LOAN AGREEMENT
THIS LOAN AGREEMENT made and entered into on this 31st day
of July, 1996, by and among
PIONEER BANK, A Kentucky Corporation,
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Bank"),
and
FREEDOM FINANCIAL CORPORATION, An Indiana Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Borrower").
PRELIMINARY STATEMENTS
A. The Freedom Financial Corporation, (the "Borrower")
desires to obtain from Pioneer Bank (the "Bank") a loan (the
"Loan") in the original principal sum of ONE MILLION EIGHT
HUNDRED THOUSAND DOLLARS AND NO/100 ($1,800,000.00), to be used
to refinance an existing line of credit with the Bank, with any
remaining proceeds to be used as the Borrower's operating
capital.
B. The Borrower desires to secure this Loan by pledging
1,000,000 shares of common stock in Florida Gaming Corporation, a
Delaware Corporation, copies of said stock certificates attached
hereto as Exhibit "A".
C. The Bank desires to make the Loan to the Borrower and
accept such pledge of stock as security upon the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements set forth herein, and for other good and
valuable consideration, the mutuality, receipt and sufficiency of
which are hereby acknowledged, the Bank and the Borrower hereby
agree as follows:
SECTION 1. DEFINITIONS
As used in this Loan Agreement:
1.1 "Event of Default" shall mean the occurrence or
happening of any of the matters set forth in Section 7 hereof
which is not cured within the time period (if any) afforded for
curing same.
1.2 "Loan" shall mean the loan made to the Borrower by the
Bank pursuant to Section 2 of this Loan Agreement and as
evidenced by the Note.
1.3 "Loan Documents" shall mean this Loan Agreement, the
Note or Notes, the Stock Pledge Agreement, the Guaranty Agreement
and other instruments, documents and agreements related hereto as
may be reasonably required by the Bank.
1.4 "Note" shall mean the promissory note or notes
evidencing the Loan and shall include any renewal, replacement,
extension or novation thereof (including any note that alters the
applicable interest rate.) A copy of the note is attached
hereto as Exhibit "B".
1.5 "Stock Pledge Agreement" shall mean that certain Stock
Pledge Agreement of even date herewith, referred to in Section
3.1, hereof, pursuant to which Borrower has pledged 1,000,000
Florida Gaming Corporation stock and granted to Bank a priority
security interest in the Florida Gaming Corporation stock.
1.6 "Borrower" means Freedom Financial Corporation, an
Indiana Corporation.
1.7 "Possible Default" shall mean any event, condition, or
thing which, with the lapse of any applicable grace period or the
giving of notice, or both, would constitute an Event of Default.
1.8 "Guaranty Agreement" shall mean that certain Guaranty
Agreement of even date herewith, executed by Guarantor ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ in favor of the Bank.
1.9 "And/Or" means one or the other, or both, or any one or
more or all, of the things, persons or parties in connection with
which the conjunction is used.
1.10 "Commonwealth" means the Commonwealth of Kentucky.
1.11 "Guarantor" means ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
1.12 "Indebtedness" means the Note and all other
indebtedness and/or other obligations of the Borrower to the Bank
of any nature whatsoever arising under or pursuant to this Loan
Agreement, or any of the other Loan Documents, whether debt,
lease, contract or otherwise, whether joint, several, or joint
and several, whether represented by a note or other instrument,
and whether now existing or hereafter incurred or arising either
directly or indirectly by assignment or otherwise or pursuant to
a guarantee.
1.13. "Bank" shall mean Pioneer Bank, a Kentucky
corporation, having its principal office and place of business at
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, and its successors, legal
representatives, assigns and endorsees.
1.14 "Person" or "Party" means any individual, sole
proprietorship, partnership (both general and limited), joint
venture, trust, unincorporated organization, association,
corporation, other entity or group, institution, party or
government (whether federal, state, county, city, municipal or
other) or agency or division thereof.
1.15 "GAAP" means generally accepted accounting principles.
SECTION 2. LOAN TERMS.
Borrower shall repay the Loan pursuant to the Note. The
following provisions shall apply to payment of the Note.
2.1 Installments of Principal and Interest Under the Note.
This loan provides a loan in the amount of ONE MILLION EIGHT
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,800,000.00) for a term of
one year, which term shall expire on the 31st day of July, 1997,
if not renewed or extended by the Bank, at the Bank's sole
option.
The Borrower shall use the funds from this loan to refinance
the existing line of credit with the Bank and may use any
remaining proceeds as its operating capital pursuant to and in
accordance with corporate resolutions passed and adopted by its
Board of Directors.
Interest on this Loan of ONE MILLION EIGHT HUNDRED THOUSAND
AND NO/100 ($1,800,000.00), shall be paid to the Bank in
quarterly payments. The term of the Loan shall be a one (1) year
period, requiring quarterly payments of interest on the
outstanding balance of the principal borrowed and one final
payment of the outstanding balance of accrued interest and
principal borrowed due on the 31st day of July, 1997.
The amount of the quarterly interest payments shall be as
stated in the Note and may change according to the Note terms.
This is a variable interest rate Note. The interest rate charged
on the outstanding balance is a floating rate of one (1%) percent
in excess of the New York prime rate as quoted in the Wall Street
Journal. On this date, the interest rate is nine and one-quarter
percent (9.25%) per annum. This interest rate may fluctuate on a
daily basis. Any increase in the interest rate will result in
higher quarterly interest payments.
Notice by the Bank to the Borrower of any increase, decrease
or no change, in the interest rate being charged shall be given
prior to a payment of interest being due.
In addition to the quarterly interest payments, Borrower
will also make quarterly principal payments of FIFTY THOUSAND
DOLLARS AND NO/100 ($50,000.00) each to be applied to the
outstanding principal balance.
The Loan may be renewed or extended at the sole discretion
of the Bank.
2.2 Application of Payments. All payments on the Note of
any nature whatsoever, whether received by the Bank by direct
remittance, set-off, foreclosure or other enforcement of security
or otherwise shall be applied first to interest accrued to date
of receipt, then against the principal in accordance with the
terms of the Note thereof, then to any expenses or charges
payable hereunder, finally to the balance -if any- against the
principal in accordance with the terms of the Note thereof.
All payments of principal and accrued interest shall be made
in legal tender of the United States of America in immediately
available funds at the Bank's principal office on each date
specified in the Note and this Loan Agreement.
2.3 Pre-payment Penalty. There is no prepayment penalty
associated with this loan. Borrower can prepay the loan in whole
or in part without penalty at any time during the term of the
loan.
SECTION 3. SECURITY FOR LOAN.
3.1 Security for Loan. The Loan made hereunder shall be
secured by and entitled to the benefits of all of the following:
- That certain Stock Pledge Agreement between Borrower
and the Bank of even date herewith, delivered
contemporaneously with the execution of this Loan
Agreement, pursuant to which the Borrower has pledged
to the Bank, and has granted to the Bank a first
priority security interest in 1,000,000 shares of
Florida Gaming Corporation to secure the payment of the
Note and the performance of all obligations of the
Borrower under this Loan Agreement and the other Loan
Instruments.
- That certain Guaranty Agreement of even date
herewith, executed and delivered by ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
Guarantor, in favor of the Bank; and
-Such other security and instruments, if any, granted
by the Borrower to the Bank, whether of even date
herewith or hereafter or hereto before so granted, to
secure the payment of the Note and the other
Indebtedness; and
-The right of offset as described in Section 8.3 herein.
3.2. Additional Collateral. In the event the stock price
for Florida Gaming Corporation as quoted in the Wall Street
Journal at any time is quoted below $5.00 per share then the Bank
may do one or more of the following at the Bank's sole option and
discretion:
1. demand the loan be paid in full immediately;
2. make a call for additional collateral to secure the
loan; or
3. demand a principal payment to reduce the outstanding
principal balance in such an amount that the Bank will
be fully secured with the existing collateral, with the
Bank determining if it is fully secured, at its sole
discretion.
SECTION 4. CONDITIONS PRECEDENT.
The Bank's obligation to make the Loan pursuant to this Loan
Agreement shall be conditioned upon the fulfillment of the
following conditions prior to the making of the Loan hereunder.
4.1 Executed Agreements. Simultaneously with the execution
and delivery of this Loan Agreement, the Borrower and Guarantor
shall duly execute and deliver the other Loan Documents.
4.2 Fees and Expenses. The Borrower shall pay all fees and
expenses associated with the cost of making this Loan by the
Bank, including, without limitation, the fees of J. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & Associates, as the Bank's counsel.
4.3 Corporate Resolutions. Certified copies of the
Resolutions of the Board of Directors of the Borrower evidencing
approval of the execution and delivery of the Loan Documents and
the consummation of all transactions contemplated thereby.
4.4 Certificates of Stock. The certificates evidencing the
Florida Gaming Corporation stock duly endorsed to the order of
the Borrower, together with a blank stock power executed by the
Borrower, delivered to the Bank.
4.5 Certificate of Incumbency. A certificate of the
Secretary of the Borrower certifying the names of the officers of
the Borrower authorized to execute and deliver this Loan
Agreement, the Note, the Stock Pledge Agreement and the other
Loan Instruments to which the Borrower is a party, together with
the true signatures of the officers so authorized.
4.6 Officer's Certificates. A certificate of the President
and Secretary of the Borrower to the effect that each of the
representations and warranties contained in Section 6 hereof is,
to the best of their respective knowledge and belief, true and
correct as to the date hereof, and that no Event of Default or
Potential Default exists as of the date hereof or will begin to
exist immediately after the execution and delivery of the Loan
Documents.
SECTION 5. GENERAL COVENANTS AND CONDITIONS.
5.1 Further Documentation to Assure Liens; Fees and
Expenses. Borrower covenants that it shall, at the sole cost and
expense of Borrower, do, execute, acknowledge and deliver all and
every such further acts, note, notes, guaranty agreements,
assignments, notices of assignment, transfers, consents and
assurances as the Bank shall from time to time require, which are
necessary in the judgment of Bank from time to time to assure,
perfect, assign, transfer and confirm unto Bank the property and
rights to be transferred or assigned as agreed to in the Loan
Documents, or which Borrower may be or may hereafter become bound
to convey or assign to Bank or to facilitate the performance of
the terms of the Loan Documents, or for filing, registering or
recording the Loan Documents.
5.2 Financial Statements.
The Borrower has furnished to the Bank a complete financial
statement of the Borrower. Borrower further covenants to furnish
to the Bank, updated financial statements of the Borrower
annually and as reasonably requested by the Bank. Upon written
request of the Bank, Borrower will allow Bank the opportunity to
review such books, records and accounts of Borrower at Borrower's
premises and make copies thereof as Bank shall desire.
The Guarantor hereby covenants and agrees to furnish to the
Bank (a) a personal financial statement on or before the end of
each fiscal year of the Borrower, dated within thirty (30) days
prior to such fiscal year end and (b) prompt written notice of
any condition or event which has resulted or could reasonably be
expected to result in a material adverse change in the financial
condition or net worth of such Guarantor.
5.3 Failure to Make Certain Payments. If Borrower shall fail
to perform any of the covenants contained in this Loan Agreement
or any Loan Document, Bank may make advances to perform the same
on its behalf, and all sums so advanced shall be included in the
Indebtedness and be secured hereby. Borrower shall repay on
demand all sums so advanced by Bank on behalf of Borrower, with
interest at the rate set out in Section 2 of this Loan Agreement,
payable on demand. The provisions of this Section 5.3 or any
action taken by Bank pursuant to the provision of this Section
5.3 shall not prevent any such failure to observe any covenant
contained in this Loan Agreement from constituting an Event of
Default.
5.4 Authority of Corporation. Borrower has the power and
authority to enter into this Loan Agreement and the Loan
Documents and has obtained all consents required of it to do the
same. Borrower is not in default of any of the terms of any
material agreements to which it is a party or which affect all or
any portion of the collateral.
5.5 Notice. The Borrower shall notify the Bank in writing,
within no more than twenty-four (24) hours (and without the
benefit of any grace period afforded in any provision of this
Loan Agreement, the Note or any other Loan Document), after it
learns of any of the following:
(i) the existence of a set of facts known to the Borrower
which constitutes or may constitute an Event of Default under
this Loan Agreement;
(ii) any representation or warranty made herein, or in any
other Loan Document, shall, for any reason, not be or shall cease
in any material respect to be true and complete and not
misleading; or
(iii) the adverse determination in any litigation,
arbitration, federal or state regulatory examination or
governmental proceedings involving it, including without
limitation, an adverse determination rendered by the Internal
Revenue Service. Notice of any of the foregoing shall describe
the nature of any such litigation, arbitration, regulatory
examination or governmental proceeding, what happened with
respect thereto and what steps are being taken by it with respect
thereto.
5.6 Mergers, Sales, Transfers and Other Disposition of Assets;
Capital Readjustments; Amendments to Charter or Bylaws. Without
Bank's prior written consent, the Borrower shall not
(a) be or become a party to any consolidation,
reorganization, including, without limitation, those types
referred in Section 368 in the Internal Revenue Code, merger or
recapitalization;
(b) Sell all or substantially all of its assets;
(c) Purchase all or a substantial part of the assets of any
other corporation or other business enterprise, other than assets
which may be acquired in any foreclosure or similar proceeding
involving the enforcement of any lien or security interest
granted to the Borrower; and/or
(d) Effect a split, reverse split, reclassification,
reorganization, recapitalization or any other change in its
capital structure or amend its Articles of Incorporation or By-Laws.
5.7. Good Faith Transactions. The Borrower shall not enter
into or be a party to any transaction, except in the ordinary
course of business and upon fair and reasonable terms which
constitute an arms length transaction.
SECTION 6.0 REPRESENTATIONS AND WARRANTIES.
The Borrower hereby represents and warrants to the Bank as
follows, which representations and warranties shall be deemed to
be continuing and shall survive the execution of this Loan
Agreement and the making of this Loan:
6.1 Authority and Enforceability. No registration with or
approval of any governmental agency of any kind is required for
the due execution and delivery of, or for the enforceability of,
this Loan Agreement, the Note, the Stock Pledge Agreement, or any
of the other Loan Documents to which the Borrower is a party.
The Borrower has the full legal right, power and authority
to execute and deliver this Loan Agreement, the Note, the Stock
Pledge Agreement, or any of the other Loan Documents to which it
is a party, and the performance or observance by the Borrower of
the provisions thereof do not violate and will not violate any
existing provision in the Articles of Incorporation and By-Laws
of the Borrower, or any law, regulation, rule, interpretive
ruling or order applicable to the Borrower, or otherwise
constitute default or violation under any existing contract,
indenture, deed, lease, loan agreement, note or other instrument
or obligation binding upon the Borrower, with or without the
passage of time or the giving of notice or both.
The officers executing and delivering this Loan Agreement
and the other Loan Documents on behalf of the Borrower have been
duly authorized to do so, and this Loan Agreement, Note, the
Stock Pledge Agreement and the other Loan Documents to which the
Borrower is a party are valid, legal and binding obligations of
the Borrower and are enforceable in accordance with their
respective terms.
The Stock Pledge Agreement along with all action required to
perfect the Bank's security interest in and to the Florida Gaming
Corporation stock, creates and constitutes a valid and perfected
first priority security interest in and to the Florida Gaming
Corporation stock, enforceable against all third parties.
6.2 Financial Statements. The financial statements and
other documents previously furnished to the Bank on behalf of the
Borrower and Guarantor are true and complete and are not
misleading. All financial statements so furnished to the Bank
have been prepared in accordance with GAAP and fairly and
accurately present the respective financial conditions of the
Borrower and the Guarantor, as of their respective dates. There
have been no material adverse changes in any of their respective
financial conditions subsequent to the date of which their
respective financial statements were furnished to the Bank.
6.3 Existence and Licenses. The Borrower is a duly
organized and validly existing corporation in good standing under
the laws of the State of Indiana.
The Borrower has all licenses and permits necessary or
appropriate for its business. The Borrower has all requisite
power and authority to own its assets and carry on its businesses
as presently being conducted.
6.4 Ligation and Taxes. There are no claims of any kind or
any actions, suits, proceedings, arbitrations or investigations
pending or, to the best knowledge of the Borrower, threatened,
nor does the Borrower have knowledge of a basis for any claim, in
any court or before any governmental agency or instrumentality or
arbitration panel or otherwise against, by or affecting the
Borrower, or any officer or director of the Borrower, or any of
their businesses, prospects, conditions (financial or otherwise),
or assets which (a) would prevent the performance of this Loan
Agreement or any of the transactions contemplated thereby or
declare the same unlawful or cause the rescission thereof, or (b)
which would likely materially and adversely affect or impair the
business, assets or financial condition or earnings of the
Borrower.
There are no material uncured violations, or violations with
respect to which material refunds or restitution may be required,
cited in any report concerning the Borrower as a result of
examination by any regulatory authority. The Borrower is not in
default in the payment of any tax or in any assessment threatened
in respect thereof to the best knowledge, information ,and belief
of the Borrower, other than the assessment of ad valorem property
taxes not yet due and payable. The Borrower has timely filed all
federal, state and local tax returns and have paid all taxes
required to be paid herewith.
The Borrower has withheld and timely paid to the appropriate
governmental entity proper and accurate amounts from its
employees for all periods in material compliance with all tax
withholding provisions including, without limitation, income,
social security and employment tax for all forms of compensation
of applicable federal, state, foreign and local laws.
6.5 Default. No potential default or event of default
exists under this Loan Agreement nor will any such Potential
Default or Event of Default begin to exist immediately after the
execution and delivery of the Loan Documents.
6.6 No Misleading Statements. Neither the Loan Documents
nor the financial statements referred to in Section 5.2, nor any
other document, certificate, or statement referred to herein or
furnished to the Bank by or on behalf of the Borrower in
connection herewith, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
SECTION 7.0 EVENTS OF DEFAULT.
Each of the following shall constitute an "Event of
Default":
7.1 Payments. The failure of any installment of principal
or interest on the Note to be paid in full when due and payable
and shall remain unpaid for a period of ten (10) days, after
written notice of such default has been given to the Borrower.
7.2 Covenants and Agreements. If Borrower shall violate,
fail or omit to perform or observe any term, condition,
agreement, provision or covenant contained or referred to in this
Loan Agreement, the Stock Pledge Agreements or any other Loan
Documents, and such failure or omission shall not have been fully
corrected to the complete satisfaction of the Bank within thirty
(30) days after the Bank has given written notice thereof to the
Borrower.
7.3 Default under Guaranty. If the Guarantor shall attempt
to terminate, rescind or otherwise deny his liability under the
Guaranty.
7.4 Failure to Pay or Perform Other Obligations. The
failure of the Borrower to pay or perform any other obligation it
may have or be subject to with any other party within thirty (30)
days after the respective due date or performance date thereof
and the effect of such default in payment or performance is the
imposition of any lien on any assets of the Borrower and/or the
acceleration of the maturity date of any indebtedness of the
Borrower.
7.5 Accuracy of Statements. If any representation or
warranty or other statement of fact contained in any of the Loan
Documents or in any writing, certificate, report or statement at
any time furnished to the Bank pursuant to or in connection with
this Loan Agreement or otherwise shall be false or misleading in
any material respect or shall omit a material fact, whether or
not made with knowledge of same.
7.6 Judgments and Liens. If a final judgment or judgments
for the payment of money in excess of the sum of Fifty Thousand
Dollars ($50,000.00) in the aggregate shall be rendered against
the Borrower and such judgment or judgments shall remain
unsatisfied and in effect and shall not have been discharged
within sixty (60) (60) consecutive days after the entry of such
judgment or judgments unless execution thereof shall have been
stayed pending appeal, or if so stayed, then ten (10) days after
the expiration of such stay.
7.7 Solvency. If the Borrower shall (a) make a general
assignment for the benefit of its creditors, (b) apply for or
consent to the appointment of a receiver, trustee or liquidator
of all or a substantial part of his or her assets, (c) be
adjudicated bankrupt or insolvent, (d) file a voluntary petition
in bankruptcy or file a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to
take advantage of any other law (whether federal or state)
relating to relief for debtors, (e) admit (by answer, default or
otherwise) the material allegations of any petition filed against
him or her in any bankruptcy, reorganization, insolvency or other
proceeding (whether federal or state) relating to relief for
debtors, or (f) suffer or permit to continue unstayed and in
effect for thirty (30) consecutive days any judgment, decree or
order entered by a court or governmental agency of competent
jurisdiction, which assumes control of the affairs of the
Borrower, or approve a petition seeking reorganization of the
Borrower or any other judicial modification of the rights of the
Borrower's respective creditors, or appoints a receiver, trustee
or liquidator for the Borrower for all or a substantial part any
of their business or assets.
7.11 Insecurity. If the Bank shall, in the exercise of good
faith, deem itself to be insecure with respect to the Borrowers,
ability or intention (a) to make fully and timely payment of each
and every installment of principal of and/or interest on the Note
or (b) to perform and observe and /or each of the agreements,
obligations, covenants, conditions, representations, or
warranties made or to be performed or observed by the Borrower
under this Loan Agreement, the Note, the Stock Pledge Agreement
and the other Loan Documents, and the event or action giving rise
to the insecurity on the part of the Bank is not cured to the
satisfaction of the Bank within ten (10) days after written
notice thereof has been given to the Borrower.
The parties specifically acknowledge and agree that the Bank
has the right, power and authority to declare itself insecure in
the event the stock price for Florida Gaming Corporation as
quoted in the Wall Street Journal at any time is quoted below
$5.00 per share.
SECTION 8.0 REMEDIES UPON DEFAULT
If any Event of Default shall have occurred, then, and in
any such case, any or all of the following remedies may be
availed of, at the Bank's sole option, to wit:
8.1 Unpaid Balance Due. If any Event of Default shall
occur, the Bank, in its sole and absolute discretion, without
further notice to the Borrower and without obligation on the part
of the Bank, may declare all or any part of the Note to be,
whereupon the same shall be, immediately due and payable in full
to the Bank, without any presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived by the
Borrower.
8.2 Rights Under Security Instruments. If any Event of
Default shall occur the Bank shall also have all rights and
remedies granted it under the Stock Pledge Agreement and any
other Loan Document now or hereafter securing or intended to
secure the payment of the Note and the other Indebtedness.
8.3 Offsets. If any Event of Default shall occur and be
continuing, the Bank shall have the right to set off against, and
to appropriate and apply toward the payment of, the indebtedness
then owed by Borrower to the Bank, as evidenced by the Note,
whether or not such indebtedness shall be due and payable and
whether or not the Bank has declared the Note to be in default
and immediately due, any and all deposit balances and other sums
and indebtedness then held or owed by the Bank to or for the
credit or account of the Borrower and in all of which the
Borrower hereby grants the Bank a security interest to secure the
Note, all without notice to or demand upon the Borrower or any
other person, all such notices and demands being hereby expressly
waived.
8.4 Remedies Not Exclusive. No remedy conferred upon or
reserved to Bank by this Loan Agreement is intended to be
exclusive of any other remedy or remedies, and each and every
such remedy shall be cumulative and shall be in addition to every
other remedy given under this Loan Agreement or in any other Loan
Document or now or hereafter existing at law or in equity. Any
delay or omission of Bank to exercise any right or power accruing
on any Event of Default shall not impair any such right or power
and shall not be construed to be a waiver of or acquiescence in
any such Event of Default. Every power and remedy given by this
Loan Agreement or in any other Loan Document may be exercised
from time to time as often as may be deemed expedient by Bank. If
Bank accepts any moneys required to be paid by Borrower under
this Loan Agreement after the same becomes due, such acceptance
shall not constitute a waiver of the right either to require
prompt payment, when due, of all other sums secured by the Loan
Documents or to declare an Event of Default with regard to
subsequent defaults. If Bank accepts any moneys required to be
paid by Borrower under this Loan Agreement in an amount less than
the sum then due, such acceptance shall be deemed an acceptance
on account only and on the condition that it shall not constitute
a waiver of the obligation of Borrower to pay the entire sum then
due, and Borrower's failure to pay the entire sum then due shall
be and continue to be an Event of Default notwithstanding
acceptance of amount on account.
8.5 Fees and Expenses. If any Event of Default shall occur
under this Loan Agreement or under any other Loan Document,
including the Note, the Borrower shall pay to the Bank, to the
extent allowable by applicable law, such amounts as shall be
sufficient to reimburse the Bank fully for all of its costs and
expenses incurred in enforcing its rights and remedies under the
Loan Documents, including without limitation the Bank's
reasonable attorney's fees and court costs. Such amounts shall
be deemed evidenced by the Note and secured by the Loan
Documents.
SECTION 9.0 NOTICES
9.1 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon
any party named herein shall be in writing and (except for
written confirmation of telephonic instructions, which may be
sent by first-class mail, postage prepaid) shall be personally
delivered or sent by registered or certified mail, postage
prepaid, return receipt requested, or by a reputable courier
delivery service, or by telecopier, and shall be deemed to be
given for purposes of this Loan Agreement on the day that such
writing is personally delivered or two (2) business days after
mailing to the intended recipient thereof in accordance with the
provisions of this Section 9.1. Unless otherwise specified in a
notice sent or delivered in accordance with the foregoing
provisions of this Section 9.1, notices, demands, instructions
and other communications in writing shall be given to or made
upon the respective parties named herein at their respective
addresses indicated above.
SECTION 10. MISCELLANEOUS PROVISIONS.
10.1 Severability. In the event any one or more of the
provisions contained in this Loan Agreement shall for any reason
be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall, at the
option of Bank, not affect any other provision of this Loan
Agreement, but this Loan Agreement shall be construed as if such
invalid, illegal or unenforceable provision had never been
contained herein or therein. The invalidity of any provision of
this Loan Agreement in any one jurisdiction shall not affect or
impair in any manner the validity of such provision in any other
jurisdiction.
10.2 Covenants to Bind Successors and Assigns. All of the
grants, covenants, terms, provisions and conditions in this Loan
Agreement shall apply to, bind and inure to the benefit of, the
successors and assigns of Borrower.
10.3 Captions; Gender and Number; Successors or Assigns.
The captions and section headings of this Loan Agreement are for
convenience only and are not to be used to interpret or define
the provision hereof. All terms contained herein shall be
construed, whenever the context of this Loan Agreement so
requires, so that the singular shall be construed as the plural
and so that the masculine shall be construed as the feminine.
10.4 Limitation on Interest Payable. It is the intention of
the parties to conform strictly to the usury laws, whether state
or federal, that are applicable to the respective Loan Documents.
All agreements between Borrower and Bank, whether now existing or
hereafter arising and whether oral or written, are hereby
expressly limited so that in no contingency or event whatsoever
shall the amount paid or agreed to be paid by Borrower for the
use, forbearance or detention of the money to be loaned under any
of the Loan Documents, or for the payment or performance of any
covenant or obligation contained herein, or in any Loan Document
exceed the maximum amount permissible under applicable federal or
state usury laws. If under any circumstances whatsoever
fulfillment of any provision hereof or of any Loan Document, at
the time performance of such provision shall be due, shall
involve exceeding the limit of validity prescribed by law, then
the obligation to be fulfilled shall be reduced to the limit of
such validity. If under any circumstances Borrower shall have
paid an amount deemed interest by applicable law, which would
exceed the highest lawful rate, such amount that would be
excessive interest under applicable usury laws shall be applied
to the reduction of the principal amount owing in respect of any
Notes and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal and any other
amounts due hereunder, the excess shall be refunded to Borrower.
10.5 Indemnification; Reimbursement. Borrower shall
reimburse Bank, upon demand, for all reasonable costs and
expenses incurred by Bank in connection with the administration
and enforcement of this Loan Agreement, and shall indemnify and
hold harmless Bank, upon demand, from and against any and all
losses, liability (including liabilities for penalties), actions,
suits, proceedings, judgments, demands, costs and expenses
(including, without limitation, reasonable attorneys' fees and
the allocated costs of staff counsel) incurred by Bank hereunder
or in connection herewith, unless a court of competent
jurisdiction shall determine such liability is properly due to
the willful misconduct, gross negligence or bad faith of Bank. In
the event Borrower shall fail to perform any act or thing which
it has covenanted to do hereunder or any warranty on the part of
Borrower contained herein shall be breached, Bank may (but shall
not be under obligation to) do the same or cause it to be done or
remedy any such breach, and may expend its funds for such
purpose. Any and all amounts so expended by Bank shall be
repayable to it by Borrower upon demand therefor, with interest
at the rate set out in Section 2 of this Loan Agreement, and
shall be added to the Indebtedness and be payable on demand. If
any action or proceeding is commenced to which action or
proceeding Bank is made a party or in which it becomes necessary
to defend or uphold the security of the Stock Pledge Agreement,
Borrower shall, on demand, reimburse Bank for all reasonable
expenses (including, without limitation, reasonable attorneys'
fees) incurred by Bank in any such action or proceeding.
10.6 Choice of Law. It is agreed between Borrower and Bank
that the Loan evidenced by the Note or Notes and which are
secured by the Mortgage was negotiated in the Commonwealth of
Kentucky and that the laws of the Commonwealth of Kentucky shall
govern the construction and interpretation of the Loan Documents
and the rights and duties of the parties hereunder.
10.7 No Merger. The rights and estate created by this Loan
Agreement shall not, under any circumstances, be held to have
merged into any other estate or interest now owned or hereafter
acquired by Bank, unless Bank shall have consented to such merger
in writing.
10.8 Changes in Writing. This Loan Agreement may not be
modified, amended, discharged or waived in whole or in part
except by an instrument in writing or signed by (i) Borrower, to
the extent any modification, amendment, discharge or waiver is
sought to be enforced against Borrower, and (ii) Bank, to the
extent any modification, amendment, discharge or waiver is sought
to be enforced against Bank.
10.9 Waiver of Rights. Borrower acknowledged that Borrower
has read this Loan Agreement and any and all questions regarding
the legal effect of this Loan Agreement and its provisions have
been explained fully to Borrower and Borrower has consulted with
Counsel of Borrower's choice.
10.10 Time is of the Essence. Time shall be of the essence
in the performance of all of the Borrower's obligations under the
Loan Documents and other instruments related hereto.
10.11 Binding Effect. The provisions of this Loan Agreement
shall bind and benefit the Borrower and the Bank and their
respective successors, heirs, personal representatives and
assigns, including each subsequent holder, if any, of the Note.
10.12 Complete Agreement. This Loan Agreement and the other
instruments referred to herein contain the entire agreement of
the parties pertaining to its subject matter and supersede all
prior written and oral agreements pertaining hereto.
10.13 Assignments. The Borrower may not assign its rights
under this Loan Agreement to any other party without the express
written permission of the Bank.
10.14 No Agency. Bank is not the agent or representative of
Borrower and Borrower is not the agent or representative of Bank,
and nothing in this Loan Agreement shall be construed to make
Bank liable to anyone for goods delivered or services performed
upon the property or for debts or claims accruing against
Borrower. Nothing herein shall be deemed to create a contractual
relationship between the Bank and anyone supplying labor or
materials to the property. Bank's obligations are not for the
benefit of or enforceable by any successor or assignee of
Borrower.
10.15 No Partnership or Joint Venture. Nothing herein nor
the acts of the parties hereto shall be construed to create a
partnership or joint venture between the Bank and Borrower.
10.17 Conflict with Other Loan Documents. In the event of
any conflict between the terms of other Loan Documents and this
Loan Agreement, the terms of the Loan Agreement shall control and
govern in all respects. Whenever possible, the provisions of
this Loan Agreement shall be deemed supplemental to and not in
derogation of the other Loan Documents.
10.18 Survival of Covenants, Agreements, Warranties and
Representations. All covenants, warranties, agreements, and
representations made by the Borrower herein shall survive the
making of the Loan and the execution and delivery of this Loan
Agreement, the Note, the Stock Pledge Agreement and the other
Loan Documents, and shall be deemed to be continuing covenants,
agreements, representations, and warranties at all times while
any portion of the Note remains unpaid.
10.19 Waivers. No waiver or consent granted by the Bank in
respect to this Loan Agreement, the Note, the Stock Pledge
Agreement or any other Loan Document shall be binding upon the
Bank unless specifically granted in writing by a duly authorized
officer of the Bank, which writing shall be strictly construed.
IN WITNESS WHEREOF, the parties hereto have executed this
Loan Agreement as of the date first set forth above.
PIONEER BANK
DATE: 7/31/96 BY: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, VICE-PRESIDENT
FREEDOM FINANCIAL CORPORATION
DATE: 7/31/96 BY: /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, CEO
This instrument prepared by:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ESQ.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇-▇▇▇-▇▇▇▇
