Exhibit 10.0
FORBEARANCE
AGREEMENT
THIS FORBEARANCE AGREEMENT
(“Agreement”) is being entered into as of July 24,
2008, by and between PEOPLES COMMUNITY BANCORP, INC., a Maryland
corporation (“Borrower”), and INTEGRA BANK, N.A., a
national banking association (“Bank”).
RECITALS
A.
Bank and Borrower entered into a
Revolving Credit Loan Agreement dated December 8, 2006, as
amended by the Amendment to Revolving Credit Loan Agreement dated
December 5, 2007, (collectively, the “Loan
Agreement”).
B.
The loan made to Borrower pursuant
to the terms of the Loan Agreement is evidenced by an Amended and
Restated Revolving Credit Note dated December 8, 2006, in the
original principal amount of Seventeen Million Five Hundred
Thousand Dollars ($17,500,000), as amended by the Amendment to
Revolving Credit Note dated as of December 5, 2007
(collectively, the “Note”).
C.
Borrower failed to pay the principal
amount of the loan within ten (10) business days of the
maturity date of June 30, 2008 and, accordingly, an
“Event of Default” as defined in the Loan Agreement
exists and is continuing.
D.
The Note is secured by the Stock
Pledge Agreement dated as of December 8, 2006 (the
“Pledge Agreement”), pursuant to which Borrower has
pledged 100% of the outstanding common stock (the “Pledged
Stock”) of its banking subsidiary, Peoples Community Bank, a
federal savings bank (“PCB”).
E.
Borrower has developed a structured
plan which contemplates the participation of certain parties whose
identities have been disclosed to Bank (the “Third
Parties”) and involves a series of transactions
(collectively, the “Transaction”) which, when
implemented, will result in the repayment in full of the
Indebtedness.
NOW, THEREFORE, in consideration of
the Recitals, the mutual covenants and agreements contained herein
and the acts to be performed hereunder, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
AGREEMENT
1.
Definitions
. Unless otherwise specifically
defined herein, capitalized terms shall have the respective
meanings ascribed to them in the Recitals or the Loan
Documents.
(a)
“Acceptable Transaction
Agreement” means a definitive agreement between Borrower and
the Third Parties with respect to the Transaction which
(1) will provide for either payment in full of the
Indebtedness or a purchase of the Note for the full amount of the
Indebtedness at the earlier of the closing of the Transaction or
the end
of the Forbearance Period and
(2) has other terms and conditions which Bank consents to
(such consent not to be unreasonably withheld).
(b)
“Collection Action” has
the meaning set forth in Section 5 of this
Agreement.
(c)
“Forbearance Period”
means: (1) the period that commences on the date of this
Agreement and ends thirty (30) days from the date hereof; provided,
however, Bank may, in its sole discretion, extend such initial
30-day period for an additional fifteen (15) days; and (2) if
prior to the end of the period contemplated in clause (1), Borrower
and the Third Parties enter into an Acceptable Transaction
Agreement, the Forbearance Period shall be extended and shall end
on the earliest of (i) the closing date under the Acceptable
Transaction Agreement, (ii) the occurrence of a Termination
Event (as such term is defined in Section 7 of this Agreement)
or (iii) December 31, 2008. Upon the expiration of the
Forbearance Period, Bank may initiate its remedies under the Loan
Documents.
(d)
“Forbearance Rate” means
the annual interest rate for a “Prime Rate Based Loan”
as defined in the Note plus three percent (3%).
(e)
“Indebtedness” has the
meaning set forth in Section 3 of this Agreement.
(f)
“Loan Documents” means,
collectively, the Loan Agreement, the Note, the Pledge Agreement
and any other agreements, documents or instruments evidencing,
governing or securing the Indebtedness, as hereinafter
defined.
(g)
“Termination Event” has
the meaning set forth in Section 7 of this
Agreement.
2.
Recitals . The Recitals are incorporated herein and made
a part hereof. Borrower acknowledges, represents and warrants that
the Recitals are true and correct.
3.
Acknowledgment of Existing
Indebtedness . Borrower
acknowledges that the Note matured on June 30, 2008, and that
Bank is entitled to exercise all of its rights, powers and remedies
provided for in the Loan Documents following maturity. Borrower
further acknowledges that as of June 30, 2008, Borrower is
indebted to Bank in the principal amount of $17,500,000.00. The
foregoing amount, together with interest accruing at the
Forbearance Rate commencing July 1, 2008 until payment in full
and all other obligations owed by Borrower to Bank under the Loan
Documents, this Agreement, or otherwise, are collectively referred
to herein as the “Indebtedness.”
4.
Reaffirmation of Loan
Documents-No Defenses .
Borrower reaffirms all of its obligations under the Loan Documents.
The Loan Documents are valid, binding and enforceable in accordance
with their respective terms against Borrower, and remain in full
force and effect. Borrower acknowledges that it has no defenses,
set-offs, claims, counterclaims or causes of action of any kind or
nature with respect to any of the Loan Documents or the
Indebtedness represented thereby. The lien and security interest of
Bank with respect to the Pledged Stock is valid and in full force
and effect, and is prior to any other liens and security interests
granted to
2
or obtained by third parties on such asset. Bank
is entitled under the terms of the Loan Documents to exercise all
voting and consensual rights and powers of the Pledged Shares and
to receive and retain all dividends on the Pledged Shares without
advance notice to Borrower or any other party of any such action.
The Loan Documents remain in full force and effect and nothing
contained herein shall be deemed to be a waiver by Bank of any
provision contained in the Loan Documents. This Agreement does not
supersede the Loan Documents; however, in the event of any conflict
between this Agreement and the Loan Documents, this Agreement shall
control. Borrower acknowledges that the Indebtedness is not
impaired or cancelled by this Agreement and Borrower remains
obligated to pay the Indebtedness in full.
5.
Agreement to Forbear-Extent of
Forbearance . Subject to
complete and timely compliance with the terms of this Agreement by
Borrower, Bank agrees to (a) forbear and refrain during the
Forbearance Period from initiating or prosecuting any action in any
court to collect the Indebtedness, including without limitation any
action seeking the establishment of a receivership, trust, or
similar arrangement with respect to Borrower, business, or any
portion of its assets, petitioning as a creditor for the
establishment of any case under the Bankruptcy Code against
Borrower or for any determination that Borrower is insolvent,
seeking prejudgment attachment of any of Borrower’s assets,
or similar action, or from exercising any non-judicial means of
collecting the Indebtedness, including without limitation any
remedy available to Bank under the Uniform Commercial Code as
enacted in the applicable jurisdiction (referred to herein as a
“Collection Action”); and (b) refrain from
exercising its vested rights to vote and receive dividends on the
Pledged Stock. “Collection Action” does not include,
and the forbearance provided in this Section 5 does not extend
to, any action which Bank may take to preserve, perfect, protect or
otherwise act with respect to the lien and security interest held
by Bank with respect to the Pledged Stock or from enforcing the
provisions of this Agreement.
6.
Borrower Covenants
. To induce Bank to enter into this
Agreement, Borrower agrees to the following covenants:
(a)
Borrower agrees to pay Bank interest
at the Forbearance Rate on the Indebtedness commencing July 1,
2008, payable as follows: (1) Borrower shall pay Bank interest
at the annual rate for a “Prime Rate Based Loan” on the
Indebtedness as defined in the Note monthly in arrears commencing
August 1, 2008; and (2) Borrower shall pay the unpaid
portion of all accrued interest at the earlier of the closing of
the Transaction or the end of the Forbearance Period.
(b)
Borrower shall pay Bank a
forbearance fee equal to $175,000.00, which fee shall be fully
earned and nonrefundable upon execution of this Agreement and shall
be payable no later than the earlier of the termination of the
Forbearance Period or the closing of the Transaction.
(c)
Borrower shall pay within five
(5) days of receipt of an invoice from Bank upon demand
Bank’s reasonable attorney’s fees incurred by Bank in
the negotiation and preparation of this Agreement.
(d)
At Bank’s request, Borrower
shall execute and deliver or cause to be delivered to Bank and/or
file with the appropriate offices, such documents, instruments,
agreements, financing statements, amendments and/or other things
deemed necessary by
3
Bank, in its sole discretion, to
implement the substance and intent of this Agreement, the Loan
Documents, and the other documents executed in connection herewith
or therewith.
(e)
Borrower shall provide Bank and its
advisors with reasonable access to all financial books, records and
files (whether such information is stored on any computer or disk)
to, among other things, verify the results of operations, loans and
the loan loss reserves. Reasonable fees and expenses incurred by
Bank in connection with the foregoing shall be paid or reimbursed
by Borrower.
(f)
Borrower shall continue to provide
Bank all information required to be reported to Bank under the Loan
Documents and, in addition, on the 15 th day of each
month (each such day,
