EXHIBIT 99.2
LOAN AGREEMENT
THIS LOAN AGREEMENT (hereinafter called "Agreement") made and entered into
this 30th day of October, 2002, by and between Heritage Financial Holding
Corporation, a Delaware corporation, (hereinafter called "Borrower") and FIRST
TENNESSEE BANK NATIONAL ASSOCIATION, a national banking association having its
principal office located in Memphis, Tennessee ("Lender").
W I T N E S S E T H :
WHEREAS, the Borrower desires to borrow from Lender Seven Million Five
Hundred Thousand and no/Dollars ($7,500,000.00) and Borrower desires to pledge
as collateral for this loan all of Borrower's common stock in the Heritage Bank
(hereinafter called "Bank").
NOW, THEREFORE, in consideration of the premises and the mutual agreements,
covenants and conditions herein contained, the parties hereto hereby agree as
follows:
AGREEMENTS
1. COMMITMENT AND FUNDING.
1.1 The Commitment. Subject to the terms and conditions herein set out,
Lender agrees and commits to make a loan (the "Loan") to Borrower in an amount
not to exceed Seven Million Five Hundred Thousand and no/dollars
($7,500,000.00). Such borrowing shall be evidenced by, and shall be payable in
accordance with the terms and provisions of, a promissory note executed by
Borrower, as maker, attached hereto and incorporated herein by reference (such
promissory note together with any renewals, modifications and extensions thereof
is herein referred to as the "Note").
1.2 Funding. The advance of Loan proceeds hereunder shall be made, upon
Borrower's request, by depositing the same into Bank's demand deposit account
with Lender. The Loan to Borrower may be made, at Borrower's request, in one or
more advances, each of which shall be subject to the terms and conditions of
this Agreement, including but not limited to Sections 2.1 and 2.2 hereof.
1.3 Prepayments. The Borrower may, at its option, at any time and from time
to time, without prepayment penalty or premium, prepay the Loan in whole or in
part; 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.
1.4 Interest Rate. The Loan indebtedness evidenced by the Note shall bear
interest from date at the variable rate determined in accordance with the terms
and provisions of the Note.
2. CONDITIONS OF LENDING.
2.1 Loan Documents. The obligation of Lender to fund the Loan is subject to
the condition precedent that Lender shall have received at or before the
execution of this Agreement all of the following in form and substance
satisfactory to Lender provided that if any of the following shall not have been
furnished to Lender at or before the date of this Agreement, the same shall be
furnished promptly thereafter unless Lender shall waive any such requirement in
writing.
a) The Note;
b) This Loan Agreement;
c) The Pledge and Security Agreement (hereinafter called "Pledge
Agreement"), executed by Borrower, granting to Lender a security interest in all
of Borrower's capital stock in 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.
d) Current certificates of good standing for the Borrower and Bank in the
State of Delaware and Alabama, respectively.
e) Certified corporate resolutions of Borrower authorizing the execution,
delivery and performance of this Loan Agreement and of the other instruments and
documents to be executed and delivered in connection herewith, and a certified
copy of Borrower's charter and bylaws.
f) True and exact copies of the current financial statements of the
Borrower and Bank and audit report and opinion of Schauer, Taylor, Cox, Vise, &
Xxxxxx P. C., Certified Public Accountants, with respect thereto (it being
understood that Lender is relying upon such audit report and opinion in entering
into this Loan Agreement).
g) The opinion of Borrower's independent counsel in the form approved by
Lender, as to the due organization and valid existence of Borrower, the due
authorization and execution by Borrower of the Loan Documents, the validity and
enforceability of the Loan Documents against Borrower and such other matters as
Lender shall require.
h) The Note, this Loan Agreement, the Pledge Agreement, and any other
documents executed by Borrower in connection herewith shall be referred to
hereinafter as the "Loan Documents".
2.2 Other Conditions. The obligation of the Lender to fund the Loan is
subject to each of the following further terms and conditions:
a) The entire proceeds of such Loan shall be used for the purpose of
capital injection into Bank or other such purposes deemed appropriate by Lender.
b) At the time of funding, each of the Loan advances hereunder and each of
Borrower's warranties and representations contained herein or in the Pledge
Agreement shall be and remain true and correct in all material respects. In
addition, no Event of Default (as defined in Section 6 hereof) shall have
occurred and be continuing, and, if requested by Lender, Borrower shall execute
a certificate verifying each of such matters to be true in all respects, if such
be the case.
c) At the time the loan is funded hereunder, there shall have occurred, in
the opinion of Lender, no material adverse changes in the condition, financial
or otherwise, of Borrower or Bank from that reflected in the financial
statements furnished pursuant to Section 2.1 hereof.
3. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender to enter into this Agreement and to make the
Loan, the Borrower represents and warrants to the Lender (which representations
and warranties shall survive the delivery of the Loan Documents and the funding
of the Loan) that:
3.1 Corporate Status. Borrower is a corporation duly organized and existing
under the laws of the State of Delaware, is duly qualified to do business and is
in good standing under the laws of the State of Delaware, and has the corporate
power and authority to own its properties and assets and conduct its affairs and
business.
3.2 Corporate Power and Authority. Borrower has full power and authority to
enter into this Agreement, to borrow funds contemplated herein, to execute and
deliver this Agreement, the Note, Pledge Agreement and other Loan Documents
executed and delivered by it, and to incur the obligations provided for herein,
all of which have been duly authorized by all proper and necessary corporate
action; and the officer executing each of the Loan Documents is duly authorized
to do so by all necessary corporate action. Any consents or approval of
shareholders of Borrower required as a condition to the validity of any Loan
Document have been obtained; and each of said Loan Documents is the valid,
legal, and binding obligation of Borrower enforceable in accordance with its
terms.
3.3 No Violation of Agreements or Law. Neither Borrower nor Bank is in
default under any indenture, agreement or instrument to which it is a party or
by which it may be bound, nor in violation of any state or federal statute,
rule, ruling, or regulation governing its operations and the conduct of its
business, operations or financial condition of Borrower or Bank. Neither the
execution and delivery of the Loan Documents nor the consummation of the
transactions herein contemplated, or compliance with the provisions hereof will
conflict with, or result in the breach of, or constitute a default under, any
indenture, agreement or other instrument to which Borrower is a party or by
which it may be bound, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the property of Borrower, or violate or be in
conflict with any provision of the charter or bylaws of Borrower.
3.4 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 the 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 as 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.
3.5 Litigation. There are no actions, suits or proceedings pending or, to
the knowledge of the Borrower threatened against before any court, arbitrator or
governmental or administrative body or agency which, if adversely determined,
would result in any material and adverse change in the financial condition,
business operation, or properties or assets of the Borrower. 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 except
those of which lender is aware.
3.6 Financial Condition. The balance sheets and the related statements of
income of Borrower and Bank, which have been delivered to the Lender pursuant to
Sections 2.1 hereof and the financial reports of Borrower and Bank which will be
delivered to Lender pursuant to Section 4.5 hereof are, or will be as of their
respective dates and for the respective periods stated therein, complete and
correctly and fairly present the financial condition of Borrower and Bank, and
the results of their operations, respectively, as of the dates and for the
periods stated therein, and have been, or will be as of their respective dates
and for the respective periods stated therein, prepared in accordance with
generally accepted accounting principles consistently applied throughout the
period involved. There has been no material adverse change in the business,
properties or condition of Borrower or Bank since the date of the financial
statement furnished to Lender pursuant to Section 2.1 hereof.
3.7 Tax Liability. Borrower and Bank have filed all tax returns required to
be filed by them, and have paid all taxes which have become due pursuant to such
returns or pursuant to any assessments received by them.
3.8 Subsidiaries. Borrower has no subsidiaries and owns stock in no
corporation or banking association other than Bank, and Heritage Financial
Statutory Trust I; and Bank has no subsidiaries and owns stock in no other
corporation.
3.9 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_________________
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 non-assessable; the Bank
stock certificates delivered to Lender pursuant to the Pledge Agreement will be
genuine and comply with 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 (other than those established by applicable banking laws) on the
transfer or pledge of any shares of common stock of Bank; Borrower has the right
to pledge and transfer the pledged 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 Lender a first security interest in the pledged Bank
stock, subject to no other interests or claims.
4.0 AFFIRMAT IVE COVENANTS. Borrower covenants and agrees that, until the
Note together with interest thereon is paid in full, unless specifically waived
by the Lender in writing, Borrower will, or will cause Borrower and Bank to:
4.1 Business and Existence. Perform all things necessary to preserve and
keep in full force and effect the existence, rights and franchises of Borrower
and to comply with all laws and regulations applicable to Borrower and Bank,
including, but not limited to, laws and regulations of state and federal
authorities applicable to banks and bank holding companies.
4.2 Maintain Property. Maintain, preserve, and protect all properties used
or useful in the conduct of Borrower's and Bank's business and keep the same in
good repair, working order and condition.
4.3 Insurance. At all times keep the insurable properties of Borrower and
Bank adequately insured and maintain in force (i) insurance, to such an extent
and against such risks, including fire, as is customary with companies in the
same or similar business, (ii) necessary workmen's compensation insurance,
fidelity bonds and directors' and officers' insurance coverage in amounts
satisfactory to Lender, and (iii) such other insurance as may be required by
law; and if required by Lender, deliver to the Lender a copy of the bonds and
policies providing such coverage and a certificate of Borrower's or Bank's chief
executive officer, as the case may be, setting forth the nature of the risks
covered by such insurance, the amount carried with respect to each risk, and the
name of the insurer.
4.4 Taxes and Liens. Pay and discharge promptly all taxes, assessments, and
governmental charges or levies imposed upon Borrower or Bank or upon any of
their respective income and profits, or their properties, real, personal or
mixed, or any part thereof, before the same shall become delinquent; provided,
however, that Borrower and Bank shall not be required to pay and discharge or to
cause to be paid and discharged any such tax, assessment, charge, levy or claim
so long as the amount or validity thereof shall be contested in good faith by
appropriate proceedings.
4.5 Financial Reports. Furnish to Lender (a) as soon as available and in
any event within ninety (90) days after the end of each calendar year,
consolidated and consolidating balance sheets of Borrower and Bank, as of the
end of such year and consolidated and consolidating statements of income of
Borrower and Bank for the year then ended, together with the audit report and
opinion of independent Certified Public Accountants acceptable to the Lender
with respect thereto, such audit report and opinion shall contain no exceptions
or qualifications unacceptable to Lender; (b) promptly upon receipt, copies of
all management letters and other assessments and recommendations, formal or
informal, submitted by the Certified Public Accountants to Borrower or Bank; (c)
a copy of Borrower's FR Y-9 Parent Company Only (and Consolidated, if
applicable) financial statement(s) and (d) a copy of Borrower's F.R. Y-6 Annual
Report promptly upon the filing of the same with the Federal Reserve Board; and
(e) a copy of Bank's Quarterly Report of Condition and Income ("Call Report")
promptly upon the filing with the appropriate regulatory agency.
4.6 Regulatory Examinations. (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.
4.7 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
valuation performed.
4.8 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 reasonable request. If required by
Lender, Borrower will pay Lender loan fees in an amount determined by Lender to
be necessary to cover the costs of such inspections, including a reasonable
allowance for Lender's overhead as well as out-of-pocket expenses in connection
with such inspection.
4.9 Notice of Default. At the time of Borrower's first knowledge or notice,
furnish the Lender with written notice or 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.
4.10 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.
4.11 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 Bank in full compliance with all
state and federal regulatory authorities and, without limiting the generality of
the foregoing, a ratio of Tier 1 Capital to Total Assets as required by all
state and federal regulatory authorities; provided, however, with respect to the
financial statement of the Bank in no event shall the minimum ratio of Tier 1
Capital to Total Assets be less than 5%. For purposes hereof, "Tier 1 Capital"
is defined in Appendix A to Title 12, Code of Federal Regulations, Part 225n,
Capital Adequacy Guidelines for Bank Holding Companies.
4.12 Loan Loss Reserves. With respect to Bank, maintain at all times loan
loss reserves in amounts deemed adequate by all federal and state regulatory
authorities, but in no event less than less than 1.25% of total loans.
4.13 Compliance Certificate. Furnish Lender a certificate of compliance
duly certified by the chief executive officer or chief financial officer of
Borrower within forty-five (45) days after the end of each calendar quarter
stating that Borrower and Bank are in compliance with all terms, covenants and
conditions of this Loan Agreement and all related Loan Documents.
5.0 NEGATIVE COVENANTS. Borrower covenants and agrees that, until the
indebtedness evidenced by the Note, together with interest, is paid in full,
Borrower will not, without the prior written consent of the Lender:
5.1 Indebtedness. Create, incur, assume or suffer to exist, contingently or
otherwise, any indebtedness, except for the following indebtedness:
i) the indebtedness of Borrower under the Loan;
ii) operating expenses incurred by Borrower in the ordinary course of
business;
iii) indebtedness reflected on Borrower's financial statements dated as of
September 30, 2002.
iv) indebtedness that would be subordinate to Lenders debt in all aspects.
5.2 Merger, Dissolution, Acquisition of Assets. Enter into, or permit Bank
to enter into, any transaction of merger or consolidation, or any
reorganization, reclassification of stock, readjustment or change in capital
structure; or acquire, or permit Bank to acquire, all of the stock, property or
assets of any other person, corporation, partnership or other entity.
5.3 Affiliates and Subsidiaries. Create, establish or acquire affiliates or
subsidiaries or acquire or own stock or any other interest in any bank other
than Bank, or permit the creation, establishment or acquisition of such
affiliates or subsidiaries by Bank.
5.4 Stock. Sell, transfer or otherwise dispose of any of its common capital
stock in Bank nor permit Bank to issue additional shares of stock or rights,
options or securities convertible into capital stock of Bank.
5.5 Dividends, Redemptions and Other Payments. Declare or pay any dividends
if an Event of Default has occurred and is continuing under this Agreement or
the payment of a dividend would create an Event of Default. The payment of any
dividend shall in all respects comply with the Rules and Regulations of the
Federal Reserve Board.
5.6 Capital Expenditures. Make or become committed to make, or permit Bank
to make or to become committed to make, directly or indirectly, during any
calendar year, capital expenditures which for Borrower and Bank exceed amounts
deemed acceptable to applicable regulatory authorities.
5.7 Relocation. Cause or permit Borrower or the bank to relocate their
principal office, principal banking office, principal registered office or
approved charter location.
5.8 Sale of Assets. Sell, lease, transfer or dispose of all or any
substantial part of its assets, including the assets of any of its subsidiaries.
6.0 DEFAULT AND REMEDIES.
6.1 Events of Default. Any one or more of the following events shall
constitute a default ("Event of Default") under the terms of this Agreement:
(a) Default in the payment when due of the principal of or interest on the
Note.
(b) Default in the performance of any provisions or breach of any covenant
of this Agreement or any other Loan Document and such default continues for 30
days.
(c) If any representation or warranty or any other statement of fact
contained herein, in any other Loan Document, or in any writing, certificate, or
report or statement at any time furnished to Lender pursuant to or in connection
with this Agreement shall prove to be false or misleading in any material
respect.
(d) If Borrower or Bank files a petition in bankruptcy or seeks
reorganization or arrangements under the Bankruptcy Code (as it now exists or as
amended); is unable or admits in writing its inability to pay its debts as they
become due or is not generally paying its debts as they come due; makes an
assignment for the benefit of creditors; has a receiver, custodian or trustee
appointed voluntarily or involuntarily, for its property; or is adjudicated
bankrupt; or if an involuntary petition is filed in bankruptcy, for
reorganization or arrangements, or for the appointment of a receiver, custodian
or trustee of Borrower or Bank on their respective properties and if Borrower or
Bank either acquiesce therein or fails to have such petition dismissed within
sixty (60) days of the filing thereof.
(e) If the principal amount of Classified Assets (hereinafter defined) of
Bank, as determined by Lender or by any bank regulatory authority, shall at any
time exceed one hundred fifteen percent (115%) of Tier 1 Capital (as defined by
bank regulatory authorities). For purposes hereof, "Classified Assets" means
assets which are classified as substandard, doubtful or loss under standards
from time to time promulgated or established by the state or any other federal
regulatory authority or as those same standards are applied by Lender in the
exercise of its reasonable judgment (even though any such regulatory authority
may not have so classified any such asset as substandard, doubtful or loss under
the aforementioned standards).
(f) If the outstanding principal balance of the Loan shall at any time be
more than fifty percent (50%) of the Book Value (hereinafter defined) of the
stock pledged pursuant to the Pledge Agreement, and Borrower shall not have
remedied such default by reduction of the Loan balance or pledging of additional
collateral satisfactory to Lender within twenty (20) days after notice by Lender
to Borrower of such default. For purposes hereof, "Book Value" means the Tier 1
Capital (as defined in Section 4.11 and as adjusted as therein provided) of Bank
divided by the number of shares of outstanding stock times the number of shares
pledged as collateral.
(g) If 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 ninety (90) 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 (90) days within an calendar
year.
(h) If Bank shall fail to maintain an annualized return on total average
assets of at least one quarter of one percent (.25%) as of the date of all
financial reports required by regulatory authorities beginning January 1, 2003.
For purposes of this Section 6.1 (h) "total average assets" shall be deemed to
mean the year-to-date average of total assets of Bank.
(i) If the Bank's non-performing loans exceed four percent (4 %) of the
Bank's gross loans. For purposes hereof, "non-performing loans" shall be defined
as the sum of all loans whose installments or prepayments are 90 days or more
past due plus all loans that are on non-accrual plus those loans which have been
renegotiated (as defined by the regulatory agencies) or restructured to provide
a reduction in either interest or principal because of a deterioration in the
financial position of the borrower and all other real estate owned.
(j) If there shall at any time occur without the prior written approval of
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.
6.2 Remedies. If an Event of Default shall occur, at any time thereafter,
Lender may, at its option without demand or notice (except as otherwise provided
herein), the same being expressly waived, declare the Loan, with interest
thereon, to be immediately due and payable, and may proceed to exercise all
rights and remedies available under the Pledge Agreement, under any other Loan
Document, at law or in equity, concurrently or sequentially, in such order as
Lender may elect, all such rights and remedies being cumulative. Nothing herein
contained shall be deemed to limit the right and privilege of Lender, in its
sole discretion, before or after the occurrence of an Event of Default, to make
demand for payment of the Note, such Note being payable on demand.
7.0 MISCELLANEOUS.
7.1 Amendments. The provisions of this Loan Agreement and the other Loan
Documents may be amended or modified only by an instrument in writing signed by
the parties thereto.
7.2 Notices. All notices and other communications provided for hereunder
shall be in writing and shall be mailed, certified mail, return receipt
requested or delivered, if to the Borrower, to it at P. O. Xxx 0000, Xxxxxxx, XX
00000-0000, Attention: Chief Financial Officer, and if to the Lender, to it at
000 Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, 00000, Attention: Correspondent
Services Division; or as to any such person at such other address as shall be
designated by such person in a written notice to the other parties hereto
complying as to delivery with the terms of this Section 7.2. All such notices
and other communications shall be effective (i) if mailed, when received or
three business days after mailing, whichever is earlier; or (ii) if delivered,
upon delivery.
7.3 No Waiver, Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Lender, any right, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Waiver of any
right, power, or privilege hereunder or under any instrument or document now or
hereafter evidencing or securing the Loan is a waiver only as to the specified
item. The rights and remedies herein provided are cumulative and not exclusive
of any rights or remedies provided by law.
7.4 Binding Effect. This Loan Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective heirs, successors, and
assigns, except that Borrower shall not have the right to assign its rights
hereunder or any interest therein without the prior written consent of Lender.
7.5 Governing Law. This Loan Agreement shall be governed and construed in
accordance with the laws of the State of Tennessee; except that the provisions
hereof which relate to the payment of interest shall be governed by (i) the laws
of the United States or, (ii) the laws of the State of Tennessee, whichever
permits the Lender to charge the higher rate, as more particularly set out in
the Note.
7.6 Venue of Actions. As an integral part of the consideration for the
making of the Loan hereunder, it is expressly understood and agreed that no suit
or action shall be commenced by the Borrower, or by any successor, personal
representative or assignee of it, with respect to the Loan contemplated hereby,
or with respect to any of the Loan Documents, other than in a state court of
competent jurisdiction in and for the County of the State in which the principal
place of business of the Lender is situated, or in the United States District
Court for the District in which the principal place of business of the Lender is
situated, and not elsewhere. Nothing in this paragraph contained shall prohibit
Lender from instituting suit in any court of competent jurisdiction for the
enforcement of its rights hereunder or under any other Loan Document, but the
parties stipulate and agree that the courts specified in the preceding sentence
of this section shall be an appropriate forum for any such suit.
7.7 Terminology; Section Headings. All personal pronouns used in this Loan
Agreement whether used in the masculine, feminine, or neuter gender, shall
include all other genders; and the singular of any such pronoun or of any term
defined herein shall include the plural, and vice versa. Section headings are
for convenience only and neither limit nor amplify the provisions of this Loan
Agreement.
7.8 Enforceability of Agreement. Should any one or more of the provisions
of this Loan Agreement be determined to be illegal or unenforceable, all other
provisions nevertheless, shall remain effective and binding on the parties
hereto. In the event that the provisions of the Note or this Loan Agreement
governing the determination of the rate of interest on the Loan should be
construed by a court of competent jurisdiction not to constitute a valid,
enforceable designation of a rate of interest or method of determining the same,
the Loan indebtedness shall bear interest at the maximum effective variable
contract rate which may be charged by Lender under applicable law from time to
time in effect.
7.9 Interest Limitations. It is the intention of the parties hereto to
comply strictly with all applicable usury laws; and, accordingly, in no event
and upon no contingency shall Lender ever be entitled to receive, collect, or
apply as interest any interest, fees, charges or other payments equivalent to
interest, in excess of the maximum rate for which Borrower may lawfully contract
under applicable law, from time to time in effect. Any provision hereof, or of
any other agreement executed by Borrower that would otherwise operate to bind,
obligate or compel Borrower to pay interest in excess of such maximum lawful
rate shall be construed to require the payment of the maximum rate only. The
provisions of this paragraph shall be given precedence over any other provisions
of this paragraph shall be given precedence over any other provisions contained
herein or in any other agreement applicable to the Loan, that is in conflict
with the provisions of this paragraph.
7.10 Non-Control. In no event shall Lender's rights hereunder be deemed to
indicate that Lender is in control of the business, management or properties of
Borrower or Bank or has power over the daily management functions and operating
decisions made by Borrower or Bank.
7.11 Fees and Expenses. Borrower agrees to pay, or reimburse Lender for,
the actual out-of-pocket expenses, including counsel fees, incurred by Lender in
connection with the development, preparation, execution, amendment, recording,
administration or enforcement of, or the preservation of any rights under this
Loan Agreement and the other Loan Documents, or the collection of the Loan or
realization upon any collateral security therefore.
7.12 Indemnification. Borrower hereby agrees to indemnify Lender against,
and hold Lender harmless from, any and all claims, suits and damages asserted
against Lender by any person or entity arising out of or asserted with respect
to the transactions contemplated by this Loan Agreement and shall pay all
attorneys' fees and costs in connection with the defense of any such claim.
7.13 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (B) IN ANY
WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH WHETHER NOW EXISTING OR
HEREAFTER ARISING: AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
ATTEST: ___________________________________
("Borrower")
By:__________________________ By:_______________________________
Title:_________________________ Title:______________________________
FIRST TENNESSEE BANK
NATIONAL ASSOCIATION
("Lender")
By:_______________________________
Title:______________________________
Rev. 5/28/96
