EXHIBIT 10.1
TERM LOAN AGREEMENT
THIS AGREEMENT dated December 29, 2005, made by and between
FIRSTFED
BANCORP, INC., a Delaware corporation ("Borrower") and ALABAMA
BANKER'S BANK, an
Alabama banking corporation ("Lender").
W I T N E S S E T H:
--------------------
WHEREAS, Borrower
has requested Lender to lend it the sum of
$6,190,000.00 on a
term loan basis,
and Lender is willing to do so upon the
terms and conditions hereinafter set forth.
WHEREAS, Borrower
desires to pledge as collateral for this loan all
of Borrower's common stock in First Financial Bank (the
"Bank").
NOW, THEREFORE,
in consideration of
the promises herein contained,
Lender and Borrower, intending to be legally bound, agree as
follows:
ARTICLE I. - THE TERM LOAN
Section 1.1 General Terms. Lender hereby agrees to lend to
Borrower,
and Borrower hereby agrees to borrow from Lender, upon the terms and conditions
set forth in this Agreement, the principal sum of Six Million One
Hundred Ninety
Thousand and 00/100
United States dollars (U.S. $6,190,000.00) (the "Term
Loan"). Borrower's
obligation to repay
the Term Loan and the interest thereon
shall be evidenced
by a promissory note (the "Note") in form and substance
satisfactory to
Lender. The form of
the original
Note is attached
hereto as
Exhibit A.
Section 1.2 Interest
Rate. Borrower
agrees to pay interest
on the
Term Loan at the rate(s), on the date(s), and calculated by the method, set
forth in the Note.
Section 1.3 Payments of Principal and Interest. Unless payment is
required to be made earlier pursuant to Section 6.2 of this
Agreement,
Borrower
shall make to Lender such payments of principal and interest on the
Term Loan as
are required by the terms of the Note.
Section 1.4 Prepayment. Borrower may, at its option, prepay the
Term
Loan in part or in full at any time without premium or penalty (and
upon payment
of any prepayment premium provided for in the Note); provided,
however, that any
such prepayment
of principal
shall be accompanied by the payment of accrued
interest on the
amount of such prepayment to the date thereof. Any such
prepayment shall be applied to reduce the principal installments under the Note
in the inverse
order of their
maturities,
and shall not have the effect of
suspending or deferring payments thereunder.
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ARTICLE II. - COLLATERAL
Section 2.1 Security
Documents.
The repayment by Borrower of the
indebtedness under the
Term Loan and the Note, and the performance by Borrower
of all obligations
under this Agreement, are and shall be secured by every
mortgage, deed of
trust, security agreement, assignment, pledge, guaranty and
other security document (every "Security Document") which secures
obligations so
defined as to include the Term Loan or the Note (including,
without
limitation,
those Security
Documents described
below), and by all property of Borrower now
or hereafter in the possession, control or custody of Lender (in
which property
Borrower hereby grants
Lender a security
interest to secure such indebtedness
and obligations)
and by all
property of Borrower in which Lender has or
hereafter acquires a lien, security interest, or other right,
including, without
limitation, the
property described
below (in which
property Borrower
hereby
grants Lender a security interest to secure such indebtedness and
obligations):
(a) Stock Pledge Agreement, executed by Borrower, granting
to
Lender a
security interest in all of Borrower's capital stock in the Bank
as
security for the Loan,
together with irrevocable stock powers executed
in
blank with respect to such shares of stock, and the original
Certificates
representing such
shares of stock, and a Form U-1 which
complies
with the provisions of
Regulation U of the Board of Governors of
the
Federal Reserve System.
(The property
described above and the property
described in every Security
Document is individually and collectively referred to in this Agreement as
the
"Collateral").
Section 2.2 Financing
Statements, etc.
Borrower shall execute
and
deliver, or shall cause to be executed and delivered, such financing statements
(including amendments
thereto and continuation statements therefore) and
other
documents relating to
the Collateral
as Lender may from
time to time request.
Borrower shall pay, or
reimburse to Lender
for paying, all costs
and taxes of
filing or recording any financing statement or Security Document in
such public
offices as Lender may
designate and shall
take such other steps
as Lender may
from time to time direct, all to perfect and maintain the
perfection of Lender's
interest in the Collateral to the satisfaction of Lender.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES;
CONDITIONS PRECEDENT
To induce Lender to enter into this Agreement, Borrower represents
and warrants to Lender, as of the date hereof and except as
otherwise
expressly
provided, as of all
times until the Agreement is terminated and all obligations
under the Term Loan are satisfied, that:
Section 3.1
Incorporation, Good
Standing and Due Qualification.
Borrower is a corporation duly organized, validly existing and in good
standing
under the laws of the State of Delaware, has the corporate power and authority
to own its assets and to transact the business in which it is now engaged or
proposes to be engaged, and is qualified to do business
and in good standing in
all jurisdictions in which it conducts its business.
Section 3.2
Corporate Power and Authority. The execution and
delivery by Borrower
of, and the
performance
by Borrower of its
obligations
under, this
Agreement,
the Note and the
Security Documents have been duly
authorized by all
requisite action on
the part of Borrower and do not and will
not (i) violate any provision of Borrower's articles of
incorporation,
by-laws,
or
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other organizational documents, any law, rule, regulation or any
judgment, order
or ruling of any court or governmental agency, or (ii) be in conflict with,
result in a breach of, or constitute, following notice or lapse of
time or both,
a default under, any indenture, agreement or other instrument to
which Borrower
is a party or by which Borrower or any of its property may be bound
or affected.
Each of this Agreement, the Note and the Security
documents is the legal, valid
and binding obligation
of Borrower
enforceable against
Borrower in accordance
with its terms.
Section 3.3 Compliance with Law; Government Approvals.
-----------------------------------------
(a) Borrower has
complied and is complying with all requirements,
made all applications,
and submitted all
reports required by
the Bank Holding
Company Act of 1956,
as amended, and any
regulations or rulings issued in connection therewith, and the
transaction
contemplated hereby
will not violate any such
statutes, rules,
rulings, or regulations, nor will the
consummation of said actions and transactions cause Borrower
to be in violation thereof. Borrower has, as required,
received all
governmental
approvals
necessary
for the
consummation of the transactions described herein, including
approval of the Board
of Governors
of the Federal Reserve
System.
(b) Borrower
has complied and is complying with all other
applicable state or
federal statutes,
rules, rulings, and
regulations. The borrowing of money and pledging of such stock
is described herein,
and said actions and
transactions will
not violate
any of such statutes, rules, rulings, or
regulations. Borrower
has made all filings
and received all
governmental or
regulatory
approvals
necessary
for the
consummation of the transactions described herein.
Section 3.4 Litigation. There are no pending or threatened
actions
or proceedings before
any court or administrative or governmental agency that
may, individually or
collectively,
adversely affect the
financial
condition,
business operations
or properties
of Borrower or Bank.
Without limiting the
generality of the
foregoing,
neither Borrower nor Bank is subject to any
Supervisory Action
(herein defined) by any federal or state bank regulatory
authority. As used
herein, "Supervisory Action" shall mean and include the
issuance by any bank regulatory authority of a letter agreement or
memorandum of
understanding(regardless of whether consented or agreed to
by the party to whom
it is addressed);
or the issuance by or at the behest of
any bank
regulatory
authority of a cease and desist order, injunction, directive,
restraining order,
notice of charges
or civil money penalties, against Borrower, Bank or the
directors or officers of either of them, whether temporary or
permanent.
Section 3.5 Financial
Statements.
The financial
statement dated
December 31, 2004,
previously delivered by Borrower and Bank to Lender, fairly
and accurately
presents the financial condition of Borrower as of such date
and
has been prepared in accordance with generally accepted accounting principles
consistently applied. Since the date of that financial statement,
there has been
no materially adverse change in the financial condition of
Borrower, and,
after
due inquiry,
there exists no material contingent liability or obligation
assertable against Borrower.
Section 3.6 Other
Agreements. Neither
Borrower nor Bank is a party
to any indenture,
loan, or credit agreement, or to any lease or other agreement
or instrument, or
subject to any charter or corporate restriction which could
have a materially adverse effect on the business,
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properties, assets,
operations,
or conditions, financial or otherwise, of
Borrower or Bank, or the ability of Borrower to carry out its
obligations under
the Agreement,
the Note or the Security Documents to which it is a party.
Neither Borrower
nor Bank is in
default in any
respect in the performance,
observance or
fulfillment of any of
the obligations,
covenants or
conditions
contained in any agreement or instrument material to its
business.
Section 3.7
Taxes. All federal, state and other tax returns of
Borrower or Bank
required by law to be
filed have been
completed in full
and
have been duly filed, and all taxes, assessments and withholdings shown
on such
returns or billed to
Borrower or Bank have
been paid, and
Borrower and Bank
maintain adequate
reserves and accruals
in respect of all such federal, state
and other taxes,
assessments and withholdings. There are no unpaid
assessments
pending against
Borrower or Bank for any taxes or
withholdings,
and neither
Borrower nor Bank knows of any basis therefore.
Section 3.8 Priority of Obligations. The obligations of Borrower
under this Agreement
and the Note are not
subordinated in right
of payment to
any other obligation of Borrower.
Section 3.9 Operation
of Business; Consents. Borrower and Bank
possess all permits,
memberships,
franchises, contracts,
licenses,
trademark
rights, trade names, patents, and other authorizations necessary to enable each
of them to conduct their business operations as now conducted, and no filing
with, and no
consent, permission, authorization, order or license of, any
individual, entity,
or governmental
authority is necessary
in connection with
the execution,
delivery, performance or enforcement of this Agreement, the
Note
or the Security Documents.
Section 3.10 No
Defaults. No event has
occurred and is
continuing
which is, or which
with the giving of notice or lapse of time or both would be,
an Event of Default (as defined in Article VI) of this
Agreement.
Section 3.11 Ownership
and Liens.
Borrower and Bank have
good and
marketable title to all of each of its properties and assets
including, without
limitation, the
Collateral
and the properties and assets reflected in the
above-described
financial statement
(other than such
properties and assets as
have been disposed of in the ordinary course of business since the date
of that
financial statement).
All such properties
and assets are free and clear of all
mortgages, pledges,
liens, charges,
security interests and other encumbrances,
except as otherwise
expressly disclosed by Borrower to Lender in writing on the
date of this Agreement.
Section 3.12
ERISA. Borrower is in compliance in all material
respects with all
applicable
provisions
of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The minimum funding standards of
Section 302 of ERISA
have been met at all times with respect to all "plans" of
Borrower to which
such standards apply; Borrower has not made a "partial
withdrawal" or a "complete withdrawal" from any "multi-employer plan"; and no
"reportable event" or "prohibited transaction" has occurred with
respect to any
such "plan" (as all of the quoted terms are defined in ERISA).
Section 3.13 Environment. Except as otherwise expressly disclosed
by
Borrower or Bank to
Lender in writing on the date of this Agreement: No
"hazardous
substance" (as
that term is defined in Section 101 of the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as
amended "CERCLA") has been released, discharged, disposed of, or stored
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on any of Borrower's
or Bank's owned or leased real or
personal property by
Borrower or Bank, by any third party, or by any predecessor in
interest or title
to Borrower
or Bank; Borrower and Bank, and all of Borrower's or Bank's
properties, are in
compliance
with all applicable local, state and federal
environmental laws and
regulations;
no notice has been
served on Borrower
or
Bank by any governmental authority or any individual or entity claiming
violation of any
environmental
protection
law or regulation, or demanding
compliance with any
environmental
protection law or
regulation, or
demanding
payment, indemnity,
or contribution for
any environmental
damage or injury to
natural resources; no
"hazardous substance"
(as defined in CERCLA) is produced
or used in Borrower's
or Bank's business; and no improvement on any real
property owned or
leased by Borrower or Bank contains any asbestos, including,
without limitation,
asbestos insulation on ceilings, piping or structural
members or supports.
Section 3.14 Conditions Precedent. Lender shall not be obligated
to
make the Term Loan until Borrower shall have furnished Lender, at Borrower's
expense and as Lender may request from time to time, such evidence as Lender
shall require
regarding the truth of the foregoing representations and
warranties, including,
without limitation, Uniform Commercial Code, tax and
judgment lien searches, opinions of Borrower's outside
legal counsel,
opinions
and certificates
of Borrower's independent certified public accountants,
surveys, appraisals,
environmental audits
by qualified environmental engineers
approved by Lender, reports of other independent consultants
approved by Lender,
and certificates of Borrower's officers. All such evidence must be in form
and
content satisfactory
to Lender. Borrower shall also pay to Lender, the
origination fee in the
amount of $30,000,
which amount
shall be deemed
fully
earned by Lender and not refundable for any reason.
Section 3.15 Bank Stock. The common stock of Bank owned by
Borrower
is duly authorized
and validly
issued by Bank.
The total number of
shares of
common stock of Bank
issued and
outstanding
as of the date
hereof is 50,000
shares. The stock in
Bank owned by
Borrower is free and clear of all
liens,
encumbrances, security
interests or pledges, except the pledge to Lender
described herein; said
common stock is fully paid and nonassessable; the Bank
stock certificates
delivered to Lender pursuant to the Pledge Agreement will be
genuine and comply with all applicable laws concerning form,
content, and manner
of preparation and
execution; there are
no outstanding
warrants or options to
acquire any
common stock of Bank; there are no outstanding securities
convertible or
exchangeable into
shares of common stock of Bank; there are no
restrictions on the
transfer or pledge of
any shares of common
stock of Bank;
Borrower has the right
to pledge and transfer
the pledge stock and
assign the
income therefrom
without obtaining the consent of any other
person or entity;
and the pledge agreement creates for the benefit of the
Lender a first security
interest in the pledged bank stock, subject to no other interests
or claims.
ARTICLE IV. - AFFIRMATIVE COVENANTS
Borrower and Bank
covenant and agree that, so long as Borrower may
borrow under this Agreement or so long as any indebtedness
remains outstanding
under the Term Loan or under the Note, Borrower and Bank shall:
Section 4.1
Maintenance of
Existence.
Preserve and maintain its
existence in good standing in the state of its organization or
incorporation and
its
qualification
and good standing in all jurisdictions where such
qualification is
required under applicable law, and conduct its business in the
manner in which it is now conducted subject only to changes made in
the ordinary
course of business.
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Section 4.2 Financial
Statements;
Reports. Deliver to Lender (i)
within 30 days after
each fiscal quarter an unaudited financial statement
including a balance sheet and statements of income and cash flows,
certified by
Borrower's chief
executive or chief financial officer to be correct and
complete, (ii)
within 90 days after
the end of each fiscal
year a financial
statement including a
balance sheet of
Borrower and Bank as of the end of such
year and statements of
income, cash flows and
changes in equity for such year,
setting forth in each case in comparative form the corresponding
figures for the
previous year,
together with accompanying schedules and footnotes,
audited by
the present
independent certified
public accountants of Borrower or by another
firm of independent certified public accountants designated by
Borrower which is
satisfactory to
Lender, such financial
statement to be
prepared in accordance
with generally
accepted accounting
principles
applied in a manner
consistent
with the financial
statements
previously
furnished to Lender, or if not so
prepared, setting
forth the manner in which such financial statement departs
from generally
accepted accounting principles, or from previous financial
statements furnished
to Lender by Borrower,
and (iii) a copy of
Borrower's FR
Y-9 parent
company
only (and consolidated, if applicable) financial
statement(s), (iv) a
copy of Borrower's FR Y-6 annual report promptly upon the
filing of the
same with the Federal Reserve Board, (v) a copy of Bank's
quarterly report of
condition and income
("call report") promptly upon the
filing with
the appropriate regulatory agency, and (vi) with reasonable
promptness, such other information (including, without limitation,
copies of tax
returns and amendments thereto filed by Borrower) as Lender may
request.
Section 4.3
Maintenance of Records; Right of Inspection. Maintain
its books, accounts and records in accordance with generally
accepted accounting
principles, applied
in a manner consistent with the financial statements
previously furnished
to Lender, and shall, at any reasonable time and from time
to time, permit any
person or entity
designated in writing
by Lender to visit
and inspect any of its
properties, books and
financial records, and to make
copies thereof and take extracts therefrom, and to discuss
Borrower's and Bank's
financial affairs with Borrower's financial officers and
accountants.
Section 4.4 Taxes. Pay and discharge all taxes, assessments, fees,
withholdings and other
governmental charges
or levies imposed upon it, or upon
its income and profits, or upon any property belonging to
it, prior to the date
on which penalties attach thereto, unless the legality thereof
shall be promptly
and actively contested
in good faith by
appropriate
proceedings and
adequate
reserves for such
liability are maintained by Borrower and Bank pending
determination of such contest.
Section 4.5 Litigation and Default Notice. Promptly notify Lender
in
writing of the
occurrence
of any Event of Default or of any pending or
threatened litigation
claiming damages in excess of $25,000 or
seeking relief
that, if granted,
would adversely
affect the financial
condition or
business
operations of Borrower or Bank.
Section 4.6 Maintenance of Insurance. Maintain and keep in force at
all times insurance of the types and in the amounts customarily
carried in lines
of business similar to
Borrower's and Bank's and such other insurance as Lender
may require, including, without limitation, fire, public liability,
casualty,
property damage,
flood damage, and worker's compensation insurance, which
insurance shall be carried with companies and in amounts
satisfactory to Lender.
All casualty and
property damage insurance shall name Lender as additional
insured, as appropriate, and shall provide for a minimum of thirty
days' written
notice to Lender before cancellation. Borrower and Bank shall deliver to
Lender
from time to time at Lender's request copies of all such insurance
policies and
certificates of
insurance and
schedules setting
forth all insurance
then in
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effect. Borrower
and Bank hereby appoint Lender the attorney-in-fact for
Borrower and Bank for purposes of obtaining, adjusting, settling, and
canceling
such insurance and of endorsing in Borrower's and Bank's name and
giving receipt
for checks and drafts
issued in payment of losses and as
returned premiums.
Borrower hereby assigns to Lender as additional Collateral for the
Term Loan and
the Note all insurance policies at any time covering property that
is Collateral
for the Term Loan or the Note and all returned and unearned
premiums thereon.
Section 4.7 Maintenance of Properties. Keep all of its properties
in
good repair
and condition, and from time to time make necessary repairs,
renewals and
replacements
thereto and thereof so
that Borrower's
and Bank's
property shall be fully and efficiently preserved and
maintained.
Section 4.8 Further Assurances. Perform or take, on request of
Lender, such action as
may be necessary
or advisable to perfect any lien or
security interest in the Collateral or otherwise to carry out the
intent of this
Agreement and the Security Documents.
Section 4.9 Expenses of Lender. Borrower will, on demand,
reimburse
Lender for all
expenses, including
the fees and expenses
of legal counsel for
Lender, reasonably incurred in connection with the preparation,
administration,
amendment, modification, renewal, extension or enforcement of the
Agreement, the
Note and the Security Documents and any other documents related to this
Agreement and the
collection or
attempted collection
of the Term Loan and any
other sum due under this Agreement, the Note, and the Security
Documents after
default by Borrower in the payment thereof. Any amounts paid by Lender under
this section or any of the Security Documents shall bear interest at the rate
specified under the
Note. The obligation
of Borrower under this section to pay
all expenses incurred
by Lender shall survive payment of the Term Loan and
the
Note and termination of this Agreement.
Section 4.10
ERISA. Fund all of its "plans" to which the minimum
funding standards
of Section 302 of ERISA apply in accordance with such
standards; furnish Lender, promptly upon Lender's request, copies
of all reports
or other statements
filed with, or received from, the United States Department
of Labor, the Internal Revenue Service, or the Pension Benefit Guaranty
Corporation with
respect to all of
Borrower's "plans";
and promptly advise
Lender of the occurrence of any "reportable event" or "prohibited transaction"
with respect
to any such
"plan" (as all of the
quoted terms are defined in
ERISA).
Section 4.11
Compliance
with Laws. Comply with all applicable
present and future local, state and federal laws, including,
without limitation,
environmental laws and regulations; notify Lender immediately if any
"hazardous
substance" (as defined in CERCLA) is released, discharged,
disposed of,
stored,
or discovered on any
real or personal
property owned or
leased by Borrower or
Bank; notify Lender in writing within three days after Borrower or
Bank receives
notice from any
governmental authority
or any individual
or entity claiming
violation of any
environmental
protection
law or regulation, or demanding
compliance with any
environmental
protection law or
regulation, or
demanding
payment, indemnity,
or contribution for
any environmental
damage or injury to
natural resources; and
permit Lender from time to time to observe Borrower's or
Bank's operations and
to perform tests
(including soil tests
and ground water
tests) for "hazardous
substances"
on any real or
personal property
owned or
leased by Borrower or Bank.
Section 4.12 Regulatory Examinations.
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(a) Promptly
notify Lender of every
examination by any federal or
state regulatory
body or authority, with respect to the
properties, loans,
operations, and/or
condition of Borrower,
Bank, or both, and of the receipt by Borrower or Bank of every
examination or other report prepared by such body or authority
with respect thereto; and
(b) if
required by Lender, fully and completely assist and
cooperate with
Lender in requesting approval by such
regulatory body or
authority of the
furnishing to Lender
of
any such report,
and furnish such report to Lender if such
approval is given;
provided, however,
that Lender shall take
such steps as may be necessary to assure that all such reports
shall remain
confidential and shall
be used by Lender solely
in connection
with the administration of the loan in
accordance with the provisions of this agreement.
Section 4.13 Additional Information. Furnish such other information
regarding the operations, business affairs and financial
condition of
Borrower
and Bank as Lender may from time to time reasonably request, including but not
limited to, true and exact copies of any monthly management reports to their
respective directors,
their
respective
tax returns, and all information
furnished to shareholders, or any governmental authority,
including the
results
of any stock evaluation performed.
Section 4.14 Right of
Inspection.
Except to the
extent, if any,
prohibited by applicable law, permit any person designated by Lender to
inspect
any of the properties,
books and financial and other reports and records of
Borrower and Bank, including, but not limited to, all
documentation and records
pertaining to Bank's
loans, investments and deposits; and to discuss their
affairs, finances and accounts with Borrower's and Bank's principal
officers, at
all such reasonable
times and as often as
Lender may reasonably
request. If
required by Lender,
Borrower will pay Lender all applicable loan fees in an
amount determined
by Lender to be necessary to cover the cost of such
inspections, including
a reasonable allowance
for Lender's overhead as well as
out-of-pocket expenses in connection with such inspection.
Section 4.15 Notice of
Default. At the time of Borrower's first
knowledge or notice, furnish the Lender with written notice of the
occurrence of
any event or the existence of any condition which constitutes, or upon written
notice or lapse of time or both, would constitute an event of
default under the
terms of this loan agreement.
Section 4.16 Compliance with Banking Regulations. At all times be
in
compliance with,
cause Bank to be in
compliance
with, all banking and bank
holding company laws, rules and regulations applicable to Borrower
or Bank.
Section 4.17 Capital Ratio/Equity Capital Adequacy. With respect to
the financial
statements of the Borrower and Bank, maintain at all times until
payment in full of the Loan, capital levels of both Borrower and the Bank in
full compliance with
all state and federal
regulatory
authorities, and in
no
event maintain a total
capital ratio of less than seven percent (7%). For
purposes hereof, all ratios should be calculated according to
federal regulatory
guidelines for capital adequacy guidelines for bank-holding
companies and banks.
Section 4.18 [Intentionally Omitted].
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Section 4.19 [Intentionally Omitted].
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Section 4.20
Bank Account. Maintain its principal transaction
account with Lender.
Section 4.21 Use of Proceeds. Use the proceeds of the Term Loan
only
to make a loan to a newly formed ESOP which will, in turn, use the loan to
purchase shares of stock of the Borrower.
ARTICLE V. - NEGATIVE COVENANTS
Borrower covenants
and agrees that, without the prior written
consent of Lender,
which may be given or withheld in Lender's sole and absolute
discretion, so long as
it may borrow
under this
Agreement or so long as any
indebtedness remains outstanding under the Term Loan or under the
Note, Borrower
shall not:
Section 5.1 Use of
Proceeds. Use any proceeds of the Term Loan
except for the purposes stated in Section 4.21.
Section 5.2 Debt.
Create, incur, assume, or suffer to exist any
indebtedness of any
description whatsoever
not existing as of the date of this
Agreement, except (i) indebtedness incurred under this
Agreement.
Section 5.3 Sale of Assets, Consolidation, Merger, etc. (i) Sell,
lease, transfer or
otherwise dispose of
any of the Collateral
(except in the
ordinary course of
business and as permitted under this Agreement) or all or
a
substantial part of
the properties and assets of Borrower or Bank to any person
or entity;
(ii) consolidate with or merge into any other
entity, or permit
another entity
to merge into Borrower, or acquire stock in or all or
substantially all of
the properties or
assets of any other person or entity or
enter into any
reorganization,
recapitalization or otherwise change Borrower's
corporate structure;
provided,
that,
the Borrower may enter into such
transaction so long as ninety percent (90%) of the Borrower's
retained earnings
(as shown on the prior year's audited financial statements) was retained by
the
Borrower or its
successor;
(iii) enter into any arrangement, directly or
indirectly with any person or entity whereby Borrower shall sell or
transfer any
property, real,
personal or mixed,
and used and useful in
the business of the
Borrower, whether now
owned or hereafter acquired, and thereafter rent or lease
such property or other property which Borrower intends to use for
substantially
the same purpose or purposes as the property being sold or transferred; (iv)
enter into a
partnership or joint
venture with any person or entity;
or (v)
authorize or enter
into any plan, letter
of intent, or
agreement to do any of
the foregoing.
Section 5.4 Name;
Chief Executive
Office. Change its name or the
location of its chief executive office.
Section 5.5
Guaranties,
etc. Guarantee or become directly or
contingently liable
for any obligation or
indebtedness of any
other person or
entity, except that
Borrower may endorse negotiable instruments for collection
in the ordinary course of business.
Section 5.6 Investments, Loans. Purchase or hold beneficially any
stock, other
securities or
evidences of indebtedness of, or make or permit to
exist any loans or advances to, or make any investment or acquire any interest
whatsoever in, any other person or entity except that
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Borrower may invest in any of the following if they mature within
one year from
the date of
acquisition thereof:
(i) readily
marketable
direct obligations
issued or guaranteed by the United States of America or an agency
thereof, (ii)
certificates of time deposit issued by commercial banks of recognized standing
organized under the
laws of, and operating
in, the United States of America or
one of the States of the United States and having a combined
paid-in-capital and
paid-in surplus of not
less than $10,000,000
in the case of each such bank and
(iii) commercial
paper rated at least
Prime-1 by Moody's
Investors
Services,
Inc., or A-1 by Standard & Poor's Corporation (or having a
comparable rating by
another rating service of comparable standing).
Section 5.7 [Intentionally Omitted].
-----------------------
Section 5.8
Liens. Create, incur, assume or suffer to exist any
mortgage, pledge,
lien, security interest, charge, or other encumbrance of
any
nature whatsoever,
on any of its properties or assets including, without
limitation, the
Collateral, and,
except for liens in favor of Lender and liens
for taxes not yet due and payable or which are being actively
contested in good
faith by appropriate
proceedings
and for which
adequate reserves are being
maintained by
Borrower and those liens disclosed to Lender by Borrower in
writing prior to the execution of this Agreement.
Section 5.9 ERISA.
Take, or fail to take, any act if such act or
failure to act results in the imposition of withdrawal liability under Title IV
of ERISA.
Section 5.10
Environment. Release,
discharge,
dispose of, store,
accept or receive for storage or disposal, or allow to be stored or
disposed of,
any "hazardous
substance" (as defined
in CERCLA) on or in any real or personal
property owned or
leased by Borrower or
Bank, except as
otherwise expressly
consented to by Lender in writing; or release, discharge, use, transport, or
dispose of any "hazardous substance" in an unlawful manner.
Section 5.11 Sale of
Receivables. Sell,
assign or discount any
of
the accounts of Borrower to any person or entity other than
Lender.
Section 5.12 Other
Negative Covenants.
(i) Engage in any
business
other than that in which Borrower is now engaged or make any
material change in
the manner in which Borrower conducts Borrower's business; (ii) enter into any
transaction which materially and adversely affects Borrower's
property or assets
or Borrower's ability
to repay the Term Loan; (iii) enter into any
transaction
with any affiliate of
Borrower except in the
ordinary course of business and
upon fair and
reasonable terms no
less favorable to Borrower than would obtain
in a comparable
arm's length transaction with a person or entity not an
affiliate of Borrower;
(iv) prepay any indebtedness which is subordinate to the
Note or other indebtedness of Borrower to Lender; or (v) issue,
redeem, purchase
or retire any of Borrower's capital stock or grant or issue
any warrant, right
or option pertaining
to any of the
foregoing, or permit
any transfer,
sale,
redemption, retirement
or other change in the ownership of the outstanding
capital stock of Borrower.
Section 5.13 [Intentionally Omitted].
-----------------------
Section 5.14 Certain Financial Covenants.
---------------------------
(a) Permit
the ratio of its
capital to its assets to be at any
time less than seven percent (7.00%);
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(b) Change the
dates of its fiscal year now employed for financial
and accounting purposes.
Section 5.15
Relocation.
Cause or permit
Borrower or the Bank
to
relocate its principal office, principal banking office,
principal registered
office or approved charter location.
ARTICLE VI. - EVENTS OF DEFAULT AND REMEDIES
Section 6.1
Events of Default. Any one or more of the
following
shall constitute an Event of Default hereunder by Borrower;
(a) Failure to
pay when due any payment of principal or interest
due on the Note or any sum due hereunder; or
(b) Failure to
pay when due any payment of principal or interest
due on any other obligation for money borrowed or the deferred
purchase price of goods or services; or
(c) Default under any Security Document or any other document,
note, agreement, mortgage, security agreement, instrument, or
understanding with,
held by, or executed
in favor of Lender;
or
(d)
Should any
representation or warranty contained herein or made
by or furnished on behalf of Borrower in connection herewith
be false or misleading in any material respect as of the date
made; or
(e) Failure
to perform or observe any covenant or agreement
contained in Articles IV or V of this Agreement; or
(f) Failure to
pay its debts generally as they become due; or
(g) Borrower's
or Bank's making or taking any action to make an
assignment for the
benefit of creditors,
or petitioning
or
taking any action to petition any tribunal for the appointment
of a custodian, receiver or any trustee for it or a
substantial part of
its assets, or
commencing or taking
any
action to commence any proceeding under any bankruptcy,
reorganization, arrangement,
readjustment of debt,
dissolution,
liquidation or debtor
relief law or statute
of
any
jurisdiction,
whether now
or hereafter in effect,
including, without
limitation,
any chapter of the federal
Bankruptcy Code;
or, if there shall have been filed or
commenced
against Borrower
or Bank any such petition,
application or
proceeding which is
not dismissed
within 30
days or in which an order for relief is entered; or should
Borrower or Bank by any act or omission indicate its approval
of or acquiescence
in any such petition, application or
proceeding or
order for relief or the appointment of a
custodian, receiver or
any trustee for it or any substantial
part of any of its
properties; or
should Borrower or Bank
suffer to exist any such custodianship, receivership or
trusteeship; or
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(h) Borrower's
or Bank's concealing, removing, or permitting to be
concealed or removed, any part of its property, with intent to
hinder, delay or
defraud its
creditors or any of them, or
making or suffering a
transfer of any of its
property which
may be fraudulent under any bankruptcy, fraudulent conveyance
or similar law; or
making any transfer of
its property to or
for the benefit of a creditor at a time when other creditors
similarly situated
have not been paid, or suffering or
permitting, while
insolvent,
any creditor to obtain a lien
upon any of its property through legal proceedings or
distraint which is not
vacated within 30 days
after the date
thereof; or
(i) Occurrence
of any of the following with respect to Borrower or
any Bank: death (if an
individual), death or
withdrawal of a
general partner (if a
partnership), death or
withdrawal of a
member (if
a limited liability company), dissolution or
cessation of business
(if a partnership,
limited liability
company, corporation, or other organization), or insolvency.
(j) Any
executive officer of Borrower or Bank, who in the
reasonable
judgment of
Lender, occupies a position of
substantial and material management responsibility shall, by
reason of death,
permanent disability,
or departure from the
employ of Borrower or Bank, or for any other reason, ceases to
be active in the management of Borrower or Bank and the
Borrower or Bank
shall not,
within a period of one
hundred
eighty (180) days from
such permanent
disability,
death or
departure secure
a replacement for said officer (such
replacement to be,
by reason of his or her experience and
credentials, satisfactory to the Lender). For purposes of this
section,
permanent disability
means any disability that
prevents such officer
from rendering
full-time services to
Borrower or Bank for
sixty (60)
consecutive
days or in the
aggregate for ninety (90) days within a calendar year.
(k)
[Intentionally Omitted].
-----------------------
(l) If there
shall at any time
occur, without the
prior written
approval of the
Lender, a change in
control (including
any
change in control
under the Change in Bank Control Act of
1978, as amended, and
any transaction or restructuring which
requires approval under the Bank-holding Company Act of 1956,
as amended) of Bank or Borrower.
(m) The
issuance by, or at the request of, any bank regulatory
authority of any Supervisory Action (as defined in Section 3.4
hereof), or the taking
by Borrower
or Bank of any action
of
the sort described in
Section 3.4 to prevent or forestall the
imposition by such
bank regulatory authority of any such
Supervisory Action.
Section 6.2 Remedies.
Upon the occurrence of an Event of
Default,
Lender may (i)
terminate all
obligations
of Lender to
Borrower, including,
without limitation,
any obligations to lend money under
this Agreement or the
Note, (ii) declare
immediately due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are expressly
waived, the
Note and any other note of Borrower held by Lender, including, without
limitation, principal,
accrued interest and costs of collection (including,
without limitation,
a reasonable
attorney's fee if
12
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collected by or
through an attorney
who is not a salaried
employee of Lender,
whether through
arbitration,
in bankruptcy or in
other judicial
proceedings,
including appellate proceedings, which costs Borrower hereby agrees
to p
