THIS LOAN
AGREEMENT (“Loan Agreement”) is made and entered
into as of the [x] day of [month] , 20010, by and
between the ATHENS FEDERAL COMMUNITY BANK EMPLOYEE STOCK
OWNERSHIP PLAN TRUST (“Borrower”), a trust forming
part of the Athens Federal Community Bank Employee Stock Ownership
Plan (“ESOP”), and [COMPANY]
(“Lender”), a corporation organized and existing under
the laws of [Tennessee] .
WHEREAS,
the Borrower is authorized to purchase shares of common stock of
[Company] (“Common Stock”), either directly from
[Company] or in open market purchases in an amount not to
exceed [amount] ($ [#] ) of [amount] (
[#] ) shares of Common Stock.
WHEREAS,
the Borrower is authorized to borrow funds from the Lender for the
purpose of financing authorized purchases of Common Stock;
and
WHEREAS,
the Lender is willing to make a loan to the Borrower for such
purpose.
NOW,
THEREFORE, the parties agree hereto as follows:
The following
definitions shall apply for purposes of this Loan Agreement, except
to the extent that a different meaning is plainly indicated by the
context:
Business
Day means any day other than a Saturday, Sunday or other
day on which banks are authorized or required to close under
federal or local law or regulation.
Code means the Internal Revenue Code of 1986, as
amended (including the corresponding provisions of any succeeding
law).
Default means an event or condition which would
constitute an Event of Default. The determination as to whether an
event or condition would constitute an Event of Default shall be
determined without regard to any applicable requirements of notice
or lapse of time.
ERISA means the Employee Retirement Income Security
Act of 1974, as amended (including the corresponding provisions of
any succeeding law).
Event of
Default means an event or condition described in
Article 5 of this Loan Agreement.
Loan means the loan described in Section 2.1 of
this Loan Agreement.
Loan
Documents means, collectively, the Loan Agreement, the
Promissory Note and the Pledge Agreement and all other documents
now or hereafter executed and delivered in connection with such
documents, including all amendments, modifications and supplements
of or to all such documents.
Pledge
Agreement means the agreement described in
Section 2.8(a) of this Loan Agreement.
Principal
Amount means the face amount of the Promissory Note,
determined as set forth in Section 2.1(c) of this Loan
Agreement.
Promissory
Note means the promissory note described in
Section 2.3 of this Loan Agreement.
Register means the register described in
Section 2.9 of this Loan Agreement.
ARTICLE II
The Loan; Principal Amount;
Interest; Security; Indemnification
Section 2.1 The Loan; Principal Amount
.
(a) The
Lender hereby agrees to lend to the Borrower such amount, and at
such time, as shall be determined under this Section 2.1;
provided, however, that in no event shall the aggregate amount lent
under this Loan Agreement from time to time exceed the greater of
(i) [number] ($ [#] ) or (ii) the aggregate
amount paid by the Borrower to purchase up to [number] (
[#] ) shares of Common Stock.
(b) Subject
to the limitations of Section 2.1(a), the Borrower shall
determine the amounts borrowed under this Loan Agreement, and the
time at which such borrowings are effected. Each such determination
shall be evidenced in a writing which shall set forth the amount to
be borrowed and the date on which the Lender shall disburse such
amount, and such writing shall be furnished to the Lender by notice
from the Borrower. The Lender shall disburse to the Borrower the
amount specified in each such notice on the date specified therein
or, if later, as promptly as practicable following the
Lender’s receipt of such notice; provided, however, that the
Lender shall have no obligation to disburse funds pursuant to this
Agreement following the occurrence of a Default or an Event of
Default until such time as such Default or Event of Default shall
have been cured.
(c) For all
purposes of this Loan Agreement, the Principal Amount on any date
shall be equal to the excess, if any, of:
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(i)
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the
aggregate amount disbursed by the Lender pursuant to
Section 2.1(b) on or before such date; over
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(ii)
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the
aggregate amount of any repayments of such amounts made before such
date.
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The Lender
shall maintain on the Register a record of, and shall record in the
Promissory Note, the Principal Amount, any changes in the Principal
Amount and the effective date of any changes in the Principal
Amount.
(a) The
Borrower shall pay to the Lender interest on the Principal Amount,
for the period commencing with the first disbursement of funds
under this Loan Agreement and continuing until the Principal Amount
shall be paid in full, at the rate of [number] percent (
[#] %) per annum. Interest payable under this Agreement
shall be computed on the basis of a
2
year of
365 days and actual days elapsed (including the first day but
excluding the last) occurring during the period to which the
computation relates.
(b) Accrued
interest on the Principal Amount shall be payable by the Borrower
on the dates set forth in Schedule I to the Promissory Note.
All interest on the Principal Amount shall be paid by the Borrower
in immediately available funds.
(c) Anything
in this Loan Agreement or the Promissory Note to the contrary
notwithstanding, the obligation of the Borrower to make payments of
interest shall be subject to the limitation that payments of
interest shall not be required to be made to the Lender to the
extent that the Lender’s receipt thereof would not be
permissible under the law or laws applicable to the Lender limiting
rates of interest which may be charged or collected by the Lender.
Any such payment referred to in the preceding sentence shall be
made by the Borrower to the Lender on the earliest interest payment
date or dates on which the receipt thereof would be permissible
under the laws applicable to the Lender limiting rates of interest
which may be charged or collected by the Lender. Such deferred
interest shall not bear interest.
Section 2.3 Promissory Note .
The Loan shall be
evidenced by the Promissory Note of the Borrower attached hereto as
an exhibit payable to the order of the lender in the Principal
Amount and otherwise duly completed.
Section 2.4 Payment of Trust Loan .
The Principal
Amount of the Loan shall be repaid in accordance with
Schedule I to the Promissory Note on the dates specified
therein until fully paid.
The Borrower shall
be entitled to prepay the Loan in whole or in part, at any time and
from time to time; provided, however, that the Borrower shall give
notice to the Lender of any such prepayment; and provided, further,
that any partial prepayment of the Loan shall be in an amount not
less than $1,000. Any such prepayment shall be: (a) permanent
and irrevocable; (b) accompanied by all accrued interest
through the date of such prepayment; (c) made without premium
or penalty; and (d) applied on the inverse order of the
maturity of the installment thereof unless the Lender and the
Borrower agree to apply such prepayments in some other
order.
Section 2.6 Method of Payments .
(a) All
payments of principal, interest, other charges (including
indemnities) and other amounts payable by the Borrower hereunder
shall be made in lawful money of the United States, in immediately
available funds, to the Lender at the address specified in or
pursuant to this Loan Agreement for notices to the Lender, on the
date on which such payment shall become due. Any such payment made
on such date but after such time shall, if the amount paid bears
interest, and except as expressly provided to the contrary herein,
be deemed to have been made on, and interest shall continue to
accrue and be payable thereon until, the next succeeding Business
Day. If any payment of principal or interest becomes due on a day
other than a Business Day, such payment may be made on the next
succeeding Business Day, and when paid, such payment shall include
interest to the day on which payment is in fact made.
(b) Notwithstanding
anything to the contrary contained in this Loan Agreement or the
Promissory Note, the Borrower shall not be obligated to make any
payment, repayment or pre-
3
payment on the
Promissory Note if doing so would cause the ESOP to cease to be an
employee stock ownership plan within the meaning of
Section 4975(e)(7) of the Code or qualified under Section
401(a) of the Code or cause the Borrower to cease to be a tax
exempt trust under Section 501(a) of the Code or if such act or
failure to act would cause the Borrower to engage in any
“prohibited transaction” as such term is defined in the
Section 4975(c) of the Code and the regulations promulgated
thereunder which is not exempted by Section 4975(c)(2) or
(d) of the Code and the regulations promulgated thereunder or
in Section 406 of ERISA and the regulations promulgated
thereunder which is not exempted by Section 408(b) of ERISA and the
regulations promulgated thereunder; provided, however, that in each
case, the Borrower, may act or refrain from acting pursuant to this
Section 2.6(b) on the basis of an opinion of counsel, and any
opinion of such counsel. The Borrower may consult with counsel, and
any opinion of such counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
with such opinion of counsel. Nothing contained in this
Section 2.6(b) shall be construed as imposing a duty on the
Borrower to consult with counsel. Any obligation of the Borrower to
make any payment, repayment or prepayment on the Promissory Note or
refrain from taking any other act hereunder or under the Promissory
Note which is excused pursuant to this Section 2.6(b) shall be
considered a binding obligation of the Borrower, or both, as the
case may be, for the purposes of determining whether a Default or
Event of Default has occurred hereunder or under the Promissory
Note and nothing in this Section 2.6(b) shall be construed as
providing a defense to any remedies otherwise available upon a
Default or an Event of Default hereunder (other than the remedy of
specific performance).
Section 2.7 Use of Proceeds of Loan .
The entire
proceeds of the Loan shall be used solely for acquiring shares of
Common Stock, and for no other purpose whatsoever.
(a) In order
to secure the due payment and performance by the Borrower of all of
its obligations under this Loan Agreement, simultaneously with the
execution and delivery of this Loan Agreement by the Borrower, the
Borrower shall:
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(i)
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pledge to the Lender as Collateral
(as defined in the Pledge Agreement), and grant to the Lender a
first priority lien on and security interest in, the Common Stock
purchased with the Principal Amount, by the execution and delivery
to the lender of the Pledge Agreement attached hereto as an
exhibit; and
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(ii)
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execute and deliver, or cause to be
executed and delivered, such other agreement, instruments and
documents as the Lender may reasonably require in order to effect
the purposes of the Pledge Agreement and this Loan
Agreement.
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(b) The
Lender shall release from encumbrance under the Pledge Agreement
and transfer to the Borrower, as of the date on which any payment
or repayment of the Principal Amount is made, a number of shares of
Common Stock held as Collateral determined pursuant to the
applicable provisions of the ESOP.
Section 2.9 Registration of the Promissory Note
.
(a) The
Lender shall maintain a Register providing for the registration of
the Principal Amount and any stated interest and of transfer and
exchange of the Promissory Note.
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Transfer of the
Promissory Note may be effected only by the surrender of the old
instrument and either the reissuance by the Borrower of the old
instrument to the new holder or the issuance by the Borrower of a
new instrument to the new holder. The old Promissory Note so
surrendered shall be canceled by the Lender and returned to the
Borrower after such cancellation.
(b) Any new
Promissory Note issued pursuant to Section 2.9(a) shall carry
the same rights to interest (unpaid and to accrue) carried by the
Promissory Note so transferred or exchanged so that there will not
be any loss or gain of interest on the note surrender. Such new
Promissory Note shall be subject to all of the provisions and
entitled to all of the benefits of this Agreement. Prior to due
presentment for registration or transfer, the Borrower may deem and
treat the registered holder of any Promissory Note as the holder
thereof for purposes of payment and other purposes. A notation
shall be made on each new Promissory Note of the amount of all
payments of principal and interest theretofore paid.
ARTICLE III
Representations And Warranties Of The Borrower
The Borrower
hereby represents and warrants to the Lender as follows:
Section 3.1 Power, Authority, Consents
.
The Borrower has
the power to execute, deliver and perform this Loan Agreement, the
Promissory Note and Pledge Agreement, all of which have been duly
authorized by all necessary and proper corporate or other
action.
Section 3.2 Due Execution, Validity, Enforceability
.
Each of the Loan
Documents, including, without limitation, this Loan Agreement, the
Promissory Note and the Pledge Agreement, has been duly executed
and delivered by the Borrower; and each constitutes the valid and
legally binding obligation of the Borrower, enforceable in
accordance with its terms.
Section 3.3 Properties, Priority of Liens
.
The liens which
have been created and granted by the Pledge Agreement constitute
valid, first liens on the properties and assets covered by the
Pledge Agreement, subject to no prior or equal lien.
Section 3.4 No Defaults, Compliance with Laws
.
The Borrower is
not in default in any material respect under any agreement,
ordinance, resolution, decree, bond, note, indenture, order or
judgment to which it is a party or by which it is bound, or any
other agreement or other instrument by which any of the properties
or assets owned by it is materially affected.
Section 3.5 Purchase of Common Stock
.
Upon consummation
of any purchase of Common Stock by the Borrower with the proceeds
of the Loan, the Borrower shall acquire valid, legal and marketable
title to all of the Common Stock so purchased, free and clear of
any liens, other than a pledge to the Lender of the Common Stock so
purchased pursuant to the Pledge Agreement. Neither the execution
and delivery of the Loan Documents nor the performance of any
obligation thereunder violates any provisions of law or conflicts
with or results in a breach of or creates (with or without the
giving of notice of lapse of time, or both) a default under any
agreement to which the Borrower is a
5
party or by
which it is bound or any of its properties is affected. No consent
of any federal, state, or local governmental authority, agency, or
other regulatory body, the absence of which could have a materially
adverse effect on the Borrower or the Trustee, is or was required
to be obtained in connection with the execution, delivery, or
performance of the Loan Documents and the transaction contemplated
therein or in connection therewith, including without limitation,
with respect to the transfer of the shares of Common Stock
purchased with the proceeds of the Loan pursuant
thereto.
Section 3.6 ESOP; Contributions .
As of the
effective date of the ESOP sponsor’s conversion, the ESOP and
the Borrower will be duly created, organized and maintained by the
ESOP sponsor in compliance with all applicable laws, regulations
and rulings. The ESOP will qualify as an “employee stock
ownership plan” as defined in Section 4975(e)(7) of the
Code. The ESOP provides that the ESOP sponsor may make
contributions to the ESOP in an amount necessary to enable the
Trustee to amortize the Loan in accordance with the terms of the
Promissory Note; provided, however, that no such contributions
shall be required if they would adversely affect the qualification
of the ESOP under Section 401(a) of the Code.
The trustee of the
ESOP has been duly appointed by the ESOP sponsor.
Section 3.8 Compliance with Laws; Actions
.
Neither the
execution and delivery by the Borrower of this Loan Agreement or
any instruments required thereby, nor compliance with the terms and
provisions of any such documents by the lender, constitutes a
violation of any provision of any law or any regulation, order,
writ, injunction or decree of any court or governmental
instrumentality, or an event of default under any agreement, to
which the Borrower is a party, to which the Borrower is bound or to
which the Borrower is subject, which violation or event of default
would have a material adverse effect on the Borrower. There is no
action or proceeding pending or threatened against either the ESOP
or the Borrower before any court or administrative
agency.
ARTICLE IV
Representations And Warranties Of The Lender
The Lender hereby
represents and warrants to the Borrower as follows:
Section 4.1 Power, Authority, Consents
.
The Lender has the
power to execute, deliver and perform this Loan Agreement, the
Pledge Agreement and all documents executed by the Lender in
connection with the Loan, all of which have been duly authorized by
all necessa
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