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EXHIBIT 10.11
LOAN AGREEMENT
This LOAN AGREEMENT (the "Agreement"), dated as of August 2, 1996, is
entered into between UNIONBANCORP, INC., a Delaware corporation (the
"Borrower"), and LASALLE NATIONAL BANK, a national banking association (the
"Bank").
RECITALS:
WHEREAS, the Borrower has entered into agreements pursuant to which it has
agreed to enter into the following transactions, (i) Agreement of Merger dated
January 23, 1996, pursuant to which the Borrower will merge with PRAIRIE
BANCORP, an Illinois corporation ("Prairie"), with the Borrower being the
corporation which survives the merger, and (ii) Stock Purchase Agreement dated
March 21, 1996, pursuant to which the Borrower purchased all of the issued and
outstanding shares of the capital stock of COUNTRY BANCSHARES, an Illinois
corporation (the "Country Shares");
WHEREAS, the Borrower desires to borrow from the Bank and the Bank is
willing to lend to the Borrower up to an amount not to exceed TWENTY SIX
MILLION FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($26,500,000) in accordance
with the terms, subject to the conditions and in reliance on the
representations, warranties and covenants set forth herein and in the other
documents and instruments entered into or delivered in connection with or
relating to the loans contemplated in this Agreement; and
WHEREAS, as collateral security for such extension of credit, the Borrower
and its direct subsidiaries, Prairie Acquisition Corp. ("PAC") and CBI
Acquisition Corp. ("CBI"), have agreed to grant to the Bank a security interest
in the capital stock of their respective subsidiaries (the "Subsidiaries", and
the capital stock issued thereby shall be referred to as the "Subsidiary
Shares").
AGREEMENT:
1. COMMITMENTS OF THE BANK.
The Bank agrees to extend certain loan facilities (each a "Loan" and
collectively, the "Loans") to the Borrower, as follows:
(a) Line of Credit Loan in a principal amount not to exceed TWENTY SIX
MILLION and 00/100 DOLLARS ($26,000,000); and
(b) Revolving Credit Loan in a principal amount not to exceed FIVE
HUNDRED THOUSAND and 00/100 DOLLARS ($500,000).
The Loans shall be evidenced by the Notes (as such term is defined below),
and secured by the Pledge Agreements (as such term is defined below) in
accordance with terms and subject to the conditions set forth in this
Agreement, the Notes and the Pledge Agreements.
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2. CONDITIONS OF BORROWING.
Notwithstanding any other provision of this Agreement, the Bank shall not
be required to extend the Loans:
(a) if, since the date of this Agreement and up to the agreed upon
date of the Loans, there has occurred, in the Bank's sole and complete
discretion, a material adverse change in the financial condition or affairs of
the Borrower or the Subsidiaries;
(b) if any Default (as such term is defined below) or any event which,
with the giving of notice or lapse of time, or both, would constitute such a
Default, has occurred;
(c) if any litigation or governmental proceeding has been instituted or
threatened against the Borrower, the Subsidiaries or any of their respective
officers or shareholders which in the sole discretion of the Bank will
adversely affect the financial condition or operations of the Borrower or any
such Subsidiary;
(d) if all necessary or appropriate actions and proceedings shall not
have been taken in connection with, or relating to the transactions
contemplated hereby and all documents incident thereto shall not have been
completed and tendered for delivery, in substance and form satisfactory to the
Bank, including, but not limited to, the Bank's failure to have received
evidence that: (i) the Borrower has received all necessary regulatory approvals
to acquire the Country Shares and to merge with Prairie; and (ii) the Borrower
has provided such notices to all appropriate federal banking agencies as to
satisfy the requirements of 12 U.S.C. Section 1817(j)(9)(E);
(e) (i) if the Borrower shall not have tendered for delivery the Notes
and that certain Pledge and Security Agreement dated of even date
herewith and executed by Borrower for the benefit of Bank (the "Borrower Pledge
Agreement"); (ii) PAC shall not have tendered a Pledge and Security Agreement
dated of even date herewith and executed by PAC for the benefit of the Bank
(the "PAC Pledge Agreement"); and (iii) CBI shall not have tendered a Pledge
and Security Agreement of even date herewith and executed by CBI for the
benefit of the Bank (the "CBI Pledge Agreement"; and collectively with the
Borrower Pledge Agreement and the PAC Pledge Agreement, the "Pledge
Agreements") together with all of the Pledged Security (as such term is defined
in the Pledge Agreements), or if the Borrower, PAC or CBI has not executed and
delivered an agreement to pledge with respect to any Subsidiary Shares which
cannot be immediately pledged pursuant to the Pledge Agreements, all in form
and content satisfactory to the Bank;
(f) if the Borrower shall not have tendered for delivery a legal opinion
from the Borrower's counsel in form and substance satisfactory to the Bank and
Bank's legal counsel; or
(g) if the Bank shall not have received in substance and form
satisfactory to the Bank, all certificates, affidavits, schedules,
resolutions, opinions, notes, and/or other documents which are provided for
hereunder, or which it may reasonably request.
3. NOTES EVIDENCING BORROWING.
(a) The Loans shall be evidenced by the following promissory notes:
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(i) a Line of Credit Note in the principal amount of TWENTY SIX MILLION
AND 00/100 DOLLARS ($26,000,000) (the "Line of Credit Note"), in the form of
Exhibit A hereto; and
(ii) a Revolving Note in the principal amount of FIVE HUNDRED THOUSAND and
00/100 DOLLARS ($500,000) (the "Revolving Note"), in the form of Exhibit B
hereto (the Revolving Note and the Line of Credit Note are each referred to
individually as the "Note" and collectively as the "Notes").
Without in any way limiting the terms or conditions of the Notes:
(b) Interest on both Notes shall be payable the earlier of quarterly or at
the end of a LIBOR Interest Period (as defined below), in arrears, commencing
on January 1, 1997 and continuing on the first day of each April, July, October
and January thereafter, with a final payment of all outstanding amounts due
under the Notes, including, but not limited to principal, interest and any
amounts owing under Subsection 10(k) of this Agreement, if not sooner paid, on
August 2, 1997.
The amounts outstanding from time to time under the Line of Credit Note
shall bear interest calculated on the actual number of days elapsed on the
basis of a 360 day year, at a rate equal, at the Borrower's option of:
(i) the London Inter-Bank Offered Rate ("LIBOR") plus 125 basis
points;
(ii) the Prime Rate; or
(iii) the fixed rate of 150 basis points in excess of the rate of
treasury bills with the same maturity as the remaining term of the
Line of Credit Note (the "Fixed Rate"; whichever rate is so selected
or applicable to a Note from time to time, the "Interest Rate").
The amounts outstanding from time to time under the Revolving Note shall
bear interest calculated on the actual number of days elapsed on the basis of a
360 day year at the Prime Rate.
For purposes of this Agreement, the term "Prime Rate" shall mean the
floating prime rate in effect from time to time as set by the Bank, and
referred to by the Bank as its Prime Rate. The Borrower acknowledges that the
Prime Rate is not necessarily the Bank's lowest or most favorable rate of
interest at any one time. The effective date of any change in the Prime Rate
shall for purposes hereof be the date the rate change is publicly announced by
the Bank.
LIBOR borrowings hereunder shall be for a period of one, two, three, six
or twelve months (each an "Interest Period"). Payments of LIBOR borrowings
shall be permitted only at the conclusion of an Interest Period.
The Bank's determination of LIBOR as provided above shall be conclusive,
absent manifest error. Furthermore, if the Bank determines, in good faith
(which determination shall be conclusive, absent manifest error), prior to the
commencement of any Interest Period that (a) U.S. dollar deposits of sufficient
amount and maturity for funding any LIBOR Loan are not available to the Bank in
the London Interbank Eurodollar market in the ordinary course of business, or
(b) by reason of circumstances affecting the London Interbank Eurodollar
market, adequate and fair means do not exist
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for ascertaining the rate of interest to be applicable to the relevant LIBOR
Loan, the Bank shall promptly notify the Borrower and such LIBOR Loan shall be
immediately due and payable on the last banking day of the then existing
Interest Period, without further demand, presentment, protest or notice of any
kind, all of which are hereby waived by the Borrower.
If, after the date hereof, the introduction of, or any change in any
applicable law, treaty, rule, regulation or guideline or in the interpretation
or administration thereof by any governmental authority or any central bank or
other fiscal, monetary or other authority having jurisdiction over the Bank or
its lending office (a "Regulatory Change"), shall, in the opinion of counsel to
the Bank, makes it unlawful for the Bank to make or maintain any LIBOR Loan
evidenced hereby, then the Bank shall promptly notify the Borrower and such
LIBOR Loan shall be immediately due and payable on the last banking day of the
then existing Interest Period or on such earlier date as required by law, all
without further demand, presentment, protest or notice of any kind, all of
which are hereby waived by the Borrower.
If, for any reason, any LIBOR Loan is paid prior to the last banking day
of its then-current Interest Period, the Borrower agrees to indemnify the Bank
against any loss (including any loss on redeployment of the funds repaid), cost
or expense incurred by the Bank as a result of such prepayment.
If any Regulatory Change (whether or not having the force of law) shall
(a) impose, modify or deem applicable any assessment, reserve, special deposit
or similar requirement against assets held by, or deposits in or for the
account of or loans by, or any other acquisition of funds or disbursements by,
the Bank; (b) subject the Bank or any LIBOR Loan to any tax, duty, charge,
stamp tax or fee or change the basis of taxation of payments to the Bank of
principal or interest due from the Borrower to the Bank hereunder (other than a
change in the taxation of the overall net income of the Bank); or (c) impose on
the Bank any other condition regarding such LIBOR Loan or the Bank's funding
thereof, and the Bank shall determine (which determination shall be conclusive,
absent manifest error) that the result of the foregoing is to increase the cost
to the Bank of making or maintaining such LIBOR Loan or to reduce the amount of
principal or interest received by the bank hereunder, then the Borrower shall
pay to the Bank, on demand, such additional amounts as the Bank shall, from
time to time, determine are sufficient to compensate and indemnify the Bank for
such increased cost or reduced amount.
Each request by Borrower for a LIBOR Loan must be received by Bank no
later than 11:00 a.m. Chicago, Illinois time, on the day which is two days
prior to the day it is to be funded. Requests for all other Loans must be
received by Bank no later than 11:00 a.m. Chicago, Illinois time, on the same
day it is to be funded.
(c) No amount of principal repaid under the Line of Credit Note may be
borrowed again. One principal payment in the amount of $10,000,000 shall be
due and payable under the Line of Credit Note on or before November 1, 1996.
(d) Any amount of principal or interest on the Notes which is not paid
when due, whether at stated maturity, by acceleration or otherwise shall bear
interest payable on demand at an interest rate equal at all times to two
percent (2%) above the Interest Rate.
(e) If any payment to be made by the Borrower hereunder shall become
due on a Saturday, Sunday or Bank holiday under the laws of the State
of Illinois, such payment shall be made
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on the next succeeding business day and such extension of time shall be
included in computing any interest in respect of such payment.
4. PRINCIPAL PREPAYMENTS.
Prepayments of principal amounts of Prime Rate Loans are permitted without
premium or penalty at any time, and shall be applied to the next succeeding
principal payment due. Prepayments of principal amounts of LIBOR Loans shall be
subject to Section 3(b), above.
The Borrower may prepay the principal balance of Fixed Rate Loans, in
whole, subject to the following conditions:
(a) Not less than thirty (30) days prior to the date upon which the
Borrower desires to make such prepayment, the Borrower shall deliver to the
Bank written notice of its intention to prepay, which notice shall be
irrevocable and state the prepayment amount and the prepayment date (the
"Prepayment Date");
(b) The Borrower shall pay to the Bank, concurrently with such prepayment,
a prepayment premium (the "Prepayment Premium") equal to the greater of (1) the
Yield Amount (as hereinafter defined) or (2) the Fixed Amount (as hereinafter
defined); and
(c) The Borrower shall pay to the Bank all accrued and unpaid interest on
such Fixed Rate Loan through the date of such prepayment on the principal
balance being prepaid.
The Borrower shall, in addition to the outstanding principal balance,
accrued interest and other sums due hereunder, pay the amount representing the
Prepayment Premium. For purposes hereof, the "Fixed Amount" shall mean one
percent (1.00%) of the amount prepaid and the "Yield Amount" shall be the
amount calculated as follows:
(A) There shall first be determined, as of the Prepayment Date,
the amount, if any, by which the Fixed Rate exceeds the yield to
maturity percentage (the "Current Yield") for the United States
Treasury Note closest in maturity to the maturity of such Fixed Rate
Loan (the "Treasury Note") as published in The Wall Street Journal on
the fifth business day preceding the Prepayment Date. If publication
of (1) The Wall Street Journal or (2) the Current Yield of the Treasury
Note in The Wall Street Journal is discontinued, the Bank, in its sole
discretion, shall designate another daily financial or governmental
publication of national circulation to be used to determine the Current
Yield;
(B) The difference calculated pursuant to clause (A) above shall
be multiplied by the outstanding principal balance of the Fixed Rate
Loan as of the Prepayment Date;
(C) The product calculated pursuant to clause (B) above shall be
multiplied by the quotient, rounded to the nearest one-hundredth of one
percent, obtained by dividing (1) the number of days from and including
the Prepayment Date to and including the maturity of the Fixed Rate
Loan, by (2) 365; and
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(D) The sum calculated pursuant to clause (C) above shall be
discounted at the annual rate of the Current Yield to the present value
thereof as of the Prepayment Date, on the assumption that said sum
would be received in equal monthly installments on each monthly
anniversary of the Prepayment Date prior to the maturity date of the
Fixed Rate Loan, with the final such installment to be deemed received
on the maturity date of the Fixed Loan; provided, that the Borrower
shall not be entitled in any event to a credit against, or a reduction
of, the indebtedness being prepaid if the Current Yield exceeds the
Fixed Rate or for any other reason.
5. REPRESENTATIONS AND WARRANTIES.
To induce the Bank to make the Loans provided for herein, the Borrower
represents and warrants as follows:
(a) The Borrower: (i) is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware; (ii) is
duly qualified as a foreign corporation and in good standing in all states in
which it is doing business except where the failure to so qualify would not have
a material adverse effect on the Borrower or its business; and (iii) has all
requisite power and authority, corporate or otherwise, to own, operate and lease
its properties and to carry on its business as now being conducted. Each of the
Subsidiaries is an Illinois banking corporation, and has all requisite power and
authority, corporate or otherwise, to own, operate and lease its property and to
carry on its business as now being conducted. The Borrower and each Subsidiary
have made payment of all franchise and similar taxes in all of the respective
jurisdictions in which they are incorporated or qualified, so far as such taxes
are due and payable at the date of the Agreement, except for any such taxes the
validity of which is being contested in good faith and for which proper reserves
have been set aside on the books of the Borrower or the Subsidiaries, as the
case may be.
(b) The proceeds of the Line of Credit Loan shall be used to acquire the
Country Shares and to consummate the merger with Prairie and upon acquisition
of the Country Shares, the Borrower shall be the owner of 100% of the issued
and outstanding capital stock of Country. Attached hereto as Exhibit C is a
true, correct and complete list of the owners of the shares of capital stock of
the Subsidiaries.
(c) The Country Shares have been duly authorized, legally and validly
issued, are fully paid and nonassessable, and are owned by the Borrower free
and clear of all pledges, liens, security interests, charges or encumbrances,
except, upon consummation of the transactions contemplated herein, for the
security interest granted by the Borrower to the Bank. There are, as of the
date hereof, no outstanding options, rights or warrants obligating the Borrower
or the Subsidiaries to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the capital stock of the Subsidiaries or
obligating the Borrower or the Subsidiaries to grant, extend or enter into any
such agreement or commitment.
(d) The financial statements of:
(i) the Borrower, all of which have heretofore been furnished to the
Bank, have been prepared in accordance with generally accepted
accounting principles consistently applied ("GAAP") and maintained by the
Borrower throughout the periods involved, and fairly present the financial
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condition of the Borrower individually and on a consolidated basis at such
dates specified therein and the results of its operations for the periods then
ended; and
(ii) each Subsidiary, all of which have heretofore been furnished to the
Bank, to the best knowledge of the Borrower have been prepared in accordance
with GAAP and maintained by each Subsidiary throughout the periods involved,
and fairly present the financial condition of such Subsidiary at such dates
specified therein and the results of its operation for the periods then
entered.
(e) To the best knowledge of the Borrower, since the latest date of the
financial statements referred to in Section 5(d) above, there have been no
material changes in the assets, liabilities, or condition, financial or
otherwise, of the Borrower or the Subsidiaries other than changes arising from
transactions in the ordinary course of business, and none of such changes has
been materially adverse, whether in the ordinary course of business or
otherwise. To the best knowledge of the Borrower, neither the business nor the
properties of the Borrower nor any Subsidiary have been materially and
adversely affected in any way, including, without limitation, as a result of
any fire, explosion, accident, strike, lockout, labor disputes, food, drought,
embargo, imposition of governmental restrictions, confiscation by a
governmental agency or acts of God.
(f) There are no actions, suits, proceedings or written agreements
pending, or to the best of the knowledge of the Borrower threatened or
proposed, against the Borrower or, to the best knowledge of the Borrower, any
Subsidiary at law or in equity or before or by any federal, state, municipal,
or other governmental department, commission, board, or other administrative
agency, domestic or foreign, of a material nature; and neither of the Borrower
nor, to the best knowledge of the Borrower, any Subsidiary is in default with
respect to any order, writ, injunction, or decree of, or any written agreement
with, any court, commission, board or agency, domestic or foreign.
(g) all tax returns and reports of the Borrower and, to the best knowledge
of the Borrower, each Subsidiary, required by law to be filed have been duly
filed, and all taxes, assessments, fees and other governmental charges upon the
Borrower and each Subsidiary or upon any of their properties or assets which
are due and payable have been paid, and the Borrower knows of no additional
assessment of a material nature against the Borrower or either Subsidiary for
taxes, or except as disclosed on the financial statements referred to in
Section 5(d) above, of any basis for any such additional assessment.
(h) The Borrower's primary business is that of a bank holding company, and
all necessary regulatory approvals have been obtained for it to conduct its
business.
(i) The deposit accounts of the Subsidiaries which are banks or savings
and loan entities are insured by the Federal Deposit Insurance Corporation
("FDIC").
(j) None of the Pledged Security constitutes margin stock, as defined in
Regulation U of the Board of Governors of the Federal Reserve System ("FRS").
The foregoing representations and warranties shall survive the making of
this Agreement, and execution and delivery of the Notes and the Pledge
Agreements, and shall be deemed to be continuing representations and warranties
until such time as the Borrower has satisfied all of its
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obligations to the Bank, including, but not limited to the obligation to pay in
full all principal, interest and other amounts in accordance with the terms of
this Agreement or the Notes.
6. NEGATIVE COVENANTS
The Borrower agrees that until the Borrower satisfies all of its
obligations to the Bank, including, but not limited to its obligations to pay
in full all principal, interest and other amounts owing in accordance with the
terms of this Agreement or the Notes, the Borrower shall not itself, nor shall
Borrower cause, permit or allow the Subsidiaries to:
(a) create, assume, incur, have outstanding, or in any manner become
liable in respect of any indebtedness for borrowed money, except in the case of
Borrower, secured indebtedness under Section 6(b)(vi), and, in the case of the
Subsidiaries, indebtedness incurred in the ordinary course of the business of
banking and in accordance with applicable laws and regulations and safe and
sound banking practices. For purposes of this Agreement, the phrase
"indebtedness" shall mean and include:
(i) all items arising from the borrowing of money, which according to
generally accepted accounting principles now in effect, would be included in
determining total liabilities as shown on the balance sheet;
(ii) all indebtedness secured by any lien in property owned by the
Borrower whether or not such indebtedness shall have been assumed;
(iii) all guarantees and similar contingent liabilities in respect to
indebtedness of others; and
(iv) all other interest-bearing obligations evidencing indebtedness in
others;
(b) create, assume, incur, suffer or permit to exist any mortgage,
pledge, deed of trust, encumbrance (including the lien or retained
security title of a conditional vendor) security interest, assignment, lien or
charge of any kind or character upon or with respect to any of their properties
whether owned at the date hereof or hereafter acquired, or assigned or
otherwise convey any right to receive income excepting only:
(i) liens for taxes, assessments or other governmental charges for the
then current year or which are not yet due or delinquent;
(ii) liens for taxes, assessments or other governmental charges already
due, but the validity of which is being contested at the time in good faith in
such a manner as not to make the property forfeitable;
(iii) liens and charges incidental to current operation which are not
due or delinquent;
(iv) liens for workmen's compensation awards not due or delinquent;
(v) pledges or deposits to secure obligations under workmen's
compensation laws or similar legislation;
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(vi) purchase money mortgages or other liens on real property including
those incurred for the construction of a banking facility, and bank furniture
and fixtures acquired or held in the ordinary course of business to secure the
purchase price of such property or to secure the indebtedness incurred solely
for the purpose of financing the acquisition, construction or improvement of
any such property to be subject to such mortgages or other liens, or mortgages
or other liens existing on any such property at the time of acquisition, or
extensions, renewals, or replacements of any of the foregoing for the same or a
lesser amount, provided that no such mortgage or other liens shall extend to or
cover any property other than the property being acquired, constructed or
improved, and no such extension, renewal or replacement shall extend to or
cover any property not theretofore subject to the mortgage or lien being
extended, renewed or replaced, and provided further that no such mortgage or
lien shall exceed 75% of the price of acquisition, construction or improvement
at the time of acquisition, construction or improvement, and provided, further
that the aggregate principal amount of consolidated indebtedness at any one
time outstanding and secured by mortgages, liens, conditional sale agreements
and other security interests permitted by this clause (vi) shall not exceed 10%
of the consolidated capital of the Borrower or any Subsidiary, as the case may
be;
(vii) liens existing on the date hereof as shown on their financial
statements; and
(viii) in the case of the Subsidiaries, liens incurred in the ordinary
course of the business of banking and in accordance with applicable laws and
regulations and safe and sound banking practices;
(c) dispose by sale, assignment, lease or otherwise property or assets
now owned or hereafter acquired, outside the ordinary course of business in
excess of 10% of its consolidated assets in any fiscal year;
(d) merge into or consolidate with or into any other person, firm or
corporation;
(e) make any loans or advances whether secured or unsecured to any
person, firm or corporation, other than loans or advances made by the
Subsidiaries in the ordinary course of their banking business and in accordance
with applicable laws and regulations and safe and sound banking practices;
(f) engage in any business or activity not permitted by all applicable
laws and regulations, including without limitation, the Bank Holding Company
Act of 1954, the Illinois Banking Act, the Federal Deposit Insurance Act and
any regulations promulgated thereunder;
(g) make any loan or advance secured by the capital stock of another
bank or depository institution (except for loans made in the ordinary
course of business), or acquire the capital stock, assets or obligations of or
any interest in another bank or depository institution, without prior written
approval of the Bank;
(h) directly or indirectly create, assume, incur, suffer or permit to
exist any pledge, encumbrance, security interest, assignment, lien or charge of
any kind or character on the Subsidiary Shares or any other stock owned by the
Borrower;
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(i) permit the value of the Subsidiary Shares to be less than
$45,000,000 at any time;
(j) sell, transfer, issue, reissue, exchange or grant any option with
respect to the Subsidiary Shares;
(k) redeem any of its capital stock, declare a stock dividend or split
or otherwise change the capital structure of Borrower or any Subsidiary without
prior written approval of the Bank;
(l) breach or fail to perform or observe any of the terms and conditions
of the Notes, the Pledge Agreements or any other document or agreement entered
into or delivered in connection with, or relating to, the Loans;
(m) engage in any unsafe or unsound banking practices; or
(n) violate any law or regulation, or any condition imposed by or
undertaking provided to the FRS, the FDIC or the Illinois Commissioner of Banks
and Trust Companies in connection with the Borrower's acquisition of the
Subsidiary Shares.
7. AFFIRMATIVE COVENANTS.
The Borrower agrees that until the Borrower satisfies all of its
obligations to the Bank, including, but not limited to its obligations to pay
in full all principal, interest and other amounts in accordance with the terms
of the Agreement, the Notes and the Pledge Agreements, it shall:
(a) furnish and deliver to the Bank:
(i) as soon as practicable, and in no event later than forty-five (45)
days after the end of each of the first three calendar quarterly periods of the
Borrower and the Subsidiaries, a copy of: (1) the balance sheet, profit and
loss statement, surplus statement and any supporting schedules prepared in
accordance with generally accepted accounting principles consistently applied
and signed by the presidents and chief financial officers of the Borrower and
the Subsidiaries; and (2) all financial statements, including, but not limited
to, all call reports, filed with any state or federal bank regulatory
authority;
(ii) as soon as practicable, and in no event later than one hundred
twenty (120) days after the end of each calendar year, a copy of: (1)
the consolidated balance sheets as of the end of such year and of the
consolidated profit and loss and surplus statements for the Borrower and the
Subsidiaries for such year audited by independent certified public accountants
satisfactory to the Bank and accompanied by an unqualified opinion; and (2) all
financial statements and reports, including, but not limited to call reports
and annual reports, filed annually with state or federal regulatory
authorities;
(iii) at the Bank's request, copies of the then current loan/asset watch
list, the substandard loan/asset list, the nonperforming loan/asset list and
other real estate owned list of each Subsidiary;
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(iv) immediately after receiving knowledge thereof, notice in writing of
all charges, assessment, actions, suits and proceeding that are proposed or
initiated by, or brought before, any court or governmental department,
commission, board or other administrative agency, in connection with the
Borrower or any Subsidiary, other than ordinary course of business litigation
not involving the FRS, the FDIC or the Illinois Commissioner of Banks and Trust
Companies, which, if adversely decided, would not have a material effect on the
financial condition or operations of the Borrower or any such Subsidiary; and
(v) promptly after the occurrence thereof, notice of any other matter
which has resulted in a materially adverse change in the financial condition or
operations of the Borrower or any Subsidiary;
(b) at the Bank's request, deliver to Bank a certificate signed by the
President and the Treasurer of the Borrower, containing a computation of the
then current financial ratios specified in Subsections 7(c) through (h) of this
Agreement, and stating that no Default or unmatured Default has occurred or is
continuing, or, if there is any such event, describing such event, the steps,
if any, that are being taken to cure it, and the time within which such cure
will occur;
(c) maintain such capital as is necessary to cause the Borrower to have
adequate capital in accordance with the regulations of the FRS and any
requirements or conditions that the FRS has or may impose on the Borrower;
(d) as of June 30, 1996 maintain such capital as is necessary to cause
each Subsidiary to be classified as an "adequately capitalized" institution in
accordance with the regulations of the FDIC, currently measured on the basis of
information filed by Borrower in its quarterly Consolidated Report of Income
and Condition (the "Call Report") as follows:
(i) Total Capital to Risk-Weighted
Assets of not less than 8%;
(ii) Tier 1 Capital to Risk-Weighted
Assets of not less than 4%; and
(iii) Tier 1 Capital to average Total
Assets of not less than 4% (For the purposes of this
subsection (d)(iii) the average Total Assets shall be
determined on the basis of information contain in the
preceding four (4) Call Reports);
(e) cause the Borrower to maintain tangible equity capital of no less than
that required at any time by any governmental or regulatory agency having
jurisdiction over the Borrower. For the purposes of this Section 7(e),
"tangible equity capital" shall mean the sum of the common stock, surplus and
retained earning accounts reduced by the amount of any goodwill;
(f) cause the ratio of nonperforming loans to the primary capital of each
Subsidiary to be not more than twenty five percent (25%) at all times. For
purposes of this Section 7(f), "primary capital" shall mean the sum of the
common stock, surplus and retained earning accounts plus the reserve for loan
and lease losses and "nonperforming loans" shall mean the sum of all
non-accrual loans and loans on which any payment is ninety (90) or more days
past due;
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(g) cause the ratios of the loan and lease loss reserve to the total
loans of each Subsidiary to be not less than three-quarters of one
percent (.75%) at all times;
(h) cause the Borrower's Return on Assets determined on the basis of
information filed in the Borrower's Call Report to be at least seven-tenths of
one percent (.70%);
(i) promptly pay and discharge all taxes, assessments and other
governmental charges imposed upon the Borrower or the Subsidiaries or upon the
income, profits, or property of the Borrower or the Subsidiaries and all claims
for labor, material or supplies which, if unpaid, might by law become a lien or
charge upon the property of the Borrower or the Subsidiaries. Neither the
Borrower nor any Subsidiary shall be required to pay any such tax, assessment,
charge or claim, so long as the validity thereof shall be contested in good
faith by appropriate proceedings, and reserves therefor shall be maintained on
the books of the Borrower or the Subsidiaries as are deemed reasonably adequate
by the Bank;
(j) maintain bonds and insurance and cause the Subsidiaries to maintain
bonds and insurance with responsible and reputable insurance companies or
associations in such amounts and covering such risk as is usually carried by
owners of similar businesses and properties in the same general area in which
the Borrower or the Subsidiaries respectively operate, and such additional
bonds and insurance as may be reasonably required by the Bank;
(k) permit and cause the Subsidiaries to permit the Bank through its
employees, attorneys, accountants or other agents, to inspect any of the
properties, corporate books and financial books and records of the Borrower and
the Subsidiaries at such times and as often as the Bank reasonably may request;
and
(l) provide and cause the Subsidiaries promptly to provide the Bank with
such other information concerning the business, operations, financial condition
and regulatory status of the Borrower and the Subsidiaries as the Bank may from
time to time reasonably request.
8. COLLATERAL.
Pursuant to the Pledge Agreements, the Borrower, PAC and CBI have
concurrently herewith assigned, transferred, pledged and delivered to the Bank
as collateral for all of the Borrower's obligations from time to time to the
Bank the Subsidiary Shares and any other Pledged Security (as defined in the
Pledge Agreements) whether now or hereafter pledged.
9. EVENTS OF DEFAULT; DEFAULT; RIGHTS UPON DEFAULT.
The happening or occurrence of any of the following events or acts shall
each constitute a Default hereunder, and any such Default shall also constitute
a Default under the Notes, the Pledge Agreements and any other loan document,
without right to notice or time to cure in favor of the Borrower except as
indicated below:
(a) if the Borrower fails to make payment when due or fails to make any
payments as provided for herein and such payment remains unpaid for ten (10)
days;
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(b) if there continues to exist any breach under any obligation of any
other documents executed pursuant to this Agreement including, without
limitation, the Notes and the Pledge Agreements and such breach remains uncured
for thirty (30) days;
(c) if any representation or warranty made in this Agreement shall be
false when made or at any time during the term of this Agreement or any
extension thereof, or if the Borrower fails to perform or observe any covenant
or agreement contained in this Agreement thirty (30) days after notice by Bank;
(d) if the Borrower fails to perform or observe any covenant or
agreement contained in any other agreement between the Borrower or any
Subsidiary and the Bank, or if any condition contained in any agreement between
the Borrower or any Subsidiary and the Bank is not fulfilled and such failure
remains uncured for thirty (30) days;
(e) if the Borrower shall continue to fail to perform and observe, or
cause or permit any Subsidiary to fail to perform and observe any covenants
under this Agreement, including, without limitation, all affirmative and
negative covenants set forth in Sections 6 and 7 of this Agreement and the same
remains uncured for thirty (30) days;
(f) if the FRS, the FDIC, the Illinois Commissioner of Banks and Trust
Companies or other governmental agency charged with the regulation of bank
holding companies or depository institutions: (i) issues to the Borrower or
any Subsidiary, or initiates any action, suit or proceeding to obtain against,
impose on or require from the Borrower or any Subsidiary, a cease and desist
order or similar regulatory order, the assessment of civil monetary penalties,
articles of agreement, a memorandum of understanding, a capital directive, a
capital restoration plan, restrictions that prevent or as a practical matter
impair the payment of dividends by such Subsidiary or the payments of any debt
by the Borrower, restrictions that make the payment of dividends by such
Subsidiary or the payment of debt by the Borrower subject to prior regulatory
approval, a notice or finding under Section 51 or Section 52 of the Illinois
Banking Act or Section 8(a) of the Federal Deposit Insurance Act, or any
similar enforcement action, measure or proceeding; or (ii) issues to any
officer or director of the Borrower or any Subsidiary, or initiates any action,
suit or proceeding to obtain against, impose on or require from any such
officer or director, a cease and desist order or similar regulatory order, a
removal order or suspension order, or the assessment of civil monetary
penalties;
(g) if any Subsidiary is notified that it is considered an institution
in "troubled condition" within the meaning of 12 U.S.C. Section 1831i
and the regulations promulgated thereunder, or if a conservator or receiver is
appointed for any Subsidiary;
(h) if the Borrower or any Subsidiary becomes insolvent or is unable to
pay its debts as they mature; or makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts as they mature;
or suspends transaction of its usual business, or if a trustee of any
substantial part of the assets of the Borrower or any Subsidiary is applied for
or appointed, and if appointed in a proceeding brought against the Borrower,
the Borrower by any action or failure to act indicates its approval of, consent
to, or acquiescence in such appointment, or within thirty (30) days such
appointment is not vacated or stayed on appeal or otherwise, or shall not
otherwise have ceased to continue in effect;
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(i) if any proceedings involving the Borrower or any Subsidiary are
commenced by or against the Borrower or any Subsidiary under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law or statute of the federal government or any state government
and if such proceedings are instituted against the Borrower, the Borrower by
any action or failure to act indicates its approval of, consent to our
acquiescence therein, or an order shall be entered approving the petition in
such proceedings and within thirty (30) days after the entry thereof such order
is not vacated or stayed on appeal or otherwise, or shall not otherwise have
ceased to continue in effect; or
(j) if the Borrower or any Subsidiary continue to be in default in any
payment of principal or interest for any other obligation which exceeds
$100,000 in the aggregate, or in the performance of any other term, condition
or covenant contained in any agreement (including but not limited to an
agreement in connection with the acquisition of capital equipment on a title
retention or net lease basis), under which any such obligation is created, the
effect of which default is to cause or permit the holder of such obligation to
cause such obligation to become due prior to its stated maturity.
Upon the occurrence of a Default, the Bank shall have all rights and
remedies provided by applicable law and, without limiting the generality of the
foregoing, may, at its option, declare its commitments to be terminated
hereunder and under the Notes shall thereupon be and become forthwith, due and
payable, without any presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in the Notes or the Pledge Agreements to the contrary
notwithstanding, and may, also without limitation, appropriate and apply toward
the payment of the Notes any indebtedness of the Bank to the Borrower however
created or arising, and may, also without limitation exercise any and all
rights in and to the collateral security referred to in Section 8 above and
under the Pledge Agreements. There shall be no obligation to liquidate any
collateral pledge hereunder in any order or with any priority or to exercise
any remedy available to the Bank in any order.
10. MISCELLANEOUS.
(a) No failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder shall operate as a waiver thereof. No single or
partial exercise of any such right, power or remedy shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law. Time is of the essence in the performance of the
covenants, agreements and obligations of the Borrower and the Subsidiaries.
(b) This Agreement constitutes the entire agreement between the parties
and supersedes all prior agreements between the Bank and the Borrower with
respect to the subject matter hereof. No amendment, modification, termination
or waiver of any provision of this Agreement, the Pledge Agreements or the
Notes, or consent to any departure by the Borrower therefrom, shall be
effective except for the specific purpose for which given. No notice to or
demand on the Borrower in any case shall entitle the Borrower to any other or
further notice or demand in similar or other circumstances.
(c) All notices, requests, demands and other communications provided for
hereunder shall be: (i) in writing, (ii) made in one of the following manners,
and (iii) deemed given (a)
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if and when personally delivered, (b) on the next business day if sent by
nationally recognized overnight courier addressed to the appropriate party as
set forth below, or (c) on the second business day after being deposited in
United States certified or registered mail, and addressed as follows:
If to Borrower: UnionBancorp, Inc.
122 W. Madison St.
Ottawa, Illinois 61350
Attention: Scott R. Grigbsy
If to the Bank: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60674
Attention: Delmar Rogers, Jr.
or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party complying as to delivery with the
terms of this subsection.
(d) This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
(e) This Agreement shall become effective when it shall have been executed
by the Borrower and the Bank and thereafter shall be binding upon and inure to
the benefit of the Borrower and the Bank and their respective successors and
assigns, except that the Borrower shall not have the right to assign its rights
hereunder or any interest herein.
(f) This Agreement and the Notes shall be governed by the internal laws of
the State of Illinois, and for all purposes shall be construed in accordance
with the laws of said State.
(g) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or lack of enforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provision in any other jurisdiction; wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law.
(h) All covenants, agreements, representations and warranties made by the
Borrower herein shall, notwithstanding any investigation by or knowledge on the
part of the Bank, be deemed material and relied on by the Bank and shall
survive the execution and delivery to the Bank of this Agreement and the Notes.
(i) This Agreement shall govern the terms of any extensions or renewals of
the Notes, subject to any additional terms and conditions imposed by the Bank
in connection with any such extension or renewal.
(j) The Borrower hereby represents that the indebtedness evidenced hereby
constitutes loans made by Bank to enable the Borrower to carry on a commercial
enterprise for the
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purpose of investment or profit and that such loan is a loan for business
purposes under the intent and purview of Ill. Rev. Stat. Ch. 17, Section
6404(c).
(k) The Borrower will pay all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees) in connection with the
preparation, negotiations, documentation, execution, delivery, administration,
amendment, modification, collection and enforcement of this Agreement, the
Notes, the Pledge Agreements and the other instruments and documents to be
delivered hereunder. In addition, the Borrower shall pay, and save Bank
harmless from any liability for, any and all stamp and other taxes determined
to be payable in connection with the execution and delivery of this Agreement,
the borrowings hereunder, or the Notes and the other instruments and documents
to be delivered hereunder, and agrees to save the Bank harmless from and
against any and all liabilities with respect to or resulting from any delay in
paying or omitting to pay such taxes. The foregoing obligations shall survive
any termination of this Agreement, the Notes of the Pledge Agreements;
provided, that the indemnification of the Bank by the Borrower in connection
with any stamp or other taxes shall apply only to those taxes which arise
during the term of this Agreement or any extension hereof. Any of the
foregoing amounts incurred by Bank and not paid by the Borrower upon demand
shall bear interest from the date incurred at the Prime Rate plus two percent
(2%) per annum and shall be deemed part of the indebtedness hereunder.
(l) Any accounting term not specifically defined herein shall be construed
in accordance with generally accepted accounting principles which are applied
in the preparation of the financial statements referred to in Section 5, and
all financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
(m) The Bank reserves the right to sell participations in the Loans or
otherwise assign, transfer or hypothecate all or any part of the Loans. The
Bank will not sell the Loans to a non-affiliate without the Borrower's consent,
which shall not be unreasonably withheld.
(n) All covenants, agreements, warranties, and representations of the
Borrower herein shall be deemed to have been made jointly and severally by the
Borrower and the Subsidiaries.
(o) The Borrower agrees to do such further acts and things and to execute
and deliver to Bank such additional assignments, agreements, powers and
instruments, as Bank may reasonably require or deem advisable to carry into
effect the purpose of this Agreement, the Notes, the Pledge Agreements or any
agreement or instrument in connection herewith, or to better assure and confirm
unto Bank its rights, powers and remedies hereunder or under such other loan
documents.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
UNIONBANCORP, INC.
By: \s\ R. Scott Grigsby
--------------------
Its: President
--------------------
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LASALLE NATIONAL BANK
By: \s\ Wayne A. Veselsky
---------------------
Its: Senior Vice President
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Exhibit C
Subsidiary Owner of Stock Number of Shares
---------- -------------- ----------------
Union Bank-Streator UnionBancorp, Inc. 6100
Union Bank-Sandwich UnionBancorp, Inc. 75,000
Hanover State Bank Prairie Acquisition Corp.* 1800
FNB Manlius Prairie Acquisition Corp.* 5910
Bank of Ladd Prairie Acquisition Corp.* 2800
Tampico National Bank Prairie Acquisition Corp.* 884.9
Tiskilwa State Bank Prairie Acquisition Corp.* 14,250
Farmers State Bank Prairie Acquisition Corp.* 2675
Ferris
Omni Bank Macomb CBI Acquisition Corp.* 1800
Prairie Acquisition Corp. UnionBancorp, Inc. 1000
CBI Acquisition Corp. UnionBancorp, Inc. 1000
* Wholly owned subsidiary of UnionBancorp, Inc.
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