|
EXHIBIT 10.1 TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (together
with all schedules annexed hereto from time to time, this
"Agreement") is entered into this 6th day of November, 2008,
between PEOPLES STATE BANK OF COMMERCE , a bank organized
under the laws of the State of Tennessee ("Lender"), and HOME
FEDERAL HOLDINGS CORPORATION , a corporation organized under
the laws of the State of Georgia ("Borrower"). Capitalized terms
used but not otherwise defined herein shall have the meanings
ascribed to such terms in the Definitions Schedule annexed hereto.
All schedules annexed hereto are incorporated herein and made a
part hereof. SECTION 1. TERM LOAN AND TERMS OF REPAYMENT
1.1 Term Loan .
Subject to the terms and conditions of this Agreement, Lender
agrees to make a term loan to Borrower in the principal amount of
ONE MILLION FIVE HUNDRED TWENTY-TWO THOUSAND FOUR HUNDRED AND
NO/100 DOLLARS ($1,522,400.00) (the "Term Loan"), which shall be
evidenced by a promissory note to be executed and delivered by
Borrower in favor of Lender in the form of Exhibit A attached
hereto (as at any time amended, renewed or extended, the "Term
Note"). Subject to the satisfaction of the conditions precedent set
forth in Section 3 of this Agreement, the Term Loan shall be
funded by Lender on the Closing Date. The proceeds of the term Loan
shall be used by Borrower solely to pay a portion of the purchase
price for the Real Property. 1.2
Payments .
(a) All
payments with respect to any of the Obligations shall be made to
Lender in dollars on the date when due, in immediately available
funds, without any offset or counterclaim. Except where evidenced
by Notes or other instruments made by Borrower to Lender
specifically containing payment provisions in conflict with this
Section 1.2 (in which event the conflicting provisions
of such instruments shall govern and control), the Obligations
shall be due and payable as follows:
(i) Principal payable on account of
the Term Loan shall be due and payable immediately upon the
Maturity Date; (ii) Interest accrued
on the principal balance of the Term Loan shall be due and payable
on (x) the first day of each month, computed through the last
day of the preceding month; and (y) the Maturity Date; and
(iii) The balance of the Obligations
requiring the payment of money, if any, shall be due and payable as
and when provided in the Loan Documents, or, if the date of payment
is not specified in the Loan Documents, on demand .
(b) Whenever
any payment of any Obligations shall be due on a day that is not a
Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day and interest thereon shall continue to
accrue and shall be payable for such extended period of time. If
any amount applied to the Obligations is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other Person, then the
Obligations or part thereof originally intended to be satisfied,
and all rights and remedies therefor, shall be revived and
continued in full force and effect as if such amount had not been
made or received. The provisions hereof shall survive the Maturity
Date and payment in full of the Obligations.
1.3 Interest Rates
. The principal balance of the Term Loan and other Obligations
outstanding from time to time shall bear interest from the
respective dates such principal amounts are advanced or incurred
until paid at a variable rate per annum equal to the sum of the
Prime Rate plus 0.75%. All interest chargeable under this Agreement
shall be computed on the basis of the actual number of days elapsed
in a year of 360 days. At any time that an Event of Default
exists, the principal amount of the Obligations outstanding shall
bear interest at the Default Rate. The Prime Rate on the date
hereof is 4.00% and therefore the rate of interest in effect
hereunder, expressed in simple interest terms as of the date
hereof, is 4.75%. 1.4
Reimbursement of Expenses . Borrower shall reimburse
Lender for all Lender Expenses. All amounts chargeable to Borrower
under this Section 1.4 shall be secured by the Collateral,
shall be payable on demand to Lender, and shall bear interest from
the date such demand is made until paid in full at the rate
applicable to the Term Loan from time to time.
1.5 Maximum Interest .
In no event shall the aggregate of all amounts that are contracted
for, charged or received by Lender pursuant to the terms of the
Loan Documents and that are deemed interest under applicable law
exceed the highest rate permissible under any applicable law, that
a court of competent jurisdiction shall, in a final determination,
deem applicable hereto. If any interest is charged or received in
excess of the maximum rate allowable under applicable law
("Excess"), Borrower acknowledges and stipulates that any such
charge or receipt shall be the result of an accident and bona fide
error, and such Excess, to the extent received, shall be applied
first to reduce the principal Obligations and the balance, if any,
returned to Borrower, it being the intent of the parties hereto not
to enter into a usurious or other illegal relationship. The
provisions of this Section shall be deemed to be incorporated into
every Loan Document (whether or not any provision of this Section
is referred to therein). 1.6
Prepayments . Borrower may, at its option, prepay any
portion of the Term Loan in whole at any time or in part from time
to time, in an amount not less than $50,000, by paying the
principal amount to be prepaid together with interest accrued
thereon to the date of prepayment. Borrower shall prepay the Term
Loan concurrently with, and by an amount equal to, (i) the net
proceeds received in connection with an Permitted Asset Disposition
of Fixed Assets and (ii) proceeds of insurance or condemnation
awards paid in respect of any Fixed Assets.
1.7 Application of Payments
and Collections . Borrower irrevocably waives the right to
direct the application of any and all payments and collections at
any time or hereafter received by Lender from or on behalf of
Borrower, and agrees that Lender shall have the continuing right to
apply and reapply any and all such payments and collections
received at any time hereafter against the Obligations, in such
manner as Lender may deem advisable.
1.8 Collateral . All of the Obligations shall be
secured by a continuing security interest and Lien upon all
property of Borrower, as and to the extent provided in the Security
Documents. SECTION 2. TERM On
the Maturity Date, all Obligations shall become immediately due and
payable without notice to or demand upon Borrower and shall be paid
to Lender in cash or by wire transfer of immediately available
funds.
-2-
SECTION 3. CONDITIONS PRECEDENT
Lender shall not be obligated to make
any extension of credit hereunder unless, on or before
November 7, 2008, each of the following conditions has been
satisfied:
(a) Borrower
and each other Person that is to be a party to any Loan Document
shall have executed and delivered each such Loan Document, all in
form and substance satisfactory to Lender;
(b) Borrower
shall cause to be delivered to Lender the following documents, each
in form and substance satisfactory to Lender:
(i) A copy of the Organic Documents
of Borrower; (ii) A certificate of
the resolutions of the board of directors or other appropriate
governing body of Borrower, signed by a Senior Officer of Borrower,
authorizing Borrower to execute, deliver and perform its
obligations under the Loan Documents;
(iii) A favorable legal opinion of
Borrower’s outside legal counsel addressed to Lender
regarding such matters as Lender and its counsel may request;
(iv) Evidence of insurance, including
standard forms of certificates of insurance addressed to Lender,
reasonably satisfactory to Lender and otherwise confirming
Borrower’s satisfaction of the insurance requirements
contained in the Loan Documents; (v)
A UCC fixture filing naming Borrower as debtor and Lender as
secured party with respect to fixtures from time to time located on
the Real Property; (vi) A fully paid
commitment for a loan policy of title insurance with respect to the
Real Property issued to Lender by a title insurance company, and
with endorsements, satisfactory to Lender in such amount as Lender
may request, and with no exceptions not approved by Lender; and
(vii) A certificate, signed by
Borrower’s President, confirming satisfaction not the
conditions set out in clauses (c) through (g), below.
(c) There
shall be no Liens upon the Real Property, other than Permitted
Liens;
(d) There
shall be no litigation pending or threatened against Borrower which
Lender determines may have a Material Adverse Effect;
(e) The
Real Property shall not have been materially damaged by fire or
other casualty;
(f) Borrower
shall have received all licenses, permits and approvals of
governmental authorities, if any, required to purchase the Real
Property, and the Real Property shall not violate any law,
ordinance, rule or regulation, building lines or other restrictions
applicable to it; and
(g) There
shall not have occurred any Event of Default under (and as defined
in) the Line of Credit Loan Agreement.
-3-
SECTION 4. BORROWER’S REPRESENTATIONS AND
WARRANTIES To induce Lender to
enter into this Agreement and to extend credit, Borrower makes the
following representations and warranties, all of which shall be
deemed made as of the date hereof and on each date that a request
for an extension of credit hereunder is made:
4.1 Existence and Rights;
Predecessors . Borrower is a corporation, duly organized,
validly existing and in good standing under the laws of the State
of Georgia and is duly qualified or licensed to transact business
in all places where the failure to be so qualified could reasonably
be expected to have a Material Adverse Effect; has the right and
power to enter into and discharge all of its obligations under the
Loan Documents, each of which constitutes a legal, valid and
binding obligation of Borrower, enforceable against it in
accordance with its terms, subject only to bankruptcy and similar
laws affecting creditors’ rights generally; and has the
power, authority, rights and franchises to own its property and to
carry on its business as presently conducted. Borrower has not been
a party to any merger, consolidation or acquisition of all or
substantially all of the assets or equity interests of any other
Person and has not changed its legal status or the jurisdiction in
which it is organized. 4.2
Authority . The execution, delivery and performance of
the Loan Documents by Borrower and each other Person (other than
Lender) executing any Loan Document have been duly authorized by
all necessary actions of such Person, and do not and will not
violate any provision of law, or any writ, order or decree of any
court or governmental authority or agency, or any provision of the
Organic Documents of such Person, and do not and will not result in
a breach of, or constitute a default or require any consent under,
or result in the creation of any Lien upon any property or assets
of such Person pursuant to, any law, regulation, instrument or
agreement to which any such Person is a party or by which any such
Person or its properties may be subject or bound.
4.3 Litigation . There
are no actions or proceedings pending, or to the knowledge of
Borrower threatened, against any Obligor before any court or
administrative agency, and Borrower has no knowledge or belief or
any pending, threatened or imminent, governmental investigations or
claims, complaints, actions or prosecutions involving Borrower or
any Obligor. Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or any governmental
or regulatory authority. 4.4
Financial Condition . All financial statements and
information relating to Borrower which have been delivered to
Lender have been prepared in accordance with GAAP, unless otherwise
stated therein, and fairly and reasonably present Borrower’s
financial condition. There has been no material adverse change in
the financial condition of Borrower since the date of the most
recent of such financial statements submitted to Lender. Borrower
has no knowledge of any liabilities, contingent or otherwise, that
are not reflected in such financial statements and information.
Borrower has not entered into any special commitments or contracts
which are not reflected in such financial statements or information
and that may have a Material Adverse Effect. Borrower is, and after
consummating the transactions described in the Loan Documents will
be, Solvent. Borrower has delivered to Lender pro forma balance
sheets and income statements for Bank in the forms filed by
Borrower with the OCC in connection with the Bank Application.
4.5 Taxes . Borrower
has filed all tax returns that it is required to file, and has paid
all Taxes shown on said returns as well as all Taxes shown on all
assessments received by it to the extent that such Taxes are not
being Properly Contested; and Borrower is not subject to any tax
Liens and has not received any notice of deficiency or other
official notice to pay any Taxes.
-4-
4.6 Material Agreements
. Borrower is not a party to any agreement or instrument
adversely affecting its business, assets, operations or condition,
nor is Borrower in default in the performance, observance or
fulfillment of any material obligations, covenants or conditions
contained in any agreement or instrument where such default could
reasonably be expected to have a Material Adverse Effect.
4.7 Title to Assets;
Intellectual Property . Borrower has good title to its
assets and the same are not subject to any Liens other than
Permitted Liens. Borrower possesses all necessary trademarks, trade
names, copyrights, patents, patent rights and licenses to conduct
business as now operated, without any known conflict with the
rights of others. 4.8
Compliance With Laws . Borrower, and its properties,
business operations and leaseholds, are in compliance in all
material respects with all applicable laws.
4.9 Business and Collateral
Locations . Borrower’s chief executive office,
principal place of business and office where Borrower’s
business records are located is 4271 Mundy Mill Road, Oakwood,
Georgia. None of Borrower’s assets is in the possession of
any Person other than Borrower.
4.10 ERISA . Borrower does not have, and has not ever
had, any Plan. Borrower is not required to contribute to or is not
contributing to a Multiemployer Plan and has no withdrawal
liability to any Plan, nor has any reportable event referred to in
Section 4043(b) of ERISA occurred that has resulted or could result
in liability of Borrower; and Borrower does not have any reason to
believe that any other event has occurred that has resulted or
could result in liability of Borrower as set forth above.
4.11 Labor Relations .
Borrower is not a party to or bound by any collective bargaining
agreement, management agreement or consulting agreement. On the
date hereof, there are no material grievances, disputes or
controversies with any union or any other organization of
Borrower’s employees, or, to Borrower’s knowledge, any
threats of strikes, work stoppages or any asserted pending demands
for collective bargaining by any union or organization.
4.12 Anti-Terrorism Laws
. Neither Borrower nor any of its Affiliates is in violation of
any anti-terrorism law, including the PATRIOT Act, engages in or
conspires to engage in any transaction that evades or avoids, or
has the purpose of evading or avoiding, or attempts to violate, any
of the prohibitions set forth in any anti-terrorism law, including
the PATRIOT Act; or is any of the following (each a "Blocked
Person"): (i) a Person that is listed in the annex to, or is
otherwise subject to the provisions of, Executive Order
No. 13224; (ii) a Person owned or controlled by, or
acting for or on behalf of, any Person that is listed in the annex
to, or is otherwise subject to the provisions of, Executive Order
No. 13224; (iii) a Person with which any bank or other
financial institution is prohibited from dealing or otherwise
engaging in any transaction by any anti-terrorism law; (iv) a
Person that commits, threatens or conspires to commit or supports
"terrorism" as defined in Executive Order No. 13224;
(v) a Person that is named as a "specially designated
national" on the most current list published by the U.S. Treasury
Department Office of Foreign Asset Control at its official website
or any replacement website or other replacement official
publication of such list; or (vi) a Person who is affiliated
with a Person listed above. Neither Borrower nor any of its
Affiliates conducts any business or engages in making or receiving
any contribution of funds, goods or services to or for the benefit
of any Blocked Person or deals in, or otherwise engages in any
transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224.
4.13 Capital Structure
. Borrower does not have, and has not ever had, any
Subsidiaries. Borrower has not made, or obligated itself to make,
any Distributions. There are no outstanding
-5-
agreements or instruments binding upon holders of any
Borrower’s Equity Interests relating to ownership of such
Equity Interests. 4.14 Bank
Application Status . Borrower submitted the Bank
Application to the OCC to establish Bank as a national bank. The
Bank Application includes a business plan or operating plan,
articles of association for Bank, an organization certificate for
Bank, and a statement to the OCC that demonstrates Bank’s
plans for attracting and maintaining community support and that
Bank intends to achieve the objectives of the community
Reinvestment Act, 12 U.S.C. § 901 et seq. Bank does not
intend to offer fiduciary services. To ensure that all capital
stock of Bank will be paid in, Borrower has established the Escrow
Account with the Escrow Agent pursuant to the Escrow Agreement and
has delivered to Lender a complete and correct copy of the Escrow
Agreement. When its capital stock is paid in, Bank would have
capital sufficient to support the projected volume and type of
business proposed in Bank’s plan filed as part of the Bank
Application, and Bank can reasonably be expected to achieve and
maintain profitability. Borrower and its principals are familiar
with national banking laws and regulations (including, without
imitation, safe and sound banking operations and practices). Bank
has competent management, including a board of directors of no
fewer than 5 elected members, with the ability and experience
relevant to the types of services to be provided by Bank. Each of
Borrower and Bank has complied with all instructions of the OCC
regarding the Escrow Account established in connection with the
issuance or sale of Equity Interests in Bank. SECTION 5.
AFFIRMATIVE COVENANTS At all
times prior to the Maturity Date and payment in full of the
Obligations, Borrower covenants that it shall:
5.1 Notices . Notify
Lender, promptly after Borrower’s obtaining knowledge
thereof, of (i) any Default or Event of Default; (ii) the
commencement of any action, suit or other proceeding against, or
any demand for arbitration with respect to, any Obligor;
(iii) the occurrence or existence of any default by an Obligor
under any agreement relating to Debt for money borrowed;
(iv) any notice by Borrower or Bank to, or to Borrower or Bank
from, the OCC in connection with the Bank Application; (v) any
notice to Borrower or Bank from any subscribers to the Equity
Interests in Borrower; or (vi) any other event or transaction
that could reasonably be expected to have a Material Adverse
Effect. 5.2 Maintenance of
Rights and Properties . Maintain and preserve all rights,
franchises and other authority adequate for the conduct of its
business; maintain its properties, equipment and facilities in good
order and repair; conduct its business in an orderly manner without
voluntary interruption; and maintain and preserve its existence.
5.3 Insurance . In
addition to the insurance required by the Loan Documents with
respect to the Collateral, maintain with its current insurers or
with other financially sound and reputable insurers having a rating
of at least A- or better by Best’s Ratings , a
publication of A.M. Best Company, (i) insurance with respect
to its properties and business against such casualties and
contingencies of such type (including product liability,
workers’ compensation, larceny, embezzlement or other
criminal misappropriation insurance) and in such amounts and with
such coverages, limits and deductibles as is customary in the
business of Borrower and (ii) business interruption insurance in an
amount approved by Lender. 5.4
Visits and Inspections . Permit representatives of
Lender, as often as may be reasonably requested, but only during
normal business hours and (except when a Default or Event of
Default exists) upon reasonable prior notice to Borrower to: visit
and inspect properties of Borrower and each of its Subsidiaries;
inspect, audit and make extracts from Borrower’s Books,
including all records
-6-
relating to any Collateral; and discuss with its officers,
employees and independent accountants Borrower’s business,
financial conditions, business prospects and results of operations.
5.5 Taxes . Pay and
discharge all Taxes prior to the date on which such Taxes become
delinquent or any penalties attached thereto, except and to the
extent only that such Taxes are being Properly Contested. If
requested by Lender, Borrower shall provide proof of payment or, in
the case of withholding or other employee taxes, deposit required
by applicable law and shall deliver to Lender copies of all of tax
returns (and amendments thereto).
5.6 Financial Statements and Other Information . Keep
adequate records and books of account with respect to its business
activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions; and cause to be prepared
and furnished to Lender all reporting with respect to the
Collateral as provided in the Loan Documents, and, upon
Lender’s request therefor, copies of Borrower’s
internal unaudited financial statements, any audited financial
statements of Borrower and, promptly after the sending or filing
thereof, as the case may be, copies of any statements or reports
which Borrower has made generally available to its shareholders,
copies of any regular, periodic and special reports or registration
statements or prospectuses which Borrower files with any
governmental authority, and copies of any press releases or other
statements made available by Borrower to the public concerning
material changes to or developments in the business of Borrower.
5.7 Compliance with Laws
. Comply with all applicable laws (including the PATRIOT Act),
and all other laws regarding the collection, payment and deposit of
Taxes, and shall obtain and keep in full force and effect any and
all governmental approvals necessary to the ownership of its
properties or the conduct of its business and shall promptly report
any non-compliance to Lender. SECTION 6. NEGATIVE COVENANTS
At all times prior to the Maturity
Date and payment in full of the Obligations, Borrower shall not:
6.1 Fundamental Changes
. Merge, reorganize, or consolidate with any Person, or
liquidate, wind up its affairs or dissolve itself, in each case
whether in a single transaction or in a series of related
transactions; change its name or conduct business under any
fictitious name; change its federal employer identification number,
organizational identification number or state of organization;
relocate its chief executive office or principal place of business
without having first provided 30 days prior written notice to
Lender; amend, modify or otherwise change any of the terms or
provisions in any of its Organic Documents, except for changes that
do not affect in any way Borrower’s authority to enter into
and perform the Loan Documents to which it is a party, the
perfection of Lender’s Liens in any of the Collateral, or
Borrower’s authority or obligation to perform and pay the
Obligations; or create any Subsidiary or acquire all or
substantially all of the assets or Equity Interests of another
Person. 6.2 Conduct of
Business . Sell, lease or otherwise dispose of any of its
assets (including any Collateral) other than in a Permitted Asset
Disposition; suspend or otherwise discontinue all or any material
part of its business operations; or engage in any business other
than the business engaged in by it on the Closing Date.
6.3 Liens . Create,
incur or suffer to exist any Lien on any of its assets other than
Permitted Liens. 6.4 Loans;
Asset Transfers . Make any loans, advances or other
transfers of property to any Person, except reimbursement of
expenses to officers or employees of Borrower in the Ordinary
Course of Business and transfers to Lender pursuant to the Loan
Documents.
-7-
6.5 Distributions .
Declare or make any Distribution.
6.6 ERISA . Withdraw from participation in, permit
any full or partial termination of, or permit the occurrence of any
other event with respect to any Plan maintained for the benefit of
Borrower’s employees under circumstances that could result in
liability to the Pension Benefit Guaranty Corporation, or any of
its successors or assigns, or to any entity which provides funds
for such Plan; or withdraw from any Multiemployer Plan described in
Section 4001(a)(3) of ERISA which covers Borrower’s
employees. 6.7 Tax and
Accounting Matters . File or consent to the filing of any
consolidated income tax return with any Person; make any
significant change in accounting treatment or reporting practices,
except as required by GAAP; or establish a fiscal year different
than the Fiscal Year. SECTION 7. EVENTS OF DEFAULTS;
REMEDIES 7.1 Events of
Default . The occurrence or existence of any one or more of
the following events or conditions shall constitute an Event of
Default under this Agreement:
&
|
