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| LOAN AND
STOCK PLEDGE AGREEMENT |
THIS LOAN AND STOCK PLEDGE AGREEMENT
(the "Agreement"), entered into as of
July 2, 2008, by and between 1 ST UNITED
BANCORP, INC., a Florida corporation (the "Borrower"), and SILVERTON BANK , N.A.
(the "Lender").
On the date hereof the Borrower is borrowing up to the
principal amount of Five
Million and 00/100 Dollars ($5,000,000.00) from the Lender (the "Loan"), which will be
evidenced by the Note as defined herein below. The Lender is
willing to make the Loan to the Borrower on the terms and
conditions described below. The Borrower and Lender agree that the
payment and performance of all obligations relating to the Loan
will be secured through the pledge to the Lender of one hundred
percent (100%) of the issued and outstanding shares of capital
stock owned or hereafter acquired by the Borrower (the "Stock") in
1 st
United Bank, a Florida banking
corporation, having its main office at One North Federal Highway,
Boca Raton, Florida 33432 (the “Bank”). Certain
capitalized terms used in this Agreement are defined in Section 22
of this Agreement.
In consideration of the premises and the mutual
agreements and representations in this Agreement, the Lender and
the Borrower agree as follows:
1.
Security Interest
.
(a) The
Borrower hereby unconditionally grants and assigns to the Lender
and its successors and assigns a continuing security interest in
and security title to the Stock. The Borrower hereby delivers to
the Lender all of its right, title and interest in and to the
Stock, together with certificates representing the Stock and stock
powers endorsed in blank, as security for (i) all obligations of
the Borrower to the Lender hereunder, and (ii) payment and
performance of all obligations of the Borrower to the Lender under
the Note, whether direct or indirect, absolute or contingent, now
or hereafter existing, or due or to become due. If the Borrower
receives, for any reason whatsoever, any additional shares of the
capital stock of the Bank, such shares shall thereupon constitute
Stock to be held by the Lender under the terms of this Agreement
and the Borrower shall immediately deliver such shares to the
Lender, together with stock powers endorsed in blank by the
Borrower. Beneficial ownership of the Stock, including all voting,
consensual and dividend rights, shall remain in the Borrower until
the occurrence of a Default.
(b) The Amount of the Loan shall not
exceed twenty five percent (25%) of Bank’s total equity. If,
prior to repayment in full of the Loan, the amount of the Loan
exceeds twenty five percent (25%) of Bank’s total equity, the
Borrower shall either pay down the outstanding principal balance of
the Loan or promptly deliver to the Lender on demand additional
collateral of a type and value acceptable to the Lender (and the
Lender's judgment in valuing same shall be conclusive) so that the
sum of the value of such additional collateral plus the Stock is
equal to or in excess of the aforementioned twenty five percent
(25%). The Borrower shall also execute any security documents the
Lender may request to evidence and perfect the Lender's rights in
such additional collateral. If at any time such additional
collateral is no longer required pursuant to this Section 1(b), the
Lender shall release its security interest in such additional
collateral upon the request of the Borrower.
2. Representations and Warranties
. The Borrower represents and warrants to the Lender as
follows:
(a) The
Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Florida and is
qualified to do business in all jurisdictions where such
qualification is necessary. The Borrower is registered as a bank
holding company with the Board of Governors of the Federal Reserve
System and the Florida Department of Banking and Finance. The chief
executive office of the Borrower and the principal place of
business of the Borrower where the records of the Borrower are kept
is One North Federal Highway, Boca Raton, Florida 33432 and the
Borrower's U.S. employer identification number is
65-0925265.
(b) The
Bank is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Florida. The Borrower owns
100% of the Stock (consisting 537,710 Shares of 1 st
United Bank, represented by certificate Nos. 1) and there are no
other outstanding shares of capital stock and no outstanding
options, warrants or other rights, which can be converted into
shares of capital stock of the Bank, and the Bank shall not issue
any additional shares without the prior written consent of Lender,
which shall not be unreasonably withheld. The Bank has all
requisite corporate power and authority and possesses all
licenses,
permits and
authorizations necessary for it to own its properties and conduct
its business as presently conducted.
(c) Each
financial statement of the Borrower or any Subsidiary which has
been delivered to the Lender presents fairly in all material
respects 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
such financial statement.
(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 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 this 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, and the Borrower has the unencumbered right to
pledge the Stock.
(f) There
is no action, arbitration, or other proceeding at law or in equity,
or by or before any court, agency, or arbitrator, nor 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 or filing with or 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) None
of the transactions contemplated in this Agreement (including,
without limitation, the use of the proceeds of the Loan) will
violate or result in a violation of Section 7 of the Securities
Exchange Act of 1934, or any regulations issued pursuant
thereto.
(i)
The following are attached as
exhibits hereto: true, correct and complete copies of (i) the
Borrower's and the Bank's Articles of Incorporation as in effect as
of the date hereof; (ii) certificates of existence/evidence of
active status for the Borrower and the Bank issued by the Florida
Secretary of State; (iii) the bylaws of the Borrower in effect
immediately prior to the adoption of the resolutions referred to
below (and such bylaws have not been further altered or amended and
have been in full force and effect at all times since the adoption
of such resolutions through the date hereof); (iv) the bylaws of
the Bank as of the date hereof; (v) resolutions (the "Resolutions")
of the Board of Directors of the Borrower duly adopted as of even
date herewith via an Action By Written Consent. A quorum for the
transaction of business has signed same and the Resolutions have
been since adoption and are now in full force and effect and have
not been modified in any respect. There have been no further
amendments or other documents affecting or altering the Borrower's
or the Bank's articles of incorporation since the date of the
certifications referred to above through the date hereof except
with respect to the acquisition of Equitable Financial Group, Inc.,
and the Borrower and the Bank have remained in valid existence
under the laws of the State of Florida since such dates.
3.
Affirmative
Covenants . The Borrower
agrees that so long as the Note is outstanding or this Agreement is
in effect:
(a)
The Borrower shall provide on a quarterly
basis, as soon as practicable, and in any event within forty-five
(45) days after the end of each quarter of Borrower’s fiscal
year: (i) an internally generated consolidated financial statement
of Borrower and Subsidiaries (consisting of profit and loss
statement, balance sheet, cash flow statement and report on changes
in stockholder’s equity), certified to the Lender by an
authorized financial officer of the Borrower acceptable to the
Lender; (ii) a Covenant Compliance Certificate as more
particularly
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set forth herein
below; and (iii) a copy of the quarterly and annual call report and
any other quarterly regulatory reports and filings as required by
any Governmental Authority having supervisory authority over the
Borrower or any Depository Institution Subsidiary for each
Depository Institution Subsidiary for the most recent calendar
quarter and year. “Covenant Compliance Certificate”
shall mean a certificate, in form and content satisfactory to the
Lender, which shall: (a) set forth the various financial covenants
and ratios which the Borrower and the Depository Institution
Subsidiaries are required to comply with during the term of this
Agreement; (b) contain calculations reflecting whether or not the
Borrower or each Depository Institution Subsidiary, as the case may
be, is in compliance with each such financial covenant or ratio
requirement; (c) contain a statement as to whether or not the
Borrower is in default under the Loan Agreement or any of the other
Loan Documents, and, if the Borrower is in default, such statement
shall indicate the nature thereof as well as the steps which
Borrower proposes to take in order to cure said default; and (d) be
certified to be true and correct by an authorized financial officer
of the Borrower acceptable to the Lender.
(b)
Borrower shall provide as soon as
practicable and in any event within one hundred twenty (120) days
after the end of each fiscal year, year end audited consolidated
financial statements of the Borrower (consisting of profit and loss
statement, balance sheet, cash flow statement and report on changes
in stockholders equity) that are examined and reviewed by a
certified public accountant selected by Borrower and reasonably
acceptable to Lender (Lender acknowledges Crowe Chizek as
acceptable), together with the unqualified opinion of such
accountant.
(c)
Borrower will provide copies of all
internal and external loan reviews within 30 days of issuance.
Promptly upon receipt thereof, a copy of each other report
submitted to the Borrower or any Subsidiary by independent
accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower or any
Subsidiary.
(d)
Promptly upon transmission thereof,
Borrower shall provide copies of all such financial statements,
proxy statements, notices, and reports as it shall send to its
stockholders and of all registration statements (with exhibits) and
all reports which it is or may be required to file with the
Securities and Exchange Commission or any governmental body or
agency succeeding to the functions of such Commission.
(e)
Promptly upon receipt thereof, Borrower
shall provide a copy of each other report submitted to the Borrower
or any subsidiary by independent accountants in connection with any
annual, interim or special audit made by them of the books of the
Borrower or any Subsidiary.
(f)
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 unless contested in good faith by
appropriate proceedings.
(g)
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.
(h)
The Borrower shall quarterly notify the
Lender of any change in executive management or the beneficial
ownership of the Borrower's stock by executive officers, directors
or 25% or greater shareholder of the Borrower.
(i)
Upon Lender’s reasonable request,
during regular business hours, and upon reasonable prior notice,
the Borrower will allow the Lender to inspect its Books, to perform
a review of the loan portfolio of each Subsidiary as deemed
necessary, and to review internal and external loan review reports
in a manner which is not unduly disruptive to the business of
Borrower.
(j)
The Borrower will maintain Debt Service
Coverage of at least 1.25x calculated as set forth in Paragraph
22(d) herein below. This covenant shall be measured
quarterly.
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(k) Bank must maintain
regulatory approval to provide dividends to Borrower necessary to
adequately service the Loan.
(l) Bank is to maintain a pass rating from all of its governing
regulatory agencies.
(m) In the event a trust
preferred is issued, proceeds of the trust preferred are not
expected to repay the principal of the Loan.
(n) Upon the Lender's
written request, the Borrower shall provide any financial
information, and/or other information and/or documentation as
reasonably requested by the Lender, including without limitation,
copies of SEC reports, including but not limited to, 10K reports,
10Q reports.
4.
Negative Covenants
. The Borrower agrees that so long as the Note is outstanding
or this Agreement is in effect:
(a)
Borrower’s Tier 1 Capital Leverage
Ratio shall be “Adequately Capitalized”, and shall be
measured quarterly.
(b)
Borrower’s Tier 1 Risk Based Capital
Ratio shall be “Adequately Capitalized”, and shall be
measured quarterly.
(c)
Subsidiary’s Tier 1 Capital Leverage
Ratio shall be maintained as “Well Capitalized”, and
shall be measured quarterly.
(d)
Subsidiary’s Tier 1 Risk Based
Capital Ratio shall be “Well Capitalized”, to be
measured quarterly.
(e)
Borrower’s Non-Performing Assets
(defined as the sum of bank subsidiaries of (i) cash basis loans,
(ii) loans 90 days or more past due, (iii) renegotiated loans plus,
(iv) other real estate, plus (iv) other assets described as
“other non-performing assets” on Borrower’s
consolidated financial statements divided by the sum of (i) loans
plus, (ii) other real estate, shall be less than 1.50%, measured
quarterly.
(f)
The Borrower will notify the Lender
immediately of all significant changes in executive
management.
(g)
No dividend shall be paid by the Borrower
if the Loan is in default or if the dividend would create a default
without prior Lender approval.
(h)
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 any other Person (other than
a Subsidiary) except in connection with the depositing of checks in
the normal and ordinary course of business.
(i) The Borrower shall
not create, incur, assume or suffer to exist any indebtedness or
Liabilities (other than this facility) for borrowed money, any
indebtedness evidenced by notes, debentures or similar obligations
or any conditional sales or title retention agreements or
capitalized leases, which in any single case, or in aggregate,
exceed One Million and 00/100 Dollars ($1,000,000.00), without the
prior written consent of the Lender, which shall not be
unreasonably withheld.
(j)
The Borrower shall not permit any
Subsidiary to issue, sell or otherwise dispose or part with control
of any shares of any class of its stock (other than
directors’ qualifying shares) except to the Borrower or a
wholly-owned Subsidiary of the Borrower.
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(k)
The Borrower shall not sell or otherwise
dispose or part with control of any of the Stock or any other
securities or indebtedness of any Subsidiary, and the Borrower
shall not pledge or otherwise transfer or grant a security interest
in any of the capital stock or other securities or of its
Subsidiary, except to Lender.
(l)
The Borrower shall not outside the
ordinary course of business, and shall not permit the Bank’s
Subsidiary to, pledge any assets to any other Person without the
prior written consent of the Lender.
(m) The Borrower and Subsidiary
must not be in a situation requiring a material formal enforcement
action by its Regulators as it relates to the financial condition
of the Borrower and/or the Subsidiary.
5.
Advances Under the
Loan .
The Lender shall not be obligated to
make any advance of the Loan to the Borrower unless in each
instance, at the time of each advance:
(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
Loan.
(b)
The Borrower and each Subsidiary shall have
performed in all material resp
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