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Exhibit
10.1
LOAN
AGREEMENT
This Loan Agreement (this
“Agreement”), dated as of October 16, 2007, is
entered into by and between The Bankers Bank, N.A., a national
banking association (together with its successors and assigns, the
“Bank”), and BancTrust Financial Group, Inc., an
Alabama corporation (the “Borrower”), which owns all of
the issued and outstanding capital stock of BankTrust, an Alabama
banking corporation (“BankTrust-Mobile”) and BankTrust,
a Florida banking corporation
(“BankTrust-Florida”)(together Bank Trust-Mobile and
BankTrust-Florida are referred to as the “Bank
Subsidiaries”, and each a “Bank
Subsidiary”).
ARTICLE I.
THE LOAN AND STOCK
PLEDGE
Section 1.01. Loan
and Use of Proceeds . The Bank shall, upon the terms
and subject to the conditions set forth in this Agreement, extend
credit to the Borrower (the “Loan”) in the aggregate
principal amount of up to THIRTY-EIGHT MILLION DOLLARS
($38,000,000.00) (the “Maximum Outstanding Principal
Balance”). The Loan shall be used exclusively by the Borrower
to fund the cash portion of the purchase price to be paid in the
merger of The Peoples BancTrust Company, Inc. into the Borrower
pursuant to the Agreement and Plan of Merger between the Borrower
and The Peoples BancTrust Company, Inc. (“Peoples”)
dated May 21, 2007, and any expenses associated with the
Loan.
Section 1.02.
Note . The Loan shall be evidenced by a promissory
note of even date (the “Note”) prepared by Bank
counsel, payable to the order of the Bank, executed by the
Borrower, in the amount of the Maximum Outstanding Principal
Balance, bearing interest from the date credit is extended
thereunder at the rate specified, being otherwise payable as set
forth under the Note, and providing for a term of three
years.
Section 1.03.
Fees . The Borrower shall pay a reservation fee of
TWENTY-FIVE THOUSAND DOLLARS ($25,000.00), which shall be
non-refundable. This fee will be applied toward the loan fee
payable at closing. The Borrower shall also pay an annual fee in
the following amounts: (i) a one-year loan fee due and payable
at closing equal to twenty basis points (.002) of the commitment
amount being SEVENTY-SIX THOUSAND DOLLARS ($76,000); (ii) on
October 16, 2008, an annual fee shall be due and payable equal
to fifteen basis points (.015) of the commitment amount being
FIFTY-SEVEN THOUSAND DOLLARS ($57,000); and (iii) on
October 16, 2009, an annual loan fee shall be due and payable
equal to ten basis points (.001) of the commitment amount being
THIRTY-EIGHT THOUSAND DOLLARS ($38,000). If the Loan is pre-paid
partially or in its entirety before August 31, 2008, a
pre-payment penalty equal to the product of the principal balance
so prepaid multiplied by five basis points will be due and payable
at the time of any such pre-payment. If the pre-payment occurs from
the proceeds of a capital markets financing arranged, made, or
managed by BankersBanc Capital Corporation or its affiliates, no
pre-payment penalty will be incurred. On or after August 31,
2008, the Loan may be prepaid in whole or in part at any time
without fee or penalty.
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Section 1.04.
Security Interest . The Borrower hereby unconditionally
grants and assigns to the Bank and its successors and assigns a
continuing security interest in and security title to all of the
issued and outstanding shares of capital stock owned or hereafter
acquired by the Borrower in the Bank Subsidiaries (the
“Stock”). The Borrower hereby delivers to the Bank all
of its right, title and interest in and to the Stock, together with
certificates representing the Stock and stock powers endorsed in
blank, as security for all obligations of the Borrower to the Bank
under the Note, whether direct or indirect, absolute or contingent,
now or hereafter existing, or due or to become due. If either Bank
Subsidiary issues, for any reason whatsoever any additional shares
of the capital stock of the Bank Subsidiaries, such shares shall
thereupon constitute Stock to be held by the Bank under the terms
of this Agreement and the Borrower shall immediately deliver such
shares to the Bank, together with stock powers endorsed in blank by
the Borrower. Beneficial ownership of the Stock, including all
voting, consensual and dividend rights, shall remain in the
Borrower until the occurrence of an Event of Default.
ARTICLE II.
REPRESENTATIONS AND
WARRANTIES
In extending credit pursuant
to this Agreement, the Bank has relied upon the following
representations and warranties by the Borrower, all of which shall
survive the closing of the Loan (the
“Closing”):
Section 2.01. Loan
to Book Value . On the date of this Agreement, the Maximum
Outstanding Principal Balance of the Loan does not exceed 50% of
the total combined equity capital of BankTrust-Florida and
BankTrust-Mobile, including BankTrust-Mobile after giving effect to
the merger of Peoples into BankTrust-Mobile.
Section 2.02.
Organization, Power, Authority and Binding Effect .
The Borrower is an Alabama corporation which is duly
organized, validly existing, and in good standing in the State of
Alabama and all other jurisdictions where it is required to qualify
to do business, and has all necessary licenses, permits, and
governmental approvals necessary for the present and proposed
conduct of its business. The Borrower has all necessary
corporate power and authority to execute and deliver and perform
under this Agreement, the Note, and the other documents evidencing
or otherwise relating to or delivered in connection with the Loan
or any other liability of the Borrower to the Bank (collectively,
the “Loan Documents”). Upon execution and delivery
hereof and thereof, the Loan Documents will constitute valid and
binding obligations of the Borrower, enforceable in accordance with
their respective terms (subject to applicable bankruptcy laws and
similar laws affecting creditors’ rights), and the Note will
be entitled to the benefits of the Loan Documents.
Section 2.03. No
Violations . Neither the Borrower nor any Bank
Subsidiary is in default and no event has occurred which, but for
the giving of notice or the passage of time or both, under any
Indebtedness (as defined in Section 5.03), or under any other
agreement or instrument to which the Borrower or any Bank
Subsidiary is a party or by which the Borrower or any Bank
Subsidiary is or may be bound or subject, which could materially
affect this Agreement, the credit extended hereunder, the Loan
Documents, or the financial condition, earnings capacity, or
prospects of the Borrower. Neither the execution and delivery
of any of the Loan Documents nor compliance with the terms and
provisions hereof and thereof, nor the
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performance of the transactions
contemplated herein or therein will: (i) violate any provision
of law or of any applicable statute, regulation, rule, order, writ,
injunction, or decree of any court or governmental authority;
(ii) conflict or be inconsistent with, or result in any breach
of, any of the terms, covenants, conditions, or provisions of, or
constitute a default under, any Indebtedness, obligation,
agreement, or instrument to which the Borrower is a party, or by
which the Borrower is or may be subject or bound; or
(iii) result in the creation or imposition of (or the
obligation to create or impose) any lien, charge, security
interest, or encumbrance upon any of the property or assets of the
Borrower except as provided in this Agreement in favor of the
Bank.
Section 2.04.
Financials . All financial statements of the
Borrower supplied to the Bank correctly and fairly set forth in
accordance with generally accepted accounting principles
consistently applied (“GAAP”), the results of
operations for such periods and the financial condition of the
Borrower at such dates, and there have been no material adjustments
made or proposed to such statements or material adverse changes in
the financial condition, business, properties, prospects,
operations, or earnings capacity of the Borrower.
Section 2.05.
Litigation, Proceedings, Etc. There are no actions,
suits, claims, proceedings, or investigations (whether or not
purportedly on behalf of the Borrower or any Bank Subsidiary)
pending or, to the knowledge of the Borrower, threatened or in
prospect before any court, agency or other tribunal, or
governmental authority against the Borrower or any Bank Subsidiary
which, if adversely determined, would result in any material
adverse change in the business, properties, prospects, financial
condition, earnings, results of operations, or earnings capacity of
the Borrower or Bank Subsidiary, or which question the validity of
the Loan or the Loan Documents, or any action or instrument
contemplated hereby or thereby. Neither the Borrower nor any
Bank Subsidiary is currently affected by any strike or other labor
disturbance, and is not in default in any material respect under
any material judgment, order, injunction, rule, ruling, or
regulation of any court or governmental authority. The
Borrower and each Bank Subsidiary is in compliance with all laws,
rules, regulations, orders, memoranda, and agreements applicable to
them or to which they are parties. Except as certified in writing
by the Borrower to the Bank, neither the Borrower nor any Bank
Subsidiary is subject to any regulatory cease and desist or other
orders or memoranda, and based upon their latest regulatory
examination, as applicable, none of them knows of, or has reason to
believe that any applicable regulatory agency is contemplating any
such action.
Section 2.06. Tax
Returns and Payments . The Borrower and each Bank
Subsidiary has filed all tax returns and reports required by law to
be filed, and all taxes, fees, assessments, and other governmental
charges (other than those presently payable without interest or
penalty) upon the Borrower and each Bank Subsidiary, or any of
their respective properties or income, have been paid in full and
reflected in their respective financial statements.
Section 2.07.
Accuracy and Completeness . All Loan Documents and
other information and documents submitted by the Borrower prior to
the Closing, and at any time thereafter, shall constitute
representations and warranties to the Bank, and no representation
or warranty contains or shall contain any untrue statement of a
material fact or omits or shall omit to state a material fact
necessary to make such representation or warranty not misleading in
light of the circumstances under which it was given.
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Section 2.08.
Regulatory Approvals . Every requisite approval of
all state and federal regulatory authorities which was required to
be obtained prior to the Borrower’s taking any of the actions
or consummating any of the transactions contemplated by this
Agreement has been obtained.
ARTICLE
III.
CONDITIONS
Section 3.01.
Conditions . The Bank’s obligations to
extend credit under the Loan are subject to the following
conditions:
(a) There shall be no Event
of Default or condition or event which, after notice or lapse of
time or both, would constitute such an Event of Default;
(b) The Bank shall have
received from counsel to the Borrower favorable opinions as to all
matters reasonably requested by the Bank, in form and substance
mutually agreeable to the Borrower and the Bank;
(c) The Borrower shall
deliver to the Bank duly executed Loan Documents and all other
documents or instruments which the Bank shall require in connection
with extension of credit under the Loan;
(d) The Borrower shall have
received and shall have provided to the Bank evidence of all
necessary approvals of federal and state regulatory agencies if
required regarding the Loan and the payment of dividends by the
Bank Subsidiaries to the Borrower to make all payments under the
Loan;
(e) The Borrower shall use
the entire loan amount to fund the cash portion of the purchase
price to be paid in the merger of The Peoples BancTrust Company,
Inc. into the Borrower pursuant to the Agreement and Plan of Merger
between the Borrower and The Peoples BancTrust Company, Inc. dated
May 21, 2007, and any expenses associated with the
Loan;
(f) The Borrower shall
continue to fulfill all of the terms, representations, warranties,
and covenants of the Loan Documents;
(g) Neither the Borrower nor
any Bank Subsidiary shall be subject to any regulatory formal
enforcement action;
(h) The Bank shall have
conducted an on-site investigation and review of the Borrower and
shall have been satisfied in its sole discretion with its findings
and of the condition of the Borrower;
(i) The Bank shall have
received a certificate of the president, a vice president, or other
officer(s) of the Borrower, in form and substance mutually
agreeable to the Borrower and the Bank, stating (i) that all
representations and warranties contained in this Agreement and in
all other Loan Documents are true and accurate as of the date of
the Closing; (ii) that there exists no Event of Default under
this Agreement or under any other Loan Document, or any condition
or event which with the giving of notice or the passage of time, or
both, would become an Event of Default under this Agreement or
under any other Loan Document; and (iii) any other fact or
representation reasonably requested by the Bank in its sole
discretion; and
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(j) The Borrower and each
Bank Subsidiary shall be in material compliance with all laws,
regulations, orders, memoranda, and requirements applicable to
them.
ARTICLE IV.
AFFIRMATIVE
COVENANTS
Section 4.01.
Stock Rights . The Borrower shall at all times that the
Loan is outstanding own 100% of the voting stock of each Bank
Subsidiary.
Section 4.02.
Financial and Other Information . To the extent
permitted by law, the Borrower shall make available to the Bank
such financial information, reports, and documents concerning the
financial condition and operations of the Borrower and each Bank
Subsidiary as the Bank may reasonably request. Without
limiting the generality of the foregoing, the Borrower shall
provide to the Bank the following:
(a) The Borrower shall
furnish to the Bank no later than 45 days after the end of each
quarter, a quarterly compliance letter certified by an officer of
the Borrower in form and substance reasonably satisfactory to the
Bank and evidencing the Borrower’s compliance with all terms
and conditions of the Loan and this Agreement including, without
limitation, all covenants contained in Articles IV and
V.
(b) Not later than 120 days
after the end of each fiscal year, audited consolidated financial
statements of the Borrower prepared in accordance with generally
accepted accounting principles (“GAAP”) and certified
by an independent accounting firm acceptable to the
Bank;
(c) Not later than 45 days
after each of the first three quarters of each fiscal year,
unaudited consolidated financial statements of the Borrower,
prepared in accordance with GAAP (subject to changes resulting from
normal year-end adjustments) and certified by the chief financial
officer of the Borrower;
(d) Not later than 45 days
after the end of each of the first three quarters of each year,
copies of the Report of Condition and the Report of Income and
Dividends of each Bank Subsidiary;
(e) Immediately after the
occurrence of a material adverse change in the business,
properties, condition, management, or prospects (financial or
otherwise) of the Borrower or any Bank Subsidiary, including,
without limitation, imposition of any letter agreement, memorandum
of understanding, cease and desist order, or other similar
regulatory action involving the Borrower or any Bank Subsidiary, a
statement of the Borrower’s chief executive officer or chief
financial officer setting forth in reasonable detail such change
and the action which the Borrower or any Bank Subsidiary proposes
to take with respect thereto;
(f) From time to time upon
request of the Bank, such information relating to the operations,
business, condition, management, properties, or prospects of the
Borrower or any Bank Subsidiary as the Bank may request (including
meetings with the Borrower’s or Bank Subsidiary’s
officers and employees).
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(g) No later than 30 days
from the end of each fiscal quarter of the Borrower, the Borrower
shall provide to the Bank a written certificate stating that it is
in compliance with all obligation of Articles IV and V of this
Agreement; and, if the Borrower is not in compliance, such
certificate shall specify the manner in which the Borrower has not
complied with such covenant.
Section 4.03.
Financial Ratios and Indicators . The Borrower shall
maintain certain financial ratios and indicators as described
below:
(a) Non-Performing Assets
Ratio . Borrower’s Non-Performing Assets Ratio (as
defined below) shall be equal to or less than: (i) 3.00% on
December 31, 2007; (ii) 2.75% on March 31, 2008;
(iii) 2.50% on June 30, 2008; (iv) 2.25% on
September 30, 2008; (v) 2.00% on December 31, 2008;
(vi) 1.75% on March 31, 2009; (vii) 1.50% on
June 30, 2009; (viii) 1.25% on September 30, 2009;
and (ix) 1.00% on and after October 1, 2009. The
Non-Performing Assets Ratio will be measured quarterly.
“Non-Performing Assets” shall mean the aggregate sum of
the Borrower’s consolidated (i) Cash Basis Loans,
(ii) loans 90 days or more past due, (iii) Renegotiated
Loans, (iv) Other Real Estate Owned and (v) loans defined
as “other non-performing assets” on Borrower’s
consolidated financial statements. The Non-Performing Assets Ratio
shall be calculated as the quotient of (i) Non-Performing
Assets divided by (ii) the sum of (a) total loans and
(b) Other Real Estate Owned.
(b) Debt Service Coverage
Ratio . Borrower shall maintain a minimum Debt Service Coverage
Ratio of 1.25 to 1.00, to be measured at the end of each fiscal
quarter on a trailing twelve month basis. Debt Service Coverage
Ratio shall mean the quotient of (i)(a) the sum of Consolidated Net
Income multiplied by 0.75 and (b) interest expense (based on
the actual Loan balance and outstanding trust preferred securities
balances), divided by (ii) the Debt Service on all outstanding
debt of the Borrower. For purposes of the denominator of this
quotient, Debt Service of the Borrower shall be determined on an
unconsolidated basis. Debt Service shall include all payments of
interest and shall assume payments of principal on the Loan on a 20
year straight line amortization and shall assume payments of
principal on all outstanding trust preferred securities on a 30
year straight line amortization. For the purposes of this ratio,
Consolidated Net Income shall mean, for any period, the net income
(or loss) of the Borrower and its subsidiaries for such period
determined on a consolidated basis in accordance with
GAAP.
(c) Tier 1 Core Leverage
Ratio . Borrower shall maintain a minimum Tier 1 Core Leverage
Ratio of 7.00%, to be measured quarterly. Each Bank Subsidiary
shall maintain a minimum Tier 1 Core Leverage Ratio of 7.00%, to be
measured quarterly.
(d) Tier 1 Risk Based
Capital Ratio . Borrower shall maintain a minimum Tier 1 Risk
Based Capital Ratio of (i) 8.75% from the date hereof through
December
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