EXHIBIT 99.2
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LOAN AGREEMENT
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THIS LOAN AGREEMENT is entered into this 19th day of February, 1999, by
and between INDIANA UNITED BANCORP, an Indiana corporation, having its principal
office at 201 North Broadway Street, Greensburg, Indiana 47240, Indianapolis,
Indiana (hereinafter referred to as "Borrower") and NATIONAL CITY BANK OF
INDIANA, a national banking association, having its principal offices at 101
West Washington Street, Indianapolis, Indiana 46255 (hereinafter referred to as
"Bank").
WITNESSETH:
WHEREAS, Borrower is engaged in business as a registered bank holding
company and is the parent corporation for Regional Federal Savings Bank, Union
Bank and Trust Company of Indiana, and People's Trust Company; and,
WHEREAS, Borrower wishes to obtain: (1) an Eight Million and No/100
Dollars ($8,000,000.00) seventy (70) month term loan from Bank for general
corporate purposes including equity contributions to subsidiaries; (2) Three
Million and No/100 Dollars ($3,000,000.00) revolving credit for general
corporate purposes including the acquisition of bank branches; and (3) a
commitment to term-out the principal balance of the above revolving credit under
a five (5) year term loan when such revolving credit expires; and
WHEREAS, Bank is willing to provide said financing subject to the terms
and conditions of this Agreement.
NOW THEREFORE, in consideration of these premises and the undertakings
of the parties hereto, Borrower and Bank hereby agree as follows:
1. DEFINITIONS. Definitions of certain of the terms used in this
Agreement are set out as follows:
(a) "APPLICABLE MARGIN" shall mean the applicable
percentage amount determined by Bank in
accordance with the following performance based
pricing matrix:
Consolidated Leverage Ratio Applicable Margin
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0 (less than or equal to) 1.0 1.2%
1.0 (greater than or equal to) 1.35 1.5%
1.35 (greater than or equal to) 1.7 1.85%
1.7 (greater than or equal to) 2.0 2.2%
The Applicable Margin shall be adjusted
quarterly by the Bank based upon the
Consolidated Leverage Ratio. Adjustments to the
Applicable Margin shall be based upon the
Borrower's quarterly Compliance Certificate as
required hereunder in Section 9(c)(iv) herein.
LIBOR Options shall not be available if an
Event of Default shall have occurred and is
continuing or the Compliance Certificate is not
timely received. Adjustments shall not be made
until three (3) Business Days after the date
the Compliance Certificate was due or upon
actual receipt by Bank, whichever is later.
Adjustments to the Applicable Margin shall not
be retroactive to the date the Compliance
Certificate was due, unless the adjustment is
upward.
(b) "AVERAGE ASSETS" shall mean Borrower's and its
Subsidiaries' total "Average Assets" as such
term is defined by current governing laws and
regulations, and such Average is disclosed in
Part III of Schedule HC-I of Borrower's and its
Subsidiaries Federal Reserve FR-Y-9C
Consolidated Financial Statement.
(c) "BANK DEBT" shall mean Debt payable to Bank,
whether initially payable to Bank or acquired
by Bank by purchase, pledge or otherwise and
whether assigned to or participated to or from
Bank in whole or in part.
(d) "CONSOLIDATED LEVERAGE RATIO" shall mean
Senior Debt divided by Consolidated Net
Income.
(e) "CONSOLIDATED NET INCOME" shall mean the
consolidated after tax net income of Borrower
and its Subsidiaries.
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(f) "DEBT" shall mean collectively, all monetary
liabilities, and any charges or expenses
incurred in connection therewith, now or
hereafter owing by the Person or Persons in
question, including, without limitation, every
such liability whether owing by such Person or
one (1) of such Persons alone or jointly,
severally or jointly and severally, whether
owing absolutely or contingently, or directly
or indirectly, and whether created by loan,
overdraft, guaranty or other contract or
quasi-contract, tort, statute or other
operation of law.
(g) "DEBT SERVICE COVERAGE RATIO" shall mean
Consolidated Net Income divided by the sum of
(i) the current portion of long term Debt for
borrowed money of Borrower and its
Subsidiaries plus (ii) all cash dividends of
Borrower, for the same fiscal period.
(h) "LOAN LOSS RESERVE" shall mean reserve
accounts in which contributions are made based
on the quality of loans and an estimation of
possible losses and otherwise as such term is
defined in accordance with current governing
laws and regulations.
(i) "LIBOR" shall mean that as it is defined under
the Notes.
(j) "MINIMUM CAPITAL" shall mean the sum of Tier 1
Capital and Tier II Capital as those terms are
defined by current governing laws and
regulations, and such capital amounts are
disclosed in Part III of Schedule HC-I of
Borrower's and its Subsidiaries Federal
Reserve FR-Y-9C Consolidated Financial
Statements.
(k) "PEOPLE'S TRUST" shall mean People's Trust
Company, an Indiana state bank corporation,
which is wholly owned by Borrower.
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(l) "PERSON" shall mean a natural person or entity
of any kind, including, without limitation,
any corporation, partnership, trust,
governmental body or any other form of entity.
(m) "PRIME RATE" shall mean the fluctuating rate
of interest which is publicly announced from
time to time by Bank at its principal place of
business as being its "prime rate" or "base
rate" thereafter in effect, with each change
in the Prime Rate automatically, immediately
and without notice changing the fluctuating
interest rate thereafter applicable hereunder,
it being agreed that the Prime Rate is not
necessarily the lowest rate of interest then
available from Bank on fluctuating rate loans.
(n) "REGIONAL BANK" shall mean Regional Federal
Savings Bank, a federal savings bank, which is
wholly owned by Borrower.
(o) "RELATED WRITING" shall mean a writing of any
form or substance signed by Borrower (whether
as principal or agent) or by any attorney,
accountant or other representative of Borrower
and received by Bank in respect of Borrower's
or its Subsidiaries Bank Debt or any part
thereof, including, without limitation, any
credit application, loan agreement,
reimbursement agreement, financial statement,
promissory note, security agreement,
certificate, or any similar writing, but shall
not include any commitment letter issued by
Bank, without regard to whether Borrower or
any other Person signed or acknowledged
receipt thereof.
(p) "SENIOR DEBT" shall mean all of Borrower's and
its Subsidiaries outstanding Debt for borrowed
money except Debt which has been subordinated
to Bank Debt pursuant to a subordination
agreement acceptable to Bank including
$22,425,000 of subordinated Trust Preferred
Certificates issued by Borrower.
(q) "SUBSIDIARIES" shall mean Regional Bank, Union
Bank and People's Trust.
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(r) "TOTAL LOANS" shall mean total loans as listed
on the Borrower's and its Subsidiaries'
balance sheet and Loan Loss Reserves and
otherwise as such term is defined in
accordance with current governing laws and
regulations.
(s) "UNDERPERFORMING LOANS" shall mean those loans
which are ninety (90) days delinquent or more
plus nonaccrual loans, renegotiated loans and
in substance foreclosures and otherwise as
such term is defined in accordance with
current governing laws and regulations.
(t) "YEAR 2000 READY" shall mean that Borrower's
and its Subsidiaries' information technology,
systems, processes, products and services
(including any software and/or
micro-processors embedded in any products)
("Services"), will correctly identify,
recognize and process multi-century dates, and
the Services will: (1) continue to function
properly and accurately with regard to dates
before, during and after the transition to
Year 2000 including, but not limited to, the
ability to roll dates from December 31, 1999
to January 1, 2000 and beyond with no errors
or system interruptions; (2) accurately
perform calculations and comparisons on dates
that span centuries; (3) properly and
accurately sort and sequence dates that span
centuries; (4) understand that the Year 2000
starts on a Saturday; (5) recognize that
February 29, 2000 is a valid date and that the
Year 2000 has 366 days; (6) prohibit use of
date fields for any purpose other than to
store valid dates; (7) preclude the use of
12/31/99 or any other valid date to indicate
something other than a date (e.g., 12/31/99 in
a date field means "do not ever cancel"); and
(8) comply with and conform to the
specifications of American National Standard
ANSI X3.30-1985, Representation for Calendar
Date and Ordinal Date for Information
Interchange.
(u) "UNION BANK" shall mean Union Bank and Trust
Company of Indiana, an Indiana state banking
corporation, which is wholly owned by Borrower.
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OTHER DEFINITIONS; RULES OF CONSTRUCTION. Terms defined in this
Section, as well as terms defined throughout this Agreement, shall include both
the singular and plural forms thereof and shall be construed accordingly. All
computations required hereunder and all financial terms used herein shall be
made or construed in accordance with generally accepted accounting principles
unless such principles are inconsistent with the express requirements of this
Agreement.
2. TERM LOAN #1. Bank shall, subject to the terms and conditions of
this Agreement, grant a seventy (70) month term loan ("Loan #1") to Borrower in
the principal amount of Eight Million and No/100 Dollars ($8,000,000.00). Loan
#1 shall be used for general corporate purposes including equity contributions
to subsidiaries. Loan #1 shall bear interest at a fluctuating rate per annum
equal to the Prime Rate. At Borrower's option (the "LIBOR Option"), all or any
portion of Loan #1 (in a minimum amount of $500,000 and increments of $100,000
thereafter) may bear interest at a fixed rate equal to LIBOR, plus the
Applicable Margin, for an interest period elected by Borrower of one (1), two
(2), three (3), six (6) or twelve (12) months. Once duly elected, a LIBOR Option
may not be revoked. LIBOR Options shall be elected in writing and delivered to
Borrower's account officer at the Bank by facsimile transmission. Such writing
shall contain all necessary details and be signed by an authorized officer of
Borrower. If an Event of Default has occurred and is continuing, no new LIBOR
Options shall be available unless and until such Event of Default is cured or
waived by the Bank in writing. Principal bearing interest at a LIBOR Option
fixed rate may not be prepaid during the elected interest period without payment
of a prepayment premium as provided under the Loan #1 Note. In addition to the
provisions of the Loan #1 Note, and notwithstanding anything to the contrary
herein or in such Note, irregardless whether principal bears interest at a LIBOR
Option or the Prime Rate, if Borrower prepays the principal balance of Loan #1
prior to June 30, 2000, the Borrower shall immediately pay to Bank a prepayment
premium in an amount equal to one percent (1%) of the prepaid amount; provided
however, that on December 31, 1999 or June 30, 2000, Borrower may prepay
principal bearing interest at the Prime Rate without premium, so long as and to
the extent the total outstanding principal balance of Loan #1 is not below
$4,000,000.00 Loan #1 shall be fully amortized and repaid in ten (10) equal
consecutive semi-
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annual installments of principal, plus accrued interest, commencing December 31,
1999, and continuing on the last day of every sixth (6th) month thereafter until
June 30, 2004, when the total outstanding balance of unpaid principal, accrued
interest, and charges provided for herein shall become due and payable. Accrued
interest shall be due and payable quarterly, commencing March 31, 1999, and
continuing on the last day of every third month thereafter for principal bearing
interest at the Prime Rate and at the end of each elected interest period (or
every ninety (90) days, whichever comes first) for principal bearing interest at
a LIBOR Option. Loan #1 shall be evidenced by a Commercial Note (the "Loan #1
Note") in the form attached hereto as EXHIBIT "A," the terms of which are
incorporated herein. The account records of Bank shall be a prima facie evidence
of transactions between Borrower and Bank for the purpose of Loan #1.
3. REVOLVING CREDIT. Bank shall, subject to the terms and conditions of
this Agreement, grant a revolving credit (the "Credit") to Borrower in the
maximum principal amount of Three Million and No/100 Dollars ($3,000,000.00) for
the period beginning with the execution of this Agreement and expiring on
December 31, 1999, when the total outstanding balance of unpaid principal,
accrued interest and charges provided for herein shall be due and payable. In
June 1999, and each June thereafter that the Credit continues to exist, the
Borrower may request that the Bank renew and extend the Credit for an additional
one (1) year period. Bank shall review such request and in Bank's sole
discretion advise the Borrower in writing whether the Credit shall be renewed
and extended. If Bank fails to advise the Borrower in writing by September 1st
of such year, the request shall be deemed to be denied. The Credit shall be used
by Borrower for its general corporate purposes, including acquisition of bank
branches. All advances made under the Credit shall bear interest at a
fluctuating rate equal to the Prime Rate or at a LIBOR Option, as it is defined
under Section 2 herein.. Accrued interest shall be due and payable monthly and
on the first day of each month hereafter for principal bearing interest at the
Prime Rate and at end of each elected interest period (or every ninety (90)
days, whichever arrives first) for principal bearing interest at a LIBOR Option.
The Credit shall be evidenced by a Commercial Note (the "Credit Note") in the
form attached hereto as EXHIBIT "B", the terms of which are incorporated herein.
The
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account records of Bank shall be prima facie evidence of the transactions
between Borrower and Bank for the purpose of the Credit.
4. CONVERSION OF CREDIT TO TERM LOAN #2. Bank shall, subject to the
terms and conditions of this Agreement, when the Credit expires, (the
"Conversion Date") refinance the outstanding principal balance of the Credit
under a five (5) year term loan ("Loan #2," together with Loan #1, the "Loans")
in an amount not to exceed Three Million and No/100 Dollars ($3,000,000.00).
Loan #2 shall bear interest at a fluctuating rate equal to the Prime Rate or the
LIBOR Option, as it is defined under Section 2 herein. Loan #2 shall be fully
amortized in ten (10) equal consecutive semi-annual payments of principal
commencing six (6) months from the Conversion Date and continuing to be due and
payable every six (6) month until five (5) years from the Conversion Date.
Accrued interest shall be payable quarterly for principal bearing interest at
the Prime Rate and at the end of each elected interest period (or every 90 days,
whichever comes first) for principal bearing interest at a LIBOR Option. Loan #2
shall be evidenced by a Commercial Note (the "Loan #2 Note," and collectively
with the Credit Note and Loan #1 Note, the "Notes") in the form attached hereto
as EXHIBIT "C", the terms of which are incorporated herein. The account records
of Bank shall be prima facie evidence of transactions between Borrower and Bank
for the purposes of Loan #2.
5. COLLATERAL. All Bank Debt of Borrower and its Subsidiaries and the
performance of all liabilities and covenants of Borrower in favor of Bank
hereunder shall be secured, and a first lien is hereby granted to Bank in:
(a) One Hundred Seventy Eight Thousand Seven Hundred Ninety Three
(178,793) shares of common stock of Union Bank as evidenced by
Certificate No. 001(the "Union Stock"), which constitutes one
hundred percent (100%) of the issued and outstanding shares of
common stock of Union Bank pursuant to a Pledge Agreement (the
"Union Stock Pledge Agreement") in the form of EXHIBIT "D,"
which is attached hereto, the terms of which are incorporated
herein;
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(b) Seven Thousand Six Hundred Eleven (7,611) shares of common
stock of Regional Savings (the "Regional Savings Stock)" as
evidenced by Certificate No. 001, which constitutes one
hundred percent (100%) of the issued and outstanding shares of
common stock of Regional Savings pursuant to a Pledge
Agreement (the "Regional Savings Stock Pledge Agreement") in
the form of EXHIBIT "E," which is attach hereto, the terms of
which are incorporated; and
(c) Twenty Seven Thousand Five Hundred (27,500) shares of common
stock of People's Trust Company (the "People's Trust Stock,"
and collectively with the Union Stock and the Regional Savings
Stock, the "Stock") as evidenced by Certificate No. 001, which
constitutes one hundred percent (100%) of the issued and
outstanding shares of common stock of Peoples Trust pursuant
to a Pledge Agreement (the "People's Trust Stock Pledge
Agreement," and collectively with the Union Stock Pledge
Agreement and the Regional Savings Stock Pledge Agreement, the
"Pledge Agreements") in the form attached hereto as EXHIBIT
"F," the terms of which are incorporated herein.
The Stock shall be delivered to Bank in a negotiable form acceptable to the
Bank, which shall include duly executed powers of attorney (the "Stock Powers")
for each Stock certificate, the form of which is attached hereto as EXHIBIT "G,"
the terms of which are incorporated herein.
6. DOCUMENTATION FEE AND COMMITMENT FEE. In an effort to keep the cost
of documenting the Credit and Loans to a minimum for Borrower, Bank agrees, to
the extent it is possible, to prepare the commercial loan documentation for this
Agreement. Borrower agrees to help defray Bank's costs of documentation by
paying Bank a documentation fee in the amount Five Thousand and No/100 Dollars
($5,000.00). This documentation fee has been paid and is non-refundable.
Borrower shall also pay to Bank a commitment fee equal to
one-eighth of one percent (0.125%) per annum of the daily average unused portion
of the Credit. This commitment fee shall be due and payable quarterly in arrears
commencing March 31, 1999 and continuing to be due and payable on last day of
every third (3rd) month thereafter.
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7. CONDITIONS PRECEDENT. The following shall be conditions precedent to
the advancement of any portion of the Credit or Loans by Bank to Borrower:
(a) Borrower shall execute and deliver, or cause to be
delivered to Bank the Notes, Pledge Agreements, Stock,
Stock Powers and other documents reasonably required by
bank pursuant to this Agreement.
(b) Borrower shall furnish to Bank certified copies of
resolutions of the Board of Directors of Borrower
approving and authorizing the borrowings from
hereunder, the pledge of Stock hereunder, and the
execution and delivery of all documents in connection
therewith by the duly designated officer of Borrower.
(c) Borrower shall furnish or cause to be furnished to Bank
a copy of Borrower's Articles of Incorporation and
By-Laws, and all amendments thereto, and a Certificate
of Existence, currently certified respectively by the
Secretary of State and the Secretary of Borrower.
(d) Borrower shall furnish to Bank an opinion of Borrower's
counsel, which is acceptable to Bank and its counsel,
to the effect that:
(i) Borrower is a corporation duly
organized and validly existing under
the laws of the State of Indiana and
has the power, authority and
necessary licenses to carry on its
business as now conducted or
proposed to be conducted;
(ii) Regional Savings is a federal
savings bank duly organized and
validly existing under federal law
and has the power, authority and
necessary licenses to do business in
the State of Indiana;
(iii) Union Bank is an Indiana state
banking corporation duly organized
and validly existing under the laws
of the State of Indiana and has the
power, authority and necessary
licenses to do business in the State
of Indiana;
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(iv) People's Trust is an Indiana state
banking corporation duly organized
and validly existing under the laws
of the State of Indiana and has the
power, authority and necessary
licenses to do business in the State
of Indiana;
(v) This Agreement and all documents and
instruments required hereunder or in
connection herewith have been duly
authorized by all corporate action
necessary on the part of Borrower
and have been executed and delivered
by the duly authorized officers of
Borrower, and such instruments,
constitute legal, valid and binding
instruments in accordance with their
terms;
(vi) There is no material litigation or
proceeding pending, or, to the
knowledge of counsel, threatened
against or otherwise affecting
Borrower or any of its Subsidiaries,
properties or other assets before
any court or before or by any
governmental agency; and
(vii) Neither the execution nor the
consummation of the transactions
contemplated by this Agreement nor
compliance with the terms and
provisions of the other documents
referred to above conflict with,
result in a breach of or constitute
a default under, the terms,
conditions or provisions of the
Articles of Incorporation or By-Laws
of Borrower, or any law, regulation,
order, writ, injunction or decree of
any court or governmental
instrumentality having jurisdiction.
(e) Before being required to make any advance hereunder,
Bank may require Borrower to submit to Bank such
evidence and information to enable Bank to determine,
to Bank's satisfaction that: (1) there has been no
material deterioration of Borrower's or its
Subsidiaries financial position since the execution of
this Agreement and (2) that
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Borrower has the financial capacity and is otherwise
able to repay all amounts owing or to be owed by
Borrower hereunder in accordance with the terms herein.
All documents required to be executed and delivered under this
paragraph shall be satisfactory in form and substance to Bank and its counsel.
Any of the foregoing conditions may be waived by Bank at the time of any
advancement. In addition to all of the terms and conditions to be performed by
Borrower under this Agreement, Borrower shall deliver or cause to be delivered
to Bank such other documents as may from time to time be required by Bank to
carry out the terms and provisions of this Agreement.
8. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Bank that:
(a) Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Indiana and Borrower has full corporate power
under its Articles of Incorporation and By-Laws and all
applicable provisions of the law to procure the Credit
and Loans, pledge the Stock and consummate all
transactions connected with this Agreement.
(b) Regional Savings is a federal savings bank duly
organized, validly existing and in good standing under
federal laws and the laws of the State of Indiana and
has full power, authority and necessary licenses do
business in the State of Indiana.
(c) Union Bank is an Indiana state banking corporation duly
organized, validly existing and in good standing under
the laws of the State of Indiana and has full power,
authority and necessary licenses to do business in the
State of Indiana.
(d) People's Trust is an Indiana state banking corporation
duly organized, validly existing and in good standing
under the laws of the State of Indiana and has full
power, authority and necessary licenses to do business
in the State of Indiana.
(e) Borrower has full corporate power and authority to
conduct business in the State of Indiana.
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(f) The procurement of the Credit and Loans and the
consummation of all transactions connected with this
Agreement have been duly authorized by all necessary
corporate action on the part of the Borrower.
(g) All required federal, state and other tax returns have
been filed by Borrower and its Subsidiaries and the
taxes in connection therewith paid to date and no
additional taxes or assessments have been asserted or
are anticipated.
(h) There is no material litigation or proceeding pending,
or to the knowledge of Borrower, threatened against or
otherwise affecting Borrower or any of its
Subsidiaries, or any of their respective properties or
other assets before any court or before or by any
governmental agency.
(i) All Stock pledged hereunder is owned by Borrower and is
not subject to any prior liens, security interests or
encumbrances.
(j) All information heretofore furnished to Bank by
Borrower is true, accurate and correct.
(k) There are no governmental authorizations, permits,
certificates, licenses, filings, registrations,
approvals or consents which must be obtained, received
or made by Borrower for Borrower lawfully to (i) make,
execute and deliver this Agreement; (ii) perform all of
Borrower's obligations under this Agreement; or (iii)
conduct Borrower's business as contemplated hereunder;
(l) Neither Borrower or any of its Subsidiaries are in
material violation of any local, state or federal law,
including but not limited to, any health, labor or
environmental laws or regulations.
(m) Borrower and its Subsidiaries are in material
compliance with the Employee Retirement Income Security
Act of 1974 ("ERISA") insofar as such Act applies. No
condition exists or event or transaction has occurred
in connection with any plan, as defined in Section 3 of
ERISA, maintained by the Borrower or its Subsidiaries,
which
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could result in the incurrence of any material
liability, fine or penalty for any such unfunded pension
plan.
(n) Borrower is not now engaged principally, or as one of
Borrower's important activities, in the business of
extending credit for the purpose of purchasing or
carrying any margin stock (within the meaning of
Regulation U of the Board of Governors of the Federal
Reserve System). No part of the proceeds of the Credit
and/or Loans hereunder have been or will be used to
purchase or carry any such margin stock or to extend
credit to others for the purpose of purchasing or
carrying any such margin stock. If requested by Bank,
Borrower will furnish to Bank a statement in conformity
with the requirements of Federal Reserve Form U-1. No
part of the proceeds of the Credit and Loans have been
or will be used for purpose that violates, or which is
inconsistent with the provisions of Regulations G, U or
X of said Board of Governors.
(o) The Borrower and its Subsidiaries have undertaken and
will continue to undertake to review the areas within
their respective businesses and the business of their
suppliers that could be adversely affected if not Year
2000 Ready, and reasonably anticipate that all computer
applications, hardware and services that are material to
their businesses and operations will, on a timely basis,
be Year 2000 Ready on or before January 1, 2000.
(p) Borrower further warrants to Bank that (a) none of the
written statements, representations or warranties
furnished by Borrower to Bank in connection with this
Agreement contains or will contain any untrue statement
or omits or will omit a material fact necessary to make
the statements contained therein or herein, in light of
the circumstances when made, misleading; and (b) there
is no fact which Borrower has not disclosed to Bank
which materially affects adversely, or as far as
Borrower presently can foresee, will have a material
adverse effect on the properties, business,
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or condition (financial or otherwise) of Borrower or its
Subsidiaries or the ability of Borrower to fully perform
Borrower's obligations under this Agreement.
All representations and warranties made by Borrower under or in
connection with this Agreement or in any other document delivered by Borrower to
Bank in connection with this Agreement shall survive the making of the Credit
and/or Loans and issuance and delivery of the Notes to the Bank, notwithstanding
any investigation made by Bank or on Bank's behalf. All statements contained in
any certificate or financial statement delivered by Borrower to Bank under this
Agreement shall constitute representations and warranties made by Borrower
hereunder.
9. AFFIRMATIVE COVENANTS. Borrower covenants to Bank that so long as
the Credit and/or Loans shall remain unpaid Borrower shall and Borrower shall
cause its Subsidiaries to:
(a) Promptly pay and discharge all taxes, assessments and
governmental charges which may be lawfully levied,
imposed or assessed upon Borrower or Borrower's
properties and assets or upon Borrower's income or
profits; provided, however, that Borrower shall have the
right to contest in good faith any such tax, assessment,
charge or levy by appropriate proceedings.
(b) Keep accurate and complete books and records and
maintain the same at Borrower's principal offices.
(c) Furnish Bank with the following financial statements and
other information at the following times:
(i) As soon as available, and in any event within
forty-five (45) days after the end of each
calendar quarter, on e (1) copy of Borrower's
and its Subsidiaries' current Federal Reserve
FR-Y-9C Consolidated Financial Statement, both
duly certified by a duly authorized officer of
Borrower and completed in filing form;
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(ii) As soon as available, one (1) copy of the
Borrower's 10-Q Statement, certified by a duly
authorized officer of Borrower and completed in
filing form;
(iii) As soon as available, and in any event within
forty-five (45) days after the end of each
calendar quarter a Call Report certified by a
duly authorized officer of the applicable
entity;
(iv) As soon as available after the written request
of the Bank, one (1) copy of a (1) Loan Loss
Reserve analysis; (2) charge-off/recovery
report; (3) credit watch list, and (4)
non-accruing loan report; all duly certified by
a duly authorized officer of the applicable
entity, and otherwise in a form reasonably
acceptable to Bank;
(v) As soon as available, and in any event within
forty-five (45) days after the end of each
calendar quarter, one copy (1) of a Compliance
Certificate, which shall be in the form of
"EXHIBIT H" which is attached hereto and made a
part hereof, and shall be duly completed and
certified by the duly authorized officer of
Borrower;
(vi) As soon as available and in any event within
one hundred twenty (120) days after the end of
each fiscal year, one (1) copy of the annual
consolidated and consolidating balance sheet
and statement of income and retained earnings
for Borrower and its Subsidiaries, as of and
for the year then ended, all in reasonable
detail, including a statement of contingent
liabilities, and stating in comparative form
the figures for the corresponding date and
period in the previous fiscal year, plus a
statement of cash flows, audited by an
independent certified public accountant
selected by Borrower and reasonably acceptable
to Bank;
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(vii) As soon as available and in any event promptly
after distribution or filing, furnish Bank
copies of all reports submitted to Borrower's
shareholders or any governmental agency,
excluding communications with or in response to
federal banking regulatory agencies relating to
their examination, including, but not limited
to, the above referenced financial reports;
(viii) From time to time upon request by Bank, as Bank
may reasonably require, such further
information regarding the business affairs and
financial conditions of Borrower or any of its
Subsidiaries, including but not limited to,
accounting and management recommendations and
certificates of no Event of Default under this
Agreement by the independent certified public
accountant selected by Borrower and acceptable
to Bank.
(d) Permit any authorized representative of Bank and its
attorneys and accountants to inspect, examine and make
copies and extracts of the books of account, records and
inventory of Borrower or its Subsidiaries at reasonable
times during normal business hours, including, but not
limited to, periodic field examinations by Bank's
accounting staff, the reasonable expense of which shall
be reimbursed to Bank by Borrower.
(e) Defend and give prompt written notice to Bank of any
process or action taken or pending whereby a third party
is claiming any money damages or any interest in the
assets of Borrower or any of its Subsidiaries in excess
of Five Hundred Thousand and No/100 Dollars
($500,000.00).
(f) Insure and keep insured by fire and extended coverage
and valuable papers coverage the assets of Borrower and
its Subsidiaries in an amount at least equal to the full
value thereof against loss by fire and other risks
customarily insured against by companies engaged in
similar business, including but not limited to
comprehensive property and casualty, public liability
and workmen's compensation insurance, with insurance
companies acceptable to Bank.
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(g) Maintain Borrower's and its Subsidiaries' in existence
and in good standing in the State of Indiana.
(h) Give prompt written notice to Bank of any material
changes or modifications in existing contracts,
indentures or agreements. All such notices shall be
accompanied by copies of such instruments.
(i) Maintain Borrower and its Subsidiaries in compliance
with all local, state and federal laws, including but
not limited to, all environmental health and labor rules
and regulations.
10. FINANCIAL COVENANTS. Borrower covenants to Bank that so long as the
Credit and/or Loans shall remain unpaid Borrower shall and Borrower shall cause
its Subsidiaries to:
(a) Maintain at all times for Borrower and its Subsidiaries
on a consolidated basis a minimum Debt Service Coverage
Ratio of no less than 1.1:1. This Covenant shall be
tested quarterly based upon the immediately prior four
(4) fiscal quarters.
(b) Maintain at all times for Borrower and its Subsidiaries
on a consolidated basis, Minimum Capital in an amount of
no less than six percent (6%) of total Average Assets.
This Covenant shall be tested quarterly based upon the
immediately prior four (4) fiscal quarters.
(c) Maintain at all times for Borrower and its Subsidiaries
on a consolidated basis a minimum Loan Loss Reserve in
an amount of no less than one percent (1%) of Total
Loans based upon the immediately prior four (4) fiscal
quarters.
(d) Maintain at all times a maximum Consolidated Leverage
Ratio for Borrower and its Subsidiaries on a
consolidated basis not to exceed 2.0:1. This Covenant
shall be tested quarterly based upon the immediately
prior four (4) fiscal quarters.
(e) Maintain at all times a maximum ratio of Under
Performing Loans to Total Loans not to exceed two
percent (2%) for Borrower and its Subsidiaries on a
consolidated basis.
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This Covenant shall be tested quarterly based upon the
immediately prior four (4) fiscal quarters.
(f) Maintain at all times Borrower's Subsidiaries in a "Well
Capitalized" status as such term is defined in
accordance with current governing laws and regulations.
11. NEGATIVE COVENANTS. In addition, Borrower covenants to Bank that so
long as the Credit and/or Loans shall remain unpaid Borrower shall not and shall
not allow its Subsidiaries to:
(a) Create or permit to exist any mortgage, pledge, security
interest, title retention device or other encumbrance on
any property, rights or assets owned or hereafter
acquired by Borrower or its Subsidiaries, except for
liens of taxes and assessments not delinquent or
contested in good faith, the security held by Bank, and
those liens or encumbrances incurred in the ordinary
course of the banking business.
(b) Incur or permit to exist any Senior Debt to any other
lender.
(c) Enter into any consolidation or merger with any other
corporation or entity unless Borrower or the applicable
Subsidiary is the surviving entity and no change in
control occurs; or sell or lease all or any substantial
part of its property.
(d) Make any loans or advances to its officer, directors or
shareholders or their relatives, other than those loans
approved in the normal course of business which are made
in compliance with all applicable law, including, but
not limited to, Regulation "O" under the Federal Reserve
Act.
(e) Assume, guarantee or otherwise become liable as a
guarantor or surety for the obligations of any person,
firm, corporation or any other entity, except those that
are required in the ordinary course of the banking
business.
(f) Purchase, redeem or acquire, directly or except for
acquisition of its stock by any employee benefit plans,
subject to ERISA requirements.
(g) Pay or declare any dividends on its common stock or make
any distributions to common stock shareholders, if an
Event of Default has occurred and is continuing.
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(h) Make any material changes in the scope or nature of its
business activities.
12. DEFAULT. The occurrence of any of the
following shall constitute an event of default (an "Event of Default")
hereunder; (a) Borrower's or any of its Subsidiaries' Bank Debt or any part
thereof shall not be paid in full within ten (10) days of the date when due
(whether by lapse of time, acceleration of maturity or otherwise); (b) any
Borrower shall be dissolved; (c) any representation or warranty made by Borrower
in this Agreement or any Related Writing shall be false or erroneous in any
material respect; (d) Borrower shall fail or omit to perform or observe any
agreement made in this Agreement or any Related Writing which is not cured
within thirty (30) days of the date that Borrower discovered such failure or
omission; (e) a final and non-appealable judgment shall be entered against
Borrower or any of its Subsidiaries in any court of record in excess of One
Million and No/100 Dollars ($1,000,000.00); (f) any deposit account of Borrower
is attached or levied upon; (g) any voluntary petition by or involuntary
petition against Borrower or any of its Subsidiaries shall be filed pursuant to
any chapter of any bankruptcy code or Borrower or any of its Subsidiaries shall
make an assignment for the benefit of creditors, or there shall be any other
marshaling of the assets and liabilities of Borrower or any of its Subsidiaries
for the benefit of their respective creditors. Upon the occurrence of an Event
of Default, Bank may, in its sole discretion, declare any and all Bank Debt of
Borrower or any of its Subsidiaries to be due and payable and, if applicable,
that Borrower or any of its subsidiaries no longer be permitted to obtain
advances; and all principal of and interest shall thereupon become immediately
payable in full, without any presentment, demand or notice of any kind, which
Borrower hereby waives. Borrower will pay to Bank all costs and expenses of
collection of this Borrower's or its subsidiaries Bank Debt, including, without
limitation, reasonable attorneys' fees.
13. GENERAL. No waiver by Bank of any requirement or of the breach of
any term, condition, warranty, representation, covenant or agreement contained
herein or in the documents delivered pursuant to this Agreement shall be
considered as a waiver of the same in the future or any other requirement or
default and no delay or omission by Bank in exercising any right or remedy
hereunder shall impair any such right or remedy or be construed as a waiver of
any default. Any modification of or amendment of
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this Agreement shall be ineffective unless in writing and signed by the duly
authorized officers of Borrower and Bank. Any notices required hereunder shall
be deemed sufficient when mailed, first class with postage prepaid, to Borrower
and Bank (at its Corporate Banking Department) at the address first above
written or to such other address as either Borrower or Bank may from time to
time specify by written notice to the other. Borrower and Bank severally, each
for itself, acknowledges and agrees that, except as expressly provided herein
with respect to Borrower's obligations to maintain depository account(s) (if
any) with Bank, the extension(s) of credit provided for herein are neither
conditioned upon nor have the interest rates and fees therefore been set based
upon Borrower's agreement to purchase any other product or service from Bank.
Further, Borrower and Bank severally, each for itself, acknowledges and agrees
that Bank has not offered these extension(s) of credit or offered to reduce the
interest rate(s) or fee(s) therefore except as provided herein.
14. ENTIRE AGREEMENT AND SEVERABILITY. This Agreement contains the
entire understanding between and among the parties hereto and supersedes any
prior understandings and agreements between or among them respecting the subject
matter of this Agreement. The invalidity or unenforceability of any provision of
this Agreement in a particular respect shall not affect the validity or
enforceability of any other provisions of this Agreement or of the same
provision in any other respect, and all other provisions or terms of this
Agreement shall remain in full force and effect and shall be enforceable as if
the unenforceable or invalid provision or term had never been a part hereof.
15. SUCCESSORS AND ASSIGNS. The covenants, representations, warranties
and provisions herein set forth shall be binding upon Borrower and Borrower's
successors and assigns; however, because Bank has entered into this Agreement in
reliance upon Borrower and its present shareholders, officers and directors, any
transfer, assignment or alienation (except to Bank) of any rights of Borrower
hereunder or of any right or interest in Borrower shall not be effective without
the prior written consent of Bank.
16. JURISDICTION, VENUE AND LAW. This Agreement and the Related
Writings executed in association herewith, and the rights and obligations of the
parties hereunder and thereunder shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Indiana without
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regard to any conflict of laws provisions. The Borrower hereby irrevocably and
unconditionally: (a) submits for itself and its respective property in any legal
action or proceeding commenced by Bank relating to this Agreement or any
security interest hereto, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts of the
State of Indiana, the courts of the United States of America for the Southern
District of Indiana, and appellate courts from any thereof; (b) consents that
any such action or proceeding may be brought in such courts, and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same; (c) agrees that
the service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Borrower at its address set forth
above or at such other address of which Bank has been notified in writing; and
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.
17. JURY TRIAL WAIVER. IN ORDER TO AVOID DELAYS AND MINIMIZE EXPENSE,
BANK AND BORROWER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY
RIGHT TO TRIAL BY JURY IN RESPECT OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY RELATED
WRITING OR ANY AMENDMENT THERETO, WHETHER NOW EXISTING OR HEREINAFTER ARISING
AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE, AND EACH PARTY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY A COURT TRIAL WITHOUT A JURY, AND A COPY OF THIS AGREEMENT MAY BE
FILED WITH ANY COURT AS EVIDENCE OF THE CONSENT OF EACH OF THE PARTIES HERETO TO
THE WAIVER OF ITS RIGHT TO TRIAL BY JURY.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and in the year first above written.
"BORROWER" "BANK"
INDIANA UNITED BANCORP NATIONAL CITY BANK OF INDIANA
By: /s/ James L. Saner, Sr. By: /s/ Rafe Boldrick
---------------------------- --------------------------
James L. Saner, Sr. Rafe Boldrick
President and Chief Operating Officer Senior Vice President
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