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EXHIBIT 10.6
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NOTE AND AGENCY AGREEMENT
BETWEEN
SOUTHERN ARIZONA BANCORP, INC.
AND
PHS MORTGAGE, INC.
Dated as of July 15, 1993
8.75% Senior Notes Due July 1, 2000
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TABLE OF CONTENTS
Article Page
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1. RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND
EXCHANGE OF NOTES . . . . . . . . . . . . . . . . . . . . . . 7
4. PREPAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . 10
5. PAYMENT OF PRINCIPAL AND INTEREST . . . . . . . . . . . . . . 12
6. PARTICULAR COVENANTS OF THE COMPANY . . . . . . . . . . . . . 12
7. NOTE HOLDERS' LISTS . . . . . . . . . . . . . . . . . . . . . 14
8. REMEDIES OF THE AGENT AND THE NOTE HOLDERS IN
EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 15
9. AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10. ACTS OF NOTE HOLDERS; EVIDENCE OF OWNERSHIP
OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11. AMENDMENTS AND SUPPLEMENTS . . . . . . . . . . . . . . . . . . 27
12. SATISFACTION AND DISCHARGE OF AGREEMENT;
UNCLAIMED MONEYS . . . . . . . . . . . . . . . . . . . . . . . 28
13. NO REGISTRATION OF NOTES; RESTRICTIONS ON
TRANSFERABILITY . . . . . . . . . . . . . . . . . . . . . . . 28
14. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 29
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NOTE AND AGENCY AGREEMENT
This Note and Agency Agreement ("Agreement") dated as of July 15, 1993,
is made by and between SOUTHERN ARIZONA BANCORP, INC., an Arizona corporation
(the "Company:), and PHS MORTGAGE, INC., an Arizona corporation (the "Agent"),
acting for and on behalf of certain Note Holders identified in Schedule 1
attached hereto.
1. RECITALS
1.1 Issuance of Notes. Company shall issue not less than $1,500,000,
nor more than $2,500,000, in principal amount of Senior Notes ("Notes") to
certain investors ("Note Holders") pursuant to the terms of this Agreement.
1.2 Agency Duties. This Agreement shall provide the terms and
conditions upon which the Notes are to be authenticated, issued, delivered,
registered, and transferred and the terms upon which the Company will act as
Note Registrar and Paying Agent with respect to the Notes, and Agent will act as
the Agent of the Note Holders in the collection of amounts due under the Notes
if an Event of Default occurs and the enforcement of the rights of the Note
Holders hereunder and under the Notes.
2. DEFINITIONS; INTERPRETATION
2.1 Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
Agent means PHS Mortgage, Inc. and any successor appointed pursuant to
this Agreement.
Agreement means this Note and Agency Agreement, as amended and in force
from time to time.
Authorized Denominations means minimum principal amounts of $5,000 and
integral multiples of $1,000 in excess of $5,000.
Bank means Southern Arizona Bank, the wholly owned subsidiary of the
Company.
Business Day means any day other than (i) a Saturday, or Sunday, or
(ii) a day on which banking institutions in Arizona are authorized or obligated
by law or executive order to be closed.
Capitalized Lease means any lease the obligation for Rentals with
respect to which is required to be capitalized on a balance sheet of the lessee
in accordance with generally accepted accounting principles.
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Capitalized Rentals means as of the date of any determination, the
amount at which the aggregate Rentals due and to become due under all
Capitalized Leases under which the Company or the Bank is a lessee would be
reflected as a liability on a consolidated balance sheet of the Company and the
Bank.
Change of Control means the occurrence of any one or more of the
following (i) the date a person or group of affiliated or associated persons
("acquiring person") acquires 50% or more of the outstanding shares of the
voting capital stock of the Company or the Bank, (ii) the date an acquiring
person acquires all or substantially all of the assets of the Company or the
Bank, or (iii) the date the Company or the Bank is merged with or into another
person, and, is either not the surviving entity, or, if it is the surviving
entity, the holders of its capital stock immediately prior to such merger do not
own 50% or more of the voting capital stock of the surviving entity.
Company means Southern Arizona Bancorp, Inc., an Arizona corporation.
Consolidated Current Assets and Consolidated Current Liabilities means
such assets and liabilities of the Company the Bank on a consolidated basis, as
shall be determined in accordance with generally accepted accounting principles
to constitute current assets and current liabilities, respectively.
Consolidated Funded Debt means all Funded Debt of the Company and the
Bank determined on a consolidated basis eliminating intercompany items.
Consolidated Net Income for any period shall mean the gross revenues of
the Company and the Bank for such period less all expenses and other proper
charges (including taxes on income), determined on a consolidated basis in
accordance with generally accepted accounting principles consistently applied,
but excluding in any event:
(a) any gains or losses on the sale or other disposition of
investments other than in the ordinary course of business in securities
transactions or fixed or capital assets, and any taxes on such excluded gains
and any tax deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of the Bank accrued prior to the date
Company acquired the Bank;
(d) net earnings and losses of any corporation (other than the Bank)
substantially all the assets of which have
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been acquired in any manner, realized by such other corporation prior to the
date of such acquisition;
(e) net earnings and losses of any corporation (other than the Bank)
with which the Company or the Bank shall have consolidated or which shall have
merged into or with the Company or the Bank prior to the date of such
consolidation or merger;
(f) net earnings of any business entity (other than the Bank) in
which the Company or the Bank has an ownership interest unless such net earnings
shall have actually been received by the Company or the Bank in the form of cash
distribution;
(g) any portion of the net earnings of the Bank that for any reason
is unavailable for payment of dividends to the Company or the Bank;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the
equity in the Bank at the date of acquisition thereof over the amount invested
in the Bank;
(j) any gain arising from the acquisition of any securities of the
Company or Bank; and
(k) any reversal of any contingency reserve, except to the extent
that provision for such contingency reserve shall have been made from income
arising during such period.
Consolidated Net Income Available for Fixed Charges means for any
period the sum of (i) Consolidated Net Income during such period plus ( to the
extent deducted in determining Consolidated Net Income) (ii) all provisions for
any Federal, state or other income taxes made by the Company and the Bank during
such period and (iii) Fixed Charges during such period.
Consolidated Net Tangible Assets means as of the date of any
determination thereof, the total amount of all Tangible Assets of the Company
and the Bank, after deducting therefrom all items, which, in accordance with
generally accepted accounting principles, would be included on the liability and
equity side of a consolidated balance sheet, except deferred income taxes,
deferred investment tax credits, capital stock of any class, surplus and
Consolidated Funded Debt.
Consolidated Tangible Net Worth means as of the date of any
determination thereof, Consolidated Net Tangible Assets, less all outstanding
Funded Debt, deferred income taxes, deferred investment tax credits of the
Company and the Bank.
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Closing means the Closing of the issuance and sale of the Notes.
Closing Date is defined in Section 3.1(b).
Disclosure Document means that certain Form U-7 Disclosure Document
dated as of June 11, 1993, filed by the Company with the Arizona Corporation
Commission Securities Division as it may be amended or supplemented from time to
time.
Escrow Agent means The Valley National Bank of Arizona, acting as
Escrow Agent on behalf of the Company to receive subscription proceeds for the
Notes purchased in the Offering.
Event of Default means any event or condition, the occurrence of which
would, with the passage of time or the giving of notice, or both, constitute an
Event of Default as defined in Section 8.1.
Fixed Charges means for any period on a consolidated basis the sum of
(i) one-third (1/3) of all Rentals (including all Rentals on Capitalized Leases)
payable during such period by the Company and the Bank and (ii) all Interest
Charges on all Indebtedness (other than Capitalized Rentals) of the Company and
the Bank.
Funded Debt means (i) all indebtedness for borrowed money or
indebtedness that has been incurred in connection with the acquisition of assets
in each case having a final maturity of one or more than one year from the date
of origin thereof (or that is renewable or extendable at the option of the
obligor for a period or periods more than one year from the date of origin),
including all payments in respect thereof that are required to be made within
one year from the date of any determination of Funded Debt, whether or not
included in Consolidated Current Liabilities, (ii) all Capitalized Rentals and
(iii) all Guaranties of Funded Debt of others.
Guaranties means, by any person, all obligations (other than
endorsements in the ordinary course of business of negotiable instruments, for
deposit or collection) of such person guaranteeing, or in effect guaranteeing,
any Indebtedness, dividend or other obligation of any other person ("primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement, contingent or
otherwise, by such person: (i) to purchase such Indebtedness or obligation or
any property or assets constituting security therefor, (ii) to advance or supply
funds (1) for the purchase or payment of such Indebtedness or obligation, or (2)
to maintain working capital or any other balance sheet condition, or otherwise
to advance or make available funds for the purchase or
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payment of such Indebtedness or obligation, or (iii) to lease property or to
purchase securities or other property or services primarily for the purpose of
assuring the owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or obligation, or (iv)
otherwise to assure the owner of the Indebtedness or obligation of the primary
obligor against loss and respect thereof. For the purposes of all computations
made under this Agreement, a Guarantee in respect of any Indebtedness for
borrowed money shall be deemed to be Indebtedness equal to the principal amount
of such Indebtedness for borrowed money which has been guaranteed, and a
guarantee in respect of any other obligation or liability or any dividend shall
be deemed to be indebtedness equal to the maximum aggregate amount of such
obligation, liability, or dividend.
Holder(s) means a Note Holder.
Indebtedness of any person means and includes all obligations of such
person that, in accordance with generally accepted accounting principles, shall
be classified upon a balance sheet of such person as liabilities of such person,
and in any event shall include all (i) obligations of such person for borrowed
money or obligations that have been incurred in connection with the acquisition
of property or assets, (ii) obligations secured by any lien or other charge upon
property or assets owned by such person even though such person has not assumed
or become liable for the payment of such obligations, (iii) obligations created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement, in the
event of default, are limited to repossession or sale of property, (iv)
Capitalized Rentals and (v) Guaranties of obligations of others of the character
referred to in this definition.
Interest means an interest rate of 8.75% per annum on the unpaid
principal balance of the Notes.
Interest Charges means for any period all interest and all amortization
of debt discount and expense on any particular Indebtedness for which such
calculations are being made. Computations of Interest Charges for Indebtedness
having a variable interest rate shall be calculated at the rate in effect on the
date of any determination.
Interest Payment Dates means January 1 and July 1 of each calendar year
during the term of the Notes, commencing July 15, 1993; provided, however, if
such date is not a Business Day, the Interest Payment Date shall be the
immediately preceding Business Day.
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Maturity Date means July 1, 2000, or any earlier date on which the
Notes become due and payable in full pursuant to the terms of this Agreement.
Minimum Offering means the sale of not less than $1,500,000 of the
Notes and the receipt of the proceeds therefor by the Escrow Agent not later
than the Termination Date (as defined in the Disclosure Document) or, if
extended, the Extended Termination Date (as defined in the Disclosure Document).
Note Amount means the aggregate amount of the Notes issued to the Note
Holders, such aggregate amount not to be less than $1,500,000 or to exceed
$2,500,000.
Note Holder(s) means persons to whom issued Notes are registered.
Note Interest means Interest.
Offering means the offering of Senior Notes to be issued hereunder
pursuant to the Disclosure Document.
Record Date means with respect to any Interest payment, the last
Business Day of the calendar month preceding each Interest Payment Date.
Rentals means and includes, as of the date of any determination
thereof, all fixed rents (including as such, all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Company or the Bank as lessee or sub-lessee under a
lease of real or personal property, which shall be exclusive of any amounts
required to be paid by the Company or the Bank (whether or not designated as
rents or additional rents) on account of maintenance, repairs, insurance, taxes
and similar charges.
Senior Notes means the 8.75% Senior Notes due July 1, 2000, issued
pursuant to this Agreement.
Tangible Assets means as of the date of any determination thereof, the
total amount of all assets of the Company and the Bank (less depreciation,
depletion and other properly deductible valuation reserves), after deducting
good will, patents, trade names, trademarks, copyrights, franchises,
experimental expense, organization expense, unamortized debt discount and
expense, deferred assets, other than prepaid insurance and prepaid taxes, the
excess of cost of shares acquired over book value of related assets, and such
other assets as are properly classified as "intangible assets" in accordance
with generally accepted accounting principles.
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2.2 Accounting Principles. Where the character or amount of any asset
or liability or item of income or expense is required to be determined, or any
consolidation or other accounting computation is required to be made for the
purposes of this Agreement, the same shall be done in accordance with generally
accepted accounting principles, to the extent applicable, except where such
principles are inconsistent with the requirements of this Agreement.
2.3 Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any person or which such person is prohibited
from taking, such provision shall be applicable whether the action in question
is taken directly or indirectly by such person.
3. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES.
3.1 Amount and Issue of Notes.
(a) Notes in the aggregate principal amount of not less than
$1,500,000 shall be executed by the Company, and delivered to the Agent at the
Closing. The Agent shall authenticate and deliver such Notes to the Note
Holders. Except as provided in Section 3.6, the maximum aggregate principal
amount of Notes authorized by this Agreement to be outstanding at any time is
limited to $2,500,000. The Notes shall bear interest from their date of issue at
the rate of 8.75% per annum, payable as provided in Article 5.
(b) Delivery of the Notes will be made through the Agent upon
completion of the Minimum Offering, against payment therefor, in federal or
other funds, current and immediately available in the amount of 100% of the
principal amount thereof, plus interest if any, accrued from the date of issue,
on the Business Day specified by the Company, by not less than five Business
Days prior written notice to Agent, but not later than twenty Business Days
following the successful completion of the Minimum Offering ("Closing Date").
After completion of the Minimum Offering, the Notes shall be issued and
delivered by the Company as the proceeds therefor are paid by the Escrow Agent
to the Company in federal or other funds, current and immediately available in
the amount of 100% of the principal amount thereof plus interest, if any,
accrued from the date of issue.
3.2 Form of Notes. The Notes and the Agent's Certificate of
Authentication to be borne by the Notes shall be in the form of Exhibit 3.2 to
this Agreement. Any of the Notes may have printed thereon such legends or
endorsements as the Company may deem appropriate and as are not inconsistent
with the
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provisions of this Agreement, or as may be required to comply with any law or
with any rule or regulation made pursuant to such law.
3.3 Denominations and Date of Notes. The Notes shall be issued in
Authorized Denominations, and shall be numbered, lettered or otherwise
distinguished in such manner or in accordance with such plan as the Company may
determine with the approval of the Agent. The Notes shall be dated as of the
date of their issue, except that any Note issued upon the transfer, exchange or
substitution of another Note shall be dated the date of its authentication.
3.4 Execution of Notes. The Notes shall be signed (manually or in
facsimile) in the name of or on behalf of the Company by an authorized officer.
3.5 Registration, Exchange and Registration of Transfer of Notes.
(a) The Company will keep at the office or agency to be maintained
by the Company as provided in Section 6.1, a register or registers in which,
subject to such reasonable regulations as it may prescribe, it will register all
Notes, and serve as its own registrar for the Notes.
(b) Subject to the restrictions on transferability of the Notes
pursuant to Section 13, upon surrender for registration of transfer of any Note
at such office or agency, the Company shall execute and the Agent shall deliver,
in the name of the transferee or transferees, a new Note or Notes for a like
aggregate principal amount of Authorized Denominations.
(c) Notes to be exchanged shall be surrendered at the office of the
Company, which shall execute and shall deliver in exchange therefor the Note or
Notes that the Note Holder making the exchange shall be entitled to receive,
bearing serial numbers not contemporaneously outstanding.
(d) All Notes presented for registration of transfer, exchange or
payment shall, if so required by the Company, be duly endorsed by or be
accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company, duly executed by the registered Note Holder or by
his, her or its duly authorized attorney.
(e) Any exchange or registration of transfer shall be without
charge, except that the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto.
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3.6 Mutilated, Destroyed, Lost or Stolen Notes.
(a) In case any Note shall become mutilated or be destroyed, lost
or stolen, the Company in its discretion may execute and deliver a new Note,
bearing a serial number not contemporaneously outstanding, in exchange and
substitution for the mutilated Note or in lieu of and substitution for the Note
so destroyed, lost or stolen. In every case, the applicant for a substituted
Note shall furnish to the Company such security or indemnity as may be required
by it to save it harmless, and in every case of destruction, loss or theft, the
applicant shall also furnish to the Company evidence to its satisfaction of the
destruction, loss or theft of such Note and of the ownership thereof.
(b) Upon the issuance of any substituted Note, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses connected
therewith, including, without limitation, counsel fees of the Company and the
Agent, and in addition a further sum not exceeding $100 for each Note so issued
in substitution. In case any Note that has matured or is about to mature shall
have become mutilated or be destroyed, lost or stolen, the Company may, with the
consent of the applicant, instead of issuing a substitute Note, pay or authorize
the payment of the same (without surrender thereof, except in the case of a
mutilated Note), if the applicant for such payment shall furnish the Company
with such security or indemnity as it may require to save it harmless and, in
case of destruction, loss or theft, evidence to the satisfaction of the Company
and the Agent of the destruction, loss or theft of such Note and of the
ownership thereof. Every substituted Note issued pursuant to the provisions of
this Section 3.6 by virtue of the fact that any Note is destroyed, lost or
stolen, shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Note shall be found at any time,
and shall be entitled to all of the benefits of this Agreement equally and
proportionately with any and all other Notes duly issued hereunder. All Notes
shall be held and owned upon the express condition that the foregoing provisions
are exclusive with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights and
remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
3.7 Cancellation of Notes. All Notes surrendered for the purpose of
payment, redemption, exchange or registration of transfer shall be delivered to
the Company for cancellation and the Company shall cancel such Notes and all
Notes that have been
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surrendered directly to the Company for cancellation, and no Notes shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Agreement. The Company shall indicate clearly on the face and on each and
every page of such cancelled Notes the fact that such Notes are cancelled. If
the Company shall acquire any of the Notes, such acquisition shall not operate
as a redemption or satisfaction of the indebtedness represented by such Notes,
unless and until the same is cancelled.
3.8 Persons Entitled to Note interest Payments. The person in whose
name a Note is registered at the close of business on any Record Date with
respect to any Interest Payment Date shall be entitled to receive any Note
Interest payable with respect to that Note on the Interest Payment Date next
following such Record Date, notwithstanding the cancellation of such Note upon
any registration of transfer or exchange thereof subsequent to such Record Date
and prior to such Interest Payment Date. The Holder of any Note issued upon the
transfer, exchange or substitution of another Note shall only be entitled to
receive Interest payable with respect to that Note from and after the Interest
Payment Date next following the first Record Date occurring after the issuance
of that Note.
3.9 Benefits of Provisions of This Agreement. Nothing in this Agreement
or in the Notes, expressed or implied, shall give or be construed to give any
person, firm or corporation, other than the parties thereto and the Note
Holders, any legal or equitable right, remedy or claim under or in respect of
this Agreement, or under any covenant, condition or provision herein contained,
all the covenants, conditions and provisions contained in this Agreement or in
the Notes being for the sole benefit of the parties hereto and the Note Holders.
4. PREPAYMENT.
4.1 Prepayment. No prepayment of the Notes shall be made, except to the
extent and in the manner provided in this Agreement.
4.2 Optional Prepayment. The Company shall have the privilege at any
time, on or after July 1, 1994, of prepaying the outstanding Notes, either in
whole or in part (but if in part, then in units of $1,000 or integral multiples
of $1,000 in excess thereof), by payment of the multiple set forth in the
following table of the principal amount of the Notes or portion thereof to be
prepaid, and accrued interest thereon to the date of such prepayment (the amount
by which such multiple exceeds 100% of the principal amount prepaid to be the
agreed premium for such prepayment):
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Year of Prepayment
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July 1, 1994 - June 30, 1995 103%
July 1, 1995 - June 30, 1996 102%
July 1, 1996 - June 30, 1997 101%
July 1, 1997 - thereafter 100%
4.3 Mandatory Prepayment:
(a) In the event that a Change of Control shall occur, the Company
will give written notice ("Company Notice") in the manner provided in Section
14.2 of this Agreement of such fact to the Note Holders. The Company Notice
shall be delivered no later than three Business Days following the occurrence of
any Change of Control. The Company Note shall (i) describe the facts and
circumstances of such Change of Control in reasonable detail, (ii) make
reference to this Section 4.3 and the right of the Note Holders to require
payment on the terms and conditions provided for in this Section 4.3, and (iii)
offer in writing to prepay the outstanding Notes, together with accrued interest
to the date of prepayment. Each Note Holder shall have the right to accept such
offer and require prepayment of the Notes held by such Note Holder by written
notice to the Company ("Note Holder Notice"), given in the manner provided in
Section 14.2 of this Agreement within thirty days following receipt of the
Company Notice specifying a date for payment ("Prepayment Date"), which
prepayment date shall be not later than three Business Days after the date of
the Note Holder Notice. The Company shall, on each Prepayment Date, make
prepayments with accrued interest.
(b) Without limiting the foregoing, notwithstanding the failure on
the part of the Company to give the Company Notice herein required as a result
of the occurrence of a Change of Control, each Note Holder shall have the right
to require the Company to prepay such Note Holder's Notes in full, together with
accrued interest thereon to the date of prepayment at any time within ninety
days after such Holder has actual knowledge of any Change in Control. The
Company shall make such prepayment on the date designated in the Note Holder's
Notice delivered by such Note Holder.
4.4 Notice of Prepayments. The Company will give notice of any
prepayment of the Notes to each Holder thereof, not less than thirty (30) days
nor more than sixty (60) days before the date fixed for such optional prepayment
specifying (i) the date of prepayment, (ii) the principal amount of the Holder's
Notes to be prepaid on such date, and (iii) the estimated accrued interest
applicable to the prepayment. Notice of prepayment having been so given, the
aggregate principal amount of the Notes specified in such notice, together with
the premium, if any, and accrued
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interest thereon shall become due and payable on the prepayment date.
4.5 Allocation of Prepayments. All partial prepayments shall be applied
on all outstanding Notes ratably, in accordance with the unpaid principal
amounts thereof, but only in units of $1,000, and to the extent that such
ratable application shall not result in an even multiple of $1,000, adjustment
may be made by the Company to the end that successive applications shall result
in substantially ratable payments.
4.6 Direct Payment. Notwithstanding anything to the contrary in this
Agreement or the Notes, in the case of any Note owned by a Note Holder who has
given written notice to the Company requesting that the provisions of this
Section shall apply, the Company will promptly and punctually pay when due, the
principal thereof, and premium, if any, and interest thereon, without any
presentment thereof, directly to such Note Holder at the address of such Note
Holder, or such other address as such Note Holder may from time to time
designate in writing to the Company.
5. PAYMENT OF PRINCIPAL AND INTEREST.
5.1 Date for Payment of Principal and Interest. Interest shall be
payable on the Interest Payment Dates and on the Maturity Date; and principal
shall be payable on the Maturity Date.
5.2 Interest Rate on Notes. The Company shall pay the Interest on the
unpaid principal balance of the Notes as provided herein.
5.3 Paying Agent. The Company shall serve as its own paying agent for
the Notes and shall make all payments pursuant to the Notes to the Holders
thereof when due.
5.4 Application of Payment. All payments received shall be applied to
the payment of the Notes in the following order of priority: (i) first, to the
payment of accrued interest, (ii) second, to the payment of principal then due,
and (iii) third, to the payment of premium, if any.
6. PARTICULAR COVENANTS OF THE COMPANY.
6.1 Maintenance of Office; Operation of Business. The Company covenants
and agrees that, so long as any of the Notes remain outstanding, it will:
(a) Maintain in Yuma, Arizona, an office or agency where Notes may
be presented for registration, registration of transfer, exchange and payment as
in this Agreement provided, and an office or agency where notices and demands to
or upon the
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Company in respect of the Notes and this Agreement may be served. The principal
office of the Company shall be such office or agency, unless the Company shall
maintain some other office or agency for such purpose and shall give the Agent
written notice of the location thereof.
(b) Promptly pay and discharge, or cause to be paid and discharged,
all lawful taxes, assessments and governmental charges or levies imposed upon
the income and profits of the Company, or upon any of its assets, or upon any
part thereof; provided, however, that the Company shall not be required to pay
such tax, assessment or charge so long as the validity thereof shall be
contested in good faith by appropriate proceedings, nor shall the Company be
obligated hereunder to pay any such tax, assessment, or charge if such property
shall, in the opinion of the Company, be no longer advantageous to the Company
in the conduct of its business, or if in the opinion of the Company, any such
tax assessment or charge exceeds the value of such property on which it is
levied.
(c) Pay or cause to be paid the principal of, premium, if any, and
interest on all indebtedness heretofore or hereafter incurred or assumed by the
Company, when and as the same shall become due and payable, unless such
indebtedness shall be renewed or extended, or unless such payment is not
permitted under provisions subordinating such indebtedness to the Notes, and
faithfully observe, perform and discharge all the covenants, conditions and
obligations which are imposed on it by any and all indentures and other
agreements securing or evidencing such indebtedness or pursuant to which such
indebtedness is issued, and not permit the occurrence of any act or omission
which is or may be declared to be a default thereunder; provided, however, that
the Company shall not be required to make any payment or to take any action by
reason of the provisions of this subsection at any time while it shall be
contesting in good faith its obligation to make such payment or to take such
action, provided it shall have set aside in its books adequate reserves (to the
extent, and segregated if and to the extent, required by sound accounting
practice in accordance with generally accepted accounting principles) with
respect thereto.
(d) At all times keep proper books of record and account in which
full, true and accurate entries will be made of its transactions in accordance
with sound accounting practice.
(e) At its own cost and expense, do or cause to be done all things
necessary to preserve and keep in full force and effect the Company's and the
Bank's existence as an Arizona corporation.
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(f) Deliver or cause to be delivered to Agent and upon request to
each Note Holder of record, not later than one hundred twenty (120) days after
the close of each fiscal year of the Company, a copy of the Company's audited
annual financial statements consisting of a balance sheet and an income
statement fairly presenting the Company's financial condition and a copy of each
and every filing made by the Company with the Securities and Exchange Commission
("SEC") pursuant to the periodic reporting requirements of the Securities and
Exchange Act of 1934 and the related SEC regulations.
6.2 Negative Covenants. From and after the Closing Date and continuing
so long as any amount remains unpaid on any Note:
(a) Issuance of Additional Securities. Company shall not authorize
or issue any debt senior to the Notes. Company shall cause Bank not to authorize
or issue any securities senior in any respect to its voting common stock
authorized as of the date of this Agreement.
(b) Funded Debt Ratio. The Company will not assume or incur or in
any manner be or become liable in respect of any Consolidated Funded Debt, if
Consolidated Funded Debt of the Company shall exceed 125% of the Company's
Consolidated Tangible Net Worth.
(c) Dividends. The Company will not declare or pay cash dividends
on any shares of its capital stock if its Consolidated Net Income Available for
Fixed Charges on Consolidated Funded Debt is less than 150% of the amount of
interest payable on Company's Consolidated Funded Debt.
6.3 Appointment to Fill a Vacancy in Office of Agent. The Company,
whenever necessary to fill a vacancy in the office of the Agent, will appoint,
in the manner provided in Section 9.7, a new Agent, so that there shall at times
be an Agent hereunder.
6.4 Further Instruments and Acts. The Company will, upon receipt
thereof from the Agent, execute and deliver such further instruments and do such
further acts as may reasonably be necessary or proper to carry out more
effectually the purposes of this Agreement.
7. NOTE HOLDERS' LISTS.
7.1 Note Holders' List. The Company covenants and agrees that it and
every obligor upon the Notes will furnish or cause to be furnished to the Agent
at such times as the Agent may request in writing within thirty (30) days after
receipt by the Company of any such request, a list in such form as the Agent may
reasonably require containing all information in the possession or
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control of the Company as to the name and addresses of the Note Holders obtained
(in the case of each list other than the first list) since the date as of which
the next previous list was furnished. Any such list may be dated as of the date
not more than fifteen (15) days prior to the time any information is furnished
or caused to be furnished and need not include information received after such
date.
7.2 Preservation and Disclosure of List.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the Note Holders
(i) contained in the most recent list furnished to it as provided in Section 7.1
and (ii) received by it hereunder.
(b) The Agent may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list as furnished.
8. REMEDIES OF THE AGENT AND THE NOTE HOLDERS IN EVENT OF DEFAULT.
8.1 Events of Default. In case one or more of the following Events of
Default shall have occurred and be continuing:
(a) the Company shall fail to pay any installment of principal or
Interest on any of the Notes when due and payable, whether upon the Maturity
Date or otherwise pursuant to this Agreement or the Notes;
(b) the Company shall fail to comply with any other covenant or
agreement on the part of the Company in the Notes or in this Agreement for a
period of thirty (30) days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to the Company
by the Agent, or to the Company and the Agent by Note Holders holding more than
50% in aggregate principal amount of the Notes then outstanding;
(c) final judgment for the payment of money in excess of $250,000
shall be rendered against the Company or Bank and the same shall remain
undischarged for a period of 30 days during which execution shall not be
effectively stayed;
(d) (i) the Company or Bank shall commence or consent to any case,
proceeding or other action (1) under any existing or future law of any
jurisdiction relating to bankruptcy, insolvency, reorganization or relief of
debtors seeking to have an order or relief entered with respect to it or seeking
to adjudicate it as bankrupt or insolvent or seeking reorganization,
arrangement, adjustment, liquidation, dissolution, composition or other relief
with respect to it or its debts or (2) seeking appointment of a
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receiver, trustee, custodian, conservator or other similar official for it or
for all or any substantial part of its assets or the Company or Bank shall make
a general assignment for the benefit of creditors or admit in writing that it is
unable to pay its debts as they become due; or
(ii) there shall be commenced against the Company or the Bank
any such case, proceeding or other action referred to in clause (i) of this
subsection (d) that (1) results in the entry of an order for relief or any such
adjudication or appointment or (2) is not dismissed, discharged or stayed for a
period of thirty (30) days from the entry thereof; or
(iii) there shall be commenced against the Company or Bank any
case, proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any part of its assets
that results in the entry of any order for any such relief which shall not have
been vacated, discharged or stayed within thirty (30) days from the entry
thereof; or
(iv) the Company or Bank shall have been dissolved or
terminated; or
(v) the company or Bank shall take any action authorizing or
in furtherance of or indicating its consent to approval or acquiescence in any
of the acts set forth above in this subsection (d);
then, and in each and every such case, unless the principal of all of the Notes
shall have already become due and payable, the Agent shall notify all of the
Note Holders of the occurrence of an Event of Default, and upon the direction of
the holders of more than 50% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company, the Agent shall declare the
principal of and all accrued Note Interest on all the Notes to be due and
payable immediately, and upon any such declaration the same shall become and
shall be immediately due and payable, anything in this Agreement or in the said
Notes contained to the contrary notwithstanding. This provision, however, is
subject to the condition that if, at any time after the principal of the Notes
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided the Company shall pay or shall deposit with the Agent a sum
sufficient to pay all Interest or principal that shall have become due otherwise
than by acceleration and the reasonable expenses of the Agent, and any and all
defaults under this Agreement, other than the nonpayment of principal of and
accrued Interest on Notes that shall have become due by acceleration, shall have
been remedied, then and in every such case the Holders of more than 50% in
aggregate principal
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amount of the Notes then outstanding, by written notice to the Company and to
the Agent, may waive all defaults and rescind and annul such declaration and its
consequences; but no such waiver or rescission or annulment shall extend to or
shall affect any subsequent default or shall impair any right consequent
thereon.
In case the Agent shall have proceeded to enforce any right under this
Agreement and such proceeding shall have been discontinued or abandoned because
of such rescission or annulment or for any other reason, or shall have been
determined adversely to the Note Holders, then and in every such case the
Company and the Note Holders shall be restored respectively to their several
positions and rights hereunder, and all rights, remedies and powers of the
Company and the Note Holders shall continue as through no such proceeding had
been taken.
8.2 Payment of Notes on Default; Suit Therefor.
(a) The Company covenants that (i) in case default shall be made in
the payment of any installment of Interest upon any of the Notes as and when the
same shall become due and payable, and such default shall have continued for a
period of thirty days, or (ii) in case default shall be made in the payment of
the principal of any of the Notes as and when the same shall have become due and
payable, whether at the Maturity Date or by declaration or otherwise, then the
Company will pay to the Agent, for the benefit of the Note Holders, the whole
amount that then shall have become due and payable on all such Notes for
principal or Interest, or both, as the case may be, with Interest upon the
overdue principal; and, in addition thereto, upon demand of the Agent, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including reasonable compensation to the Agent, its agents,
attorneys and counsel, and any reasonable expenses or liability incurred by the
Agent hereunder other than through its negligence or bad faith.
(b) In case the Company shall fail forthwith to pay such amounts
upon such demand, the Agent, for itself as principal with respect to amounts due
to it, and as Agent of the Holders of the Notes then outstanding, shall notify
the Note Holders of such failure, and upon the request of the Holders of more
than 50% in aggregate principal amount of the Notes then outstanding, shall
institute any actions or proceedings at law or in equity for the collection of
the sums so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final decree
against the Company and collect in the manner provided by law out of the
property of the Company, wherever situated, the moneys adjudged or decreed to be
payable.
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(c) In case there shall be pending proceedings for the bankruptcy
or for the reorganization of the Company or any other obligor on the Notes under
the Bankruptcy Code or any other applicable law relative to the Company or such
other obligor, its or their creditors or its or their property, or in case a
receiver or trustee shall have been appointed for its or their property, the
Agent, irrespective of whether the principal of the Notes shall then be due and
payable as therein expressed or by declaration or otherwise, and irrespective of
whether the Agent shall have made any demand pursuant to the provisions of this
Section 8.2, shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount of principal and Interest owing and unpaid in respect of the Notes, and,
in case of any judicial proceedings, to file such proofs or advisable in order
to have the claims of the Agent and of the Note Holders allowed in such judicial
proceedings relative to the Company or any obligor on the Notes, its or their
creditors, or its or their property, and to collect and receive any moneys or
other property payable or deliverable on any such claims, and to distribute the
same after the deduction of its charges and expenses except as a result of its
negligence or a bad faith; and any receiver, assignee or trustee in bankruptcy
or reorganization is hereby authorized by each of the Note Holders to make such
payments to the Agent, and, in the event that the Agent shall consent to the
making of such payments directly to the Note Holders, to pay to the Agent any
amount due it for reasonable compensation and expenses, including reasonable
counsel fees incurred by it up to the date of such distribution except as a
result of its negligence or bad faith.
(d) All rights of action and of asserting claims under this
Agreement or under any of the Notes, may be enforced by the Agent without the
possession of any of the Notes, or the production thereof on any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Agent shall be brought by it as Agent of the Holders of the Notes then
outstanding, and any recovery of judgment shall be for the ratable benefit of
the Note Holders.
8.3 Application of Moneys Collected by Agent. Any moneys collected by
the Agent pursuant to Section 8.2 shall be applied in the following order of
priority at the date or dates fixed by the Agent for the distribution of such
moneys, upon presentation of the several Notes, and stamping thereon the payment
if only partially paid and upon surrender thereof if fully paid:
First, to the payment of reasonable costs and expenses of
collection and reasonable compensation to the Agent, its agents,
attorneys and counsel, and of all other reasonable expenses and
liability incurred, and all
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advances made, by the Agent except as a result of its gross negligence
or bad faith;
Second, in case the principal of the outstanding Notes shall
not have become due and be unpaid, to the payment of Interest on the
Notes, such payments to be made ratably to the persons entitled
thereto, without discrimination or preference;
Third, in case the principal of the outstanding Notes shall
have become due, by declaration or otherwise, to the payment of the
whole amount then owing and unpaid upon the Notes for principal and
Interest, with interest on the overdue principal; such payment is to be
first applied to the payment of unpaid Interest and then to payment of
principal without preference or priority of any Note over any other
Note; and
Fourth, to the payment of the remainder, if any, to the
Company, its successors or assigns, or to whomsoever may be lawfully
entitled to receive the same, or as a court of competent jurisdiction
may direct.
8.4 Proceedings by Note Holders.
(a) No Note Holders shall have any right by virtue of or by
availing of any provision of this Agreement to institute any suit, action or
proceedings in equity or at law upon or under or with respect to this Agreement,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless such Note Holders previously shall have given to the Agent
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of more than 50% in aggregate principal
amount of the Notes then outstanding shall have made written request upon the
Agent to institute such action, suit or proceedings as Agent and on behalf of
the Holders of the Notes then outstanding and shall have offered to the Agent
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Agent for sixty days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding and no
direction inconsistent with such action, suit or proceeding and no direction
inconsistent with such written request shall have been given to the Agent
pursuant to Section 8.7; it being understood and intended, and being expressly
covenanted by the taker and Holder of every Note with every other taker and
Holder and the Agent, that no one or more Note Holders shall have any right in
any manner whatever by virtue of or by availing of any provision of this
Agreement to affect, disrupt or prejudice the rights of any other Note Holders,
or to obtain or seek to obtain priority over or preference to any other such
Note
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Holder, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all Note
Holders.
(b) Notwithstanding any other provisions in this Agreement, the
right of any Note Holder to receive payment of the principal of and Interest on
such Note on or after the respective Interest Payment Dates or Maturity Date, or
to institute suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Note Holders.
8.5 Proceedings by Agent. In case of any Event of Default hereunder the
Agent may, upon the direction of the holders of more than 50% in aggregate
principal amount of the Notes then outstanding, proceed to protect and enforce
the rights vested in it by this Agreement by such appropriate judicial
proceedings as the Agent shall deem most effectual to protect and enforce any of
such rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Agreement, or to enforce any other legal or
equitable right vested in the Agent by this Agreement or by law.
8.6 Remedies Cumulative and Continuing. All powers and remedies given
by this Article 8 to the Agent or to the Note Holders shall, to the extent
permitted by law, be deemed cumulative and not exclusive of any other power or
remedy or of any other power, or shall be construed to be a waiver of any such
default or an acquiescence therein; and, subject to the provisions of Section
8.4, every power and remedy given by this Article 8 or by law to the Agent or to
the Note Holders may be exercised from time to time and as often as shall be
deemed expedient by the Agent or by the Note Holders.
8.7 Direction of Proceedings and Waiver of Defaults by Majority of Note
Holders. The holders of more than 50% in aggregate principal amount of the Notes
then outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Agent or exercising
any power conferred on the Agent; provided, however that such direction shall
not be otherwise than in accordance with law and the provisions of this
Agreement, and the Agent, subject to the provisions of Section 9.1, shall have
the right to decline to follow any such direction if the Agent in good faith
shall, by an officer of the Agent if the Agent is a corporation, determine that
the proceeding so directed would be unjustly prejudicial to the Note Holders not
taking part in such direction or would involve it in personal liability; and,
provided further, that, subject to the provisions of Section 9.1, nothing
contained in this Agreement shall impair the right of the Agent in its
discretion to take any
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action deemed proper by the Agent and that is not inconsistent with such
direction by Note Holders. Prior to any declaration accelerating the maturity of
the Notes, the holders of more than 50% in aggregate principal amount of the
Notes then outstanding may on behalf of all of the Note Holders waive any past
default or Event of Default hereunder and its consequences except a default in
the payment of Interest on, or the principal of, the Notes. Upon any such waiver
the Company, the Agent and the Note Holders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder shall
have been waived as permitted by this Section 8.7, such default or event of
Default shall for all purposes of the Notes and this Agreement be deemed to have
been cured and to be not continuing.
8.8 Notice of Defaults. The Agent shall, within ninety days after the
occurrence of a default, mail to all Note Holders, as the names and addresses of
such Holders appear upon the registration books of the Company, notice of all
defaults known to the Agent, unless such defaults shall have bene cured before
the giving of such notice (the term "defaults" for the purposes of this Section
8.8 being hereby defined to be the events specified in Section 8.1, not
including any periods of grace provided for therein and irrespective of the
giving of written notice provided for therein; provided that, except in the case
of default in the payment of the principal of or Interest on any of the Notes,
the Agent shall be protected in withholding such notice if Agent determines in
good faith that the withholding of such notice is in the interest of the Note
Holders.
8.9 Undertaking to Pay Costs. All parties to this Agreement agree, and
each Holder of a Note by his, her or its acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in any suit against
the Agent for any action taken or omitted by it as Agent, the filing by any
party litigant in such suit of any undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 8.9 shall not apply to any suit
instituted by the Agent, to any suit instituted by the Agent, to any suit
instituted by any Note Holder or group of Note Holders holding n the aggregate
more than 10% in aggregate principal amount of the Notes then outstanding, or to
any suit instituted by any Note Holder for the enforcement of the payment of the
principal of or interest on any Note against the Company on or after the due
date expressed in such Note.
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9. AGENT.
9.1 Duties and Liabilities of Agent.
(a) The Agent, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred (which has not been cured),
the Agent shall exercise such of the rights and powers vested in it by this
Agreement and use the same degree of care and skill in its exercise as a prudent
man would exercise or use under the circumstances in the conduct of his own
affairs.
(b) No provision of this Agreement shall be construed to relieve
the Agent from liability for its own gross negligence in acting or omitting to
act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default which may
have occurred:
(A) the duties and obligations of the Agent shall be
determined solely by the express provisions of this Agreement, and the Agent
shall not be liable except for the performance of such duties and obligations as
are specifically set forth in this Agreement, and no implied covenants or
obligations shall be read into this Agreement against the Agent; and
(B) in the absence of bad faith on the part of the Agent,
the Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Agent and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Agent, the Agent shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Agreement.
(ii) the agent shall not be liable for any error of judgment
made in good faith, unless it shall be proved that the Agent was grossly
negligent in ascertaining the pertinent facts;
(iii) the Agent shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of more than 50% in aggregate principal amount of the
Notes then outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Note Holders, or exercising any power
conferred upon the Agent, under this Agreement; and
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(iv) none of the provisions of this Agreement shall require the
Agent to expend or risk its own funds or otherwise incur any personal financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
(c) Whether or not herein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
9.2 Reliance on Documents, Opinions, Etc. Except as otherwise provided
in Section 9.1:
(a) the Agent may rely and shall be protected in acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, note, bond, debenture, or other paper or documents
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a certificate of the Company
(unless other evidence in respect thereof be herein specifically prescribed);
(c) the Agent may consult with legal counsel and any opinion of
legal counsel shall be full and complete authorization and protection in respect
of any action taken or omitted by it hereunder in good faith and in accordance
with such opinion of legal counsel;
(d) the Agent shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request, order or
direction of any of the Note Holders, pursuant to the provisions of this
Agreement, unless such Note Holders shall have offered to the Agent reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby; nothing herein contained shall, however, relieve
the Agent of the obligations, upon the occurrence of any Event of Default (which
has not been cured), to exercise such of the rights and powers vested in it by
this Agreement and to use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs;
(e) the Agent shall not be liable for any action taken or omitted
by it in good faith and reasonably believed by it
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to be authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
(f) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default, the Agent shall not be bound to make
any investigation into the facts or matters stated in the resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, note, bond debenture, or other paper or document, unless requested in
writing so to do by the Holders of more than 50% in aggregate principal amount
of the Notes then outstanding; provided that if the payment within a reasonable
time to the Agent of the costs, expenses or liabilities likely to be incurred by
it in the making of such investigation is not, in the opinion of the Agent,
reasonably assured to the Agent by the security afforded to it by the terms of
this Agreement, the Agent may require reasonable indemnity against such expense
or liability as a condition to so proceeding, the reasonable expense of every
such examination shall be paid by the Company, or, if paid by the Agent, shall
be repaid by the Company upon demand; and
(g) the Agent may execute any of the rights or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys.
9.3 No Responsibility for Recitals, etc. The recitals contained herein
and in the Notes (except in the Agent's Certificate of Authentication) shall be
taken as the statements of the Company and the Agent assumes no responsibility
for the correctness of the same. The Agent makes no representations as to the
validity or sufficiency of this Agreement or of the Notes. The Agent shall not
be accountable for the use or application by the Company of any Notes or the
proceeds of any Notes authenticated and delivered by the Agent in conformity
with the provisions of this Agreement.
9.4 Moneys to be Held in Trust. Subject to the provisions of Section
12.3, all moneys received by the Agent shall, until used or applied as herein
provided, be held in trust for the purposes for which they are received.
9.5 Expenses of Agent. The Company covenants and agrees to pay or
reimburse the Agent upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Agent in accordance with any of the
provisions of this Agreement (including the reasonable compensation and expenses
and disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its gross
negligence, willful misconduct or bad faith. The Company also covenants to
indemnify the agent for, and to hold it harmless against, any loss, liability or
expense incurred
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without negligence or bad faith on the part of the Agent and arising out of or
in connection with the acceptance or administration of this agency, including
the reasonable costs and expenses of defending itself against any claim of
liability in the premises.
9.6 Company's Certificate as Evidence. Except as otherwise provided in
Section 9.1, whenever in the administration of the provisions of this Agreement
the Agent shall deem it necessary or desirable that a matter be proved or
established prior to taking or omitting any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed)
may, in the absence of gross negligence or bad faith on the part of the Agent,
be deemed to be conclusively proved and established by a certificate signed by
the Company and delivered to the Agent, and such certificate, in the absence of
gross negligence or bad faith on the part of the Agent, shall be full warrant to
Agent for any action taken or omitted by it under the provisions of this
agreement upon the faith thereof.
9.7 Resignation of Agent.
(a) The Agent may at any time resign by giving written notice of
such resignation to the Company and by mailing notice thereof to the Note
Holders at their addresses as they shall appear on the registry books of the
Company. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor agent by written instrument, in duplicate, executed by the
Company, one copy of which instrument shall be delivered to the resigning Agent
and one copy to the successor Agent. If no successor Agent shall have been so
appointed and have accepted appointment within sixty days after the publication
of such notice of resignation, the resigning Agent may petition any court of
competent jurisdiction for the appointment of a successor Agent, or any Note
Holder who has been a bona fide holder of a Note or Notes for at least six
months may, subject to the provisions of Section 8.9, on behalf of himself and
all others similarly situation, petition any such court for the appointment of a
successor Agent. Such court may thereupon, after such notice, if any, as it may
deem proper and prescribe, appoint a successor Agent.
(b) In case at any time the Agent shall become incapable of acting;
or in connection with the performance of its obligations hereunder shall have
acted in bad faith, shall have been grossly negligent or shall have willfully
breached this Agreement; or shall be adjudged a bankrupt or insolvent, or a
receiver of the Agent or of its property shall be appointed, or any public
officer shall take charge or control of the Agent or of its property or affairs
for the purpose of rehabilitation, conservation or liquidation, then in any such
case, the Company may remove the
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Agent and appoint a successor Agent by written instrument, in duplicate,
executed by order of the Company, one copy of which instrument shall be
delivered to the Agent so removed and one copy to the successor Agent, or,
subject to the provisions of Section 8.9, any Note Holder who has been a bona
fide holder of a Note or Notes for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Agent and the appointment of a successor Agent. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, remove the Agent and appoint a successor Agent.
(c) Except as expressly provided in Section 9.7(b), Company shall
have no right or power to remove Agent.
(d) Any resignation of the Agent and appointment of a successor
Agent pursuant to any of the provisions of this Section 9.7 shall become
effective upon acceptance of appointment by the successor Agent as provided in
Section 9.8.
9.8 Acceptance by Successor Agent.
(a) Any successor Agent appointed as provided in Section 9.7 shall
execute, acknowledge and deliver to the Company and to its predecessor Agent an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor Agent shall become effective and such successor
Agent, without any further act, deed or conveyance, shall become vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
like effect as if originally named as agent herein; but, nevertheless, on the
written request of the Company or of the successor Agent, the Agent ceasing to
act shall, upon payment of any amounts then due it pursuant to the provisions of
Section 9.5, execute and deliver an instrument transferring to such successor
Agent all the rights and powers of the Agent so ceasing to act. Upon request of
any such successor Agent, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
all such rights and powers.
(b) Upon acceptance of appointment by a successor Agent as provided
in this Section 9.8, the company shall mail notice of the succession of such
agent hereunder to the Note Holders at their addresses as they shall appear on
the registry books of the Company. If the Company fails to mail such notice
within ten days after acceptance of appointment by the successor Agent, the
successor Agent shall cause such notice to be mailed at the expense of the
Company.
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10. ACTS OF NOTE HOLDERS; EVIDENCE OF OWNERSHIP OF NOTES.
10.1 Acts of Note Holders. Any action to be taken by Note Holders may
be evidenced by one or more concurrent written instruments of similar tenor
signed or executed by such Note Holders in person or by Agent appointed in
writing. The fact and date of the execution by any person or any such instrument
may be proved by acknowledgement before a Notary Public or other officer
empowered to take acknowledgements, or by an affidavit of a witness to such
execution.
10.2 Ownership of Notes. Prior to due presentment of any Note for
registration of transfer, the Company and the Agent may deem the person in whose
name the Note shall be registered upon the books of the Company as the absolute
owner of such Note (whether or not such Note shall be overdue and
notwithstanding any notation of ownership or writing thereon by anyone other
than the Agent), for the purpose of receiving payment of or on account of the
principal of, and Interest on, such Note and for all other purposes; and neither
the Company nor the Agent shall be affected by any notice to the contrary.
Payment of or on account of the principal of, and Interest on, such Note shall
be made only to or upon the order in writing of the registered owner thereof.
All such payment shall be valid and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Note.
10.3 Action Taken by the Note Holders. Any action taken by the holders
of more than 50% in aggregate principal amount of the Notes specified in this
Agreement in connection with such action shall be conclusively binding upon the
Company, the Agent and the Note Holders. Any action by of any Note Holder shall
bind all future Holders of the same Note in respect of anything done or suffered
by the Company or the Agent in pursuance thereof.
11. AMENDMENTS AND SUPPLEMENTS.
11.1 Amendments and Supplements Without Note Holders' Consent. This
Agreement may be amended or supplemented at any time and from time to time,
without the consent of the Note Holders, by the agreement of the Company and
Agent for the purpose of curing any ambiguity or curing, correcting or
supplementing any defective provision of this Agreement in such manner as shall
not be inconsistent with this Agreement and shall not materially adversely
affect Note Holders.
11.2 Amendments With Note Holders' Consent. This Agreement may be
amended from time to time, except with respect to the principal or interest
payable upon any Notes and this Article 11, by an amendment approved by the
holders of more than 50% in aggregate principal amount of the Notes then
outstanding; provided,
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however, that no amendment shall be made that affects the rights of some but
less than all of the Holders of the outstanding Notes.
11.3 Agent Authorized to Join Amendments; Reliance on Counsel. The
Agent is authorized to join in the execution and delivery of any amendment to
this Agreement permitted by this Section 11 and in so doing shall be fully
protected by an opinion of counsel that such amendment is so permitted and that
all things necessary to make it a valid and binding Agreement have been done.
12. SATISFACTION AND DISCHARGE OF AGREEMENT; UNCLAIMED MONEYS.
12.1 Discharge of Agreement. When the principal and Interest on all
Notes issued hereunder have been paid, or provisions has been made for payment
of the same, together with all other sums payable hereunder by the Company, the
right, title and interest of the Agent shall thereupon cease, and the Agent, on
demand of the Company shall release this Agreement and shall execute such
documents to evidence such releases as may be reasonably required by the Company
and shall turn over the Company for and on account of the company or such other
person, body or authority as may be entitled to receive the same, all balances,
if any, held by it, not required for the payment of the Notes and such other
sums. Provision for the payment of the Notes shall be deemed to have been made
upon the delivery to the Agent of cash and in amounts sufficient to make all
payments specified above.
12.2 Deposited Moneys to be Held in Trust by the Agent. All moneys
deposited with the Agent pursuant to Section 12.1 shall be held in trust and,
subject to the provisions of Section 12.3, applied by it to the payment to the
holders of the particular Notes for the payment or redemption of which such
moneys have been deposited with the Agent, of all sums due thereon for principal
and Interest.
12.3 Unclaimed Moneys. Any moneys deposited with the Agent not applied
but remaining unclaimed by the Note Holders for six years after the date upon
which the principal of or Interest on such Notes shall have become due and
payable shall be repaid to the Company by the Agent on demand, or if held in
trust by the Company may at the Company's option be released from such trust,
and the Note Holder entitled to receive such payment shall thereafter look only
to the Company, as the holder of a general claim, for the payment thereof.
13. NO REGISTRATION OF NOTES; RESTRICTIONS ON TRANSFERABILITY.
The Notes issued pursuant hereto have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), and
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this Agreement has not been qualified under the Trust Indenture Act of 1939, as
amended ("1939 Act"), in reliance on the exemption provided by Section 3(a)(11)
of the 1933 Act and Section 304(b) of the 1939 Act. No Note Holder may sell,
transfer, pledge or hypothecate all or any portion of his Note prior to July 1,
1994, other than to a person resident within the State of Arizona or at any time
without an opinion of Counsel acceptable to the Company (obtained at the expense
of the Note Holder) to the effect that such sale, transfer, pledge or
hypothecation is exempt from registration under the Securities Act and all
applicable state securities laws. The Notes shall bear a legend to the foregoing
effect. The Company has no intention of registering the Notes under the 1933 Act
or of qualifying this Agreement under the 1939 Act. In addition, none of the
Notes may be transferred unless the Assignment Form attached to the Note (or
such other form prescribed by the Company) is executed by the transferring Note
Holder and the transferee and is duly notarized and delivered to the Company.
14. MISCELLANEOUS PROVISIONS.
14.1 Provisions Binding on the Company's Successors. All the covenants,
stipulations, promises and agreements in this Agreement contained by or on
behalf of the Company shall bind its successors and assigns, whether so
expressed or not.
14.2 Addresses for Notice, etc. Any notice or demand that by any
provision of this Agreement is required or permitted to be given or served by
the Agent or by the Note Holders on the Company may be given or served by
delivery or by being deposited in the U.S. mail, registered or certified mail,
return receipt requested, postage prepaid, addressed (until another address is
filed by the company with the Agent) to SOUTHERN ARIZONA BANCORP, INC., 1800
Fourth Avenue, Yuma Arizona 85364. Any notice, direction request or demand by
any Note Holder or by the Company to or upon the Agent shall be deemed to have
been sufficiently given or made, for all purposes if given or made in writing to
the Agent, addressed to:
PHS Mortgage, Inc.
c/o Peacock, Hislop, Staley & Given, Inc.
2999 North 44th Street, Suite 100
Phoenix, Arizona 85018
Attention: Tom Thomas
with copy to:
Norman C. Storey
Squire, Sanders & Dempsey
40 North Central, Suite 2700
Phoenix, Arizona 85004
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14.3 Governing Law. This Agreement and each Note shall be deemed to be
a contract made under the laws of the State of Arizona and for all purposes
shall be construed in accordance with and governed by the laws of such state.
14.4 Effect of Invalidity of Provisions. In case any one or more of the
provisions contained in this Agreement or in the Notes shall for any reason be
held to be invalid, illegal, or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Agreement or of such Notes, and this Agreement and such Notes shall be construed
as if such invalid or illegal or unenforceable provision had never been
contained herein or therein.
14.5 Table of Contents and Headings. The table of contents, titles and
headings of the articles and sections of this Agreement have been inserted for
convenience of reference only, are not to be considered to be a part hereof, and
shall in no way modify or restrict any of the terms or provisions hereof.
14.6 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original; but such
counterparts shall never constitute but one and the same instrument.
EXECUTED to be effective as of the date first set forth above.
SOUTHERN ARIZONA BANCORP, INC.,
an Arizona corporation
By
-----------------------------
John E. Byrd, President
(COMPANY)
PHS MORTGAGE, INC.
an Arizona corporation
By
-----------------------------
Its
--------------------------
(AGENT)
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EXHIBIT 3.2
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), AND THIS NOTE HAS NOT BEEN ISSUED PURSUANT TO AN INDENTURE
QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED. THIS NOTE MAY NOT
BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN WHOLE OR IN PART PRIOR TO JULY
1, 1994 OTHER THAN TO A RESIDENT OF THE STATE OF ARIZONA.
THIS NOT EIS NOT A DEPOSIT, IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, AND IS NOT IN ANY WAY GUARANTEED BY THE UNITED STATES GOVERNMENT OR
ANY AGENCY THEREOF.
8.75% SENIOR NOTE DUE JULY 1, 2000
$____________________________ ___________________________, 1993
SOUTHERN ARIZONA BANCORP, INC. an Arizona corporation promises to pay
to _______________________, ____________________________________________________
or registered assigns, the principal sum of __________________ Dollars
($__________) and to pay interest (computed on the basis of a 360 day year of
twelve 30 day months) on the principal amount from time to time remaining unpaid
hereon, at the rate of 8.75% per annum from the date hereof until the Maturity
Date, payable semiannually on the first of each January and July in each year
commencing July 1, 1993 and at the Maturity Date at the office or agency of the
Company in Yuma, Arizona, in such currency of the United State of America as at
the time of payment shall be legal tender for payment of public and private
debts. The Company shall pay interest on overdue principal (including any
overdue required prepayment of principal) and premium, if any, and (to the
extent legally enforceable) on any overdue installment of interest at the rate
of % per annum after maturity whether by acceleration or otherwise, until paid.
If any amount of principal, premium, if any, or interest on or in respect of
this Note becomes due and payable on any date which is not a Business Day, such
amount shall be payable on the next preceding Business Day.
All capitalized terms used herein shall have the meaning set forth in
the Note Agreement (as defined in the next paragraph).
This Note is one of the 8.75% Senior Notes due July 1, 2000 of the
Company in the aggregate principal amount of $_________ issued or to be issued
under and pursuant to the terms and provisions of the Note and Agency Agreement
dated as of ____________, 1993 ("Note Agreement") entered into by the company
and the Agent therein referred to and this Note and the Holder hereof is subject
to the terms and conditions of the Note Agreement and is entitled equally and
ratably with the Holders of all other Notes outstanding under the Note Agreement
to all the benefits provided for thereby or referred to therein.
This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed Maturity
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Date and certain prepayments are required to be made thereon, all in the events
on the terms and in the manner and amounts as provided in the Note Agreement.
The Notes are not subject to prepayment or a redemption at the option
of the Company prior to their expressed Maturity Date except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
The Notes are issuable as registered Notes as set forth in the Note
Agreement. In the manner and subject to the limitations provided in the Note
Agreement, Notes are exchangeable for other Notes of any other Authorized
Denomination or Denominations of an equal aggregate principal amount at the
office of the Company maintained in Yuma, Arizona at 1800 Fourth Avenue, Yuma,
Arizona 85364.
The transfer of this Note is registerable by the registered Holder
hereof or by his attorney duly authorized in writing at the office of the
Company int he manner and subject to the limitations provided in the Note
Agreement and upon surrender of this Note. Upon any such registration of
transfer, a new Note or Notes of Authorized Denominations for a like aggregate
principal amount will be issued in exchange for this Note.
Prior to due presentment of this Note for registration of transfer, the
Company and the Agent may deem the registered Holder hereof as the absolute
owner hereof (whether or not this Note shall be overdue and notwithstanding any
notation of ownership or other writing hereon by anyone other than the Company
or the Agent), for the purpose of receiving payment of or on account of the
principal hereof and Interest hereon, and for all other purposes, and neither
the Company nor the Agent shall be affected by any notice to the contrary. All
such payments shall be valid and effectual to satisfy and discharge the
liability upon this Note to the extent of the sum or sums so paid.
The Note shall not be valid or become obligatory for any purpose until
the Certificate of Authentication hereon shall have been signed by the Agent.
Date: ___________________, 1993
SOUTHERN ARIZONA BANCORP, INC.,
an Arizona corporation
By:
----------------------------
President
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AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within mentioned Note
Agreement.
Dated: __________________________, 1993
________________________________
Agent
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ACCEPTANCE OF ASSIGNMENT
(This form must be completed by each transferee of the attached
8.75% Senior Note due July 1, 2000 and must be acknowledged before
a notary public)
The undersigned hereby accepts the foregoing assignment of the attached
Note subject to the Company's registration of the transfer of said Note.
To induce the Company to register the transfer of the attached Note to
the undersigned, the undersigned:
(i) hereby represents and warrants to the Company that the
undersigned has been provided with and has carefully reviewed a copy of the Note
and Agency Agreement, as currently amended in force between the Company and
___________________________ ("Agent"), and the undersigned is fully aware of the
restrictions on the transferability of the Note set forth therein; and
(ii) hereby specifically accepts, adopts and agrees to each and
every provision of the Note Agreement.
--------------------------------
Signature
--------------------------------
Name
--------------------------------
Address
--------------------------------
Please print name and address of
transferee
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ASSIGNMENT
(This form must be completed by the registered Holder desiring to
transfer all or part of the attached 8.75% Senior Note due July 1,
2000.)
A. FOR VALUE RECEIVED, the undersigned holder of the attached 8.75% Senior Note
due July 1, 2000 ("Note) hereby sells, assigns, and transfers the attached Note
(or so much of the principal amount thereof as is specified below) together with
premium, if any, allocable thereto and Interest accrued thereon to the person or
persons named below and does hereby irrevocably constitute and appoint
as the undersigned's attorney to transfer the Note on the books of the
Partnership, with full power of substitution in the premises.
Dated:
-------------------------------
-----------------------------
Signature
Fill in for new registrant(s) of Note:
- ------------------------------------ -----------------------------------
Name Name
- ------------------------------------ -----------------------------------
Address Address
- ------------------------------------ -----------------------------------
Please print name and address Please print name and address
of transferee (including of transferee (including
zip code) zip code)
- ------------------------------------ -----------------------------------
Principal amount of Note Principal amount of Note
assigned (if less than all) assigned (if less than all)
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NOTICE
The signature to the foregoing Assignment form must correspond to the
name as written upon the face of the attached Note in every particular, without
alteration, enlargement or any change whatsoever.
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