Exhibit 10.4
LOAN AGREEMENT
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This Loan Agreement is made effective as of the 12th day of September,
2002, by and between METROPOLITAN FINANCIAL CORP., an Ohio corporation with its
principal place of business located at 22901 Millcreek Boulevard, Highland
Hills, Ohio 44122, (the "Borrower"), and SKY BANK, an Ohio state chartered
financial institution, with its principal office located at 10 East Main Street,
Salineville, Ohio 43945, (the "Bank").
Whereas, the Borrower has requested that the Bank extend credit to the
Borrower in the original principal amount of Five Million Dollars
($5,000,000.00) in accordance with the terms and conditions of this Agreement,
and
Whereas, the Bank is willing to do so upon the terms and conditions of
this Loan Agreement and every other document executed in connection therewith.
NOW, THEREFORE, in consideration of the foregoing and the
representations, covenants and mutual agreements herein contained, the parties
hereby agree as follows:
SECTION I. DEFINITIONS
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As used herein:
ACCOUNTING TERMS. Any accounting terms not specifically defined herein
shall be construed in accordance with GAAP consistent with that applied in the
preparation of the "Financial Statements", as hereinafter defined, and all
financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
"ACCOUNTS," "CHATTEL PAPER," "CONTRACTS," "DOCUMENTS," "FIXTURES,"
"GENERAL INTANGIBLES," "GOODS," and "INSTRUMENTS," shall have the same
respective meanings as are given to those terms in the Uniform commercial Code
as presently adopted and in effect in the State of Ohio.
"ADVANCE(S)" means one or more distributions of borrowed funds made by
the Bank, delivered to and made pursuant to requests of the Borrower under this
Agreement.
"AFFILIATE" means, as to any Person, each other Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled by
or under common control with, such Person.
"BORROWER'S COLLATERAL" means any land or real property owned by a
third party which becomes collateral in the future in connection with any
agreement by and between such third party and the Borrower and/or any of the
Subsidiaries.
"BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on
which commercial banks in the State of Ohio are authorized to close.
"CAPITAL EXPENDITURE" means, for any fiscal year or portion thereof,
(i) all expenditures during such fiscal year or portion thereof for any fixed
assets or improvements, or for replacement or substitutions therefor or
additions thereto, that have a useful life of more than one year plus (ii) the
purchase price of assets acquired in connection with any Capital Lease entered
into during such fiscal year or portion thereof.
"CAPITAL LEASE" means all leases which have been or should be
capitalized on the books of the Borrower in accordance with GAALP,
"CLOSING" has the meaning provided in Section 3.01.
"COLLATERAL" has the meaning provided in Section 4.01.
"COLLATERAL DOCUMENTS" means the Pledge Agreement and the UCC
statements filed in connection therewith.
"CURRENT ASSETS" and "CURRENT LIABILITIES" mean, at any time, all
assets or liabilities, respectively, that should, in accordance with GAAP, be
classified as current assets or current liabilities, respectively, on the
balance sheet of the Borrower.
"EMPLOYEE PENSION BENEFIT PLAN" and "EMPLOYEE BENEFIT PLAN" shall have
the same respective meanings as are given to those terms in ERISA.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may, from time to time, be amended.
"EVENT OF DEFAULT" has the meaning provided in Section 7.01.
"ENVIRONMENTAL LAWS" means any existing or hereafter enacted laws,
ordinances, orders, rules and regulations and other requirements of any
governmental authority affecting or regulating any hazardous, toxic or dangerous
waste, substance or material such as in (or for purposes of) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLAY') as
amended 42 U.S.C. Sections 9601 ET SEQ., Resource Conservation and Recovery Act
(RCRA) 42 U.S.C. Section 9601 ET SEA., Federal Insecticide, Fungicide and
Rodenticide Act, 7 U.S.C. Section 135 ET SEQ., the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801 ET SEQ., Ohio Revised Code Sections
3734.01 ET SEQ., Sections 3751.01 ET SEQ., the Clean Air Act, 42 U.S.C. Section
7401 ET SEQ., the Clean Water Act, 33 U.S.C. Section 1251 ET SEQ., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 ET SEQ., or any other federal,
state or local, statute, law or common law, ordinance, code, rule, regulation,
order or decree regulating, relating to, or imposing liability or standards of
conduct concerning any hazardous or toxic waste, substance or material including
any material, waste or substance which is derived from or contains or is (A)
petroleum or a petroleum product, (B) asbestos, (C) polychlorinated biphenyls;
(D) flammable; (F) explosive; (G) corrosive or (H) radioactive. "Environmental
Laws" shall also include without limitation any liability theory under tort,
nuisance or absolute liability for impairment or diminution of or interference
with any personal
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or property right -created or protected by Environmental Laws, including,
without limitation, damage to natural resources or wildlife or ground or
drinking water supplies, relating to or arising out of Borrower's Collateral.
"FINANCIAL STATEMENTS" means the consolidated financial statements of
the Borrower prepared from time to time in accordance with GAAP by an
independent certified public accountant of recognized standing to present fairly
the financial position and results of operations of the businesses of the
Borrower at such date and for such periods.
"FISCAL YEAR" means the Borrower's annual accounting period which
currently ends on December 31 of each calendar year.
"GAAP" means generally accepted accounting principles applied
consistently and used in the preparation of the Financial Statements, with such
changes or modifications thereto as may be approved in writing by the Bank.
"GUARANTY" means the form of Guaranty attached hereto as Exhibit `C'
signed or to be signed by Robert M. Kaye, a shareholder of the Borrower.
"INDEBTEDNESS" means all items of indebtedness, obligation or
liability, whether matured or unmatured, liquidated or unliquidated, direct or
contingent, joint or several, of the Borrower to the Bank, including without
implied limitations:
(A) All indebtedness guaranteed, directly or indirectly, in
any manner, or endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse;
(B) All indebtedness in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise: (1) to
purchase such indebtedness; or (2) to purchase, sell, or lease (as
lessee or lessor) property, products, materials, or supplies or to
purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such indebtedness or to insure the owner of
the indebtedness against loss; or (3) to supply funds to, in any other
manner invest in, the debtor;
(C) All indebtedness secured by (or for which the holder of
such indebtedness has a right, contingent or otherwise, to be secured
by) any mortgage, deed of trust, pledge, lien, security interest, or
other charge or encumbrance upon property owned by the Borrower or
acquired by the Borrower subject thereto, whether or not the
liabilities secured thereby have been assumed; and
(D) All indebtedness whether incurred under a Capital Lease
or otherwise, as the lessee of goods or services under leases that, in
accordance with GAAP, should not be reflected on the lessee's balance
sheet.
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(E) All indebtedness evidenced by the Cognovit Revolving Note
of even date herewith in the original principal amount of Five Million
Dollars ($5,000,000.00) (the "Note") together with all amendments,
extensions, modifications and refinancings thereof.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
the same may from time to time be amended.
"LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or any court or similar entity established by any thereof.
"LIABILITIES" means all Indebtedness that, in accordance with GAAP,
should be classified as liabilities on the balance sheet of the Borrower.
"LOAN" means the extension of credit to be made on a revolving basis
pursuant to Section II.
"LOAN DOCUMENTS" shall mean this Agreement, together with all exhibits
and schedules annexed hereto and all other documents now or hereafter executed
by or on behalf of the Borrower in connection herewith and any and all
modifications or extensions or supplements to or replacement for, in whole or in
part, any of the above-described documents, including, without limitation, the
Note, the Guaranty and the Pledge Agreement.
"MATURITY DATE" means December 31, 2003 or such earlier date brought
about by acceleration due to an Event of Default.
"NET WORKING CAPITAL" means, at any time the amount by which Current
Assets exceed Current Liabilities,
"OBLIGATIONS" means the obligations of the Borrower:
(A) To pay the principal of and interest on the Note in
accordance with the terms thereof and to satisfy all of their other
Liabilities (including, without limitation, fees and charges) due to
the Bank, whether hereunder or otherwise, whether now existing or
hereafter incurred, matured or unmatured, direct or contingent, joint
or several, including any extensions, modifications, renewals thereof
and substitutions therefor;
(B) To repay to the Bank all amounts advanced by the Bank
hereunder or otherwise on behalf of the Borrower, including, but
without limitation, Advances for principal or interest payments to
prior secured parties, mortgagees, or lienors, or for taxes, levies,
insurance, rent, or repairs to, or maintenance or storage of, any of
the Collateral;
(C) To reimburse the Bank within a reasonable time after
demand, not to exceed thirty (30) days, (i) for all of the Bank's
itemized expenses and costs, including the
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reasonable fees and expenses of its counsel, in connection with the
preparation, amendment, or modification, of this Agreement and the
documents required hereunder as provided for in Sections 2.11 and 2.12
hereof, including (without implied limitation) any proceeding brought,
or threatened, to enforce payment of any of the obligations referred
to in the foregoing paragraphs (A) and (B); and
(D) To indemnify the Bank, within a reasonable time after
demand, not to exceed thirty (30) days, from and against any and all
claims, losses and liabilities growing out of or resulting from this
Agreement (including, without limitation, enforcement of this
Agreement), except claims, losses or liabilities resulting from the
Bank's negligence or willful misconduct.
"PERMITTED LIENS" means:
(A) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet due and
payable;
(B) Pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation obligations, or to
participate in any fund in connection with worker's compensation,
unemployment insurance, old-age pensions, or other social security
programs;
(C) Incohate liens of mechanics, materialmen, warehousemen,
carriers, or other like liens, securing obligations incurred in the
ordinary course of business that are not yet due and payable;
(D) Good faith pledges or deposits made in the ordinary
course of business to secure performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or to
secure statutory obligations, or surety, appeal, indemnity,
performance or other similar bonds required in the ordinary course of
business;
(E) Encumbrances consisting of zoning restrictions,
easements, or other restrictions on the use of real property, none of
which materially impairs the use of such property by the Borrower in
the operation of its business, and none of which is violated in any
material respect by existing or proposed structures or land use;
(F) Liens in favor of the Bank;
(G) Existing liens set forth or described on Schedule 1,01,
attached hereto and made a part hereof;
(H) The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long
as levy and execution thereon have been stayed and continue to be
stayed and they do not, in the aggregate, materially detract from the
value of the property of the Borrower, or materially impair the use
thereof in the operation of its business:
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(1) Claims or liens for taxes, assessments, or charges due
and payable and subject to interest or penalty;
(2) Claims, liens, and encumbrances- upon, and defects of
title to, real or personal property, including any attachment
of personal or real property or other legal process prior to
adjudication of a dispute on the merits;
(3) Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
(4) Adverse judgments on appeal.
"PERSON" means any individual, corporation, partnership, association,
joint--stock company, trust, unincorporated organization, joint venture, court
or government, or political subdivision or agency thereof.
"PLEDGE AGREEMENT" shall mean the Pledge and Collateral Assignment
Agreement attached hereto as Exhibit "E" to be entered into by the Bank and
Robert M. Kaye.
"PRIME RATE" means the rate of interest periodically established by.
the Bank as its prime rate as such rate may change from time to time. The Prime
Rate is not necessarily the lowest rate offered by the Bank and the Bank's
decision as to the Prime Rate shall be final and binding.
"RECORDS" means correspondence, memoranda, tapes, discs, papers,
books, and other documents, or transcribed information of any type, whether
expressed in ordinary or machine language.
"REPORTABLE EVENT" and "PROHIBITED TRANSACTION" shall have the meaning
given to those terms under ERISA.
"STOCKHOLDERS' EQUITY" means, at any time, the aggregate of the sum of
the following accounts set forth on a balance sheet of the Borrower, prepared in
accordance with GAAP: (A) the par or stated value of all outstanding capital
stock; (B) capital surplus; and (C) retained earnings.
"SUBSIDIARIES" means the wholly-owned subsidiaries of the Borrower and
their wholly-owned subsidiaries.
"TANGIBLE NET WORTH" means, at any time, Stockholders' Equity, less
the sum of:
(A) Any surplus resulting from any write-up of assets
subsequent to the Closing;
(B) Goodwill, including any amount, however-designated on the
Borrower's balance sheet representing the excess of the
purchase price paid for assets or
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stock acquired over the value assigned thereto on the books of
the Borrower;
(C) The value of any patents, trademarks, trade names, and
copyrights;
(D) Any amount at which shares of capital stock of the
Borrower appear as an asset on the Borrower's balance sheet;
(F) Any other amount in respect to an intangible (except for
purchase mortgage servicing rights) that should be classified
as an asset on a balance sheet of the Borrower in accordance
with GAAP,
SECTION II. THE LOAN
2.01 PURPOSE OF THE LOAN. The Loan proceeds shall be utilized (i) to
pay off Borrower's outstanding loan(s) from Huntington Bank, NA and (ii) for
working capital purposes.
2.02 THE LOAN.
(A) Provided that no Event of Default has occurred, subject to the
terms and conditions hereof, the Bank may lend the Borrower,
on a revolving basis, from time to time, such sums as the
Borrower may request, but which shall not exceed in the
aggregate amount at any one time outstanding the amount of
Five Million Dollars ($5,000,000.00). Prior to any Advance
hereunder, and at any and all times that any Obligations
remains outstanding, Robert M. Kaye shall have delivered to
the Bank certificates representing shares of stock of the
Borrower equal to at least fifty percent (50%) of all of the
issued and outstanding shares of the Borrower or such greater
number of shares as may be required from time to time under
Reg. U of the Board of Governors of the Federal Reserve
System. These shares of stock shall be pledged in accordance
with the Pledge & Collateral Assignment Agreement dated
September ______ between Robert M. Kaye and the Bank.
(B) It is the intention of the parties that the outstanding
principal amount of the Loan shall at no time exceed the
amount of Five Million Dollars ($5,000,000.00) and if, at any
time, an excess shall for any reason exist, the Borrower shall
repay to the Bank forthwith such amounts as may be necessary
to eliminate such excess. Subject to this limitation and the
other limitations set forth in this Agreement, the Borrower
may borrow, prepay without penalty or premium (except for the
prepayment fee described in Section _____) and reborrow
hereunder, the full amount permitted hereunder.
(C) A fee equal to one-eighth of one percent (1/8 of 1%) per annum
of the amount of the average unused portion of the principal
amount of the Loan will be payable quarterly commencing on
December 1, 2002 and on the same day of each March, June,
September and December thereafter.
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(D) An annual commitment fee of Fifteen Thousand ($15,000) shall
be paid to Bank by Borrower on the date of Closing and on the
same day of each year thereafter for as long as any funds are
outstanding or available under the Note.
2.03 SUBSEQUENT ADVANCES AND PROCEDURE FOR BORROWING UNDER THE
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LOAN.
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(A) So long as no Event of Default shall have occurred and be
continuing, the Borrower may request subsequent Advances
hereunder from time to time until the Maturity Date; provided
that such Advances may be made or refused by the Bank in its
reasonable discretion and shall be in an amount not less than
One Thousand Dollars ($1,000.00) or an integral multiple
thereof; and PROVIDED, FURTHER, that in no event shall the
Bank make any Advances under the Loan unless the Borrower
shall: (i) cause to be delivered to the Bank such application
documents and further Collateral as may be required by the
Bank; (ii) have complied with all conditions precedent
required by this Agreement and other applicable Loan
Documents; and (iii) have delivered disbursement instructions,
which instructions shall be in such form as the Bank shall
from time to time prescribe.
(B) The Bank shall be entitled to rely on any oral or telephonic
communication requesting an Advance and/or providing
disbursement instructions hereunder, which shall be received
by it in good faith from anyone reasonably believed by the
Bank to be the Borrower, or the Borrower's authorized agent.
(C) The Borrower agrees that all Advances made by the Bank will be
evidenced by entries made by the Bank into its electronic data
processing system and/or internal memoranda maintained by the
Bank. The Borrower further agrees that the sum or sums shown
on the most recent printout from the Bank's electronic data
processing system and/or such memoranda shall be rebuttably
presumptive evidence of the amount of the principal
outstanding and of the amount of any accrued interest.
2.04 NOTE. The Loan shall be evidenced by delivery to the Bank of the
Cognovit Revolving Note of even date herewith (the "Note")in the form set forth
in Exhibit "A" attached hereto, which shall be executed and delivered to the
Bank by the Borrower.
2.05 INTEREST RATE AND REPAYMENT.
(A) Interest and principal shall be paid as follows:
(1) Interest on the principal balance of the Loan, from time
to time outstanding, will be payable monthly commencing on October 1,
2002 and continuing on the same day of each consecutive month
thereafter until the Maturity Date, at the Prime Rate in effect from
time to time PROVIDED HOWEVER, that in no event with the interest rate
applicable to the Note be less than four and one half percent (4.5%)
per annum. On and after the Maturity Date, (whether maturity is brought
about by acceleration in the Event of Default or otherwise) the
interest rate shall be two hundred (200) basis points in excess
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of the Prime Rate in effect from time to time.
(2) Interest on all Advances and other Obligations hereunder
whether evidenced by the Note or otherwise shall be calculated on the
basis of a 360--day year, counting the actual number of days elapsed,
and shall be payable as set forth above in this Section 2.05(A), to
continue until all Advances and other Obligations hereunder have-been
paid in full, The Borrower hereby authorizes the Bank to charge any
such interest due from time to time against any account of the Borrower
with the Bank.
2.06 PREPAYMENT FEE. In the event that Borrower desires to prepay
amounts due under the Note in full prior to the Maturity Date, (whether with
funds of a third party or otherwise), Borrower shall pay to Lender, upon demand,
a prepayment fee of One Hundred Thousand Dollars ($100,000.00).
2.07 CHANGE OF CONTROL FEE. In the event that (i) a direct or indirect
change of control of Borrower occurs on or before December 31, 2003 or (ii) an
announcement of an impending direct or indirect change of control is made on or
before December 31, 2003, Borrower shall pay to Bank, upon demand, a change of
control fee of $100,000.00.
2.08 METHOD OF PAYMENT, The Borrower shall make each payment under
this Agreement and under the Note on the date when due in lawful money of the
United States to the Bank at the main office or any branch office of the Bank
(or such other address as Bank may designate) in immediately available funds,
The Borrower hereby authorizes the Bank, if and to the extent payment is not
made when due under this Agreement or under the Note, to charge any amount so
due from time to time against any account of the Borrower with the Bank.
Whenever any payment to be made under this Agreement or under the Note shall be
stated to be due on other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.
2.09 Intentionally left blank
2.10 TERMINATION OF THE LOAN. If an Event of Default has occurred, the
Loan may be terminated and cancelled by the Bank demanding payment of all
Advances and other amounts outstanding under the Note. No further Advances will
be made by Bank in such circumstances.
2.11 EXPENSES. The Borrower shall pay reasonable legal fees up to a
maximum amount of Eight Thousand Dollars ($8,000.00) plus all filing, recording
and other out-of-pocket fees expended by the Bank and/or its counsel in
connection with the Loan, and up to the amount of One Thousand Dollars
($1,000.00) for any amendment hereto.
2.12 INDEMNITY. The Borrower agrees to indemnify the Bank and to hold
the Bank harmless from and against any and all losses, liabilities, damages,
injuries, costs, expenses and claims of any and every kind whatsoever (including
attorneys fees), paid, incurred or suffered by, or asserted against, Bank for,
with respect to, or as a direct or indirect result of any of the following,
regardless of whether caused by, or within the control of Borrower except
claims,
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losses or liabilities resulting from the Bank's negligence or willful
misconduct:
(A) Which the Bank may sustain or incur as a consequence of
Default by the Borrower in payment of the principal amount of or
interest on the Advances; and
(B) Without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Laws in connection with Borrower's Collateral, or any
liens against Borrower's Collateral or any part thereof or any
interest or estate in any part thereof, created, permitted or imposed
by the Environmental Laws, or any actual or asserted liability of or
obligations of Borrower or any of-the Subsidiaries under the
Environmental Laws.
Any costs or expenses reasonably incurred by Bank for which
Borrower is responsible or for which Borrower has indemnified Bank shall be paid
to Bank on demand, and failing prompt reimbursement, shall be added to the
indebtedness secured by this Loan Agreement and earn interest at the default
rate of interest specified in the Note until paid in full.
2.13 TAXES. All payments made by the Borrower under this Agreement
shall be made free and clear of, and without reduction for or on account of, any
present or future income or other taxes, levies, imposts, duties, charges, fees,
deductions, withholdings now or hereafter imposed, levied, collected, withheld
or assessed by any governmental authority (or by any taxing authority thereof or
therein) excluding income, franchise and similar taxes of the United States of
America or any taxing authority thereof or therein.
SECTION III. CONDITIONS PRECEDENT.
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The obligation of the Bank to make the Loan or any Advance thereunder
shall be subject to the satisfaction of the following conditions:
3.01 DOCUMENTS REQUIRED FOR THE CLOSING. The Borrower shall have duly
delivered to the Bank, in form and substance satisfactory to the Bank and its
counsel, prior to the initial disbursement of the proceeds of the Loan (the
"Closing"), the following:
(A) This Loan Agreement;
(B) The Loan Note;
(C) The Pledge Agreement and related UCC financing
statements, together with a satisfactory review by
the Bank of any existing subordinated Indebtedness of
the Borrower;
(D) The Guaranty;
(E) An opinion of counsel for the Borrower in form and
substance satisfactory to the Bank.
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(F) The Borrower shall have paid the Bank the annual
commitment fee of Fifteen Thousand Dollars ($15,000).
(G) The following certificates and related documentation,
all dated as of the Closing Date:
(i) copies of the articles of incorporation of the
Borrower and the amended and restated constitution of the
Metropolitan Bank and Trust Company, certified by the
respective corporate secretary of each entity. (In addition,
the Borrower shall furnish as soon as possible after the date
of Closing, the aforementioned documents certified by an
authorized public officer of the respective jurisdictions
under which they are incorporated);
(ii) certificates of good standing from the
respective jurisdictions under which they are incorporated,
together with certificates of good standing or authority to
transact business or similar certificates from each state or
province referred to in Schedule 5.01(B) where they have
places of business or maintain records, in all cases from the
Secretary of State or comparable officer of such jurisdiction;
(iii) a copy of the Code of Regulations of the
Borrower and Metropolitan Bank and Trust Company, certified by
their respective secretaries;
(iv) resolutions of the Borrower's Strategic Planning
Committee of Its Board of Directors authorizing the execution,
delivery and performance of the applicable Loan Documents and
the consummation of the transactions contemplated thereby,
certified by its secretary; and
(v) an incumbency certificate certifying the names of
their respective officers and their signatures, certified by
their respective secretaries;
(H) A certificate, dated the date of the Closing,
signed by the Borrower's Chief Financial Officer
to the effect that:
(1) The representations and warranties set forth in
Section 5.01 are true as of the date of the Closing; and
(2) No Event of Default hereunder, and no event
which, with the giving of notice or passage of time or both,
could become such an Event of Default, has occurred as of such
date;
(I) A copy of the Supervisory Directives issued to the
Borrower and its subsidiaries by the Office of Thrift
Supervision dated July 8, 2002; and
(J) There shall have been no material adverse change in
the Borrower or any
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of the Subsidiaries subsequent to June 30, 2002 as determined
by the Bank in its sole discretion.
3.02 PAYMENTS. The Borrowers shall have paid, or reimbursed the Bank
for, the amounts required to be paid or reimbursed by the Borrower pursuant to
Section 2.10 of this Loan Agreement, including, without limitation, the fees and
expenses of Marshall & Melhorn, LLC up to a maximum amount of Eight Thousand
Dollars ($8,000.00), together with expenses related thereto.
Such other certificates, opinions, agreements and documents
as the Bank shall reasonably request, and the Bank, in its sole discretion,
shall be satisfied with the condition, financial and otherwise, of the Borrower.
3.03 DOCUMENTS REQUIRED FOR SUBSEQUENT DISBURSEMENTS. Prior to any
disbursements of Loan proceeds subsequent to the Closing, the Borrower shall
have duly delivered to the Bank the following:
(A) Stock share certificates related to the Pledge Agreement
and/or documentation as to the subsequent delivery of such
certificates acceptable in form and substance to the Bank and its
counsel.
(B) A certificate, dated the date on which such disbursement
is to be made, signed by any of the authorized officers of the
Borrower and to the effect that:
(1) As of the date thereof, no Event of Default has
occurred and is continuing, and no event has occurred and is
continuing that, with the giving of notice or passage of time
or both, would be an Event of Default.
(2) No material adverse change has occurred in the
business prospects, financial condition, or results of
operations of the Borrower since the date of the then most
recent financial information provided to the Bank pursuant to
Section 6.01(C), below; and
(3) Each of the representations and warranties
contained in Section 5.01 is true and correct in all material
respects as if made on the date of such disbursement.
(4) The Borrower shall be in compliance with all
terms, conditions and covenants under this Loan Agreement and
the Loan Documents.
3.04 CERTAIN EVENTS. At the time of the Closing and each subsequent
disbursement of Loan proceeds:
(A) No Event of Default shall have occurred and be
continuing, and no event shall have occurred and be continuing that,
with the giving of notice or passage of time or both, would be an
Event of Default;
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(B) No material adverse change as defined in Section 3.01(J)
shall have occurred in the Borrower's financial condition since the
date of the then most recent financial information provided to the
Bank pursuant to Section 6.01(C) below;
(C) This Agreement, the Note, and all of the other Loan
Documents shall have remained continuously in full force and effect
except as otherwise agreed to in writing by the Bank;
(D) The Bank shall have received evidence of the completion
of all recordings and filings pursuant to this Agreement as may be
necessary or, in the opinion of the Bank, desirable, to perfect the
security interest and liens created by this Agreement and the other
Loan Documents; and
(E) The Bank shall have received evidence of public
liability insurance and any other insurance coverage required
hereunder.
3.05 LEGAL MATTERS. At the time of the Closing and each subsequent
disbursement, all legal matters incidental thereto shall be satisfactory to
counsel for the Bank.
SECTION IV. COLLATERAL SECURITY
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4.01 COMPOSITION OF THE COLLATERAL. The property in which a security
interest is granted pursuant to the Pledge Agreement, and Section 4.02 hereof is
herein collectively referred to herein as the "Collateral." The Collateral,
together with all other property of the Borrower of any kind held by the Bank,
shall stand as one general, continuing collateral security for all Obligations
and may be retained by the Bank until all Obligations have been satisfied in
full.
4.02 RIGHTS IN PROPERTY HELD BY THE BANK. As security for the prompt
satisfaction of all Obligations, the Borrower hereby assigns, transfers, and
sets over to the Bank all of its right, title, and interest in and to, and
grants the Bank a lien on and a security interest in, all amounts that may be
owing from time to time by the Bank to the Borrower in any capacity, including,
without limitation, any balance belonging to the Borrower or any deposit or
other account with the Bank, which lien and security interest shall be
independent of, and in addition to, any right of set-off that the Bank has under
Section 7.04 or otherwise.
4.03 INSECURITY CLAUSE. The Borrower agrees that if the Collateral
shall, at any time, be unsatisfactory to the Bank in exercising its reasonable
discretion, the Borrower shall, on demand, forthwith pledge and deposit with the
Bank as part of the Collateral additional property satisfactory to the Bank,
SECTION V. REPRESENTATIONS AND WARRANTIES
-----------------------------------------
5.01 ORIGINAL. To induce the Bank to enter into this Agreement, the
Borrower represents and warrants to the Bank as follows:
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(A) The Borrower is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of Ohio;
each of the Subsidiaries is wholly owned by the Borrower and is a
corporation duly organized, validly existing, and in good standing
under the Laws of the State of Ohio; the Borrower and the Subsidiaries
have the lawful power to own their respective properties and to engage
in the businesses they conduct, and neither the Borrower nor any of
the Subsidiaries are required to be qualified as a foreign corporation
in any other jurisdiction;
(B) Attached hereto as Schedule 5.01(B) is a true, correct
and complete list of the Borrower and the Subsidiaries, a summary of
their capital structure, including all capital stock of the Borrower
and the Subsidiaries, and the addresses and all places of business of
the Borrower and the Subsidiaries;
(C) The Borrower is not directly or indirectly controlled by,
or acting on behalf of, any Person which is an "Investment Company"
within the meaning of the Investment Company Act of 1940, as amended;
(D) Neither the Borrower nor any of the Subsidiaries are in
default with respect to any of their existing Indebtedness, and the
making and performance of this Agreement, the Note and the other Loan
Documents will not (immediately or with the passage of time, the
giving of notice, or both) result in the creation or imposition of any
security interest in, or lien or encumbrance upon, any of the assets
of the Borrower, except in favor of the Bank;
(E) The Borrower has taken all action necessary to authorize
the execution, delivery and performance by it of the Loan Documents.
This Loan Agreement is, and each of the other Loan Documents to be
executed by the Borrower, when executed and delivered, will be legal,
valid and binding upon the Borrower and enforceable against the
Borrower in accordance with their respective terms, No consent,
approval, or authorization of, or registration or declaration with,
any governmental authority or other Person is required in connection
with the execution, delivery and performance by the Borrower of any of
the Loan Documents.
(F) Except as disclosed in Schedule 5.01(F) or otherwise
disclosed to the Bank in writing, there is no pending order, notice,
claim, litigation, proceeding, or investigation against or affecting
the Borrower or any of the Subsidiaries, whether or not covered by
insurance, that would, to the best of the Borrower's knowledge, in the
aggregate involve the payment of One Hundred Thousand Dollars
($100,000.00) or more or would otherwise materially or adversely affect
the financial condition or business prospects of the Borrower or any of
the Subsidiaries if adversely determined;
(G) The Borrower has furnished to the Bank certain financial
data and reports concerning the Borrower. This data is complete and
correct in all material respects and fairly presents the financial
condition of the Borrower as of the date thereof, and, in the case of
such data concerning the future financial performance of the Borrower,
represents the Borrower's reasonable and good faith estimate of
projected future operations of the
14
Borrower as of the date of this Loan Agreement, based on the notes and
assumptions stated therein (which the Borrower believes to be currently
valid assumptions), and the Borrower does not presently anticipate any
material deviations from such projections.
(H) As of the date of this Agreement, the Borrower has no
material amount of liabilities, contingent or otherwise, required to be
reflected in accordance with GAAP, which are not reflected in the
Financial Statements other than those liabilities arising in the
ordinary course of business and certain potential tax liabilities
associated with matters disclosed in the Regulatory Orders. As of the
Closing Date, neither the Borrower nor any of the Subsidiaries have any
outstanding or existing commitments for the purchase of land,
buildings, equipment, materials, or supplies, or any contracts for
services except for those made in the ordinary course of business.
Since June 30, 2002, there has been no material adverse change in the
condition, financial or otherwise, of the Borrower or any of the
Subsidiaries, and the business, operations, and properties of the
Borrower and the Subsidiaries have not been substantially and adversely
affected in any way as a result of any fire, explosion, earthquake,
accident, labor disturbance, requisition or taking of property by any
governmental authority, flood, riot, or act of God.
(I) As of the date hereof, the Borrower does not know or have
reasonable ground to know of any basis for the assertion against it or
any of the Subsidiaries of any Indebtedness (other than amounts
deposited by customers) as of the date of the Closing except as
reflected in its Financial Statements or otherwise disclosed to the
Bank in writing;
(J) Except as otherwise permitted herein, the Borrower and
each of the Subsidiaries have filed all federal, state, and local tax
returns and other reports required by any applicable Laws to have been
filed prior to the date hereof, has paid or cause to be paid all taxes,
assessments, and other governmental charges that are due and payable
prior to the date hereof, and has made adequate provision for the
payment of such taxes, assessments, or other charges accruing but not
yet payable; the Borrower has no knowledge of any deficiency or
additional assessment in a materially important amount in connection
with any taxes, assessments, or charges not provided for on its books;
(K) Except as otherwise set forth in (i) the Supervisory
Agreement dated July 26,2001 between the OTS, ODFI, and Metropolitan
Bank and Trust Company; (ii) the Supervisory Agreement dated July
26,2001 between the OTS, ODFI and the Borrower; (iii) the Supervisory
Directive dated July 8, 2002 issued by the OTS and applicable to the
Borrower and Metropolitan Bank and Trust Company and (iv) the "needs to
improve" rating assigned to Metropolitan Bank and Trust Company in
connection with its most recent Community Reinvestment Act examination
(collectively, the preceding items (i) through (iv) are sometimes
referred to herein as the "Regulatory Orders"), the Borrower and each
of the Subsidiaries have complied with all applicable Laws with respect
to: (1) any restrictions, specifications, or other requirements
pertaining to the services they perform; (2) the conduct of their
respective businesses; and (3) the use, maintenance, and operation of
the real and personal properties owned or leased by them then in the
conduct of their respective businesses;
15
(L) No representation or warranty by or with respect to the
Borrower and/or the Subsidiaries contained herein or in any certificate
or other document furnished by the Borrower pursuant hereto contains
any untrue statement of a material fact or omits to state a material
fact necessary to make such representation or warranty not misleading
in light of the circumstances under which it was made;
(M) Each consent, approval, or authorization of, or filing,
registration, or qualification with, any Person required to be obtained
or effected by the Borrower in connection with the execution and
delivery of this Agreement, the Note, and the other Loan Documents or
the undertaking or performance of any obligation hereunder or
thereunder has been duly obtained or effected;
(N) The Financial Statements furnished by the Borrower to the
Bank accurately reflect the financial condition of the Borrower and its
Subsidiaries as of the dates and for the periods therein set forth.
(O) The Borrower is not in default in the performance,
observance, or fulfillment of any of the material obligations,
covenants, or conditions contained in (i) any evidence of Indebtedness
for Borrowed Money, or (ii) any lease or other instrument by which such
Borrowers has acquired a real property interest. Neither the execution
and delivery of the Loan agreement of any other Loan Documents, nor the
consummation of the transactions contemplated thereby, nor compliance
with the terms and provisions thereof, will violate the provisions of
any applicable law or of any applicable order or regulations of any
governmental authority having jurisdiction over this Loan Agreement, or
any of the other Loan Documents or will conflict with any permit, or
will conflict with or result in a breach of any of the terms,
conditions or provisions of any restriction or of any agreement or
instrument to which the Borrower is now a party, or will constitute a
default thereunder, or will result in the creation or imposition of any
lien, charge, or encumbrance of any nature whatsoever upon any of the
properties or assets of the Borrower except in favor of the Bank;
(P) The Borrower has not made any agreement or taken any
action that may cause anyone to become entitled to a commission or
finder's fee as a result of or in connection with the making of the
Loans;
(Q) Any Employee Pension Benefit Plans, as defined in ERISA,
of the Borrower or any of the Subsidiaries meet, as of the date hereof,
the minimum funding standards of 29 U.S.C.A. section 1082 (Section
302 of ERISA), and no Reportable Event or prohibited Transaction has
occurred with respect to any Employee Benefit Plan, as defined in
ERISA, of the Borrower or any of the Subsidiaries, and the Borrower
does not have a profit sharing plan;
(R) Neither the registration of any security under the
Securities Act of 1933, as amended, or any other federal, state, or
local securities laws, nor the qualification of the Loan Documents
under the Trust Indenture Act of 1939, as amended, is required in
16
connection with (a) the Loan or the issuance and delivery of the Note
pursuant hereto, (b) the Pledge Agreement, (c) the Subordination
Agreement;
(S) Except as disclosed in Schedule 5.01(S) attached hereto,
the Borrower is conducting its business, in compliance in all material
respects, with all applicable federal, state, and local Environmental
Laws, and, there is not pending or, to the best knowledge of the
Borrower after diligent investigation, threatened, civil or criminal
litigation, notice of violation or lien, or administrative proceeding
relating to environmental matters involving the Borrower and/or any of
the Subsidiaries. There is currently no Borrower's Collateral in
existence. Except as described in the Schedule 5.01(5), there is no
condition or situation, including without limitation any lien or
encumbrance, with respect to environmental matters which, either
individually or in the aggregate, has or is reasonably expected to have
a material adverse effect on the business, operations, properties or
condition (financial or otherwise) of the Borrower. Except as disclosed
in Schedule 5.01(S), the Borrower has obtained from every federal,
state, and local Governmental Authority, all approvals, consents,
licenses, permits, and orders necessary to carry on its business as
currently conducted;
(T) The Borrower does not own, nor does it have any present
intention of acquiring, any "margin stock" within the meaning of
Regulation U (12 CFR Part 221) of the Board of Governors of the Federal
Reserve System (herein called "margin stock"). None of the proceeds of
the Loan will be used, directly or indirectly, by the Borrower for the
purpose of purchasing or carrying, or for the purpose of reducing or
retiring any indebtedness or other liability which was originally
incurred to purchase or carry, any margin stock or for any other
purpose which might cause the transactions contemplated hereby to be
considered a "purpose credit" within the meaning of said Regulation U,
or which might cause this Loan Agreement to violate Regulation G,
Regulation U, Regulation T, Regulation X, or any Other regulation of
the Board of Governors of the Federal Reserve System or the Securities
Exchange Act of 1934. Upon request, the Borrower will promptly furnish
the Bank with a statement in conformity with the requirements of
Federal Reserve Form U-1 referred to in said Regulation U; and
5.02 SURVIVAL. All of the representations and warranties set forth in
Section 5.01 shall survive until all Obligations are satisfied in full and there
remain no outstanding commitments hereunder.
SECTION VI. COVENANTS OF THE BORROWER
-------------------------------------
6.01 AFFIRMATIVE COVENANTS. The Borrower hereby covenants and agrees
with the Bank that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, the Borrower will comply, at all times
with the following affirmative covenants:
(A) Following the payment in full of its debt with Huntington
Bank, NA, the Borrower will use the proceeds of the Loans only for
working capital purposes and will
17
furnish the Bank such evidence as it may reasonably require with
respect to such use;
(B) The Borrower will cause to be done all things necessary
to preserve and to keep in full force and effect its existence and
rights. The Borrower will comply in all material respects with all
federal, state, and local laws and regulations now in effect or
hereafter promulgated by any properly constituted governmental
authority having jurisdiction. The Borrower and the Subsidiaries will
continue to comply with all regulations and orders of the Office of
Thrift Supervision ("OTS") and all other regulatory agencies as
applicable including, without limitation, the Supervisory Directive
issued by OTS on July 8, 2002 and the Supervisory Agreements issued by
OTS on July 26, 2001. The Bank acknowledges that while Borrower will
use its best efforts to comply with the OTS requirement, that Borrower
reduce its fixed assets to twenty-five percent (25%) of core capital
by December 31, 2002, actual compliance will depend on Borrower's
ability to sell certain assets. The Borrower and the Subsidiaries
shall also receive satisfactory ratings from all governmental entities
with which they conduct business, including but not limited to the
Federal National Mortgage Association. In connection with and without
limiting the generality of the foregoing, the Borrower and the
Subsidiaries will maintain and preserve their respective permits
granted by governmental authorities necessary to operate their
respective facilities in full force and effect and will take all
action which may be required to comply with all such laws and
regulations now in effect or hereafter promulgated by any federal,
state, and local governmental authority having jurisdiction over such
facilities. The Borrower and the Subsidiaries will obtain, renew and
extend their respective permits and will give prompt written notice to
the Bank of (i) any citation or order relating thereto or any claim or
notice of any default thereunder, (ii) any lapse or other termination
thereof, or (iii) any refusal of any Person to grant or extend any of
them.
(C) The Borrower will furnish the Bank:
(1) Within thirty (30) days after the close of each
calendar quarter: (a) income statements of Metropolitan Bank
and Trust Company for such quarter; and (b) balance sheets of
Metropolitan. Savings Bank as of the end of such quarter -
all in reasonable detail, subject to normal year-end audit
adjustments, certified by the Chief Financial Officer of
Metropolitan Bank and Trust Company to have been prepared in
accordance with GAAP;
(2) Within thirty (30) days after the close of
each calendar quarter: (a) income statements of the
Borrower, on a consolidated basis, for such quarter; and
(b) balance sheets of the Borrower, on a consolidated basis,
as of the end of such quarter - all in reasonable detail,
subject to normal year-end audit adjustments, certified by
the Borrower's Chief Financial Officer to have been
prepared in accordance with GAAP;
(3) Within one hundred twenty (120) days after the
close of each annual accounting period in each Fiscal Year:
(a) income statements of the Borrower and Metropolitan Bank
and Trust Company, on a consolidated basis, for such year;
18
and (b) balance sheets of the Borrower and Metropolitan Bank
and Trust Company, on a consolidated basis, for such year; and
- all in reasonable detail, subject to normal year-end audit
adjustments, certified by an outside auditor satisfactory to
the Bank to have been prepared in accordance with GAAP;
(4) Borrower and Metropolitan Bank and Trust Company shall
provide the Bank with a quarterly "Covenant Compliance Certificate" in
the form prescribed by the Bank and signed by the Chief Financial
Officer or President of the Borrower; and
(5) Upon the Bank's request from time to time of copies of
any or all agreements, contracts, or commitments referred to in
Schedule 5.01(I) hereof.
(D) The Borrower will maintain its equipment, real estate interests,
and other properties in good condition and repair (normal wear and tear
excepted), and will pay and discharge or cause to be paid and discharged when
due, the cost of repairs to, or maintenance of, the same, and will pay or cause
to be paid, in a timely manner, all rental or mortgage payments due on such real
estate. The Borrower hereby agrees that, in the event it fails to pay or cause
to be paid any such payment, it will promptly notify the Bank thereof, and the
Bank, in its discretion, may do so on demand and be reimbursed therefor by the
Borrower;
(E) The Borrower will maintain, or cause to be maintained, public
liability insurance and fire and extended coverage insurance on all assets that
are of a character usually insured by a corporation engaged in the same or
similar businesses, all in form and amount sufficient to indemnify the Borrower
for one hundred percent (100%) of the appraised value of. any such asset lost or
damaged (subject to any deductible customary in the Borrower's industry) or in
an amount consistent with the amount of insurance generally carried on
comparable assets within the industry and with such insurers as may be
satisfactory to the Bank. Within thirty (30) days after the Closing, the
Borrower will cause all such insurance policies to contain a standard mortgage
clause and to be payable to the Bank as its interest may appear, to deliver the
certificates of insurance to the Bank, and, in the case of all policies of
insurance carried for the benefit of the Borrower by any lessee, sublessee,
subtenant, or other party having rights to occupy or use the mortgaged property
or any part thereof or interest therein under any lease, sublease, or other-
agreement (whether oral, written, or otherwise evidenced), to cause all such
policies to be payable to the Bank as its interest may appear. Such policies
shall contain a provision whereby they cannot be cancelled except after ten (10)
days written notice to the Bank. The Borrower will furnish to the Bank such
evidence of insurance as the Bank may require. The Borrower hereby agrees that,
in the event it fails to pay or causes to be paid the premium on any such
insurance when due, the Bank, in its discretion, may do so and be reimbursed by
the Borrower therefor. The Borrower hereby assigns to the Bank any returned or
unearned premiums that may be due the Borrower upon cancellation by the insurer
of any such policy for any reason whatsoever and directs any such insurer to pay
the Bank any amount so due; provided, however, that the Bank will pay to the
Borrower any such returned or unearned premiums within five (5) days after the
receipt thereof if there has not occurred and be continuing an Event of Default
hereunder. The Bank is hereby appointed the Borrower's attorney-in-fact (without
requiring the Bank to act as such) to endorse any check that may be payable to
the Borrower to collect any premiums or the proceeds of such insurance (other
than proceeds of public liability insurance),
19
and any amount so collected may be applied by the Bank toward the satisfaction
of any of the Obligations if an Event of Default has occurred and is continuing.
If the Bank receives any proceeds from insurance in the absence of an Event of
Default, it shall remit such proceeds to the Borrower within three (3) Business
Days after its receipt of such proceeds;
(F) The Borrower will pay or cause to be paid when due, all taxes,
assessments, and charges or levies imposed upon it or on any of its property or
which it is required to withhold and pay, except where contested in good faith
by appropriate proceedings with adequate reserves therefor having been set aside
on its books; provided, however, that the Borrower shall pay or cause to be paid
all such taxes, assessments, charges, or levies forthwith whenever foreclosure
on any lien that may have attached (or security therefor) appears imminent;
(G) Metropolitan Bank and Trust Company shall maintain a rating from
the Office of Thrift Supervision (the "OTS") of "Adequately Capitalized," or
better;
(H) Metropolitan Bank and Trust Company shall maintain- a ratio of its
Non-performing Assets to the sum of its Equity plus Reserves of not more than
35% as of the end of each quarter;
(I) On a quarterly basis through December 31, 2003 and thereafter upon
request by the Bank, the Borrower will cause Metropolitan Bank and Trust Company
to provide the Bank with a copy of each Thrift-Financial Report required by the
OTS, as well as a copy of the Monthly Management Report on Metropolitan Bank and
Trust Company, which shall include the information listed in Exhibit "A"
attached to such report;
(J) The Borrower will, when requested to do so, make available during
normal business hours for inspection by duly authorized representatives of the
Bank, any of its books and records and will furnish the Bank any information
regarding its business affairs and financial condition within a reasonable time
after written request therefor. In the event the Bank elects to conduct field
examinations of the Borrower they will be performed at the reasonable
convenience of Borrower and at the Bank's expense;
(K) The Borrower will keep accurate and complete Records of its
Accounts and Equipment, consistent with sound business practices;
(L) The Borrower will give immediate notice to the Bank of:
(1) Any litigation or proceedings in which it or any of
the Subsidiaries is a party if, in the opinion of the
Borrower or its legal counsel, an adverse decision
therein would require it or any of its Subsidiaries
to pay more than One Million Dollars ($1,000,000.00)
or deliver assets the value of which exceeds such sum
(whether or not the claim is considered to be covered
by insurance); and
(2) The institution of any other suit or proceeding
involving the Borrower or any of the Subsidiaries
that might materially and adversely affect their
20
respective - operations, financial condition,
property, or business prospects;
(M) The Borrower shall give prompt written notice to the Bank of:
(1) Any proceedings or inquiries by any governmental
authority (Federal, State or Local) brought pursuant
to any Environmental Law affecting Borrower's
Collateral or any property adjacent to Borrower's
Collateral;
(2) All claims made or threatened by any third party
against the Borrower, any of the Subsidiaries, or
Borrower's Collateral relating to any loss or injury
arising under any Environmental Laws; and
(3) Discovery of any occurrence or condition on any real
property adjoining or in the vicinity of Borrower's
Collateral that could cause Borrower's Collateral or
any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability or use of
the land or real property under any Environmental or
other applicable Laws.
(N) The Bank shall have the right to join and participate in, as a
party if it so elects, any legal proceeding or actions initiated under any
Environmental Law in connection with Borrower's Collateral and have its
reasonable attorneys' fees in connection therewith paid by the Borrower. In the
event that any investigation, site monitoring, containment, cleanup, removal,
restoration or other remedial work of any kind or nature (the "Remedial Work")
is reasonably necessary or desirable under any applicable local, state or
federal law or regulation, any judicial order, or by any governmental or
nongovernmental entity or person because of, or in connection with, the current
or future presence, suspected presence, release or suspected releases of a
hazardous material or substance or regulated by any Environmental Law in or into
the air, soil, groundwater, surface water or soil vapor at, on, about, under or
within the Borrower's Collateral (or any portion thereof), the Borrower shall,
within thirty (30) clays after written demand for performance thereof by the
Bank (or such shorter period of time as may be required under any applicable
law, regulation, order or agreement), commence to perform, or cause to be
commenced, and thereafter diligently prosecute to completion, all such Remedial
Work. All costs and expenses of such Remedial Work shall be paid by the
Borrower, including, without limitation, the charges of such contractor(s)
and/or the consulting engineer, and the Bank's reasonable attorneys' fees and
costs incurred in connection with monitoring or review of such Remedial Work. In
the event the Borrower shall fail to timely commence, or cause to be commenced,
or fail to diligently prosecute to completion, such Remedial Work, the Bank may,
but shall -not be obligated or required to, cause such Remedial Work to be
performed and all costs and expenses thereof, or incurred in connection
therewith, shall at Bank's discretion become part of the Obligations of this
Loan Agreement or be paid to Bank pursuant to the indemnity provided for in
paragraph 2.11.
(O) This Section intentionally left blank.
(P) The Borrower will notify the Bank immediately if it becomes aware
of the occurrence
21
of any Event of Default or of any fact, condition, or event that only with the
giving of notice or passage of time or both, would become an Event of Default or
if it becomes aware of any material adverse change in the business prospects,
financial condition (including, without limitation, proceedings in bankruptcy,
insolvency, reorganization, or the appointment of a receiver or trustee), or
results of operation of the Borrower, or its failure of the Borrower to observe
any of their undertakings hereunder or under any of the other Loan Documents;
(Q) The Borrower will notify the Bank thirty (30) days in advance of
any change in the location of any of the places of business of the Borrower, or,
in the case of any of the Subsidiaries, the Borrower will notify the Bank
quarterly, of the establishment of any new, or the discontinuance of any
existing, place of business;
(R) The Borrower will: (1) fund any of its Employee Pension Benefit
Plans in accordance with no less than the minimum funding standard of 20 U.S.C.
A. section 1082 (Section 302 of ERISA); (2) furnish the Bank, promptly after the
filing of the same, with copies of any reports or other statements filed with
the United States Department of Labor or the Internal Revenue Service with
respect to any such Plan; and (3) promptly advise the Bank of the occurrence of
any Reportable Event or Prohibited Transaction with respect to any of its
Employee Benefit Plans;
(S) The Borrower agrees to execute and deliver to the Bank any
agreements, documents and instruments, including, without limitation, additional
Notes as replacements or-substitutions as may be required by the Bank, and to
take such other actions as reasonably requested by the Bank to effect the
transactions contemplated hereby.
6.02 NEGATIVE COVENANTS. The Borrower hereby covenants and agrees with
the Bank that, so long as any of the Obligations remain unsatisfied or any
commitments hereunder remain outstanding, the Borrower, unless the Bank shall
otherwise have agreed in writing, which agreement will not be unreasonably
withheld, will not:
(A) Change its name or enter into any merger, consolidation,
or reorganization;
(B) Sell, transfer, lease, or otherwise dispose of all or
(except in the ordinary course of business) any material part of its
assets in excess of One Hundred Thousand Dollars ($100,000.00) other
than as necessary to comply with the Regulatory Orders;
(C) Mortgage, pledge, grant, or permit to exist a security
interest in, or a lien upon, any of its assets of any kind, now owned
or hereafter acquired, except for Permitted Liens, and liens granted
under the Collateral Documents, and existing liens listed on Schedule
1.01;
(D) Become liable, directly or indirectly, as guarantor or
otherwise for any obligation of any other Person;
(E) Incur, create, assume, or permit to exist any
Indebtedness except: (1) the amount of the Loan; (2) existing
Indebtedness listed on Schedule 5.01(I); (3) trade
22
Indebtedness incurred in the ordinary course of business; (4)
contingent Indebtedness permitted by Section 5.01(I); and (5)
Indebtedness secured by Permitted Liens;
(F) Make any assignment or transfer of Accounts nor declare
or pay any dividends on, or purchase, redeem or otherwise acquire for
value any securities now or hereafter outstanding, or return any
capital to holders of any such-securities, or make any distribution of
assets to holders of any such securities except that the Borrower may
declare and pay dividends or make purchases or redemptions or make
distributions in cash or property to holders of any such securities if
the Borrower's ratio of tangible equity to total assets after any such
transaction is in excess of 7.0%. For purposes of this Section
6.02(F), "tangible equity" shall be Consolidated Net Worth less
goodwill. For purposes of this Section, the amount of any dividend
payable in property shall be deemed to be the fair market value of
such property as determined by the Board of Directors of the Borrower;
(G) Form any new subsidiaries or make any investment in any
Person;
(H) Make any loan or advance to any officer, shareholder,
director, or employee of the Borrower, except in compliance with
Regulation O and in the ordinary course of business.
(I) Purchase or otherwise invest in or hold securities,
non--operating real estate, or other non-operating assets except:
Negotiable instruments or securities represented by instruments in
bearer or registered form which evidence (i) obligations fully
guaranteed as to timely payment of principal and interest by the full
faith and credit of the United States of America; (ii) certificates of
deposit of, or banker's acceptances (having original maturities of not
more than 180 days) issued by, any depository institution or trust
company and subject to supervision and examination by federal or state
banking or depository institution authorities; provided, however, that
at the time of the Borrower's investment or contractual commitment to
invest therein, such depository institution or trust company shall
have a commercial paper credit rating, if any, and a long-term
unsecured debt obligation (other than such obligations whose rating is
based on the credit of a person or entity other than such institution
or trust company) credit rating from a nationally recognized rating
agency of a least "A-l+," or its equivalent, in the case of commercial
paper, and a rating not lower than "A," or its equivalent, in the case
of long-term unsecured debt obligations, or such deposits are fully
insured by the FDIC; (iii) commercial paper (having original
maturities of not more than 30 days) having, at the time of the
Borrower's investment or contractual commitment to invest therein, a
rating of at least "AA" or its equivalent; (iv) investments in money
market funds having a rating from a nationally recognized rating
agency in one of the two highest rating categories for money market
funds; and (v) any other investment if the rating agency confirms in
writing that such investment will not adversely affect any ratings
with respect to the Notes and (b) demand deposits or time deposits in
the name of the Borrower in any depository institution or trust
company referred to in (a) (ii) above; (2) the present investment in
any such assets held as of the date of Closing and reflected in the
Financial Statements; (3) operating assets that hereafter become
nonoperating assets; and (4) other instruments approved in advance in
writing by the Bank;
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(J) Issue, redeem, purchase, retire or pay any dividends on
any of the Borrower's capital stock or grant or issue or purchase or
retire for any consideration any warrant, right, or option pertaining
thereto or other security convertible into any of the foregoing, or
permit any transfer, sale, redemption, retirement, or other change in
the ownership of the outstanding capital stock of the Borrower;
(K) Prepay any Indebtedness for borrowed money or
Indebtedness secured by any of its assets other then in the ordinary
course of business (except the Obligations), or enter into or modify
any agreements as a result of which the terms of payment of any of the
foregoing Indebtedness are waived or modified;
(L) Enter into any sale-leaseback transaction (except as may
be necessary to comply with the Regulatory Orders;
(M) Acquire or agree to acquire any stock in, or all of, or
substantially all of the assets of, any Person;
(N) Furnish the Bank any certificate or other document that
will contain any untrue statement of material fact or that will omit
to state a material fact necessary to make it not misleading in light
of the circumstances under which it was furnished;
(O) Directly or indirectly apply any part of the proceeds of
the Loans to the purchasing or carrying of any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System, or any regulations, interpretations or rulings
thereunder.
(P) Pledge, hypothecate, transfer, grant a security interest
in or otherwise encumber any shares of Borrower's Capital Stock or the
stock of any of the subsidiaries.
SECTION VII. DEFAULT
--------------------
7.01 EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an Event of Default (sometimes referred to as
"Default") hereunder:
(A) The Borrower shall fail to pay when due any installment
of principal, interest, fee, or any other Obligation payable hereunder
and such failure to pay shall continue seven (7) days;
(B) The Borrower and/or Robert M. Kaye shall fail to observe
or perform any obligation or covenant to be observed or performed by
the Borrower and/or Robert M. Kaye hereunder or under any of the Loan
Documents or the Collateral Documents and such failure shall continue
beyond thirty (30) days after notice thereof from the Bank;
(C) The Borrower shall fail to pay any Indebtedness due any
third Person, and such failure shall continue beyond any applicable
grace period, or the Borrower shall
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suffer to exist any other Event of Default under any agreement binding
the Borrower;
(D) Any financial statement, representation, warranty, or
certificate made or furnished by or with respect to the Borrower to
the Bank in connection with this Agreement, or as inducement to the
Bank to enter into this Agreement, or in any separate statement or
document to be delivered to the Bank hereunder, shall be materially
false, incorrect, or incomplete when made;
(E) The Borrower shall admit in writing its inability to pay
its debts as they mature or shall make any assignment for the benefit
of any of their creditors;
(F) Proceedings in bankruptcy, or for reorganization of the
Borrower or for the readjustment of any of its debts, under the
Bankruptcy Code, as amended, or any part thereof, or under any other
Laws, whether state or federal, for the relief of debtors, now or
hereafter existing, shall be commenced against or by the Borrower and,
except with respect to any such proceedings instituted by the
Borrower, shall not be discharged within thirty (30) days of their
commencement;
(G) A receiver or trustee shall be appointed for the Borrower
or for any substantial part of their respective assets, or any
proceedings shall be instituted for the dissolution or the full or
partial liquidation of the Borrower and, except with respect to any
such appointments requested or instituted by the Borrower, such
receiver or trustee shall not be discharged within thirty (30) days of
his appointment, and, except with respect to any such proceedings
instituted by the Borrower such proceedings shall not be discharged
within thirty (30) days of their commencement, or the Borrower shall
discontinue business or materially change the nature of its business,
or the Collateral becomes, in the reasonable judgment of the Bank,
insufficient in value to satisfy the Obligations, or the Bank
otherwise reasonably finds itself insecure as to the prompt and
punctual payment and discharge of the Obligations;
(H) The Borrower shall suffer final judgments for payment of
money aggregating in excess of Two Hundred Fifty Thousand Dollars
($250,000.00) and shall not discharge the same within any applicable
time period provided under such a judgment, or, if no time period is
provided, a period of thirty (30) days (or such longer period as the
Bank may agree in writing) from the date of judgment unless, pending
further proceedings, execution has not been commenced or, if
commenced, has been effectively stayed;
(I) A judgment creditor of the Borrower shall obtain
possession of any of the Collateral by any means, including (without
implied limitation) levy, distraint, replevin, self-help or
attachment; or
(J) Transfer(s) of funds out of the ordinary course by
Metropolitan Bank and Trust Company to any of its subsidiaries or
their subsidiaries in excess of the amount of Ten Thousand Dollars
($10,000.00) per transfer, or the aggregate amount of One Hundred
Thousand Dollars ($100, 000. 00) per year for all such transfers,
without the prior written consent of the Bank.
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7.02 ACCELERATION. Immediately and without notice upon the occurrence
of an Event of Default specified in the foregoing Section 7.01(E), (F), (G), or
(J) or at the option of the Bank, but only upon notice to the Borrower upon the
occurrence of any other Event of Default, all Obligations, whether hereunder or
otherwise, shall become due and payable without further action of any kind. All
payments, collections on receipts in connection with any Collateral and all cash
proceeds received by the Bank in respect to any sale of, collection from, or
other realization upon all or any part of the Collateral may, in the discretion
of the Bank, be held by the Bank as collateral for, and/or then or at- any time
thereafter applied in whole or in part by the Bank against all or any part of
the Obligations, in such order as the Bank shall elect. Any surplus of such cash
proceeds held by the Bank and remaining after payment in full of all the
Obligations shall be paid over to the Borrowers or to whomsoever may be lawfully
entitled to receive such surplus.
7.03 REMEDIES, After any acceleration, as provided for in Section
7.02, the Bank shall have, in addition to the rights and remedies given it by
this Agreement, the Loan Documents and the Collateral Documents, all those
allowed by all applicable laws, including, but without limitation, the Uniform
Commercial Code as enacted in any jurisdiction in which any Collateral may be
located. Without limiting the generality of the foregoing, the Bank may
immediately, without demand of performance and without other notice (except as
specifically required by this Agreement, the Loan Documents or the Collateral
Documents) or demand whatsoever to the Borrower, all of which are hereby
expressly waived, and without advertisement, sell at public or private sale or
otherwise realize upon, in Cuyahoga County, Ohio, or in any other place or
places as the Bank may designate, the whole or, from time to time, any part of
the Collateral, or any interest which the Borrower may have therein. After
deducting from the proceeds of sale or- other disposition of the Collateral all
expenses (including all reasonable expenses for legal services), the Bank shall
apply such proceeds toward the satisfaction of the Obligations. Any remainder of
the proceeds after satisfaction in full of the Obligations shall be distributed
as required by applicable Laws, Notice of any sale or other disposition shall be
given to the Borrower at least five (5) Business Days before the time of any
intended public sale or of the time after which any intended private sale or
other disposition of the Collateral is to be made, which the Borrower hereby
agrees shall be reasonable notice of such sale or other disposition. The
Borrower agrees to assemble, or to cause to be assembled, at their own expense,
the Collateral at such place or places as the Bank shall reasonably designate.
At any such sale or other disposition, the Bank may, to the extent permissible
under applicable Laws, purchase the whole or any part of the Collateral, free
from any right of redemption on the part of the Borrower, which right is hereby
waived and released. Notwithstanding the foregoing, nothing in this Agreement
shall be construed as a wavier of the requirement that the Bank act in a
"commercially reasonable" manner, as defined in the Uniform Commercial Code and
decisions interpreting the Uniform Commercial Code.
7.04 RIGHT OF SET-OFF, Upon the occurrence of any Event of Default and
during the continuance thereof, the Bank may, and is hereby authorized by the
Borrower at any time and from time to time, to the fullest extent permitted by
applicable Laws, without advance notice to the Borrower (any such notice being
expressly waived by the Borrower), set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
26
any other Indebtedness at any time owing by the Bank to or for the credit or the
account of the Borrower against any or all of the Obligations of the Borrower
now or hereafter existing, whether or not such Obligations have matured and
irrespective of whether the Bank has exercised any other rights that it has or
may have with respect to such Obligations, including, without limitation any
acceleration rights. The Bank agrees promptly to notify the Borrower after any
such set-off and application, provided that the failure to give such notice
shall not affect the validity of such set-off and application. The rights of the
Bank under this Section 7.04 are in addition to the other rights and remedies
(including, without limitation other rights of set-off) which the Bank may have,
SECTION VIII. MISCELLANEOUS
---------------------------
8.01 CONSTRUCTION. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge, or security agreement, note, or other
evidence of liability now or hereafter held by the Bank, all of which shall be
construed as complementary to each other. Nothing herein contained shall prevent
the Bank from enforcing any or every other guaranty, pledge, or security
agreements, notes, or other evidences of liability in accordance with their
respective terms.
8.02 FURTHER ASSURANCE, From time to time, the Borrower will execute
and deliver to the Bank such additional documents and will provide such
additional information as the Bank may reasonably require to carry out the terms
of this Agreement and be informed of the status and affairs of the Borrower.
8.03 ENFORCEMENT AND WAIVER BY THE BANK. The Bank shall have the right
at all times to enforce the provisions of this Agreement, the Loan Documents,
and the Collateral Documents in strict accordance with the terms hereof and
thereof, The failure of the Bank at any time or times to enforce its rights
under such provisions, strictly in accordance with the same, shall not be
construed as having created a waiver in any way or manner contrary to specific
provisions of this Agreement or as having in any way or manner modified or
waived the same. All rights and remedies of the Bank are cumulative and
concurrent, and the exercise of one right or remedy shall not be deemed a waiver
or release of any other right or remedy.
8.04 NOTICES. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or, three Business Days after being deposited in First Class Mail as
follows, unless such address is changed by written notice hereunder:
(A) If to the Borrower: Metropolitan Financial Corp.
6001 Landerhaven Drive
Mayfield Heights, OH 44124
Attn: President
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(B) If to the Bank: Sky Bank
10 East Main Street
Salineville, Ohio 43945
Attn: Jayson Zatta
(C) With a Copy to: Robert M. Kaye
60 Monmouth Park Highway
West Long Branch, NJ 07764
(D) With a Copy to: Anthony Caruso, Esq.
60 Monmouth Park Highway
West Long Branch, NJ 07764
8.05 WAIVER AND RELEASE BY THE BORROWER. To the maximum extent
permitted by applicable Laws and except as otherwise provided herein, the
Borrower:
(A) Waives (1) protest of all commercial paper at any time
held by the Bank on which the Borrower is in any way liable; (2)
except as the same may herein be specifically granted, notice of
acceleration and intention to accelerate; and (3) notice and
opportunity to be heard, after acceleration in the manner provided in
Section 7.02, before exercise by the Bank of the remedies of
self-help, set-off, or of other summary procedures permitted by any
applicable Laws or by any agreement with the Borrower and, except
where required hereby or by any applicable Laws, notice of any other
action taken by the Bank; and
(B) Releases the Bank and its officers, attorneys, agents,
and employees from all claims for loss or damage caused by any act or
omission on the part of any of them except willful misconduct or
negligence.
8.06 APPLICABLE LAW. This Agreement is entered into and performable in
Cuyahoga County, Ohio and shall be subject to and construed and enforced in
accordance with the laws of the State of Ohio.
8.07 BINDING EFFECT, ASSIGNMENT, AND ENTIRE AGREEMENT. This Agreement
shall inure to the benefit of, and shall be binding upon, the respective
successors and permitted assigns of the parties hereto. The Borrower has no
right to assign any of its rights or obligations hereunder without the prior
written consent of the Bank, This Agreement, including the Schedules and
Exhibits hereto, all of which are hereby incorporated herein by reference, and
the documents executed and delivered pursuant hereto constitute the entire
agreement between the parties and may be amended only by writing signed on
behalf of each party.
8.08 SEVERABILITY. If any provision of this Agreement shall be held
invalid under any applicable Laws, such invalidity shall not affect any other
provision of this Agreement that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
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8.09 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
8.10 JURY TRIAL WAIVER. tHE UNDERSIGNED AND THE BANK (BY ITS
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY
AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE UNDERSIGNED
AND THE BANK ARISING OUT OF OR IN ANY WAY RELATED TO THIS
DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP
BETWEEN THE BANK AND THE UNDERSIGNED. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE BANK TO PROVIDE THE FINANCING AND
AMENDMENT DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written,
THE BANK: THE BORROWER:
SKY BANK METROPOLITAN FINANCIAL CORP.
By: /s/ Jayson M. Zatta By: /s/ Marcus Faust
--------------------------------- -----------------------------------
Name: Jayson M. Zatta Name: Marcus Faust
---------------------------- -----------------------------
Title: Executive Vice President Title: Executive Vice President and
--------------------------- ----------------------------
Chief Financial Officer
----------------------------
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