Exhibit 10.10
EXECUTION COPY
LOAN AND STOCK PLEDGE AGREEMENT
THIS LOAN AND STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of
June 29, 2005, between NEXITY FINANCIAL CORPORATION, a Delaware corporation (the
"Borrower"), and FLAG BANK, a Georgia banking corporation (the "Lender").
On the date hereof the Borrower is borrowing the principal amount of
$7,000,000 from the Lender (the "Loan"), which will be evidenced by the Note.
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 all the issued and outstanding shares of capital stock
owned or hereafter acquired by the Borrower (the "Stock") in Nexity Bank, having
its main office at 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000
(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.
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(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) If, prior to repayment in full of the Loan, the aggregate book value
of the Stock becomes less than $28,500,000 the Borrower shall promptly deliver
to the Lender on demand additional collateral of a type and value acceptable to
the Lender (and the Lender's reasonable judgment in valuing same shall be
conclusive) so that the sum of the value of such additional collateral plus the
aggregate book value of the Stock is equal to or in excess of $28,500,000. 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 promptly shall release its security interest in such
additional collateral upon the request of the Borrower because the $28,500,000
threshold discussed above is exceeded.
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 Delaware 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. The chief executive office of the Borrower and the
principal place of business of the Borrower where the records of the Borrower
are kept are located at 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
00000, and the Borrower's U.S. employer identification number is 00-0000000.
(b) The Bank is a commercial bank duly organized, validly existing,
and in good standing under the laws of the State of Alabama. The Borrower owns
all of the Stock (consisting of 513 shares) 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. The Bank has
all requisite corporate power and authority and possesses all material 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 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, to Borrower's knowledge, threatened, in the
financial condition or operations of the Borrower or any Subsidiary since the
date of such most recent financial statement.
(d) The Borrower has full corporate 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 or
regulation, 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, to Borrower's
knowledge, threatened against the Borrower or any Subsidiary or against any of
their properties or assets which might reasonably be expected to have a material
adverse effect on the Borrower, any Subsidiary, or their respective properties
or assets, or which might reasonably be expected to call into question the
validity or enforceability of the Financing Documents, or which might reasonably
be expected to involve the alleged violation by the Borrower or any Subsidiary
of any material 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
or certificate of incorporation, respectively, as in effect as of the date here
(as certified by the Delaware or Alabama Secretary of State, as appropriate);
(ii) certificates of existence for the Borrower and the Bank issued by the
Delaware or Alabama Secretary of State, as appropriate; (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 by written consent in lieu of a meeting duly called and held on June 29,
2005. 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 or certificate of incorporation, respectively, since
the date
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of the certifications referred to above through the date hereof, and the
Borrower and the Bank have remained in valid existence under the laws of the
State of Alabama 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 promptly furnish to the Lender: (i) not later
than 120 days after the end of each fiscal year, audited consolidated financial
statements of the Borrower prepared in accordance with generally accepted
accounting principles ("GAAP") and certified by an independent accounting firm
acceptable to the Lender, Ernst & Young LLP being hereby acknowledged as being
acceptable to the Lender; (ii) not later than 30 days after the end of the
respective semiannual period, copies of the semiannual reports filed by the
Borrower with the Board of Governors of the Federal Reserve System; (iii) not
later than 30 days after the end of each of the first three quarters of each
year, copies of the Report of Condition and the Report of Income and Dividends
of each of the Bank Subsidiaries; (iv) immediately after the occurrence of a
material adverse change in the business, properties, condition, management, or
prospects (financial or otherwise) of the Borrower or any Subsidiary, including,
without limitation, imposition of any letter agreement, memorandum of
understanding, cease and desist order, or other similar regulatory action
involving the Borrower or any Subsidiary, a statement by the Borrower's chief
executive officer or chief financial officer setting forth in reasonable detail
such change and the action which the Borrower or any Subsidiary proposes to take
with respect thereto; and (v) from time to time upon request of the Lender, such
other information relating to the operations, business, condition, management,
properties, or prospects of the Borrower or any Subsidiary as the Lender may
request (including meetings with the Borrower's or Subsidiary's officers and
upon the occurrence of an Event of Default, employees).
(b) The Borrower and each Subsidiary shall punctually pay and
discharge prior to their becoming delinquent (giving effect to all extensions)
all taxes, assessments and other governmental charges or levies imposed upon it
or upon its income or upon any of its property except to the extent being
contested in good faith by appropriate proceedings and subject to adequate
reserve to the extent required by GAAP.
(c) 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, and which the failure to comply with would have a material
adverse effect on Borrower and its subsidiaries on a consolidated basis.
(d) The Borrower shall immediately upon learning of the same notify
the Lender of any change in the Chief Executive Officer, President, Chief
Financial Officer or Chief Lending Officer of the Borrower or in the beneficial
ownership of more than 2% of the Borrower's stock by any officer, director or
25% or greater shareholder of the Borrower.
4. Negative Covenants. The Borrower agrees that so long as the Note is
outstanding or this Agreement is in effect:
(a) From the date hereof, the Borrower shall not permit the ratio of
Tier 1 Capital to average total assets (the "Tier 1 Leverage Ratio") of the
Borrower as of the end of any calendar year to be less than 7%.
(b) From the date hereof, the Borrower shall not permit its Tier 1
Risk Based Capital Ratio as of the end of any calendar year to be less than 10%.
(c) The Borrower shall not permit the Tier 1 Leverage Ratio of any
of the Bank Subsidiaries as of the end of any calendar year to be less than 7%.
(d) The Borrower shall not permit the Tier 1 Risk Based Capital
Ratio of any of the Bank Subsidiaries as of the end of any calendar year to be
less than 10%.
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(e) The Borrower shall not permit its Capital at any time during the
term of this Agreement to be less than $28,500,000.
(f) The Borrower shall not, and shall not permit any of the Bank
Subsidiaries to, fail to comply at any time with any minimum capital requirement
imposed by any of their federal or state regulators.
(g) Borrower shall not
permit the Weighted Average Return on Assets for either the Borrower or the Bank
to be less than .80%, on an annualized basis, for each calendar quarter.
(h) The Borrower shall not permit the allowance for loan and lease
losses of any of the Bank Subsidiaries to be less than the sum of 1.00% of such
Bank Subsidiary's gross loans for each calendar quarter.
(i) The Borrower shall not permit (i) the net charge-offs of any of
the Bank Subsidiaries to be .50% or more of the Bank Subsidiary's average loans
at any calendar quarter end, or (ii) the Non-Performing Loans of any of the Bank
Subsidiaries to be 1.50% or more of the Bank Subsidiary's gross loans at any
calendar quarter end, or (iii) the Non-Performing Loans plus other real estate
owned of any of the Bank Subsidiaries to be 1.50% or more of the Bank
Subsidiary's total assets at any calendar quarter end.
(j) The Borrower shall not incur or permit to exist any additional
indebtedness or liability for borrowed money in an amount to exceed $250,000
other than to the Lender or a wholly-owned Subsidiary of the Borrower without
prior Lender approval, except that this covenant shall not apply to deposits,
repurchase agreements, federal funds borrowings, Federal Home Loan Bank
advances, overdrafts, and other banking transactions entered into by a
Subsidiary in the ordinary course of its business.
(k) 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 Lender or a Subsidiary) in any amount except in connection with the
depositing of checks in the normal and ordinary course of business.
(l) Without the prior written approval of Lender, which approval
shall not be unreasonably withheld, the Borrower shall not (i) transfer all or
substantially all of its assets to, or consolidate or merge with, or acquire all
or substantially all of the properties or capital stock of any other Person, or
(ii) permit any Bank Subsidiary to, transfer all or substantially all of its
assets to or consolidate or merge with any other Person, or acquire all or
substantially all of the properties or capital stock of any other Person, or
create any Subsidiary or enter into any partnership or joint venture.
(m) Without the prior written approval of Lender, which approval
shall not be unreasonably withheld, 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 or as a result of the
pledge of stock to Lender.
(n) Without the prior written approval of Lender, which approval
shall not be unreasonably withheld, 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 of any of its Subsidiaries other than to Lender.
(o) The Borrower shall not, nor permit any Subsidiary to, pay
dividends if the Loan is in Default or if the payment of such dividends would
create a Default, other than dividends payable to the Borrower by a Subsidiary.
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5. Advances Under the Loan. The Lender shall not be obligated to make any
advance of the Loan to the Borrower unless:
(a) All representations and warranties of the Borrower contained in
this Agreement or the Note shall be true in all 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 respects all their agreements and obligations required by the Financing
Documents.
(c) No material adverse change shall have occurred in the Borrower's
or any Subsidiary's condition (financial or otherwise), or in the business,
properties, assets, liabilities, prospects, or management of the Borrower or any
Subsidiary since the date of this Agreement.
(d) No Default or event which, with the giving of notice or passage
of time (or both), would constitute a Default under the terms of this Agreement
shall have occurred.
(e) All other matters incidental to the making of the Loan upon the
terms and conditions set forth in the Financing Documents shall be satisfactory
to the Lender.
6. Default. A "Default" shall exist if any of the following occurs:
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(a) Failure of the Borrower punctually to make any payment of any
amount payable, whether principal or interest or other amount, on any of the
Liabilities, whether at maturity, or at a date fixed for any prepayment or
partial prepayment, or by acceleration, or otherwise which failure shall
continue for 15 days following notice from Lender.
(b) Any statement, representation, or warranty of the Borrower made
in any of the Financing Documents or at any time furnished by or on behalf of
the Borrower to the Lender shall be false or misleading in any material respect
as of the date made.
(c) Failure of the Borrower punctually and fully to comply with (i)
any of the covenants in Section 4 of this Agreement or (ii) any of the other
covenants set forth in this Agreement if such failure under this clause (ii) is
not remedied within 30 days after notice from the Lender to the Borrower.
(d) The occurrence of a default under any other agreement to which
the Borrower and the Lender are parties or under any other instrument executed
by the Borrower in favor of the Lender which remains uncured after the
expiration of any cure period provided by such agreement.
(e) If the Borrower or any Subsidiary becomes insolvent as defined
in the Delaware or Alabama Uniform Commercial Code, as applicable, or makes an
assignment for the benefit of creditors; or if any action is brought by the
Borrower or any Subsidiary seeking dissolution of the Borrower or such
Subsidiary or liquidation of its assets or seeking the appointment of a trustee,
interim trustee, receiver, or other custodian for any of its property; or if the
Borrower or any Subsidiary commences a voluntary case under the Federal
Bankruptcy Code; or if any reorganization or arrangement proceeding is
instituted by the Borrower or any Subsidiary for the settlement, readjustment,
composition or extension of any of its debts upon any terms; or if any action or
petition is otherwise brought by the Borrower or any Subsidiary seeking similar
relief or alleging that it is insolvent or unable to pay its debts as they
mature.
(f) Any action is brought against the Borrower or any Subsidiary
seeking dissolution of the Borrower or such Subsidiary or liquidation of any of
its assets or seeking the appointment of a trustee, interim trustee, receiver,
or other custodian for any of its property, and such action is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 60
days of the date upon which it was instituted; or any proceeding under the
Federal Bankruptcy Code is instituted against the Borrower or any Subsidiary and
(i) an order for relief is entered in such proceeding or (ii) such proceeding
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is consented to or acquiesced in by the Borrower or such Subsidiary or is not
dismissed within 60 days of the date upon which it was instituted; or any
reorganization or arrangement proceeding is instituted against the Borrower or
any Subsidiary for the settlement, readjustment, composition, or extension of
any of its debts upon any terms, and such proceeding is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 60
days of the date upon which it was instituted; or any action or petition is
otherwise brought against the Borrower or any Subsidiary seeking similar relief
or alleging that it is insolvent, unable to pay its debts as they mature, or
generally not paying its debts as they become due, and such action or petition
is consented to or acquiesced in by the Borrower or such Subsidiary or is not
dismissed within 60 days of the date upon which it was brought.
(g) The Borrower or any Subsidiary fails to make any payment due on
any indebtedness of the Borrower or any Subsidiary which causes the acceleration
of such indebtedness, or fails to perform or observe any other provision
contained in any other indebtedness of the Borrower or any Subsidiary or in any
agreement securing or relating to any indebtedness of the Borrower or any
Subsidiary if such failure causes the acceleration of such indebtedness, and the
amount of such indebtedness exceeds $100,000.
(h) Any cease and desist or other order has been threatened,
noticed, or entered against the Borrower or any Subsidiary by any bank or bank
holding company regulatory agency or body, or the Borrower or any Subsidiary
enters into any form of memorandum of understanding, plan of corrective action,
or letter agreement with any such regulatory agency or body, or any other
regulatory enforcement action is taken against the Borrower or any Subsidiary
relating to the capitalization, management, or operation of the Borrower or any
Subsidiary.
(i) The Borrower or any Subsidiary is indicted or convicted or
pleads guilty or nolo contendere to any charge that the Borrower or such
Subsidiary has violated any drug, controlled substances, money laundering,
currency reporting, racketeering, or
racketeering-influenced-and-corrupt-organization statute or regulations other
forfeiture statute.
(j) The Borrower ceases to own 100% of the issued and outstanding
capital stock of the Bank or ceases to control any of the other Bank
Subsidiaries.
7. Remedies Upon Default. Upon the occurrence of a Default and, to the
extent any applicable cure period relating to the condition underlying the
Default is not required by the definition of Default to have already expired
before a Default exists, the continuance of such Default beyond such cure
period, the Lender shall be entitled, without limitation, to exercise the
following rights at any time and from time to time, which the Borrower hereby
agrees to be commercially reasonable:
(a) declare any of the Liabilities due and payable, whereupon they
immediately will become due and payable (notwithstanding any provisions to the
contrary, and without presentment, demand, notice or protest of any kind (all of
which are expressly waived by the Borrower));
(b) (i) receive all amounts payable in respect of the Collateral
otherwise payable to the Borrower; (ii) settle all accounts, claims, and
controversies relating to the Collateral; (iii) transfer all or any part of the
Collateral into the Lender's or any nominee's name; and (iv) execute all
agreements and other instruments; bring, defend and abandon all actions and
other proceedings; and take all actions in relation to the Collateral as the
Lender in its sole discretion may determine;
(c) enforce the payment of the Stock and exercise all of the rights,
powers and remedies of the Borrower thereunder, including the exercise of all
voting rights and other ownership or consensual rights of the Stock (but the
Lender is not hereby obligated to exercise such rights), and in connection
therewith the Borrower hereby appoints the Lender to be the Borrower's true and
lawful attorney-in-fact and IRREVOCABLE PROXY to vote the Stock in any manner
the Lender deems advisable for or against all matters submitted to a vote of
shareholders, and such power-of-attorney is coupled with an interest and
irrevocable;
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(d) sell, assign and deliver, or grant options to purchase, all or
any part of or interest in the Collateral in one or more parcels, at any public
or private sale at any exchange, any of the Lender's offices, or elsewhere,
without demand of performance, advertisement, or notice of intention to sell or
of the time or place of sale or adjournment thereof or to redeem or otherwise
(all of which are hereby expressly and irrevocably waived by the Borrower), for
cash, on credit, or for other property, for immediate or future delivery without
any assumption of credit risk, and for such price and on such terms as the
Lender in its sole discretion may determine; the Borrower agrees that to the
extent that notice of sale shall be required by law that at least five business
days' notice to the Borrower of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification; the Lender shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given; the Lender may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and any such sale may, without further notice, be made at the
time and place to which it was so adjourned; the Borrower hereby waives and
releases to the fullest extent permitted by law any right or equity of
redemption with respect to the Collateral, whether before or after sale
hereunder, and all rights, if any, of marshalling the Collateral and any other
security for the Loan or otherwise; at any such sale, unless prohibited by
applicable law, the Lender may bid for and purchase all or any part of the
Collateral so sold free from any such right or equity of redemption; and the
Lender shall not be liable for failure to collect or realize upon any or all of
the Collateral or for any delay in so doing nor shall any of them be under any
obligation to take any action whatsoever with regard thereto;
(e) appoint and dismiss managers or other agents for any of the
purposes mentioned in the foregoing provisions of this Section 7, all as the
Lender in its sole discretion may determine; and
(f) generally, take all such other action as the Lender in its sole
discretion may determine as incidental or conducive to any of the matters or
powers mentioned in this Section 7 and which the Lender may or can do lawfully
and use the name of the Borrower for such purposes and in any proceedings
arising therefrom.
8. Application of Proceeds. The proceeds of the public or private sale or
other disposition of any Collateral hereunder shall be applied to (i) the costs
incurred in connection with the sale, expressly including, without limitation,
any costs under Section 11(a) hereof; (ii) any unpaid interest which may have
accrued on any obligations secured hereby; (iii) any unpaid principal on any
obligations secured hereby; and (iv) damages incurred by the Lender by reason of
any breach secured against hereby, in such order as the Lender may determine,
and any remaining proceeds shall be paid over to the Borrower or others as by
law provided. If the proceeds of the sale or other disposition of the Stock are
insufficient to pay all such amounts, the Borrower shall remain liable to the
Lender for the deficiency.
9. Additional Rights of Secured Parties. In addition to its other rights
and privileges under this Agreement, the Lender may exercise from time to time
any and all other rights and remedies available to a secured party when a debtor
is in default under a security agreement as provided in the Uniform Commercial
Code of Georgia, or available to the Lender under any other applicable law or in
equity, including without limitation the right to any deficiency remaining after
disposition of the Collateral. The Borrower shall pay all of the reasonable
costs and expenses (including documented reasonable attorneys' fees) actually
incurred by the Lender in enforcing its rights under this Agreement.
10. Return of Stock to Borrower. Upon payment in full of all of the
Liabilities and full performance by the Borrower of all covenants and other
obligations under this Agreement, the Lender shall return to the Borrower (i)
all of the then remaining Stock, (ii) all rights received by the Lender as agent
for the Borrower as a result of its possessory interest in the Stock, and (iii)
all additional collateral (if any) held by Lender pursuant to Section 1(b) above
and release all right therein.
11. Disposition of Stock by Agent. The Stock is not registered under the
various federal or state securities laws and disposition thereof after Default
may be subject to prior regulatory approval and may be restricted to one or more
private (instead of public) sales in view of the lack of such registration.
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The Borrower acknowledges that upon such disposition, the Lender may approach
only a restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Stock than if the Stock were
registered pursuant to federal and state securities laws and sold on the open
market. The Borrower, therefore, agrees that:
(a) if the Lender shall, pursuant to the terms of this Agreement,
sell or cause any of the Stock to be sold at a private sale, the Lender shall
have the right to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and experience in connection with
shares of companies in the banking industry (but shall not be obligated to seek
such advice and the failure to do so shall not be considered in determining the
commercial reasonableness of the Lender's action) as to the best manner in which
to expose the Stock for sale and as to the best price reasonably obtainable at
the private sale thereof; and
(b) such reliance shall be conclusive evidence that the Lender has
handled such disposition in a commercially reasonable manner.
12. Borrower's Obligations Absolute. The obligations of the Borrower under
this Agreement shall be direct and immediate and not conditional or contingent
upon the pursuit of any other remedies against the Borrower or any other Person,
nor against other security or liens available to the Lender or its successors,
assigns or agents. The Borrower hereby waives any right to require that an
action be brought against any other Person or require that resort be had to any
security or to any balance of any deposit account or credit on the books of the
Lender in favor of any other Person prior to any exercise of rights or remedies
hereunder, or to require resort to rights or remedies of the Lender in
connection with the Loan.
13. Notices. Except as provided otherwise in this Agreement, all notices
and other communications under this Agreement are to be in writing and are to be
deemed to have been duly given and to be effective upon delivery to the party to
whom they are directed. If sent by U.S. mail, first class, certified, return
receipt requested, postage prepaid, and addressed to the Lender or to the
Borrower at their respective addressees set forth below, such communications are
deemed to have been delivered on the second business day after being so posted.
If to the Lender: Flag Bank
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Senior Vice President
If to the Borrower: Nexity Financial Corporation
0000 Xxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxx, Chairman and Chief Executive
Officer
with a copy to: Xxxxx & Xxxxxxx LLP
0000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Either the Lender or the Borrower may, by written notice to the other,
designate a different address for receiving notices under this Agreement;
provided, however, that no such change of address will be effective until
written notice thereof is actually received by the party to whom such change of
address is sent.
14. Binding Agreement. The provisions of this Agreement shall be construed
and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the laws of the State of
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Georgia. This Agreement, together with all documents referred to herein,
constitutes the entire Agreement between the Borrower and the Lender with
respect to the matters addressed herein and may not be modified except by a
writing executed by the Lender and delivered by the Lender to the Borrower. This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which, taken together, shall constitute one and
the same instrument.
15. Participations. The Lender may, upon 30 days prior written notice to
Borrower, grant participations in or sell, assign, transfer or otherwise dispose
of all or any portion of the indebtedness of the Borrower outstanding pursuant
to the Financing Documents. The Borrower hereby agrees that any holder of a
participation in, and any assignee or transferee of, all or any portion of any
amount owed by the Borrower under the Financing Documents, upon notice to
Borrower, (i) shall be entitled to the benefits of the provisions of this
Agreement as the Lender hereunder and (ii) may exercise any and all rights of
the banker's lien, set-off or counterclaim with respect to any and all amounts
owed by the Borrower to such assignee, transferee or holder as fully as if such
assignee, transferee or holder had made the Loan in the amount of the obligation
in which it holds a participation or which is assigned or transferred to it.
16. Expenses. All reports and other documents or information furnished to
the Lender under this Agreement shall be supplied by the Borrower without cost
to the Lender. Further, the Borrower shall reimburse the Lender on demand for
all out-of-pocket costs and expenses (including reasonable documented legal
fees) actually incurred by the Lender in connection with the preparation,
interpretation, operation, and enforcement of the Financing Documents or the
protection or preservation of any right or claim of the Lender with respect to
such agreements. The Borrower will pay all taxes (other than Lender's income
taxes and taxes on capital or net worth imposed as an alternative to a tax based
on income) (if any) in connection with the Financing Documents. The obligations
of the Borrower under this section shall survive the payment of the Liabilities
and the termination of this Agreement.
17. Indemnification. In addition to any other amounts payable by the
Borrower under this Agreement, the Borrower shall pay and indemnify the Lender
from and against all claims, liabilities, losses, costs, and expenses
(including, without limitation, reasonable documented attorneys' fees and
expenses) which the Lender may (other than as a result of the gross negligence
or willful misconduct of the Lender) actually incur or be subject to as a
consequence, directly or indirectly, of (i) any breach by the Borrower of any
warranty, term or condition in, or the occurrence of any default under, any of
the Financing Documents, including all fees or expenses resulting from the
settlement (with the prior written approval of the Borrower) or defense of any
claims or liabilities arising as a result of any such breach or default, (ii)
the Lender's making, holding, or administering the Loan or the Collateral, (iii)
allegations of participation or interference by the Lender in the management,
contractual relations or other affairs of the Borrower or any Subsidiary, (iv)
allegations that the Lender has joint liability with the Borrower or any
Subsidiary for any reason, and (v) any suit, investigation, or proceeding as to
which the Lender or such participant is involved as a consequence, directly or
indirectly, of its execution of any of the Financing Documents, or any other
event or transaction contemplated by any of the foregoing. The obligations of
Borrower under this Section 17 shall survive the termination of this Agreement.
18. Right to Set-Off. Upon the occurrence and during the continuance of a
Default hereunder, the Lender, without notice or demand of any kind, may hold
and set off against such of the Liabilities (whether matured or unmatured) as
the Lender may elect any balance or amount to the credit of the Borrower in any
deposit, agency, reserve, holdback or other account of any nature whatsoever
maintained by or on behalf of the Borrower with the Lender at any of its
offices, regardless of whether such accounts are general or special and
regardless of whether such accounts are individual or joint. Any Person
purchasing an interest in debt obligations under this Agreement held by the
Lender may exercise all rights of offset with respect to such interest as fully
as if such Person were a holder of debt obligations hereunder in the amount of
such interest.
19. Further Assurances. If at any time the Lender upon advice of its
counsel shall determine that any further document shall be required to effect
this Agreement and the transactions and other agreements contemplated thereby
upon the terms contained herein and therein, the Borrower shall, and shall
9
cause its Subsidiaries to, execute and deliver such document and otherwise carry
out the purposes of this Agreement.
20. Severability. If any paragraph or part thereof shall for any reason be
held or adjudged to be invalid, illegal, or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof shall be deemed separate,
distinct, and independent, and the remainder of this Agreement shall remain in
full force and effect and shall not be affected by such holding or adjudication.
21. Binding Effect. All rights of the Lender under the Financing Documents
shall inure to the benefit of its transferees, successors and assigns. All
obligations of the Borrower under the Financing Documents shall bind its heirs,
legal representatives, successors, and assigns.
22. Definitions.
-----------
(a) "Bank Subsidiaries" means each banking Subsidiary of Borrower,
now or hereafter in existence, including but not limited to the Bank.
(b) "Capital" means all capital or all components of capital, other
than any allowance for loan and lease losses and net of any intangible assets,
as defined from time to time by the primary federal regulator of the Borrower,
the Bank, or each of the other Bank Subsidiaries (as the case may be).
(c) "Collateral" means and includes all property assigned or pledged
to the Lender or in which the Lender has been granted security interest or to
which the Lender has been granted security title, whether under any of the
Financing Documents or any other agreement, instrument, or document, and the
proceeds thereof.
(d) "Financing Documents" means and includes this Agreement, the
Note, and all other associated loan and collateral documents including, without
limitation, all guaranties, suretyship agreements, stock powers, security
agreements, security deeds, subordination agreements, exhibits, schedules,
attachments, financing statements, notices, consents, waivers, opinions,
letters, reports, records, assignments, documents, instruments, information and
other writings related thereto, or furnished by the Borrower to the Lender in
connection therewith or in connection with any of the Collateral, and any
amendments, extensions, renewals, modifications or substitutions thereof or
therefor.
(e) "Liabilities" means all indebtedness, liabilities, and
obligations of the Borrower of any nature whatsoever which the Lender may now or
hereafter have, own or hold, and which are now or hereafter owing to the Lender
regardless of however and whenever created, arising or evidenced, whether now,
heretofore or hereafter incurred, whether now, heretofore or hereafter due and
payable, whether alone or together with another or others, whether direct or
indirect, primary or secondary, absolute or contingent, or joint or several, and
whether as principal, maker, endorser, guarantor, surety or otherwise, and also
regardless of whether such Liabilities are from time to time reduced and
thereafter increased or entirely extinguished and thereafter reincurred,
including without limitation the Note and any amendments, extensions, renewals,
modifications or substitutions thereof or therefor.
(f) "Non-Performing Loans" means those loans on non-accrual status
plus all other loans 90 days or more past due, less the government guaranteed
portion of such Loans.
(g) "Note" shall mean the grid promissory note dated the date hereof
in the principal amount of $7,000,000 and any amendments, extensions, renewals,
modifications, or substitutions thereof or therefor in effect at any particular
time.
(h) "Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
10
(i) "Subsidiary" means each of the Bank Subsidiaries and each other
corporation for which the Borrower has the power, directly or indirectly, to
direct its management or policies or to vote 25% or more of any class of its
voting securities.
(j) "Tier 1 Capital" means Tier 1 capital as defined by the capital
maintenance regulations of the primary federal bank regulatory agency of the
Borrower or the relevant Bank Subsidiary, as the case may be.
(k) "Tier 1 Risk Based Capital Ratio" means the ratio of Tier 1
Capital to total risk-weighted assets as defined by the capital maintenance
regulations of the primary federal bank regulatory agency of the Borrower.
(l) "Weighted Average Return on Assets" means (i) with respect to
the Borrower, its net income for the previous calendar year plus the amount of
any interest payments by it during the previous calendar year on the Loan,
divided by its average assets during the previous calendar year, and (ii) with
respect to any Bank Subsidiary, its net income for the previous calendar year
divided by its average assets during the previous calendar year.
(m) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in effect from time to time.
(Remainder of page left blank intentionally)
11
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
affixed their seals by and through their duly authorized officers, as of the day
and year first above written.
BORROWER:
NEXITY FINANCIAL CORPORATION
By: ____________________________________
Xxxx X. Xxx
Chairman and Chief Executive
Officer
Attest: ________________________________
Xxxxx X. Xxxx
President
[CORPORATE SEAL]
I hereby certify that the representation and warranty contained in Section
2(i)(v) of this Agreement is true and correct in all material respects.
________________________________________
Xxxx X. Xxx
Secretary
LENDER:
FLAG BANK
By: ____________________________________
Xxxxx X. Xxxxx
Senior Vice President
[BANK SEAL]
12
EXHIBIT A
ARTICLES OF INCORPORATION
OF
NEXITY FINANCIAL CORPORATION
EXHIBIT B
CERTIFICATE OF EXISTENCE
OF
NEXITY FINANCIAL CORPORATION
EXHIBIT C
BYLAWS
OF
NEXITY FINANCIAL CORPORATION
EXHIBIT D
RESOLUTIONS
OF
NEXITY FINANCIAL CORPORATION
RESOLUTIONS OF BOARD OF DIRECTORS
OF
NEXITY FINANCIAL CORPORATION
RESOLVED, that the Company is authorized to borrow $7,000,000 (the
"Loan") from Flag Bank (the "Lender") upon such terms and conditions as the
authorized officers of the Company, or any one of them, shall approve, such
approval to be conclusively evidenced by the execution and delivery of a loan
and stock pledge agreement between the Company and the Lender concerning the
Loan (the "Loan Agreement"); and
RESOLVED, that the Company is authorized to pledge 513 shares of the
common stock of Nexity Bank, 0000 Xxxx Xxxx Xxxxx, Xxxxx 000, Xxxxxxxxxx,
Xxxxxxx 00000 as collateral for the Loan; and
RESOLVED, that the Chairman and Chief Executive Officer of the
Company, Xxxx X. Xxx, is authorized to execute and deliver, on behalf of the
Company, the Loan Agreement, the Note, stock powers, certificates, agreements
and other documents to be executed and delivered to the Lender by the Company
pursuant to and in connection with the Loan (collectively, the "Loan
Documents"), all in such form as the Chairman and Chief Executive Officer
executing same shall deem to be in the best interests of the Company, with the
authority to determine such form being conclusively evidenced by the Chairman
and Chief Executive Officer's execution thereof; and
RESOLVED, that the President of the Company, Xxxxx X. Xxxx, is
authorized and directed to countersign or attest the signature of the Chairman
and Chief Executive Officer on the Loan Agreement and the other Loan Documents
and to affix the corporate seal of the Company thereto (provided that no
countersignature, attestation, or seal shall be required to make any such
document effective, valid, binding or enforceable); and
RESOLVED, that the Company is authorized to make payments of
interest and principal and to perform all obligations of the Company with
respect to the Loan; and
RESOLVED, that any act taken or deed done by any officer or agent of
the Company in accordance with these resolutions or to facilitate the
transactions contemplated by these resolutions is hereby approved, ratified and
confirmed; and that the officers and agents of the Company are authorized to
take and do such further acts and deeds, and to execute and deliver, for and in
the name of the Company, such other documents, papers and instruments as they
deem necessary, appropriate, advisable or required in order to effectuate the
purpose and intent of these resolutions and to consummate the transactions
contemplated by these resolutions, and the taking of any such acts and deeds,
and the executions and delivery of any such documents, papers and instruments is
hereby ratified and approved; and
RESOLVED, that the President of the Company is authorized to
countersign or attest the signature of another officer under any and all such
agreements, documents, papers and instruments and to affix the corporate seal
thereto and to attest the same (provided that no countersignature, attestation
or seal shall be required to make any such document effective, valid, binding or
enforceable), and the Secretary of the Company is further authorized and
empowered to certify to the passage of the foregoing resolutions.
RESOLVED, that a copy of this Unanimous Consent to Action shall be placed
in the Company's minute book.
EXHIBIT E
CERTIFICATE OF INCORPORATION
OF
NEXITY BANK
EXHIBIT F
CERTIFICATE OF EXISTENCE
OF
NEXITY BANK
EXHIBIT G
BYLAWS
OF
NEXITY BANK
