Exhibit 10.17
LOAN AGREEMENT
THIS LOAN
AGREEMENT (the "Agreement"), made this 1st day of
Octber,
2008, by and among
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(the
"Lender"), and PEOPLES BANCORPORATION, INC., a South Carolina
corporation and a
bank holding company (the "Borrower").
W I T N E S S E T H:
THAT THE LENDER
AND THE BORROWER for consideration, the
receipt and
adequacy of which is hereby acknowledged, covenant and agree as
follows:
Section 1. The
Revolving Loan. Subject to the terms and conditions and
relying upon the representations and warranties set forth in this
Agreement, the
Lender agrees to make loans (each, a "Loan" and,
collectively, the "Revolving
Loan") to the Borrower on the date hereof in
an aggregate principal amount
outstanding at any time not to
exceed $15,000,000 (the "Revolving Loan
Commitment"). On September 28, 2010,
all principal and interest under the
Revolving Loan shall be due in full (the "Maturity
Date"). The Revolving Loan
shall be evidenced by the promissory note of the
Borrower (the "Note"), the
terms of the Note being incorporated herein by
reference. The Borrower hereby
agrees to pay the Lender interest on the unpaid
principal amount of the Note
from time to time outstanding at the rate or rates per annum
determined pursuant
the Note, and with such amounts being
payable on the dates set forth in the
Note.
(a) Conversion to Term Loan. At any one or more times from and
after the date
hereof but prior to the Maturity Date, the Borrower may
elect to convert
up to $10,000,000 of the Revolving Loan Commitment to
a term loan (each
such conversion being deemed to be a "Converted Loan"
and,
collectively with any other Converted Loan, the "Converted
Loans"
and collectively
with the Revolving Loan, the "Loans") by notifying the
Lender that
Borrower desires such conversion, whereupon
the Lender
shall prepare
the documentation required to implement such
Converted
Loan (subject to
the limitations described in this Section 1(a),
with
financial terms to
be reasonably agreed between the Lender and Borrower
as to method and
timing of borrowings and repayments, including a term
and loan
amortization schedule not to exceed five years) for
execution
solely by the
Lender and the Borrower; provided, however, that: (i) the
total amount
of the Converted Loans shall not exceed
an aggregate
amount of
$10,000,000; (ii) Converted Loans shall each be in a
minimum
amount of
at least $500,000; (iii) the
rate of interest of the
Converted
Loans shall not be less than 90-day LIBOR Rate
plus three
hundred basis
points (3.00), and upon any Event of Default, Lender may,
at its option and
upon notice to Borrower, increase the interest rate
on the entire
outstanding principal balance and any late fees, together
with all accrued
and unpaid interest relating to the Converted Loans to
the 90-day LIBOR
Rate plus four hundred basis points (4.00); (iv)
the
Borrower must be
in pro forma financial covenant compliance both before
and
immediately after giving effect to such Converted
Loan; (v) no
Default or
Event of Default shall have occurred and
be continuing
either
before or immediately after giving effect to
such Converted
Loan; (vi) the
Revolving Loan Commitment shall be permanently
reduced
on a
dollar-for-dollar basis in respect to the amount of the
Converted
Loan; and
(vii) all representations and warranties of
the Borrower
shall
continue to be true in all material respects on
the date such
Converted
Loan is made as though made on such date, except for
those
representations and warranties that specifically relate
to an earlier
date.
All prepayments applicable to the Loans will be
allocated pro
rata
among the Revolving Loan and any
Converted Loan pari passu
therewith,
unless otherwise allocated by the Lender. No Converted Loan
shall be made
unless the conditions set forth in Section 3 with regard
to advances under
the Revolving Loan shall be satisfied at the time of,
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and giving pro
forma effect to, the making of such Converted Loan. All
Converted
Loans shall be secured by the Collateral pro rata with
the
Revolving Loan.
The terms and conditions of any Converted Loan shall be
(except as
otherwise expressly set forth herein or
consented to in
writing by the
Lender), immediately prior to the effectiveness of such
Converted
Loan, the same as the terms and conditions of the
Revolving
Loan at such
time.
(b) Collateral. To secure the
payment of the Note and to
secure the
performance of the Borrower's covenants contained
herein,
the
Borrower has given the Lender a first
priority stock pledge
agreement
satisfactory to the Lender (the "Stock Pledge
Agreement")
covering the
outstanding shares of common stock (the "Stock") of
The
Peoples
National Bank, Bank of Anderson, N.A., and
Seneca National
Bank, all
nationally chartered banks and wholly owned
Subsidiaries of
the Borrower
(the "Banks"). The grant of this security
interest is
described in
more detail in the Stock Pledge
Agreement and loan
documents given to
evidence or secure the Revolving Loan.
(c) Fees. Borrower hereby agrees to
pay to the Lender a
commitment
fee (the "Commitment Fee"), equal to twenty basis
points
(0.20) per annum
of the Revolving Loan Commitment, payable (i) on
the
Maturity Date, and
(ii) on the first anniversary of the Maturity Date;
provided that any
payment of the Commitment Fee, once the same becomes
due and
payable, shall be fully earned and shall not
be subject to
refund or
rebate. In addition, Borrower hereby agrees
to pay to the
Lender a non-usage
fee (the "Non-Usage Fee") for each day equal to the
product of (i) 20
basis points (0.20) per annum multiplied by (ii) the
difference
between (A) the Revolving Loan
Commitment and (B) the
aggregate
outstanding amount of the Revolving Loan plus any
Converted
Loans on such
day, payable quarterly with respect to the
immediately
preceding quarter
on the same day of each calendar quarter that accrued
interest is paid
under the Note.
Section 2. Use of
Loan Proceeds. The proceeds of the Revolving Loan are
to be used to provide capital for the Banks and for general
corporate purposes.
Section 3.
Warranties of the Borrower; Conditions to
Disbursement.
Prior to the disbursement of any draw request
under the Revolving Loan, the
Lender must have received certification of the
following warranties from the
Borrower, such certification being a condition to disbursement:
(a) The Borrower is a corporation duly
organized, validly
existing, and in good standing under the laws of
the State of South
Carolina and
is qualified to do business in all jurisdictions
where
such
qualification is necessary. The Borrower is registered as a
bank
holding company with Federal Reserve and the
South Carolina State
Board of
Financial Institutions. The principal place of
business of
the
Borrower where the records of the Borrower are kept is
located at
1800 E. Main
Street, Easley, South Carolina.
(b) The Banks are each
nationally chartered banks duly
organized,
validly existing, and in good standing pursuant to the laws
of the
United States of America and subject to examination by the
the
Office of
the Comptroller of the Currency (the "OCC") and the
Federal
Deposit
Insurance Corporation (the "FDIC"). The Borrower owns
all of
the Stock
(consisting of 832,605 shares of common stock of The Peoples
National Bank; 700,000 shares of common
stock of Bank of Anderson,
N.A.;
350,000 shares of common stock of Seneca National Bank) of
the
Banks and
there are no other outstanding shares of capital stock
and
no
outstanding options, warrants or other rights that can be
converted
into
shares of capital stock of the
Banks. The Banks have all
requisite corporate power and authority and
possess all licenses,
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permits and authorizations necessary
for them to own their own
properties
and conduct their own business as presently conducted.
(c) Each financial
statement of the Borrower or
any
Subsidiary, which has been delivered to the Lender,
presents fairly
the
financial condition of the Borrower or such Subsidiary
as of the
date
indicated therein and the results of its
operations for the
periods shown therein. There has been no
Material Adverse Change,
either
existing or threatened, in the
financial condition or
operations of the Borrower or any
Subsidiary since the date of the
most recent
financial statements delivered to the Lender or the
most
recent
regulatory report filed with the appropriate agency, except
as
previously
disclosed to the Lender.
(d) The Borrower has full power and authority to
execute and
perform the Financing Documents.
The execution, delivery, and
performance by the Borrower of the Financing Documents
(i) have been
duly
authorized by all requisite action by the Borrower,
(ii) do not
violate
any provision of law, and (iii) do not result in a
breach of
or
constitute a default under any agreement or other
instrument to
which
the Borrower or any Subsidiary is a party
or by which the
Borrower or
any Subsidiary is bound. Each of the Financing
Documents
constitutes
the legal, valid, and binding obligation of the
Borrower
enforceable
in accordance with its terms.
(e) Except for the security interest
created by the Stock
Pledge
Agreement, the Borrower owns the Stock free and clear
of all
liens,
charges, and encumbrances. The Stock is duly issued, fully paid
and
non-assessable except to the extent provided by 12 U.S.C.
Section
55, and the
Borrower has the unencumbered right to pledge the Stock.
(f) To the best knowledge of the Borrower, there is no action,
arbitration, or other proceeding at law or in equity, or by
or before
any
court, agency, or arbitrator, nor, to
the best knowledge of
Borrower, is there any judgment, order, or
other decree pending,
anticipated, or threatened against the Borrower or any
Subsidiary or
against any
of their properties or assets which might have a material
adverse
effect on the Borrower, any Subsidiary, or their
respective
properties or assets, or which might call into question
the validity
or
enforceability of the Financing Documents, or which
might involve
the
alleged violation by the Borrower or any
Subsidiary of any law,
rule or
regulation.
(g) No consent or other authorization of
any governmental
authority or other public body on the part of
the Borrower or any
Subsidiary
is required in connection with the Borrower's
execution,
delivery, or performance of the Financing Documents; or
if required,
all such
prerequisites have been fully satisfied.
(h) Except as previously disclosed in writing by the Borrower,
none of the
real property now or previously owned by Borrower or
any
Bank
Subsidiary contains any underground petroleum
storage tank, is
being used
for the disposal of any property or materials in
violation
of any
federal, state, or local health, safety, or environmental
law,
ordinance, or regulation, nor to the best
knowledge of the Borrower
has it been
so used. No proceeding has been
commenced, or notice
received, concerning any alleged violation of any such law,
ordinance
or
regulations. To the best knowledge of
the Borrower, all real
property now
or previously owned by Borrower or any Bank Subsidiary is
free of
hazardous or toxic wastes, contaminants, oil,
radioactive or
other
materials the removal of which is required, or the
maintenance
of which is
restricted, prohibited or penalized, by any federal, state
or
local agency, authority, or
governmental unit, or which may be
disposed of
or transported lawfully only pursuant to a special permit
or by or at
a governmentally approved facility.
(i) No employee benefit plan established or maintained, or
to
which
contributions have been made, by Borrower or any Bank
Subsidiary
which is
subject of Part 3 of Subtitle I of the Employee
Retirement
Income
Security Act of 1974, amended ("ERISA"), had an
"accumulated
funding deficiency" (as such term is defined in Section 302
of ERISA)
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as of the
last day of the most recent fiscal year of such plan
ended
prior
to the date hereof, or would have had
such an accumulated
funding deficiency of such day if such were the
first year of such
plan to
which such Part 3 applied; and no material
liability to the
Pension
Benefit Guaranty Corporation has been incurred with respect to
any such
plan by Borrower or any Bank Subsidiary. Each such
employee
benefit plan complies and will comply
fully with all applicable
requirements of ERISA and of the Internal
Revenue Code of 1986 as
amended (the
"Code"), and which all applicable rulings and regulations
issued under
the provisions of ERISA and the Code. This Agreement and
the
consummation of the transactions
contemplated herein will not
involve any prohibited transactions
within the scope of ERISA or
Section 4975
of the Code.
Section 4.
Covenants of the Borrower. The Borrower hereby
covenants
and agrees with the Lender as follows:
Affirmative
Covenants:
(a) The Borrower shall promptly furnish to the Lender: (i) not
later
than 120 days after the end of each
fiscal year, audited
consolidated financial statements
of the Borrower prepared in
accordance
with accounting principles generally accepted in the United
States
of America ("GAAP") and certified by
a registered public
accounting firm; (ii) 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; (iii) not later
than
45
days after the end of each of the first
three quarters of each
year,
copies of the Call Reports and Problem Asset Summaries
of the
Banks for
the fiscal quarter then ended,
in compliance with the
requirements
of the governmental regulatory agency which has authority
to examine
the Banks, all prepared in accordance with the requirements
imposed by the applicable
governmental regulatory agency; (iv)
immediately after the occurrence of a Material Adverse
Change or the
imposition
of any letter agreement, memorandum of understanding, cease
and desist
order, or other similar regulatory action
involving the
Borrower or any Subsidiary, a
statement of the Borrower's chief
executive officer or chief
financial officer setting forth in
reasonable detail such event and the action which the
Borrower or any
Subsidiary proposes to take with respect
thereto; (v) from time to
time
upon request of the Lender, copies of
the Borrower's annual
reports and
quarterly regulatory reports and each Subsidiary's annual
reports and
quarterly regulatory reports, as applicable; and (vi) from
time to
time upon request of the Lender,
such other information
relating to the operations,
business, condition, management,
properties, or prospects of the Borrower or
any Subsidiary as the
Lender may
reasonably request (including meetings with the
Borrower's
or
Subsidiary's officers and employees).
(b)
The Borrower and each Subsidiary shall punctually pay and
discharge
all taxes, assessments and other
governmental charges or
levies
imposed upon it or upon its income or upon any of its property,
except
taxes, assessments and other charges which are in
good faith
being timely
litigated or otherwise properly contested by the Borrower
or the
Subsidiary and as to which the contestant has
established an
adequate
reserve on its books.
(c) The Borrower and each Subsidiary
shall comply in all
material respects with all requirements of
constitutions, statutes,
rules,
regulations, and orders and all orders and decrees of
courts
and
arbitrators applicable to it or its properties.
(d) The Borrower shall, immediately upon distribution, provide
the Lender
with a copy of any offering disclosure materials
for any
stock
offering along with any additional information about
commitments
for sale of
stock associated with any such offering.
(e) The Borrower shall furnish the Lender with a copy
of the
most
recent external loan review for the Banks if
requested by the
Lender.
(f) The Borrower shall pay the reasonable out-of-pocket
costs
and
expenses, including attorneys fees,
incurred by the Lender in
connection
with this Revolving Loan.
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(g) The Borrower shall maintain and keep in force insurance of
the types
and in amounts customarily carried in lines
of business
similar
to Borrower's, including but not
limited to fire, public
liability, property damage,
business interruption, worker's
compensation, director and officer liability and errors and
omissions
coverage.
(h) The Borrower shall keep all of
Borrower's properties
useful
or necessary to Borrower's business
in good repair and
condition,
and from time to time make necessary repairs, renewals
and
replacements thereto so that Borrower's property
shall be fully and
efficiently
preserved and maintained.
(i) Within 90 days of the date hereof,
the Borrower will
furnish to
the Lender true, correct and complete
copies of (i) the
Borrower's articles of incorporation as in
effect at the time such
articles are provided to the Lender; (ii) the
Banks' charters as in
effect
at the time such charters are provided to
the Lender (as
certified by
the OCC and dated within 90 days of the date provided to
the Lender);
(iii) certificate of existence for the Borrower issued by
the
South Carolina Secretary of State (dated
within 90 days of the
date
provided to the Lender); (iv) the bylaws of
the Borrower in
effect
immediately prior to the adoption of the resolutions
referred
to
below (and such bylaws shall have not
been further altered or
amended and
shall have remained in full force and effect at all times
since the
adoption of such resolutions through the date
provided to
the
Lender); and (v) resolutions of the Board
of Directors of the
Borrower adopted at a duly called meeting
authorizing the Revolving
Loan and
the granting of a security interest
in the Stocks (the
"Resolutions"). When provided to the Lender, the Resolutions
shall be
in
full force and effect and shall have not
been modified in any
respect. The
Borrower and the Banks shall remain in valid
existence
under the
laws of the state of South Carolina and the United States of
America. Finally, neither the
Borrower nor any of the Banks shall
materially amend the
Borrower's or the Banks'
articles of
incorporation or association without prior notice to the
Lender.
Negative
Covenants:
(a) The Borrower shall not permit its capital or the
capital
of any
subsidiary Bank as of the end of any fiscal quarter during
the
term of this
Agreement to be less than "well capitalized;"
provided
however that
it shall not be a violation of this
covenant if the
Borrower or
a Subsidiary Bank shall again become
well capitalized
within 60 days of
the date that such entity determined
or received
notice
that it had been determined
that it is no longer well
capitalized.
For the purposes of this Agreement, "well
capitalized"
shall mean
as defined by 12 CFR ss. 6.4 for each of the Banks and
12
CFR ss. 225.2(r)
for the Borrower.
(b) The Borrower shall not permit the allowance for
loan and
lease losses
of any of the Banks to be less than 1.25% of its
gross
loans at the end
of each fiscal quarter; provided however, if permitted
by the
appropriate regulatory agencies and the
applicable internal
calculations
formula of the Bank, any of the Banks may
reduce such
allowance
upon the prior written approval from
the Lender, which
approval shall not
be unreasonable withheld.
(c) The Borrower shall not permit the ratio of
Non-performing
Assets to
total assets of the Borrower to
exceed 3.50%; provided
however that, if
the ratio of Non-performing Assets to total assets of
the Borrower
exceeds 1.50% but is less than 3.50%, the Borrower shall
not be in breach
of this covenant but the interest rate of
the Loan
shall be adjusted
as stated in the Note.
(d) The Borrower shall pay no cash dividend, without the prior
written consent of
the Lender (not to be unreasonably withheld) if the
payment would
cause the Borrower to fail to be well capitalized.
(e) The Borrower shall not, directly or indirectly,
become a
guarantor of any
obligation of, or an endorser of, or otherwise assume
or become liable
upon any notes, obligations, or other indebtedness of
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any other
Person (other than a Subsidiary) without prior
approval by
the Lender except
in connection with deposits, repurchase agreements,
overdrafts,
and other banking transactions
entered into by a Bank
Subsidiary in the
ordinary course of its business, including
without
limitation
borrowings of federal funds,
Federal Home Loan Bank
advances,
or Trust Preferred
Indebtedness. Notwithstanding this
provision, the
Borrower and the Lender acknowledge that the projections
of the Banks
indicate additional earnings will be generated during the
term of the
Loans, and that such additional earnings could be used
to
service
additional debt in the form of trust
preferred securities.
Provided
that the Borrower and the Banks are otherwise in
compliance
and will remain in
compliance with all of the ratio requirements of the
Loans, the
Borrower may incur additional debt without the consent
of
the Lender,
with such additional debt restricted to trust
preferred
securities and
related guaranty.
(f) Except in the
settlement of previously
incurred
obligations
acquired in the ordinary course of business, neither
the
Borrower nor any
Subsidiary shall acquire any material portion of
the
stock, other
equity interests or assets or business of any other Person
without the prior
written consent of the Lender (not to be unreasonably
withheld).
(g) Neither the Borrower nor any
Subsidiary shall sell,
convey, pledge,
assign, lease, abandon or otherwise transfer or dispose
of,
voluntarily or involuntarily any of its
properties or assets
whether tangible
or intangible (including, but not limited to,
shares
of capital stock
of the Borrower nor the Pledged Shares (as defined in
the Stock
Pledge Agreement or any portion thereof),
except for (i)
leases
entered into in the ordinary
course of business, (ii)
dispositions of
its properties or assets; if such properties or assets
are replaced
by replacement properties or assets used for
similar or
related
purposes, and (iii) other dispositions of properties or
assets
in the
ordinary course of business which are not,
individually or in
the aggregate,
material to the operation of such Person's business.
(h) Neither the Borrower nor any Subsidiary
shall merge or
enter a binding
agreement to merge with or into or consolidate with any
other Person
without the prior written consent of the Lender (not to be
unreasonably
withheld); provided, however, that one or
more of the
Borrower's
Subsidiaries may merge with another
Subsidiary of the
Borrower without
consent.
(i) Unless required by the Securities and Exchange Commission,
the OCC, the FDIC,
the Federal Reserve, the South Carolina State Board
of
Financial Institutions or any other state or
federal regulatory
entity having or
claiming jurisdiction over the Borrower, Borrower will
not disclose
information relating to the Lender or terms and conditions
of the Loans.
Section 5.
Advances under the Revolving Loan. The Lender shall not
be
obligated to
make any advance of the Revolving Loan to the
Borrower
unless:
(a) All representations and warranties of the Borrower
contained
in
this Agreement or the Note shall be true in all
material respects
on and as of
the date of each advance of the Revolving Loan.
(b) The Borrower and each Subsidiary shall have performed in
all
material
respects all their agreements and obligations required by
the
Financing
Documents.
(c) No Material Adverse Change shall have occurred since the
date
of this
Agreement.
(d) No Default or event which, with
the giving of notice or
passage of
time (or both), would constitute a Default under the
terms
of this Agreement
shall have occurred.
Section 6. No
Third-Party Beneficiary. All conditions precedent to the
obligation of the Lender to make the disbursement
hereunder are imposed solely
and exclusively for the benefit of the Lender and its
assigns. No Person other
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than the Borrower and its Subsidiaries shall, under any
circumstances, be deemed
a beneficiary of this Agreement, or any of the terms or
conditions hereof, any
or all of which may be freely waived in whole or in
part by the Lender at any
time if in its sole discretion it deems it advisable to do so.
Section 7. Events
of Default. The following shall constitute defaults
(each a "Default") hereunder:
(i) The failure of the Borrower to pay when due any payment of
interest or
of principal due and payable under the Note.
(ii) The failure of the Borrower to keep, perform or
observe
any
covenant, agreement, term or condition herein required to be
kept,
performed or
observed by the Borrower under this Agreement, the
Note
or the Stock
Pledge Agreement, unless such failure is cured within 30
days (or
such shorter cure period deadline
as specified herein)
thereof.
(iii) The Borrower or any of the Banks (a) files a petition or
has a
petition filed against it under the
Bankruptcy Code or any
proceeding
for the relief of insolvent debtors; (b) generally fails to
pay
its debts as such debts become
due and payable; (c) has a
custodian appointed for the Borrower or a guarantor or for
the assets
of any
thereof; (d) benefits from or is subject to the
entry of any
order for
relief by any court of insolvency; (e) makes an admission of
insolvency
seeking relief provided in the Bankruptcy Code or any other
insolvency law; (f) makes an assignment for the benefit of
creditors;
(g)
has a receiver appointed, voluntarily
or otherwise, for its
property; (h) suspends business; (i) permits a judgment in
the amount
of
$250,000.00 or more to be obtained against it which is not
promptly
paid or
promptly appealed and secured pending appeal; or (j)
becomes
insolvent,
however otherwise evidenced.
(iv) The occurrence of a default under any of the
Financing
Documents.
(v) Any representation or certificate given
or at any time
hereafter required to be given hereunder shall be false
or erroneous
in any
material respect when made.
(vi) (a) the OCC, the FDIC, the Federal
Reserve, the South
Carolina
State Board of Financial Institutions or any other
state or
federal regulatory entity having or claiming
jurisdiction over the
Borrower or
any Subsidiary shall issue any formal order,
directive,
Memorandum
of Understanding, or cease and desist order involving
the
Borrower or any Subsidiary, which
materially restricts or has a
reasonable prospect of restricting the Borrower's ability to
make the
required payments when due pursuant to the
Financing Documents and
which is
not resolved within 60 days in a manner
acceptable to the
Lender its
reasonable discretion; or (b) the FDIC shall terminate
its
insurance
coverage with respect to the Borrower or any of the Banks.
Section 8.
Remedies. Upon the occurrence of a Default, the Lender
may,
at its option, declare the entire
indebtedness evidenced by the Note to be
immediately due and payable and may exercise each and every other
remedy granted
herein, in the Stock Pledge Agreement, in the Financing
Documents, or any other
right, power, privilege or remedy, either at law,
in equity or otherwise, to
which the Lender may be entitled. All rights and remedies of the
Lender shall be
cumulative and the exercise of one right or remedy shall not
be deemed to be an
election of remedies to the exclusion of
the exercise of other rights and
remedies. No failure or delay by the Lender to
exercise any right, power or
privilege hereunder shall
operate
