property and all certificates or other
written instruments or documents evidencing and/or representing
the Additional Property that is received by Pledgor, together
with such instruments of transfer as Secured Party may request,
shall immediately be delivered to or deposited with Secured Party
and held by Secured Party as Collateral under the terms of this
Agreement. If the Additional Property received by Pledgor shall
be shares of stock or other securities, such shares of stock or
other securities shall be duly endorsed in blank or accompanied
by proper instruments of transfer and assignment duly executed in
blank with, if requested by Secured Party, signatures guaranteed
by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in
form and substance satisfactory to Secured Party. Secured Party
shall be deemed to have possession of any Collateral in transit
to Secured Party or its agent.
4. VOTING RIGHTS. As long as no Event of Default shall
have occurred hereunder, any voting rights incident to any stock
or other securities pledged as Collateral may be exercised by
Pledgor; provided, however, that Pledgor will not exercise, or
cause to be exercised, any such voting rights, without the prior
written consent of Secured Party, if the direct or indirect
effect of such vote will result in an Event of Default hereunder.
5. MAINTENANCE OF COLLATERAL. Other than the exercise of
reasonable care to assure the safe custody of any Collateral in
Secured Party's possession from time to time, Secured Party does
not have any obligation, duty or responsibility with respect to
the Collateral. Without limiting the generality of the
foregoing, Secured Party shall not have any obligation, duty or
responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or
similar matters relating to the Collateral or informing Pledgor
with respect to any such matters; (b) fix, preserve or exercise
any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Pledgor
makes written demand to Secured Party to do so, (ii) such written
demand is received by Secured Party in sufficient time to permit
Secured Party to take the action demanded in the ordinary course
of its business, and (iii) Pledgor provides additional
collateral, acceptable to Secured Party in its sole discretion;
(c) collect any amounts payable in respect of the Collateral
(Secured Party being liable to account to Pledgor only for what
Secured Party may actually receive or collect thereon); (d) sell
all or any portion of the Collateral to avoid market loss; (e)
sell all or any portion of the Collateral unless and until (i)
Pledgor makes written demand upon Secured Party to sell the
Collateral, and (ii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; or (f) hold
the Collateral for or on behalf of any party other than Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby
represents and warrants the following to Secured Party:
-3-
(a) Due Authorization. The execution, delivery and
performance of this Agreement and all of the other Loan
Documents by Pledgor have been duly authorized by all
necessary corporate action of Pledgor, to the extent Pledgor
is a corporation, or by all necessary partnership action, to
the extent Pledgor is a partnership.
(b) Enforceability. This Agreement and the other Loan
Documents constitute legal, valid and binding obligations of
Pledgor, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the
enforcement of creditors' rights and except to the extent
specific remedies may generally be limited by equitable
principles.
(c) Ownership and Liens. Pledgor has good and
marketable title to the Collateral free and clear of all
liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement.
No dispute, right of setoff, counterclaim or defense exists
with respect to all or any part of the Collateral. Pledgor
has not executed any other security agreement currently
affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may
have been executed or filed in favor of Secured Party.
(d) No Conflicts or Consents. Neither the ownership,
the intended use of the Collateral by Pledgor, the grant of
the security interest by Pledgor to Secured Party herein nor
the exercise by Secured Party of its rights or remedies
hereunder, will (i) conflict with any provision of (A) any
domestic or foreign law, statute, rule or regulation, (B)
the articles or certificate of incorporation, charter,
bylaws or partnership agreement, as the case may be, of
Pledgor, or (C) any agreement, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise
affecting the Collateral, or (ii) result in or require the
creation of any lien, charge or encumbrance upon any assets
or properties of Pledgor or of any person except as may be
expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents, no consent,
approval, authorization or order of, and no notice to or
filing with, any court, governmental authority or third
party is required in connection with the grant by Pledgor of
the security interest herein or the exercise by Secured
Party of its rights and remedies hereunder.
(e) Security Interest. Pledgor has and will have at
all times full right, power and authority to grant a
security interest in the Collateral to Secured Party in the
manner provided herein, free and clear of any lien, security
interest or other
-4-
charge or encumbrance. This Agreement creates a legal,
valid and binding security interest in favor of Secured
Party in the Collateral.
(f) Location. Pledgor's residence or chief executive
office, as the case may be, and the office where the records
concerning the Collateral are kept is located at its address
set forth on the signature page hereof.
(g) Solvency of Pledgor. As of the date hereof, and
after giving effect to this Agreement and the completion of
all other transactions contemplated by Pledgor at the time
of the execution of this Agreement, (i) Pledgor is and will
be solvent, (ii) the fair saleable value of Pledgor's assets
exceeds and will continue to exceed Pledgor's liabilities
(both fixed and contingent), (iii) Pledgor is paying and
will continue to be able to pay its debts as they mature,
and (iv) if Pledgor is not an individual, Pledgor has and
will have sufficient capital to carry on Pledgor's
businesses and all businesses in which Pledgor is about to
engage.
(h) Securities. Any certificates evidencing
securities pledged as Collateral are valid and genuine and
have not been altered. All securities pledged as Collateral
have been duly authorized and validly issued, are fully paid
and non-assessable, and were not issued in violation of the
preemptive rights of any party or of any agreement by which
Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of
any securities pledged as Collateral, except as has been
disclosed to Secured Party in writing. To the best of
Pledgor's knowledge, no issuer of such securities (other
than securities of a class which are publicly traded) has
any outstanding stock rights, rights to subscribe, options,
warrants or convertible securities outstanding or any other
rights outstanding entitling any party to have issued to
such party capital stock of such issuer, except as has been
disclosed to Secured Party in writing.
7. AFFIRMATIVE COVENANTS. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective unless Secured Party
shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good
and marketable title to all Collateral free and clear of all
liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement
and the security interests and other encumbrances expressly
permitted by the other Loan Documents. Pledgor will not
permit any dispute, right of setoff, counterclaim or defense
to exist with respect to all or any part of the Collateral.
Pledgor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated,
except as may exist or as may have been filed in favor of
Secured Party. Pledgor will defend at its expense Secured
Party's right, title and security
-5-
interest in and to the Collateral against the claims of any
third party.
(b) Inspection of Books and Records. Pledgor will
keep adequate records concerning the Collateral and will
permit Secured Party and all representatives and agents
appointed by Secured Party to inspect Pledgor's books and
records of or relating to the Collateral at any time during
normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and
record any such information.
(c) Adverse Claim. Pledgor covenants and agrees to
promptly notify Secured Party of any claim, action or
proceeding affecting title to the Collateral, or any part
thereof, or the security interest created hereunder and, at
Pledgor's expense, defend Secured Party's security interest
in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to
Secured Party a copy of all written notices received by
Pledgor with respect to the Collateral, including without
limitation, notices received from the issuer of any
securities pledged hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates.
Contemporaneously herewith, Pledgor covenants and agrees to
deliver to Secured Party any certificates, documents or
instruments representing or evidencing the Collateral, with
Pledgor's endorsement thereon and/or accompanied by proper
instruments of transfer and assignment duly executed in
blank with, if requested by Secured Party, signatures
guaranteed by a member or member organization in good
standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to
Secured Party.
(e) Further Assurances. Pledgor will
contemporaneously with the execution hereof and from time to
time thereafter at its expense promptly execute and deliver
all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may
request in order (i) to perfect and protect the security
interest created or purported to be created hereby and the
first priority of such security interest, (ii) to enable
Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Collateral, and (iii)
to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any
financing or continuation statements, or any amendments
thereto; (B) obtaining written confirmation from the issuer
of any securities pledged as Collateral of the pledge of
such securities, in form and substance satisfactory to
Secured Party; (C) cooperating with Secured Party in
registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D)
delivering notice of Secured Party's security interest in
any securities pledged as Collateral to any securities or
financial intermediary, clearing corporation or other party
-6-
required by Secured Party, in form and substance
satisfactory to Secured Party; and (E) obtaining written
confirmation of the pledge of any securities constituting
Collateral from any securities or financial intermediary,
clearing corporation or other party required by Secured
Party, in form and substance satisfactory to Secured Party.
If all or any part of the Collateral is securities issued by
an agency or department of the United States, Pledgor
covenants and agrees, at Secured Party's request, to
cooperate in registering such securities in Secured Party's
name or with Secured Party's account maintained with a
Federal Reserve Bank. When applicable law provides more
than one method of perfection of Secured Party's security
interest in the Collateral, Secured Party may choose the
method(s) to be used.
8. NEGATIVE COVENANTS. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective, unless Secured Party
shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i)
sell, assign (by operation of law or otherwise) or transfer
Pledgor's rights in any of the Collateral, (ii) xxxxx x xxxx
or security interest in or execute, file or record any
financing statement or other security instrument with
respect to the Collateral to any party other than Secured
Party, or (iii) deliver actual or constructive possession of
any certificate, instrument or document evidencing and/or
representing any of the Collateral to any party other than
Secured Party.
(b) Impairment of Security Interest. Pledgor will not
take or fail to take any action which would in any manner
impair the value or enforceability of Secured Party's
security interest in any Collateral.
(c) Dilution of Ownership. As to any securities
pledged as Collateral (other than securities of a class
which are publicly traded), Pledgor will not consent to or
approve of the issuance of (i) any additional shares of any
class of securities of such issuer (unless immediately upon
issuance additional securities are pledged and delivered to
Secured Party pursuant to the terms hereof to the extent
necessary to give Secured Party a security interest after
such issuance in at least the same percentage of such
issuer's outstanding securities as Secured Party had before
such issuance), (ii) any instrument convertible voluntarily
by the holder thereof or automatically upon the occurrence
or non-occurrence of any event or condition into, or
exchangeable for, any such securities, or (iii) any
warrants, options, contracts or other commitments entitling
any third party to purchase or otherwise acquire any such
securities.
(d) Restrictions on Securities. Pledgor will not
enter into any agreement
-7-
creating, or otherwise permit to exist, any restriction or
condition upon the transfer, voting or control of any
securities pledged as Collateral, except as consented to in
writing by Secured Party.
9. RIGHTS OF SECURED PARTY. Secured Party shall have the
rights contained in this Section at all times during the period
of time this Agreement is effective.
(a) Power of Attorney. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact, such
power of attorney being coupled with an interest, with full
authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, to take any action and to execute
any instrument which Secured Party may from time to time in
Secured Party's discretion deem necessary or appropriate to
accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any
securities, instruments, documents or certificates pledged
as Collateral in the name of Secured Party or its nominee;
(ii) use any interest, premium or principal payments,
conversion or redemption proceeds or other cash proceeds
received in connection with any Collateral to reduce any of
the Indebtedness; (iii) exchange any of the securities
pledged as Collateral for any other property upon any
merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof, and, in connection
therewith, to deposit and deliver any and all of such
securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and
conditions as Secured Party may deem necessary or
appropriate; (iv) exercise or comply with any conversion,
exchange, redemption, subscription or any other right,
privilege or option pertaining to any securities pledged as
Collateral; provided, however, except as provided herein,
Secured Party shall not have a duty to exercise or comply
with any such right, privilege or option (whether
conversion, redemption or otherwise) and shall not be
responsible for any delay or failure to do so; and (v) file
any claims or take any action or institute any proceedings
which Secured Party may deem necessary or appropriate for
the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Secured Party with
respect to the Collateral.
(b) Performance by Secured Party. If Pledgor fails to
perform any agreement or obligation provided herein, Secured
Party may itself perform, or cause performance of, such
agreement or obligation, and the expenses of Secured Party
incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by
Pledgor on demand.
Notwithstanding any other provision herein to the contrary,
Secured Party does not have any duty to exercise or continue to
exercise any of the foregoing rights and shall not be responsible
for any failure to do so or for any delay in doing so.
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10. EVENTS OF DEFAULT. Each of the following constitutes
an "Event of Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal
or neglect of Borrower to make any payment of principal or
interest on the Indebtedness, or any portion thereof, as the
same shall become due and payable; or
(b) Non-Performance of Covenants. The failure of
Borrower or any Obligated Party to timely and properly
observe, keep or perform any covenant, agreement, warranty
or condition required herein or in any of the other Loan
Documents; or
(c) Default Under other Loan Documents. The
occurrence of any default or event of default under any of
the other Loan Documents.
(d) False Representation. Any representation
contained herein or in any of the other Loan Documents made
by Borrower or any Obligated Party is false or misleading in
any material respect; or
(e) Default to Third Party. The occurrence of any
event which permits the acceleration of the maturity of any
indebtedness owing by Borrower or any Obligated Party to any
third party under any agreement or undertaking; or
(f) Bankruptcy or Insolvency. If Borrower or any
Obligated Party: (i) becomes insolvent, or makes a transfer
in fraud of creditors, or makes an assignment for the
benefit of creditors, or admits in writing its inability to
pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a
receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of the assets of
such party or any of the Collateral, either in a proceeding
brought by such party or in a proceeding brought against
such party and such appointment is not discharged or such
possession is not terminated within sixty (60) days after
the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a
petition for relief under the United States Bankruptcy Code
or any other present or future federal or state insolvency,
bankruptcy or similar laws (all of the foregoing hereinafter
collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party
under any Applicable Bankruptcy Law and such involuntary
petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is
entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or
other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have
discharged within a period of sixty (60) days any
attachment, sequestration or
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similar writ levied upon any property of such party; or (vi)
fails to pay within thirty (30) days any final money
judgment against such party; or
(g) Execution on Collateral. The Collateral or any
portion thereof is taken on execution or other process of
law in any action against Pledgor; or
(h) Abandonment. Pledgor abandons the Collateral or
any portion thereof; or
(i) Action by Other Lienholder. The holder of any
lien or security interest on any of the assets of Pledgor,
including without limitation, the Collateral (without hereby
implying the consent of Secured Party to the existence or
creation of any such lien or security interest on the
Collateral), declares a default thereunder or institutes
foreclosure or other proceedings for the enforcement of its
remedies thereunder; or
(j) Liquidation Related Events. The liquidation,
dissolution, merger or consolidation of Borrower or any
Obligated Party; or
(k) Dilution of Ownership. The issuer of any
securities (other than securities of a class which are
publicly traded) constituting Collateral hereafter issues
any shares of any class of capital stock (unless immediately
upon issuance, additional securities are pledged and
delivered to Secured Party pursuant to the terms hereof to
the extent necessary to give Secured Party a security
interest after such issuance in at least the same percentage
of such issuer's outstanding securities as Secured Party had
before such issuance) or any options, warrants or other
rights to purchase any such capital stock; or
(l) Bankruptcy of Issuer. (i) The issuer of any
securities constituting Collateral files a petition for
relief under any Applicable Bankruptcy Law, (ii) an
involuntary petition for relief is filed against any such
issuer under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within thirty (30)
days after the filing thereof, or (iii) an order for relief
naming any such issuer is entered under any Applicable
Bankruptcy Law.
11. REMEDIES AND RELATED RIGHTS. If an Event of Default
shall have occurred, and without limiting any other rights and
remedies provided herein, under any of the other Loan Documents
or otherwise available to Secured Party, Secured Party may
exercise one or more of the rights and remedies provided in this
Section.
(a) Remedies. Secured Party may from time to time at
its discretion, without limitation and without notice except
as expressly provided in any of the Loan Documents:
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(i) exercise in respect of the Collateral all the
rights and remedies of a secured party under the Code
(whether or not the Code applies to the affected
Collateral);
(ii) reduce its claim to judgment or foreclose or
otherwise enforce, in whole or in part, the security
interest granted hereunder by any available judicial
procedure;
(iii) sell or otherwise dispose of, at its office,
on the premises of Pledgor or elsewhere, the
Collateral, as a unit or in parcels, by public or
private proceedings, and by way of one or more
contracts (it being agreed that the sale or other
disposition of any part of the Collateral shall not
exhaust Secured Party's power of sale, but sales or
other dispositions may be made from time to time until
all of the Collateral has been sold or disposed of or
until the Indebtedness has been paid and performed in
full), and at any such sale or other disposition it
shall not be necessary to exhibit any of the
Collateral;
(iv) buy the Collateral, or any portion thereof,
at any public sale;
(v) buy the Collateral, or any portion thereof,
at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard
price quotations;
(vi) apply for the appointment of a receiver for
the Collateral, and Pledgor hereby consents to any such
appointment; and
(vii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the
circumstances are such that Secured Party is entitled
to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to
receive any notice under the Uniform Commercial Code, as it
exists in the state governing any such notice, of the sale
or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a
depository receptacle under the care and custody of the
United States Postal Service, postage prepaid, at Pledgor's
address set forth on the signature page hereof, five (5)
days prior to the date of any public sale, or after which a
private sale, of any of such Collateral is to be held.
Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from
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time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. Pledgor
further acknowledges and agrees that the redemption by
Secured Party of any certificate of deposit pledged as
Collateral shall be deemed to be a commercially reasonable
disposition under Section 9.504(c) of the Code.
(b) Private Sale of Securities. Pledgor recognizes
that Secured Party may be unable to effect a public sale of
all or any part of the securities pledged as Collateral
because of restrictions in applicable federal and state
securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such
securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor
acknowledges that each any such private sale may be at
prices and other terms less favorable then what might have
been obtained at a public sale and, notwithstanding the
foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner
and that Secured Party shall have no obligation to delay the
sale of any such securities for the period of time necessary
to permit the issuer to register such securities for public
sale under any federal or state securities laws. Pledgor
further acknowledges and agrees that any offer to sell such
securities which has been made privately in the manner
described above to not less than five (5) bona fide offerees
shall be deemed to involve a "public sale" for the purposes
of Section 9.504(c) of the Code, notwithstanding that such
sale may not constitute a "public offering" under any
federal or state securities laws and that Secured Party may,
in such event, bid for the purchase of such securities.
(c) Application of Proceeds. If any Event of Default
shall have occurred, Secured Party may at its discretion
apply or use any cash held by Secured Party as Collateral,
and any cash proceeds received by Secured Party in respect
of any sale or other disposition of, collection from, or
other realization upon, all or any part of the Collateral as
follows in such order and manner as Secured Party may elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses)
incurred by Secured Party in connection with (A) the
administration of the Loan Documents, (B) the custody,
preservation, use or operation of, or the sale of,
collection from, or other realization upon, the
Collateral, and (C) the exercise or enforcement of any
of the rights and remedies of Secured Party hereunder;
(ii) to the payment or other satisfaction of any
liens and other encumbrances upon the Collateral;
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(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as
Collateral;
(v) to the payment of any other amounts required
by applicable law (including without limitation,
Section 9.504(a)(3) of the Code or any other applicable
statutory provision); and
(vi) by delivery to Pledgor or any other party
lawfully entitled to receive such cash or proceeds
whether by direction of a court of competent
jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any
sale of, collection from, or other realization upon, all or
any part of the Collateral by Secured Party are insufficient
to pay all amounts to which Secured Party is legally
entitled, Borrower and any party who guaranteed or is
otherwise obligated to pay all or any portion of the
Indebtedness shall be liable for the deficiency, together
with interest thereon as provided in the Loan Documents.
(e) Non-Judicial Remedies. In granting to Secured
Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to
enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with
the usage of trade, are responsive to commercial necessity
and are the result of a bargain at arm's length. Nothing
herein is intended to prevent Secured Party or Pledgor from
resorting to judicial process at either party's option.
(f) Other Recourse. Pledgor waives any right to
require Secured Party to proceed against any third party,
exhaust any Collateral or other security for the
Indebtedness, or to have any third party joined with Pledgor
in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to
Secured Party. Pledgor further waives any and all notice of
acceptance of this Agreement and of the creation,
modification, rearrangement, renewal or extension of the
Indebtedness. Pledgor further waives any defense arising by
reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of
the liability of any third party. Until all of the
Indebtedness shall have been paid in full, Pledgor shall
have no right of subrogation and Pledgor waives the right to
enforce any remedy which Secured Party has or may hereafter
have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever
now or hereafter held by Secured Party.
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Pledgor authorizes Secured Party, and without notice or
demand and without any reservation of rights against Pledgor
and without affecting Pledgor's liability hereunder or on
the Indebtedness, to (i) take or hold any other property of
any type from any third party as security for the
Indebtedness, and exchange, enforce, waive and release any
or all of such other property, (ii) apply such other
property and direct the order or manner of sale thereof as
Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release
any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the
provisions of any of the Loan Documents executed by any
third party, and (v) release or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of
Default, Pledgor will not exercise any voting rights with
respect to securities pledged as Collateral. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's
attorney-in-fact (such power of attorney being coupled with
an interest) and proxy to exercise any voting rights with
respect to Pledgor's securities pledged as Collateral upon
the occurrence of an Event of Default.
(h) Dividend Rights and Interest Payments. Upon the
occurrence of an Event of Default:
(i) all rights of Pledgor to receive and retain
the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant
to Section 3 shall automatically cease, and all such
rights shall thereupon become vested with Secured Party
which shall thereafter have the sole right to receive,
hold and apply as Collateral such dividends and
interest payments; and
(ii) all dividend and interest payments which are
received by Pledgor contrary to the provisions of
clause (i) of this Subsection shall be received in
trust for the benefit of Secured Party, shall be
segregated from other funds of Pledgor, and shall be
forthwith paid over to Secured Party in the exact form
received (properly endorsed or assigned if requested by
Secured Party), to be held by Secured Party as
Collateral.
(i) Bankruptcy. In the event that Debtor is the
subject of any insolvency, bankruptcy, receivership,
dissolution, reorganization or similar proceeding,
federal or state, voluntary or involuntary, under any
present or future law or act, Lender is entitled to the
automatic and absolute lifting of any automatic stay as
to the enforcement of its remedies under the Loan
Documents against the Collateral including
specifically, but not limited to the stay imposed by
Section 362 of the United States Federal Bankruptcy
Code, as amended. Debtor hereby consents to
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the immediate lifting of any such automatic stay, and
will not contest any motion by Lender to lift such
stay. Debtor expressly acknowledges that (a) there is
no equity in the Collateral after consideration of the
amount owed Lender, and (b) the Collateral is not now,
and will never be necessary to any plan of
reorganization of any type.
12. Indemnity. Pledgor hereby indemnifies and agrees to
hold harmless Secured Party, and its officers, directors,
employees, agents and representatives (each an "Indemnified
Person") from and against any and all liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred
by, or asserted against, any Indemnified Person arising in
connection with the Loan Documents, the Indebtedness or the
Collateral (including without limitation, the enforcement of the
Loan Documents and the defense of any Indemnified Person's
actions and/or inactions in connection with the Loan Documents).
WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
AND/OR ANY OTHER INDEMNIFIED PERSON, except to the limited extent
the Claims against an Indemnified Person are proximately caused
by Such Indemnified Person's gross negligence or willful
misconduct. If Pledgor or any third party ever alleges such
gross negligence or willful misconduct by any Indemnified Person,
the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect
of the alleged gross negligence or willful misconduct. The
indemnification provided for in this Section shall survive the
termination of this Agreement and shall extend and continue to
benefit each individual or entity who is or has at any time been
an Indemnified Person hereunder.
13. MISCELLANEOUS.
(a) Entire Agreement. This Agreement contains the
entire agreement of Secured Party and Pledgor with respect
to the Collateral. If the parties hereto are parties to any
prior agreement, either written or oral, relating to the
Collateral, the terms of this Agreement shall amend and
supersede the terms of such prior agreements as to
transactions on or after the effective date of this
Agreement, but all security agreements, financing
statements, guaranties, other contracts and notices for the
benefit of Secured Party shall continue in full force and
effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate
release.
(b) Amendment. No modification, consent or amendment
of any provision of this Agreement or any of the other Loan
Documents shall be valid or
-15-
effective unless the same is in writing and signed by the
party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security
interest and other security rights of Secured Party
hereunder shall not be impaired by (i) any renewal,
extension, increase or modification with respect to the
Indebtedness, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Secured
Party may grant with respect to the Collateral, or (iii) any
release or indulgence granted to any endorser, guarantor or
surety of the Indebtedness. The taking of additional
security by Secured Party shall not release or impair the
lien, security interest or other security rights of Secured
Party hereunder or affect the obligations of Pledgor
hereunder.
(d) Waiver by Secured Party. Secured Party may waive
any Event of Default without waiving any other prior or
subsequent Event of Default. Secured Party may remedy any
default without waiving the Event of Default remedied.
Neither the failure by Secured Party to exercise, nor the
delay by Secured Party in exercising, any right or remedy
upon any Event of Default shall be construed as a waiver of
such Event of Default or as a waiver of the right to
exercise any such right or remedy at a later date. No
single or partial exercise by Secured Party of any right or
remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver
of any provision hereof or consent to any departure by
Pledgor therefrom shall be effective unless the same shall
be in writing and signed by Secured Party and then such
waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further
notice or demand in similar or other circumstances.
(e) Costs and Expenses. Pledgor will upon demand pay
to Secured Party the amount of any and all costs and
expenses (including without limitation, attorneys' fees and
expenses), which Secured Party may incur in connection with
(i) the transactions which give rise to the Loan Documents,
(ii) the preparation of this Agreement and the perfection
and preservation of the security interests granted under the
Loan Documents, (iii) the administration of the Loan
Documents, (iv) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization
upon, the Collateral, (v) the exercise or enforcement of any
of the rights of Secured Party under the Loan Documents, or
(vi) the failure by Pledgor to perform or observe any of the
provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
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THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO
THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) Venue. This Agreement has been entered into in
the county in Texas where Lender's address for notice
purposes is located, and it shall be performable for all
purposes in such county. Courts within the State of Texas
shall have jurisdiction over any and all disputes arising
under or pertaining to this Agreement and venue for any such
disputes shall be in the county or judicial district where
this Agreement has been executed and delivered.
(h) Severability. If any provision of this Agreement
is held by a court of competent jurisdiction to be illegal,
invalid or unenforceable under present or future laws, such
provision shall be fully severable, shall not impair or
invalidate the remainder of this Agreement and the effect
thereof shall be confined to the provision held to be
illegal, invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be
construed as an obligation on the part of Secured Party to
extend or continue to extend credit to Borrower.
(j) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to
this Agreement shall be in writing and given by (i) personal
delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent
to the intended addressee at the address set forth on the
signature page hereof or to such different address as the
addressee shall have designated by written notice sent
pursuant to the terms hereof and shall be deemed to have
been received either, in the case of personal delivery, at
the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery
at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under
the care and custody of the United States Postal Service.
Either party shall have the right to change its address for
notice hereunder to any other location within the
continental United States by notice to the other party of
such new address at least thirty (30) days prior to the
effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i)
creates a continuing security interest in the Collateral,
(ii) shall be binding on Pledgor and the heirs, executors,
administrators, personal representatives, successors and
assigns of Pledgor, and (iii) shall inure to the benefit of
Secured Party and its successors and assigns.
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Without limiting the generality of the foregoing, Secured
Party may pledge, assign or otherwise transfer the
Indebtedness and its rights under this Agreement and any of
the other Loan Documents to any other party. Pledgor's
rights and obligations hereunder may not be assigned or
otherwise transferred without the prior written consent of
Secured Party.
(l) Termination. It is contemplated by the parties
hereto that from time to time there may be no outstanding
Indebtedness, but notwithstanding such occurrences, this
Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Indebtedness. Upon (i)
the satisfaction in full of the Indebtedness, (ii) the
termination or expiration of any commitment of Secured Party
to extend credit to Borrower, (iii) written request for the
termination hereof delivered by Pledgor to Secured Party,
and (iv) written release delivered by Secured Party to
Pledgor, this Agreement and the security interests created
hereby shall terminate. Upon termination of this Agreement
and Pledgor's written request, Secured Party will, at
Pledgor's sole cost and expense, return to Pledgor such of
the Collateral as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof and
execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination.
(m) Cumulative Rights. All rights and remedies of
Secured Party hereunder are cumulative of each other and of
every other right or remedy which Secured Party may
otherwise have at law or in equity or under any of the other
Loan Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of any other rights or
remedies.
(n) Gender and Number. Within this Agreement, words
of any gender shall be held and construed to include the
other gender, and words in the singular number shall be held
and construed to include the plural and words in the plural
number shall be held and construed to include the singular,
unless in each instance the context requires otherwise.
(o) Descriptive Headings. The headings in this
Agreement are for convenience only and shall in no way
enlarge, limit or define the scope or meaning of the various
and several provisions hereof.
EXECUTED as of the date first written above.
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Pledgor's Address: PLEDGOR:
Independent Bankshares, Inc. INDEPENDENT BANKSHARES, INC.
000 Xxxxxxxx
X. X. Xxx 0000
Xxxxxxx, Xxxxx 00000 By:
Attn: Xxxxxxx Xxxxxxxxxx Xxxxx X. Xxxxxxxxxx,
President and Chief
Executive Officer
Secured Party's Address:
Bank One, Texas, National
Association
P. X. Xxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
-19-
SCHEDULE "A"
TO
PLEDGE AGREEMENT
DATED SEPTEMBER 21, 1998
BY INDEPENDENT BANKSHARES, INC. TO
BANK ONE, TEXAS, NATIONAL ASSOCIATION
The following property is a part of the Collateral as defined in
Subsection 1(c):
1,000 shares of common stock of Independent Financial Corp.,
a Delaware corporation, as evidenced by certificate no. 1
issued in the name of Pledgor.
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement") is made as of September
21, 1998, by INDEPENDENT FINANCIAL CORP. (hereinafter called
"Pledgor", whether one or more), in favor of BANK ONE, TEXAS,
NATIONAL ASSOCIATION ("Lender"). Pledgor hereby agrees with
Lender as follows:
1. DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings indicated below:
(a) The term "Borrower" shall mean Independent
Bankshares, Inc.
(b) The term "Code" shall mean the Uniform Commercial
Code as in effect in the State of Texas on the date of this
Agreement or as it may hereafter be amended from time to
time.
(c) The term "Collateral" shall mean all property
specifically described on Schedule "A" attached hereto and
made a part hereof. The term Collateral, as used herein,
shall also include (i) all certificates, instruments and/or
other documents evidencing the foregoing, (ii) all renewals,
replacements and substitutions of all of the foregoing,
(iii) all Additional Property (as hereinafter defined), and
(iv) all PRODUCTS and PROCEEDS of all of the foregoing. The
designation of proceeds does not authorize Pledgor to sell,
transfer or otherwise convey any of the foregoing property.
The delivery at any time by Pledgor to Secured Party of any
property as a pledge to secure payment or performance of any
indebtedness or obligation whatsoever shall also constitute
a pledge of such property as Collateral hereunder.
(d) The term "Indebtedness" shall mean (i) all
indebtedness, obligations and liabilities of Borrower to
Secured Party of any kind or character, now existing or
hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated,
joint, several or joint and several, and regardless of
whether such indebtedness, obligations and liabilities may,
prior to their acquisition by Secured Party, be or have been
payable to or in favor of a third party and subsequently
acquired by Secured Party (it being contemplated that
Secured Party may make such acquisitions from third
parties), including without limitation all indebtedness,
obligations and liabilities of Borrower to Secured Party now
existing or hereafter arising by note, draft, acceptance,
guaranty, endorsement, letter of credit, assignment,
purchase, overdraft, discount, indemnity agreement or
otherwise, (ii) all accrued but unpaid interest on any of
the indebtedness described in (i) above, (iii) all
obligations of Borrower to Secured Party under any documents
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evidencing, securing, governing and/or pertaining to all or
any part of the indebtedness described in (i) and (ii)
above, (iv) all costs and expenses incurred by Secured Party
in connection with the collection and administration of all
or any part of the indebtedness and obligations described in
(i), (ii) and (iii) above or the protection or preservation
of, or realization upon, the collateral securing all or any
part of such indebtedness and obligations, including without
limitation all reasonable attorneys' fees, and (v) all
renewals, extensions, modifications and rearrangements of
the indebtedness and obligations described in (i), (ii),
(iii) and (iv) above.
(e) The term "Loan Documents" shall mean all
instruments and documents evidencing, securing, governing,
guaranteeing and/or pertaining to the Indebtedness.
(f) The term "Obligated Party" shall mean any party
other than Borrower who secures, guarantees and/or is
otherwise obligated to pay all or any portion of the
Indebtedness.
(g) The term "Secured Party" shall mean Lender, its
successors and assigns, including without limitation, any
party to whom Lender, or its successors or assigns, may
assign its rights and interests under this Agreement.
All words and phrases used herein which are expressly defined in
Section 1.201, Chapter 8 or Chapter 9 of the Code shall have the
meaning provided for therein. Other words and phrases defined
elsewhere in the Code shall have the meaning specified therein
except to the extent such meaning is inconsistent with a
definition in Section 1.201, Chapter 8 or Chapter 9 of the Code.
2. SECURITY INTEREST. As security for the Indebtedness,
Pledgor, for value received, hereby grants to Secured Party a
continuing security interest in the Collateral.
3. ADDITIONAL PROPERTY. Collateral shall also include the
following property (collectively, the "Additional Property")
which Pledgor becomes entitled to receive or shall receive in
connection with any other Collateral: (a) any stock certificate,
including without limitation, any certificate representing a
stock dividend or any certificate in connection with any
recapitalization, reclassification, merger, consolidation,
conversion, sale of assets, combination of shares, stock split or
spin-off; (b) any option, warrant, subscription or right, whether
as an addition to or in substitution of any other Collateral; (c)
any dividends or distributions of any kind whatsoever, whether
distributable in cash, stock or other property; (d) any interest,
premium or principal payments; and (e) any conversion or
redemption proceeds; provided, however, that until the occurrence
of an Event of Default (as hereinafter defined), Pledgor shall be
entitled to all cash dividends and all interest paid
-2-
on the Collateral (except interest paid on any certificate of
deposit pledged hereunder) free of the security interest created
under this Agreement. All Additional Property received by
Pledgor shall be received in trust for the benefit of Secured
Party. All Additional Property and all certificates or other
written instruments or documents evidencing and/or representing
the Additional Property that is received by Pledgor, together
with such instruments of transfer as Secured Party may request,
shall immediately be delivered to or deposited with Secured Party
and held by Secured Party as Collateral under the terms of this
Agreement. If the Additional Property received by Pledgor shall
be shares of stock or other securities, such shares of stock or
other securities shall be duly endorsed in blank or accompanied
by proper instruments of transfer and assignment duly executed in
blank with, if requested by Secured Party, signatures guaranteed
by a member or member organization in good standing of an
authorized Securities Transfer Agents Medallion Program, all in
form and substance satisfactory to Secured Party. Secured Party
shall be deemed to have possession of any Collateral in transit
to Secured Party or its agent.
4. VOTING RIGHTS. As long as no Event of Default shall
have occurred hereunder, any voting rights incident to any stock
or other securities pledged as Collateral may be exercised by
Pledgor; provided, however, that Pledgor will not exercise, or
cause to be exercised, any such voting rights, without the prior
written consent of Secured Party, if the direct or indirect
effect of such vote will result in an Event of Default hereunder.
5. MAINTENANCE OF COLLATERAL. Other than the exercise of
reasonable care to assure the safe custody of any Collateral in
Secured Party's possession from time to time, Secured Party does
not have any obligation, duty or responsibility with respect to
the Collateral. Without limiting the generality of the
foregoing, Secured Party shall not have any obligation, duty or
responsibility to do any of the following: (a) ascertain any
maturities, calls, conversions, exchanges, offers, tenders or
similar matters relating to the Collateral or informing Pledgor
with respect to any such matters; (b) fix, preserve or exercise
any right, privilege or option (whether conversion, redemption or
otherwise) with respect to the Collateral unless (i) Pledgor
makes written demand to Secured Party to do so, (ii) such written
demand is received by Secured Party in sufficient time to permit
Secured Party to take the action demanded in the ordinary course
of its business, and (iii) Pledgor provides additional
collateral, acceptable to Secured Party in its sole discretion;
(c) collect any amounts payable in respect of the Collateral
(Secured Party being liable to account to Pledgor only for what
Secured Party may actually receive or collect thereon); (d) sell
all or any portion of the Collateral to avoid market loss; (e)
sell all or any portion of the Collateral unless and until (i)
Pledgor makes written demand upon Secured Party to sell the
Collateral, and (ii) Pledgor provides additional collateral,
acceptable to Secured Party in its sole discretion; or (f) hold
the Collateral for or on behalf of any party other than Pledgor.
6. REPRESENTATIONS AND WARRANTIES. Pledgor hereby
represents and warrants the following to Secured Party:
-3-
(a) Due Authorization. The execution, delivery and
performance of this Agreement and all of the other Loan
Documents by Pledgor have been duly authorized by all
necessary corporate action of Pledgor, to the extent Pledgor
is a corporation, or by all necessary partnership action, to
the extent Pledgor is a partnership.
(b) Enforceability. This Agreement and the other Loan
Documents constitute legal, valid and binding obligations of
Pledgor, enforceable in accordance with their respective
terms, except as limited by bankruptcy, insolvency or
similar laws of general application relating to the
enforcement of creditors' rights and except to the extent
specific remedies may generally be limited by equitable
principles.
(c) Ownership and Liens. Pledgor has good and
marketable title to the Collateral free and clear of all
liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement.
No dispute, right of setoff, counterclaim or defense exists
with respect to all or any part of the Collateral. Pledgor
has not executed any other security agreement currently
affecting the Collateral and no financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office except as may
have been executed or filed in favor of Secured Party.
(d) No Conflicts or Consents. Neither the ownership,
the intended use of the Collateral by Pledgor, the grant of
the security interest by Pledgor to Secured Party herein nor
the exercise by Secured Party of its rights or remedies
hereunder, will (i) conflict with any provision of (A) any
domestic or foreign law, statute, rule or regulation, (B)
the articles or certificate of incorporation, charter,
bylaws or partnership agreement, as the case may be, of
Pledgor, or (C) any agreement, judgment, license, order or
permit applicable to or binding upon Pledgor or otherwise
affecting the Collateral, or (ii) result in or require the
creation of any lien, charge or encumbrance upon any assets
or properties of Pledgor or of any person except as may be
expressly contemplated in the Loan Documents. Except as
expressly contemplated in the Loan Documents, no consent,
approval, authorization or order of, and no notice to or
filing with, any court, governmental authority or third
party is required in connection with the grant by Pledgor of
the security interest herein or the exercise by Secured
Party of its rights and remedies hereunder.
(e) Security Interest. Pledgor has and will have at
all times full right, power and authority to grant a
security interest in the Collateral to Secured Party in the
manner provided herein, free and clear of any lien, security
-4-
interest or other charge or encumbrance. This Agreement
creates a legal, valid and binding security interest in
favor of Secured Party in the Collateral.
(f) Location. Pledgor's residence or chief executive
office, as the case may be, and the office where the records
concerning the Collateral are kept is located at its address
set forth on the signature page hereof.
(g) Solvency of Pledgor. As of the date hereof, and
after giving effect to this Agreement and the completion of
all other transactions contemplated by Pledgor at the time
of the execution of this Agreement, (i) Pledgor is and will
be solvent, (ii) the fair saleable value of Pledgor's assets
exceeds and will continue to exceed Pledgor's liabilities
(both fixed and contingent), (iii) Pledgor is paying and
will continue to be able to pay its debts as they mature,
and (iv) if Pledgor is not an individual, Pledgor has and
will have sufficient capital to carry on Pledgor's
businesses and all businesses in which Pledgor is about to
engage.
(h) Securities. Any certificates evidencing
securities pledged as Collateral are valid and genuine and
have not been altered. All securities pledged as Collateral
have been duly authorized and validly issued, are fully paid
and non-assessable, and were not issued in violation of the
preemptive rights of any party or of any agreement by which
Pledgor or the issuer thereof is bound. No restrictions or
conditions exist with respect to the transfer or voting of
any securities pledged as Collateral, except as has been
disclosed to Secured Party in writing. To the best of
Pledgor's knowledge, no issuer of such securities (other
than securities of a class which are publicly traded) has
any outstanding stock rights, rights to subscribe, options,
warrants or convertible securities outstanding or any other
rights outstanding entitling any party to have issued to
such party capital stock of such issuer, except as has been
disclosed to Secured Party in writing.
7. AFFIRMATIVE COVENANTS. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective unless Secured Party
shall otherwise consent in writing.
(a) Ownership and Liens. Pledgor will maintain good
and marketable title to all Collateral free and clear of all
liens, security interests, encumbrances or adverse claims,
except for the security interest created by this Agreement
and the security interests and other encumbrances expressly
permitted by the other Loan Documents. Pledgor will not
permit any dispute, right of setoff, counterclaim or defense
to exist with respect to all or any part of the Collateral.
Pledgor will cause any financing statement or other security
instrument with respect to the Collateral to be terminated,
except as may exist or as may have been filed in favor of
Secured Party. Pledgor will defend at its expense Secured
Party's right, title and security
-5-
interest in and to the Collateral against the claims of any
third party.
(b) Inspection of Books and Records. Pledgor will
keep adequate records concerning the Collateral and will
permit Secured Party and all representatives and agents
appointed by Secured Party to inspect Pledgor's books and
records of or relating to the Collateral at any time during
normal business hours, to make and take away photocopies,
photographs and printouts thereof and to write down and
record any such information.
(c) Adverse Claim. Pledgor covenants and agrees to
promptly notify Secured Party of any claim, action or
proceeding affecting title to the Collateral, or any part
thereof, or the security interest created hereunder and, at
Pledgor's expense, defend Secured Party's security interest
in the Collateral against the claims of any third party.
Pledgor also covenants and agrees to promptly deliver to
Secured Party a copy of all written notices received by
Pledgor with respect to the Collateral, including without
limitation, notices received from the issuer of any
securities pledged hereunder as Collateral.
(d) Delivery of Instruments and/or Certificates.
Contemporaneously herewith, Pledgor covenants and agrees to
deliver to Secured Party any certificates, documents or
instruments representing or evidencing the Collateral, with
Pledgor's endorsement thereon and/or accompanied by proper
instruments of transfer and assignment duly executed in
blank with, if requested by Secured Party, signatures
guaranteed by a member or member organization in good
standing of an authorized Securities Transfer Agents
Medallion Program, all in form and substance satisfactory to
Secured Party.
(e) Further Assurances. Pledgor will
contemporaneously with the execution hereof and from time to
time thereafter at its expense promptly execute and deliver
all further instruments and documents and take all further
action necessary or appropriate or that Secured Party may
request in order (i) to perfect and protect the security
interest created or purported to be created hereby and the
first priority of such security interest, (ii) to enable
Secured Party to exercise and enforce its rights and
remedies hereunder in respect of the Collateral, and (iii)
to otherwise effect the purposes of this Agreement,
including without limitation: (A) executing and filing any
financing or continuation statements, or any amendments
thereto; (B) obtaining written confirmation from the issuer
of any securities pledged as Collateral of the pledge of
such securities, in form and substance satisfactory to
Secured Party; (C) cooperating with Secured Party in
registering the pledge of any securities pledged as
Collateral with the issuer of such securities; (D)
delivering notice of Secured Party's security interest in
any securities pledged as Collateral to any securities or
financial intermediary, clearing corporation or other party
-6-
required by Secured Party, in form and substance
satisfactory to Secured Party; and (E) obtaining written
confirmation of the pledge of any securities constituting
Collateral from any securities or financial intermediary,
clearing corporation or other party required by Secured
Party, in form and substance satisfactory to Secured Party.
If all or any part of the Collateral is securities issued by
an agency or department of the United States, Pledgor
covenants and agrees, at Secured Party's request, to
cooperate in registering such securities in Secured Party's
name or with Secured Party's account maintained with a
Federal Reserve Bank. When applicable law provides more
than one method of perfection of Secured Party's security
interest in the Collateral, Secured Party may choose the
method(s) to be used.
8. NEGATIVE COVENANTS. Pledgor will comply with the
covenants contained in this Section at all times during the
period of time this Agreement is effective, unless Secured Party
shall otherwise consent in writing.
(a) Transfer or Encumbrance. Pledgor will not (i)
sell, assign (by operation of law or otherwise) or transfer
Pledgor's rights in any of the Collateral, (ii) xxxxx x xxxx
or security interest in or execute, file or record any
financing statement or other security instrument with
respect to the Collateral to any party other than Secured
Party, or (iii) deliver actual or constructive possession of
any certificate, instrument or document evidencing and/or
representing any of the Collateral to any party other than
Secured Party.
(b) Impairment of Security Interest. Pledgor will not
take or fail to take any action which would in any manner
impair the value or enforceability of Secured Party's
security interest in any Collateral.
(c) Dilution of Ownership. As to any securities
pledged as Collateral (other than securities of a class
which are publicly traded), Pledgor will not consent to or
approve of the issuance of (i) any additional shares of any
class of securities of such issuer (unless immediately upon
issuance additional securities are pledged and delivered to
Secured Party pursuant to the terms hereof to the extent
necessary to give Secured Party a security interest after
such issuance in at least the same percentage of such
issuer's outstanding securities as Secured Party had before
such issuance), (ii) any instrument convertible voluntarily
by the holder thereof or automatically upon the occurrence
or non-occurrence of any event or condition into, or
exchangeable for, any such securities, or (iii) any
warrants, options, contracts or other commitments entitling
any third party to purchase or otherwise acquire any such
securities.
(d) Restrictions on Securities. Pledgor will not
enter into any agreement
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creating, or otherwise permit to exist, any restriction or
condition upon the transfer, voting or control of any
securities pledged as Collateral, except as consented to in
writing by Secured Party.
9. RIGHTS OF SECURED PARTY. Secured Party shall have the
rights contained in this Section at all times during the period
of time this Agreement is effective.
(a) Power of Attorney. Pledgor hereby irrevocably
appoints Secured Party as Pledgor's attorney-in-fact, such
power of attorney being coupled with an interest, with full
authority in the place and stead of Pledgor and in the name
of Pledgor or otherwise, to take any action and to execute
any instrument which Secured Party may from time to time in
Secured Party's discretion deem necessary or appropriate to
accomplish the purposes of this Agreement, including without
limitation, the following action: (i) transfer any
securities, instruments, documents or certificates pledged
as Collateral in the name of Secured Party or its nominee;
(ii) use any interest, premium or principal payments,
conversion or redemption proceeds or other cash proceeds
received in connection with any Collateral to reduce any of
the Indebtedness; (iii) exchange any of the securities
pledged as Collateral for any other property upon any
merger, consolidation, reorganization, recapitalization or
other readjustment of the issuer thereof, and, in connection
therewith, to deposit and deliver any and all of such
securities with any committee, depository, transfer agent,
registrar or other designated agent upon such terms and
conditions as Secured Party may deem necessary or
appropriate; (iv) exercise or comply with any conversion,
exchange, redemption, subscription or any other right,
privilege or option pertaining to any securities pledged as
Collateral; provided, however, except as provided herein,
Secured Party shall not have a duty to exercise or comply
with any such right, privilege or option (whether
conversion, redemption or otherwise) and shall not be
responsible for any delay or failure to do so; and (v) file
any claims or take any action or institute any proceedings
which Secured Party may deem necessary or appropriate for
the collection and/or preservation of the Collateral or
otherwise to enforce the rights of Secured Party with
respect to the Collateral.
(b) Performance by Secured Party. If Pledgor fails to
perform any agreement or obligation provided herein, Secured
Party may itself perform, or cause performance of, such
agreement or obligation, and the expenses of Secured Party
incurred in connection therewith shall be a part of the
Indebtedness, secured by the Collateral and payable by
Pledgor on demand.
Notwithstanding any other provision herein to the contrary,
Secured Party does not have any duty to exercise or continue to
exercise any of the foregoing rights and shall not be responsible
for any failure to do so or for any delay in doing so.
-8-
10. EVENTS OF DEFAULT. Each of the following constitutes
an "Event of Default" under this Agreement:
(a) Failure to Pay Indebtedness. The failure, refusal
or neglect of Borrower to make any payment of principal or
interest on the Indebtedness, or any portion thereof, as the
same shall become due and payable; or
(b) Non-Performance of Covenants. The failure of
Borrower or any Obligated Party to timely and properly
observe, keep or perform any covenant, agreement, warranty
or condition required herein or in any of the other Loan
Documents; or
(c) Default Under other Loan Documents. The
occurrence of any default or event of default under any of
the other Loan Documents.
(d) False Representation. Any representation
contained herein or in any of the other Loan Documents made
by Borrower or any Obligated Party is false or misleading in
any material respect; or
(e) Default to Third Party. The occurrence of any
event which permits the acceleration of the maturity of any
indebtedness owing by Borrower or any Obligated Party to any
third party under any agreement or undertaking; or
(f) Bankruptcy or Insolvency. If Borrower or any
Obligated Party: (i) becomes insolvent, or makes a transfer
in fraud of creditors, or makes an assignment for the
benefit of creditors, or admits in writing its inability to
pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a
receiver, trustee or custodian appointed for, or take
possession of, all or substantially all of the assets of
such party or any of the Collateral, either in a proceeding
brought by such party or in a proceeding brought against
such party and such appointment is not discharged or such
possession is not terminated within sixty (60) days after
the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a
petition for relief under the United States Bankruptcy Code
or any other present or future federal or state insolvency,
bankruptcy or similar laws (all of the foregoing hereinafter
collectively called "Applicable Bankruptcy Law") or an
involuntary petition for relief is filed against such party
under any Applicable Bankruptcy Law and such involuntary
petition is not dismissed within sixty (60) days after the
filing thereof, or an order for relief naming such party is
entered under any Applicable Bankruptcy Law, or any
composition, rearrangement, extension, reorganization or
other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have
discharged within a period of sixty (60) days any
attachment, sequestration or
-9-
similar writ levied upon any property of such party; or (vi)
fails to pay within thirty (30) days any final money
judgment against such party; or
(g) Execution on Collateral. The Collateral or any
portion thereof is taken on execution or other process of
law in any action against Pledgor; or
(h) Abandonment. Pledgor abandons the Collateral or
any portion thereof; or
(i) Action by Other Lienholder. The holder of any
lien or security interest on any of the assets of Pledgor,
including without limitation, the Collateral (without hereby
implying the consent of Secured Party to the existence or
creation of any such lien or security interest on the
Collateral), declares a default thereunder or institutes
foreclosure or other proceedings for the enforcement of its
remedies thereunder; or
(j) Liquidation Related Events. The liquidation,
dissolution, merger or consolidation of Borrower or any
Obligated Party; or
(k) Dilution of Ownership. The issuer of any
securities (other than securities of a class which are
publicly traded) constituting Collateral hereafter issues
any shares of any class of capital stock (unless immediately
upon issuance, additional securities are pledged and
delivered to Secured Party pursuant to the terms hereof to
the extent necessary to give Secured Party a security
interest after such issuance in at least the same percentage
of such issuer's outstanding securities as Secured Party had
before such issuance) or any options, warrants or other
rights to purchase any such capital stock; or
(l) Bankruptcy of Issuer. (i) The issuer of any
securities constituting Collateral files a petition for
relief under any Applicable Bankruptcy Law, (ii) an
involuntary petition for relief is filed against any such
issuer under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within thirty (30)
days after the filing thereof, or (iii) an order for relief
naming any such issuer is entered under any Applicable
Bankruptcy Law.
11. REMEDIES AND RELATED RIGHTS. If an Event of Default
shall have occurred, and without limiting any other rights and
remedies provided herein, under any of the other Loan Documents
or otherwise available to Secured Party, Secured Party may
exercise one or more of the rights and remedies provided in this
Section.
(a) Remedies. Secured Party may from time to time at
its discretion, without limitation and without notice except
as expressly provided in any of the Loan Documents:
-10-
(i) exercise in respect of the Collateral all the
rights and remedies of a secured party under the Code
(whether or not the Code applies to the affected
Collateral);
(ii) reduce its claim to judgment or foreclose or
otherwise enforce, in whole or in part, the security
interest granted hereunder by any available judicial
procedure;
(iii) sell or otherwise dispose of, at its office,
on the premises of Pledgor or elsewhere, the
Collateral, as a unit or in parcels, by public or
private proceedings, and by way of one or more
contracts (it being agreed that the sale or other
disposition of any part of the Collateral shall not
exhaust Secured Party's power of sale, but sales or
other dispositions may be made from time to time until
all of the Collateral has been sold or disposed of or
until the Indebtedness has been paid and performed in
full), and at any such sale or other disposition it
shall not be necessary to exhibit any of the
Collateral;
(iv) buy the Collateral, or any portion thereof,
at any public sale;
(v) buy the Collateral, or any portion thereof,
at any private sale if the Collateral is of a type
customarily sold in a recognized market or is of a type
which is the subject of widely distributed standard
price quotations;
(vi) apply for the appointment of a receiver for
the Collateral, and Pledgor hereby consents to any such
appointment; and
(vii) at its option, retain the Collateral in
satisfaction of the Indebtedness whenever the
circumstances are such that Secured Party is entitled
to do so under the Code or otherwise.
Pledgor agrees that in the event Pledgor is entitled to
receive any notice under the Uniform Commercial Code, as it
exists in the state governing any such notice, of the sale
or other disposition of any Collateral, reasonable notice
shall be deemed given when such notice is deposited in a
depository receptacle under the care and custody of the
United States Postal Service, postage prepaid, at Pledgor's
address set forth on the signature page hereof, five (5)
days prior to the date of any public sale, or after which a
private sale, of any of such Collateral is to be held.
Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.
Secured Party may adjourn any public or private sale from
-11-
time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. Pledgor
further acknowledges and agrees that the redemption by
Secured Party of any certificate of deposit pledged as
Collateral shall be deemed to be a commercially reasonable
disposition under Section 9.504(c) of the Code.
(b) Private Sale of Securities. Pledgor recognizes
that Secured Party may be unable to effect a public sale of
all or any part of the securities pledged as Collateral
because of restrictions in applicable federal and state
securities laws and that Secured Party may, therefore,
determine to make one or more private sales of any such
securities to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such
securities for their own account, for investment and not
with a view to the distribution or resale thereof. Pledgor
acknowledges that each any such private sale may be at
prices and other terms less favorable then what might have
been obtained at a public sale and, notwithstanding the
foregoing, agrees that each such private sale shall be
deemed to have been made in a commercially reasonable manner
and that Secured Party shall have no obligation to delay the
sale of any such securities for the period of time necessary
to permit the issuer to register such securities for public
sale under any federal or state securities laws. Pledgor
further acknowledges and agrees that any offer to sell such
securities which has been made privately in the manner
described above to not less than five (5) bona fide offerees
shall be deemed to involve a "public sale" for the purposes
of Section 9.504(c) of the Code, notwithstanding that such
sale may not constitute a "public offering" under any
federal or state securities laws and that Secured Party may,
in such event, bid for the purchase of such securities.
(c) Application of Proceeds. If any Event of Default
shall have occurred, Secured Party may at its discretion
apply or use any cash held by Secured Party as Collateral,
and any cash proceeds received by Secured Party in respect
of any sale or other disposition of, collection from, or
other realization upon, all or any part of the Collateral as
follows in such order and manner as Secured Party may elect:
(i) to the repayment or reimbursement of the
reasonable costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses)
incurred by Secured Party in connection with (A) the
administration of the Loan Documents, (B) the custody,
preservation, use or operation of, or the sale of,
collection from, or other realization upon, the
Collateral, and (C) the exercise or enforcement of any
of the rights and remedies of Secured Party hereunder;
(ii) to the payment or other satisfaction of any
liens and other encumbrances upon the Collateral;
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(iii) to the satisfaction of the Indebtedness;
(iv) by holding such cash and proceeds as
Collateral;
(v) to the payment of any other amounts required
by applicable law (including without limitation,
Section 9.504(a)(3) of the Code or any other applicable
statutory provision); and
(vi) by delivery to Pledgor or any other party
lawfully entitled to receive such cash or proceeds
whether by direction of a court of competent
jurisdiction or otherwise.
(d) Deficiency. In the event that the proceeds of any
sale of, collection from, or other realization upon, all or
any part of the Collateral by Secured Party are insufficient
to pay all amounts to which Secured Party is legally
entitled, Borrower and any party who guaranteed or is
otherwise obligated to pay all or any portion of the
Indebtedness shall be liable for the deficiency, together
with interest thereon as provided in the Loan Documents.
(e) Non-Judicial Remedies. In granting to Secured
Party the power to enforce its rights hereunder without
prior judicial process or judicial hearing, Pledgor
expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to
enforce its rights by judicial process. Pledgor recognizes
and concedes that non-judicial remedies are consistent with
the usage of trade, are responsive to commercial necessity
and are the result of a bargain at arm's length. Nothing
herein is intended to prevent Secured Party or Pledgor from
resorting to judicial process at either party's option.
(f) Other Recourse. Pledgor waives any right to
require Secured Party to proceed against any third party,
exhaust any Collateral or other security for the
Indebtedness, or to have any third party joined with Pledgor
in any suit arising out of the Indebtedness or any of the
Loan Documents, or pursue any other remedy available to
Secured Party. Pledgor further waives any and all notice of
acceptance of this Agreement and of the creation,
modification, rearrangement, renewal or extension of the
Indebtedness. Pledgor further waives any defense arising by
reason of any disability or other defense of any third party
or by reason of the cessation from any cause whatsoever of
the liability of any third party. Until all of the
Indebtedness shall have been paid in full, Pledgor shall
have no right of subrogation and Pledgor waives the right to
enforce any remedy which Secured Party has or may hereafter
have against any third party, and waives any benefit of and
any right to participate in any other security whatsoever
now or hereafter held by Secured Party.
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Pledgor authorizes Secured Party, and without notice or
demand and without any reservation of rights against Pledgor
and without affecting Pledgor's liability hereunder or on
the Indebtedness, to (i) take or hold any other property of
any type from any third party as security for the
Indebtedness, and exchange, enforce, waive and release any
or all of such other property, (ii) apply such other
property and direct the order or manner of sale thereof as
Secured Party may in its discretion determine, (iii) renew,
extend, accelerate, modify, compromise, settle or release
any of the Indebtedness or other security for the
Indebtedness, (iv) waive, enforce or modify any of the
provisions of any of the Loan Documents executed by any
third party, and (v) release or substitute any third party.
(g) Voting Rights. Upon the occurrence of an Event of
Default, Pledgor will not exercise any voting rights with
respect to securities pledged as Collateral. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's
attorney-in-fact (such power of attorney being coupled with
an interest) and proxy to exercise any voting rights with
respect to Pledgor's securities pledged as Collateral upon
the occurrence of an Event of Default.
(h) Dividend Rights and Interest Payments. Upon the
occurrence of an Event of Default:
(i) all rights of Pledgor to receive and retain
the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant
to Section 3 shall automatically cease, and all such
rights shall thereupon become vested with Secured Party
which shall thereafter have the sole right to receive,
hold and apply as Collateral such dividends and
interest payments; and
(ii) all dividend and interest payments which are
received by Pledgor contrary to the provisions of
clause (i) of this Subsection shall be received in
trust for the benefit of Secured Party, shall be
segregated from other funds of Pledgor, and shall be
forthwith paid over to Secured Party in the exact form
received (properly endorsed or assigned if requested by
Secured Party), to be held by Secured Party as
Collateral.
(i) Bankruptcy. In the event that Debtor is the
subject of any insolvency, bankruptcy, receivership,
dissolution, reorganization or similar proceeding, federal
or state, voluntary or involuntary, under any present or
future law or act, Lender is entitled to the automatic and
absolute lifting of any automatic stay as to the enforcement
of its remedies under the Loan Documents against the
Collateral including specifically, but not limited to the
stay imposed by Section 362 of the United States Federal
Bankruptcy Code, as amended. Debtor hereby consents to
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the immediate lifting of any such automatic stay, and will
not contest any motion by Lender to lift such stay. Debtor
expressly acknowledges that (a) there is no equity in the
Collateral after consideration of the amount owed Lender,
and (b) the Collateral is not now, and will never be
necessary to any plan of reorganization of any type.
12. INDEMNITY. Pledgor hereby indemnifies and agrees to
hold harmless Secured Party, and its officers, directors,
employees, agents and representatives (each an "Indemnified
Person") from and against any and all liabilities, obligations,
claims, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature
(collectively, the "Claims") which may be imposed on, incurred
by, or asserted against, any Indemnified Person arising in
connection with the Loan Documents, the Indebtedness or the
Collateral (including without limitation, the enforcement of the
Loan Documents and the defense of any Indemnified Person's
actions and/or inactions in connection with the Loan Documents).
WITHOUT LIMITATION, THE FOREGOING INDEMNITIES SHALL APPLY TO EACH
INDEMNIFIED PERSON WITH RESPECT TO ANY CLAIMS WHICH IN WHOLE OR
IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF SUCH
AND/OR ANY OTHER INDEMNIFIED PERSON, except to the limited extent
the Claims against an Indemnified Person are proximately caused
by Such Indemnified Person's gross negligence or willful
misconduct. If Pledgor or any third party ever alleges such
gross negligence or willful misconduct by any Indemnified Person,
the indemnification provided for in this Section shall
nonetheless be paid upon demand, subject to later adjustment or
reimbursement, until such time as a court of competent
jurisdiction enters a final judgment as to the extent and effect
of the alleged gross negligence or willful misconduct. The
indemnification provided for in this Section shall survive the
termination of this Agreement and shall extend and continue to
benefit each individual or entity who is or has at any time been
an Indemnified Person hereunder.
13. MISCELLANEOUS.
(a) Entire Agreement. This Agreement contains the
entire agreement of Secured Party and Pledgor with respect
to the Collateral. If the parties hereto are parties to any
prior agreement, either written or oral, relating to the
Collateral, the terms of this Agreement shall amend and
supersede the terms of such prior agreements as to
transactions on or after the effective date of this
Agreement, but all security agreements, financing
statements, guaranties, other contracts and notices for the
benefit of Secured Party shall continue in full force and
effect to secure the Indebtedness unless Secured Party
specifically releases its rights thereunder by separate
release.
(b) Amendment. No modification, consent or amendment
of any provision of this Agreement or any of the other Loan
Documents shall be valid or
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effective unless the same is in writing and signed by the
party against whom it is sought to be enforced.
(c) Actions by Secured Party. The lien, security
interest and other security rights of Secured Party
hereunder shall not be impaired by (i) any renewal,
extension, increase or modification with respect to the
Indebtedness, (ii) any surrender, compromise, release,
renewal, extension, exchange or substitution which Secured
Party may grant with respect to the Collateral, or (iii) any
release or indulgence granted to any endorser, guarantor or
surety of the Indebtedness. The taking of additional
security by Secured Party shall not release or impair the
lien, security interest or other security rights of Secured
Party hereunder or affect the obligations of Pledgor
hereunder.
(d) Waiver by Secured Party. Secured Party may waive
any Event of Default without waiving any other prior or
subsequent Event of Default. Secured Party may remedy any
default without waiving the Event of Default remedied.
Neither the failure by Secured Party to exercise, nor the
delay by Secured Party in exercising, any right or remedy
upon any Event of Default shall be construed as a waiver of
such Event of Default or as a waiver of the right to
exercise any such right or remedy at a later date. No
single or partial exercise by Secured Party of any right or
remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right
or remedy hereunder may be exercised at any time. No waiver
of any provision hereof or consent to any departure by
Pledgor therefrom shall be effective unless the same shall
be in writing and signed by Secured Party and then such
waiver or consent shall be effective only in the specific
instances, for the purpose for which given and to the extent
therein specified. No notice to or demand on Pledgor in any
case shall of itself entitle Pledgor to any other or further
notice or demand in similar or other circumstances.
(e) Costs and Expenses. Pledgor will upon demand pay
to Secured Party the amount of any and all costs and
expenses (including without limitation, attorneys' fees and
expenses), which Secured Party may incur in connection with
(i) the transactions which give rise to the Loan Documents,
(ii) the preparation of this Agreement and the perfection
and preservation of the security interests granted under the
Loan Documents, (iii) the administration of the Loan
Documents, (iv) the custody, preservation, use or operation
of, or the sale of, collection from, or other realization
upon, the Collateral, (v) the exercise or enforcement of any
of the rights of Secured Party under the Loan Documents, or
(vi) the failure by Pledgor to perform or observe any of the
provisions hereof.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
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THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS, EXCEPT TO
THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION OR
NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER,
IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE
LAWS OF A JURISDICTION OTHER THAN THE STATE OF TEXAS.
(g) Venue. This Agreement has been entered into in
the county in Texas where Lender's address for notice
purposes is located, and it shall be performable for all
purposes in such county. Courts within the State of Texas
shall have jurisdiction over any and all disputes arising
under or pertaining to this Agreement and venue for any such
disputes shall be in the county or judicial district where
this Agreement has been executed and delivered.
(h) Severability. If any provision of this Agreement
is held by a court of competent jurisdiction to be illegal,
invalid or unenforceable under present or future laws, such
provision shall be fully severable, shall not impair or
invalidate the remainder of this Agreement and the effect
thereof shall be confined to the provision held to be
illegal, invalid or unenforceable.
(i) No Obligation. Nothing contained herein shall be
construed as an obligation on the part of Secured Party to
extend or continue to extend credit to Borrower.
(j) Notices. All notices, requests, demands or other
communications required or permitted to be given pursuant to
this Agreement shall be in writing and given by (i) personal
delivery, (ii) expedited delivery service with proof of
delivery, or (iii) United States mail, postage prepaid,
registered or certified mail, return receipt requested, sent
to the intended addressee at the address set forth on the
signature page hereof or to such different address as the
addressee shall have designated by written notice sent
pursuant to the terms hereof and shall be deemed to have
been received either, in the case of personal delivery, at
the time of personal delivery, in the case of expedited
delivery service, as of the date of first attempted delivery
at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under
the care and custody of the United States Postal Service.
Either party shall have the right to change its address for
notice hereunder to any other location within the
continental United States by notice to the other party of
such new address at least thirty (30) days prior to the
effective date of such new address.
(k) Binding Effect and Assignment. This Agreement (i)
creates a continuing security interest in the Collateral,
(ii) shall be binding on Pledgor and the heirs, executors,
administrators, personal representatives, successors and
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assigns of Pledgor, and (iii) shall inure to the benefit of
Secured Party and its successors and assigns. Without
limiting the generality of the foregoing, Secured Party may
pledge, assign or otherwise transfer the Indebtedness and
its rights under this Agreement and any of the other Loan
Documents to any other party. Pledgor's rights and
obligations hereunder may not be assigned or otherwise
transferred without the prior written consent of Secured
Party.
(l) Termination. It is contemplated by the parties
hereto that from time to time there may be no outstanding
Indebtedness, but notwithstanding such occurrences, this
Agreement shall remain valid and shall be in full force and
effect as to subsequent outstanding Indebtedness. Upon (i)
the satisfaction in full of the Indebtedness, (ii) the
termination or expiration of any commitment of Secured Party
to extend credit to Borrower, (iii) written request for the
termination hereof delivered by Pledgor to Secured Party,
and (iv) written release delivered by Secured Party to
Pledgor, this Agreement and the security interests created
hereby shall terminate. Upon termination of this Agreement
and Pledgor's written request, Secured Party will, at
Pledgor's sole cost and expense, return to Pledgor such of
the Collateral as shall not have been sold or otherwise
disposed of or applied pursuant to the terms hereof and
execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination.
(m) Cumulative Rights. All rights and remedies of
Secured Party hereunder are cumulative of each other and of
every other right or remedy which Secured Party may
otherwise have at law or in equity or under any of the other
Loan Documents, and the exercise of one or more of such
rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of any other rights or
remedies.
(n) Gender and Number. Within this Agreement, words
of any gender shall be held and construed to include the
other gender, and words in the singular number shall be held
and construed to include the plural and words in the plural
number shall be held and construed to include the singular,
unless in each instance the context requires otherwise.
(o) Descriptive Headings. The headings in this
Agreement are for convenience only and shall in no way
enlarge, limit or define the scope or meaning of the various
and several provisions hereof.
EXECUTED as of the date first written above.
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Pledgor's Address: PLEDGOR:
Independent Financial Corp. INDEPENDENT FINANCIAL CORP.
000 Xxxxxxxx
X. X. Xxx 0000
Xxxxxxx, Xxxxx 00000 By:
Attn: Xxxxxxx Xxxxxxxxxx Xxxxx X. Xxxxxxxxxx,
President
Secured Party's Address:
Bank One, Texas, National
Association
P. X. Xxx 0000
Xxxx Xxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
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SCHEDULE "A"
TO
PLEDGE AGREEMENT
DATED SEPTEMBER 21, 1998
BY INDEPENDENT FINANCIAL CORP. TO
BANK ONE, TEXAS, NATIONAL ASSOCIATION
The following property is a part of the Collateral as defined in
Subsection 1(c):
250,000 shares of common stock of First State Bank, National
Association, a national banking association, as evidenced by
certificate no. 2 issued in the name of Pledgor.
