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[Federal Home Loan Bank of Topeka Letterhead] EXHIBIT 10.2
Advance, Pledge and Security Agreement
(Blanket Pledge)
This Advance, Pledge and Security Agreement (Agreement) is made as of October
21, 1997, between: The Federal Home Loan Bank of Topeka (Bank) and First State
Bank (Institution), which has its principal office at 115 South Walnut,
Kimball, Nebraska 69145.
WHEREAS, from time to time the Institution desires to apply for extensions of
credit from the Bank in accordance with the terms and conditions of this
Agreement; and
WHEREAS, the Bank requires that all existing indebtedness of the Institution to
the Bank and all extensions of credit by the Bank to the Institution pursuant
to this Agreement be secured pursuant to this Agreement, and the Institution is
willing to provide such security;
NOW, THEREFORE, the Institution and the Bank agree as follows:
ARTICLE I
Definitions
Section 1.1 Defined Terms
The following terms shall have the following meanings:
(A) "Act" means the Federal Home Loan Bank Act, as amended.
(B) "Advance" or "Advances" means any and all loans or other
extensions of credit, including all Commissions now or hereafter
granted by the Bank to, on behalf of or for the account of the
Institution, including all loans or extensions of credit by the Bank
to the Institution prior to the date hereof.
(C) "Capital Stock" means all of the capital stock of the Bank and
all payments that have been or hereafter are made on account of any
subscription for such capital stock and all unpaid dividends on such
capital stock.
(D) ""Collateral" means all property, including the proceeds
thereof previously assigned, transferred or pledged to the Bank by the
Institution as Collateral for Advances and all property assigned,
transferred or pledged to the Bank pursuant to Section 3.1 of the
Agreement or otherwise.
(E) "Commitment" or "Commitments" means any and all agreements
under which the Bank is obligated to make advances to the Institution
or payments on behalf of or for the account of the Institution,
including without limitation Swap Transactions, letters of credit,
firm commitments, guarantees or other arrangements intended to
facilitate transactions between the Institution and third parties (but
excluding any obligations that the Bank may now or hereafter have to
honor such as items or transfer orders under a depository or similar
agreement between the Institution and the Bank), and irrespective of
whether the Bank's obligation under such agreement is contingent upon
the occurrence or nonoccurrence of any condition.
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(F) "Confirmation of Advance" means a written or machine-readable
electronic transmission issued by the Bank from time to time
confirming an Advance.
(G) "Eligible Collateral" means Collateral, other than Capital
Stock, which (1) qualifies as security for Advances under the terms
and conditions of the Act and the Regulations and satisfies the
requirements that may be established by the Bank form time to time and
(2) is owned by the Institution free and clear of any liens,
encumbrances or other interests other than the Interest of the Bank
hereunder.
(H) "Indebtedness" means all indebtedness of the Institution to
the Bank, whether now outstanding or hereafter incurred, including all
Advances and any other sums owned by the Institution to the Bank
pursuant to any provision hereof, and all other obligations and
liabilities of the Institution, to the Bank.
(I) "Landing Value" means the value that the Bank shall from time
to time, in its sole discretion, ascribe to the various types of
Collateral.
(J) "Mortgage Collateral" means that part of Perfected Collateral
that is a mortgage or deed of trust on real property and any note,
bond or other instrument evidencing any loan secured thereby and any
endorsement or assignment thereof to the Institution and all ancillary
security agreements, policies and certificates of insurance or
guarantees, evidences of recordation, applications, underwriting
materials, appraisals, approvals, permits, notices, opinions of
counsel, loan servicing data and all other electronically stored and
written records or materials relating to such loans.
(K) "Perfected Collateral" means all Collateral, including without
limitation Eligible Collateral in which the Bank has attempted in good
faith to perfect its security interest by giving constructive notice
to third parties through taking possession of the Collateral, filing a
financing statement describing the Collateral, of otherwise, and all
deposit accounts maintained by the Institution with the Bank.
(L) "Regulations" means the regulations of the Federal Housing
Finance Board or its successor, as amended.
(M) "Required Collateral Amount" means the aggregate dollar amount
that he Bank may specify from time to time with respect to each
Advance and any other obligation or liability of the Institution to
the Bank. The Bank may increase or decrease the Required Collateral
Amount at any time.
(N) "Swap Transaction" or "Swap Transactions" means any and all
interest rate swaps, interest rate caps, floors or cellars, currency
exchange transactions or similar transactions entered into between the
Bank and the Institution.
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ARTICLE II
Advances
Section 2.1 Applications and Procedures for Obtaining Advances
Periodically, the Institution may apply to the Bank for Advances in accordance
with the procedures established by the Bank from time to time. Each Advance
shall be evidenced by a Confirmation of Advance or other writing issued by the
Bank. Unless otherwise agreed to in writing by the Bank, each Advance shall be
made by crediting a demand deposit account of the Institution with the Bank.
Section 2.2 Estoppel
Failure of the Institution to deliver written notice to the Bank specifying any
disputed term or condition of an Advance within seven (7) business days after
the Bank mails by first-class a Confirmation of Advance to the Institution
shall constitute the agreement and acknowledgment by the Institution that the
terms and conditions of the Advance are valid and are those that the
Institution requested and by which the Institution agreed to be bound. The
Institution shall thereafter be estopped from asserting any claim or defense
with respect to the repayment of such Advance and all interest, fees and other
charges thereon or in connection therewith.
Section 2.3 Right of Bank to Make Advances with Respect to Outstanding
Commitments
(A) In the event that one or more Commitments are outstanding at
the time of an Event of Default, as such term is defined in Section
4.1, the Bank may at its option make an Advance by crediting a special
account of the Institution with the Bank in an amount equal to the
outstanding Commitments. The Bank shall have a first priority
perfected security interest in any such special account, and amounts
credited to such special account may not be withdrawn by the
Institution for so long as there shall be outstanding Commitments.
The funds in such special account shall be utilized by the Bank for
the purpose of satisfying the Bank's obligations under the
Commitments. When all such obligations have expired or been
satisfied, the Bank shall disburse the balance, if any, in such
account first to the satisfaction of any amounts then due and owing by
the Institution to the Bank and then to the Institution or its
successors in interest. Advances made pursuant to this section shall
be payable on demand and shall bear interest from the date the same
shall be made until paid at the rate in effect and being charged by
the Bank from time to time on the Line of Credit program then being
offered by the Bank.
(B) The Bank reserves the right to cancel any unfunded portion of
a Commitment at any time an Event of Default shall have occurred or
exist. In the event of cancellation, all or part of the commitment
fee will be refunded. The amount refunded shall be in equal
proportion to the number of days remaining in the commitment period on
the date of such cancellation.
Section 2.4 Interest
The Institution agrees to pay interest on each Advance at the rate per annum
provided in the Confirmation and Advance pertaining thereto in the Bank's
Credit Policy for such type of Advance and as otherwise specified herein.
Accrued interest on such Advance shall be due and payable at the time specified
in the Bank's Credit Policy, Confirmation of Advance or as otherwise specified
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in writing by the Bank. Such payment shall be made in the form of immediately
available funds at the office of the Bank in Topeka, Kansas, or at such other
place as the Bank or its successor or permitted assignee may from time to time
appoint in writing.
ARTICLE III
Security Agreement
Section 3.1 Blanket Pledge; Required Collateral Amount
(A) As security for all present and future Indebtedness, the
Institution hereby assigns, transfers and pledges to the Bank, and
grants to the Bank a security interest in, all property now or
thereafter owned by the Institution including without limitation the
following types of property: (1) Capital Stock; (2) instruments
(including without limitation any note or other instrument evidencing
a debt and any mortgage, deed of trust, title or document securing
it); (3) securities including without limitation mortgage-backed
securities, share certificates or other participation interests in any
securities trust and mortgage loan participation certificates; (4)
chattel paper; (5) choices in action; (6) general intangibles; (7)
certificates of deposit; (8) deposit accounts maintained by the
Institution with the Bank; (9) the proceeds of any of the foregoing.
(B) The Institution shall at all times maintain an amount of
Eligible Collateral that has a Lending Value at least equal to the
Required Collateral Amount applicable to the Institution.
(C) While the Institution may, except as provided below, retain
the documents evidencing any Collateral it has assigned to the Bank,
it is specifically understood and agreed that the holding of such
documents is for the benefit and subject to the direction and control
of the Bank.
(D) The Bank grants to the Institution the right to use, commingle
and dispose of the Collateral and to collect, compromise and dispose
of the proceeds of the Collateral without being required to account
for the proceeds or account for the replacement of the Collateral, and
any transfer of such Collateral shall take free and clear of any
security or other interest granted to the Bank in Section 3.1 hereof,
subject only to the Institution's obligation to maintain the
Collateral as provided in Section 3.1(B); provided, however, that this
section shall not apply in Perfected Collateral.
Section 3.2 Perfection of Security Interest
(A) Immediately upon the Bank's written request, or immediately at
any time that the Institution becomes subject to any mandatory
Collateral perfection requirements that may be established in writing
by the Bank, and in other case from time to time thereafter, the
Institution shall take all actions as the Bank shall deem necessary or
appropriate to perfect the Bank's security interest in the Eligible
Collateral selected by the Institution. At a minimum, the Institution
shall provide the Bank as perfected security interest in an amount of
Eligible Collateral that has a Lending Value at all times at least
equal to the Required Collateral Amount applicable to the Institution.
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(B) The Institution shall not assign, pledge, transfer, create any
security interest in, sell or otherwise dispose of any Perfected
Collateral without the written consent of the Bank.
(C) The Institution agrees to pay to the Bank upon demand such
fees and charges as may be assessed by the Bank to cover overhead and
other costs relating to the perfection of the Bank's security interest
in the Perfected Collateral (including without limitation the receipt,
holding and redelivery of Collateral and to reimburse the Bank upon
request for all recording fees) and other reasonable expenses,
disbursements and advances incurred or made by the Bank in connection
therewith (including the reasonable compensation and the expense and
disbursements of any bailee that may be appointed by the Bank
hereunder and the agents and legal counsel of the Bank and of such
bailee). Any sums owed to the Bank under this section may be
collected by the Bank, at its option, by debting a demand deposit
account of the Institution with the Bank.
(D) The form and sufficiency of all documents pertaining to the
Perfected Collateral shall be satisfactory to the Bank. Any
Collateral tendered by the Institution for perfection that is not
satisfactory to the Bank may be rejected by the Bank or may have a
value ascribed thereto that shall be less than the value normally
ascribed thereto under the Bank's Collateral Policy, or as the Bank
may otherwise specify. The Bank may require, before any Advance is
made to the Institution, that the Institution make any or all
documents pertaining to the Perfected Collateral available to the Bank
for its inspection and approval.
(E) The form and sufficiency of all documents pertaining to the
Perfected Collateral shall be satisfactory to the Bank. Any
Collateral tendered by the Institution for perfection that is not
satisfactory to the Bank may be rejected by the Bank or may have a
value ascribed thereto that shall be less than the value normally
ascribed thereto under the Bank's Collateral Policy, or as the Bank
may otherwise specify. The Bank may require, before any Advance is
made to the Institution, that the Institution make any or all
documents pertaining to the Perfected Collateral available to the Bank
for its inspection and approval.
(F) The Bank may take such steps as it deems necessary to protect
its security position with respect to outstanding Advances, including
requiring the pledging and/or perfection of additional collateral
whether or not such additional collateral is Eligible Collateral.
Section 3.3 Institution's Representations and Warranties Concerning
Perfected Collateral
(A) The Institution owns and has title to the Perfected Collateral
and has the right and authority to grant a security interest to the
Bank in the Perfected Collateral and to subject all of the Perfected
Collateral to this Agreement.
(B) The information given from time to time by the Institution to
the Bank as to each item of Perfected Collateral is true, accurate and
complete in all material respects.
(C) All the Perfected Collateral that the Institution represents
to be Eligible Collateral meets the standards and requirements with
respect thereto from time to time established by the Bank, the Act and
the Regulations.
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(D) The Institution has not conveyed or otherwise created, and
there does not otherwise exist, any participation Interest or other
direct, indirect, legal or beneficial interest in any Perfected
Collateral in favor of anyone or any entity other than the Bank and
the Institution except as specifically communicated in writing to the
Bank.
(E) All signatories to any and all documents that constitute any
Perfected Collateral are and will be bound as they appear to be by
their signatures and have the requisite authority and capacity
(corporate or other) to execute such documents.
(F) Except as may be approved in writing by the Bank, no account
debtor or other obligor owing any obligation to the Institution with
respect to any item of Perfected Collateral has or will have any
defense, offering claims or other conditions affecting the right of
the Institution or the Bank to enforce the documents constituting any
such Perfected Collateral in accordance with the express terms of such
documents, and no defaults (or conditions that, with the passage of
time or the giving of notice or both, would constitute a default)
exist or will exist under any such documents.
(G) The real property (including any interest therein) that is the
subject of and/or included in the Perfected Collateral contains no
toxic or hazardous wastes or other toxic or hazardous substance the
presence of which would subject the Bank to any liability under
applicable state or federal law or local ordinance. The Institution
hereby agrees to indemnify and hold the Bank harmless against all
costs, claims, expenses, damages and liabilities resulting in any way
from the presence of toxic or hazardous wastes or substances on any
real property (including any interest therein) that is subject to or
included in any Perfected Collateral.
Section 3.4 Release of Collateral
Upon receipt by the Bank of a written request from the Institution asking for
the release of any Perfected Collateral, the Bank shall promptly release to the
Institution, at the Institution's expense, the Perfected Collateral, specified
in said written request. Notwithstanding anything to the contrary herein,
while an Event of Default hereunder shall have occurred and be continuing, or
at any time that the Bank's records indicate that such redelivery would reduce
the Lending Value of the Institution's Perfected Collateral below the Required
Collateral Amount, or at any time that the Bank reasonably and in good faith
deems itself insecure, the Bank may release a request for release.
Section 3.5 Reports, Collateral, Audits and Access
(A) The Institution shall provide the Bank with written periodic
reports containing such information on the Collateral as the Bank
shall require from time to time, including listings of mortgages and
securities, unpaid principal balances thereof and certificates
concerning the status of payments of mortgages and of taxes and
insurance on property securing mortgages. The Institution shall give
the Bank access at all reasonable times to Collateral in the
possession of the Institution and to the books and records of account
of the Institution relating to the Collateral for the purpose of
permitting the Bank to examine, verify or reconcile the Collateral and
the reports of the Institution to the Bank thereon.
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(B) All Collateral and the satisfaction by the Institution of the
Required Collateral Amount shall be subject to audit and verification
by or on behalf of the Bank. Such audits and verifications may occur
without notice during the Institution's normal business hours or upon
reasonable notice at such other time as the bank may reasonably
request. The Institution shall provide access to, and shall make
adequate working facilities available to, the representative or agents
of the Bank for purposes of such audits and verifications. The
Institution agrees to pay to the Bank such reasonable fees and charges
as may be accrued by the Bank to cover overhead and other costs
relating to such audit and verifications.
(C) If the Lending Value of the Eligible Collateral owed by the
Institution shall at any time fall below the Required Collateral
Amount, the Institution shall immediately notify the Bank.
(D) The Institution shall furnish to the Bank, as often a the Bank
deems necessary, an audit report prepared by an external independent
auditor of the Institution in accordance with generally accepted
auditing standards and in such form as the Bank may require certifying
the accuracy or any or all information required to be given to the
Bank by the Institution under or with respect to this Agreement.
(E) The Institution shall also furnish to the Bank, on an annual
basis, copies of its audited financial statement and management
letters.
Section 3.6 Additional Documentation
The Institution shall make execute and deliver to the Bank such assignments,
listings, powers, financing statement or other instruments and documents with
respect to the Collateral and the Bank's security interest therein as the Bank
may require.
Section 3.7 Bank's Responsibility as to Collateral
In the event that the Bank shall take possession of my Collateral hereunder,
the Bank's duty as to such Collateral shall be solely to sue reasonable care in
the custody and preservation of the Collateral in its possession. This duty
shall not require the Bank to take any steps necessary to preserve rights
against prior parties or the duty to send notices, perform services or take any
action in connection with the management of the Collateral. The Bank shall not
have any responsibility or liability for the form, sufficiency, correctness,
genuineness or legal effect of any instrument or document constituting a part
of the Collateral, or any signature thereon or the description or
misdescription, or value of property represented or purported to be represented
by any such document or instrument. The Institution shall make and maintain
copies or microfilm of all Collateral delivered to the Bank. The Institution
agrees that any and all Collateral may be removed by the Bank from the state or
location where situated and may thereafter be dealt with by the Bank as
provided in this Agreement.
3.8 Bank's Rights as to Collateral Power of Attorney
At any time and at the expense of the Institution, the Bank may in its
discretion, before or after the occurrence of any Event of Default, in its own
name or in the name of its nominee or of the Institution, do any or all things
and take any and all actions that are pertinent to the protection of the Bank's
interest hereunder and, if such actions are subject to the laws of a state, are
lawful under the laws of the State of Kansas, including the following:
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(A) Terminate any consent given hereunder;
(B) Notify obligors on any Collateral to make payment thereof
directly to the Bank;
(C) Endorse any Collateral that is in the Institution's name or
that has been endorsed by others to the Institution's name;
(D) Enter into any extensions, compromise, settlement or other
agreement relating to or affecting any Collateral;
(E) Take any action the Institution is required to take or that is
otherwise necessary to: (1) sign and record a financing statement or
otherwise perfect a security interest in any or all of the Collateral;
or (2) to obtain, preserve, protect, enforce or collect the
Collateral;
(F) Take control of any funds or other proceeds generated by or
arising from the Collateral and use the same to reduce Indebtedness as
it becomes due; and
(G) Cause the Collateral to be transferred to the Bank's name or
the name of its nominee.
The Institution hereby appoints the Bank as its true and lawful attorney, for
and on behalf of the Institution and in its name, place and stead, to prepare,
execute and record endorsements and assignments to the Bank of all or any Item
of Collateral (including the Indemnification and listing by exhibit prepared by
the Bank or otherwise, of mortgage loans constituting such Collateral) giving
or granting to the Bank as such attorney, full power and authority to do or
perform every lawful act necessary or proper in connection therewith as fully
as the Institution could or might do. The Institution hereby ratifies and
confirms all that the Bank shall lawfully do or cause to be done by virtue of
this special power of attorney. This special power of attorney is granted for
a period commencing on the date hereof and continuing until the discharge of
all Indebtedness and all obligations of the Institution hereunder regardless of
any default by the Institution, is coupled with ain interest and is irrevocable
for the period granted. As of the Institution's true and lawful
attorney-in-fact, the Bank shall have no responsibility to take any steps
necessary to preserve rights against prior parties or the duty to send notices,
perform services or take any action in connection with the management of the
Collateral. The Bank shall not have any responsibility or liability for the
form, sufficiency, correctness, genuineness or legal effect of any instrument
or document constituting a part of the Collateral, or any signature thereon or
the description or misdescription or value of property represented or purported
to be represented, by any such document or instrument.
Section 3.9 Subordination of Other Loans or Collateral
The Institution hereby agrees that all mortgage notes that are part of the
Mortgage Collateral and any notes secured by personal property (personalty
notes) that become part of the Perfected Collateral shall have priority in
right and remedy over any claims, however evidenced, for other loans owed to
the Institution, whether made before or after the date of such mortgage notes
or personalty notes, that are secured by the mortgages or security agreements
accruing such mortgage notes or personalty notes but are not part of the
Collateral, and shall be satisfied out of the property covered by such mortgage
or security agreements before recourse to such property may be obtained for the
repayment of such other loans. To this end, the Institution hereby
subordinates the lien of such mortgage and security agreements with respect to
such other loans
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to the lien of such mortgages and security agreements with respect to such
mortgage and personalty notes. he Institution further agrees to retain
possession of any promissory notes evidencing such other loans and not to
pledge, assign or transfer the same, or any interest therein, except that the
same may be pledged to the Bank as part of the Collateral.
Section 3.10 Application of Payments
The Bank may, in its sole discretion, apply any payments by or recovery from
the Institution, which are received by the Bank without any designation from
the Institution (at the time of such payment or recovery) as to the intended
application thereof, at such time and in such manner and order of priority as
the Bank shall deem fit.
Section 3.11 Covenants as to Mortgage Collateral
The Institution covenants and agrees as to any Mortgage Collateral:
(A) The Institution shall cause its borrowers to pay when due (or
shall pay if such borrowers are unable or cannot be made to pay) all
taxes and assignments on the real property and improvements that are
subject to the lien of the Mortgage Collateral. Unless otherwise
agreed by the Institution and the Bank, the Institution shall perform
its obligations as lender, secured party or otherwise under all loan
or other agreements pertaining to the Mortgage Collateral.
(B) In the event that the Institution discovers, through audit or
otherwise, exceptions to statements or representations previously made
to the Bank with respect to any of the Mortgage Collateral or any real
property or improvements covered by the lien thereof or any other
matter covered by this Agreement, the Institution shall immediately
notify the Bank thereof in writing. The Institution shall also
immediately notify the Bank in writing of any legal process levied
against any such Mortgage Collateral or any other event that affects
the value of such Mortgage Collateral or any of the rights, interests
or remedies of the Bank in relation thereto.
(C) The Institution agrees to take any action necessary to
preserve rights against any prior or other parties (including without
limitation endorsers) on and any guarantors or sureties with respect
to any and all of the chattel paper, documents or instruments
constituting all or any part of the Mortgage Collateral and to
preserve redemption, conversion, warrant, preemptive or other rights
concerning all or any part of such Mortgage Collateral. The Bank may
take any action that in his reasonable judgment will assist in the
preservation of such rights. The Bank's failure to act hereunder
shall not relieve the Institution of the Institution's duties under
this section or in any way impair or discharge any Indebtedness or
result in any liability to the Institution on the part of the Bank.
The Bank shall have no duty to take any septs necessary to preserve
the rights of the Institution against prior or other parties or to
initiate any action to protect against the possibility of a decline in
the market value or other impairment of such Mortgage Collateral.
Furthermore, the Bank shall not be obligated to take any action with
respect to such Mortgage Collateral requested by the Institution
unless such request is made in writing, and the Bank determines, in
its reasonable discretion, that the requested action would not
jeopardize the value of such Mortgage Collateral as security for
Indebtedness or otherwise adversely affect any right or interest of
the Bank.
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(D) The Institution, if directed to do so by the Bank, shall
update and provide to the Bank schedules showing, with respect to any
Mortgage Collateral specified by the Bank, the results of any
reappraisal, any significant changes in leasing (affecting more than
20 percent of the rentable area), and such other information as the
Bank may prescribe. The Institution shall also immediately identify
to the Bank any Mortgage Collateral classified as nonperforming,
nonaccrual, scheduled or criticized, substandard, loss or doubtful and
the value thereof. Unless otherwise requested by the Bank, the
Institution may make the foregoing classifications according to its
own loan criteria.
(E) The Institution hereby agrees to save, hold harmless,
indemnify and defend the Bank against any and all damages,
liabilities, loans, claims, causes of action and expenses (including
attorneys' fees and expenses of the Bank's counsel) that the Bank may
directly or indirectly suffer or incur as a result of consequences of
any claim by any person arising out of or connected with the use or
creation of any Mortgage Collateral or any real properties subject to
the lien thereof. The aforesaid claims include any arising with
respect to any loan transaction involving the Institution or any
default or wrongdoing by the Institution with respect to any third
party, including any nonperformance by the Institution of any of its
obligations as a lender or otherwise in connection with any such
Mortgage Collateral. Under no circumstances shall the Bank be
obligated to assume, perform or fulfill any obligation of the
Institution as a lender or otherwise.
Section 3.12 Right to Cure Defaults
In the event that the Institution fails to (1) procure or maintain insurance,
or to maintain or cause the maintenance of any real property or improvements
covered by the lien of any Mortgage Collateral, or to pay or procure the
payment of any fees, assessments, charges or taxes arising with respect to any
real property or improvements covered by the lien of such Mortgage Collateral,
or to perform any other obligation to the Bank, all as herein specified, or (2)
make any other advances or take any other actions necessary or advisable to
preserve or protect any of such Mortgage Collateral, the value thereof, or the
Bank's security interest therein, the Bank shall have the right to effect such
issuance, or cause such real property or improvements to be maintained, or to
pay such fees, assessments, charges or taxes, or perform such obligations, or
make such advances or take such actions, as the case may be. In any such
event, the Institution agrees to pay the cost thereof immediately upon demand
by the Bank. All liabilities owing by the Institution to the Bank under this
section shall bear interest from the date when first paid by the Bank at the
rate in effect and being charged by the Bank from time to time on the Line of
Credit program then being offered by the Bank.
ARTICLE IV
Default; Remedies
Section 4.1 Events of Default; Acceleration
Upon the occurrence of and during the continuation of any of the following
events or conditions of default (Event of Default), the Bank may as its option
and notwithstanding any other provision hereof, by a notice to the Institution,
declare all Indebtedness including, but not limited to, any accrued interest
and any prepayment charges that are provided for payment of an Advance before
the date(s) scheduled for repayment, to be immediately due and payable, without
presentment, demand, protest or any further notices:
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(A) Failure of the Institution to pay any interest, principal or
other amounts owed with respect to any Advance when due; or
(B) Failure of the Institution to perform any promise or
obligation or to satisfy any condition or liability contained herein,
in any Confirmation of Advance, or in any other agreement to which the
Institution and the Bank are parties; or
(C) Credible evidence coming to the attention of the Bank that any
representations, statements or warranties made or furnished in any
manner to the Bank by or on behalf of the Institution in connection
with any Advance, and Commitment, and specification of Eligible
Collateral or any certification of Lending Value is false, misleading
or incomplete in any material respect; or
(D) Failure of the Institution to maintain adequate Eligible
Collateral as required by the Bank from time to time; or
(E) The issuance of any tax, levy, seizure, attachment,
garnishment, levy of execution of other process with respect to the
Collateral; or
(F) Any suspension of payment by the Institution to any creditor
of sums due or the occurrence of any event that results (or which with
the giving of notice or passage of time or both will result) in
acceleration of the maturity of any indebtedness of the Institution to
others under any security agreement, indenture, loan agreement or
other undertaking; or
(G) Appointment of a trustee, conservator, receiver, liquidator,
custodian or similar official for the Institution of any subsidiary
(direct or indirect) of the Institution or the Institution's property,
notice of a judgment, decree or administrative decision adjudicating
the Institution or any subsidiary of the Institution insolvent or
bankrupt or an assignment by the Institution or any subsidiary of the
Institution for the benefit of creditors or the appointment of a
trustee, conservator, receiver, liquidator, custodian or similar
official for any parent (direct or indirect) of the Institution or the
filing of a petition or application by any person for the appointment
of any such official for any such parent of the Institution or the
transfer of any of the Institution's assets or liabilities (whether by
purchase and assumption by any third party, merger or otherwise) in
connection with or as a result of any event heretofore described in
this section; or
(H) Sale by the Institution of all or a material part of the
Institution's assets or the taking of any other action by the
Institution to liquidate or dissolve; or
(I) Termination of the Institution's membership in the Bank or the
Institution's ceasing to be a type of financial institution that is
eligible under the Act to become a member of the Bank; or
(J) Merger, consolidation or other combination of the Institution
with an entity that is not a member of the Bank if the nonmember
entity is the surviving entity in such transaction; or
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(K) If an Advance is made pursuant to Section 11(g)(4) of the Act,
and if the creditor liabilities of the Institution, excepting
liabilities to the Bank, exceed or are incurred in any manner to an
amount exceeding five (5) percent of the Institution's net assets; or
(L) The Bank reasonably and in good faith determines that a
material change has occurred in the financial condition of the
Institution or is the Collateral from that disclosed previously to the
Bank; or
(M) The Bank reasonably and in good faith deems itself insecure
even though the Institution is not otherwise in default.
Section 4.2 Remedies
Upon the occurrence of any Event of Default, the Bank shall have all of the
rights and remedies provided by application law, which shall include, but not
be limited to, all of the remedies of a secured party under the Uniform
Commercial Code as in effect in the State of Kansas. In addition, the Bank may
take immediate possession of any of the Collateral or any part thereof wherever
the same may be found. The Bank may sell, assign and deliver the Collateral
or any party thereof to the public or private sale for such price as the Bank
deems appropriate without liability for any loss due to decrease in the market
value of the Collateral during the period held. The Bank shall have the right
to purchase all or part of the Collateral at such sale. If the Collateral
includes instruments or securities that will be redeemed by the issuer upon
surrender, or any accounts or deposits in the possession of the Bank, the Bank
may realize upon such Collateral without notice to the Institution. If any
notification of intended disposition of any of the Collateral is required by
applicable law, such notification shall be deemed reasonable and properly given
if mailed, postage prepaid, at least five (5) days before any such disposition
to the address of the Institution appearing on the records of the Bank. Upon
the occurrence of any Event of Default, the Bank may, in its sole discretion,
apply any payment by or recovery from the Institution or any sum realized from
the Collateral, at such time and in such manner and order of priority as the
Bank shall deem fit, irrespective of any manifestation of any contrary
intention or desire on the part of the Institution or the provisions of any
other agreement between the Bank and the Institution. The Institution agrees
that the Bank may exercise its right of setoff upon the occurrence of an Event
of Default in the same manner as if the Advances and Commitments were
unsecured. Notwithstanding any other provision hereof, upon the occurrence of
any Event of Default at any time when all or part of the obligations of the
Institution to the Bank hereunder shall be the subject of any guarantee by a
third party for the Bank's benefit and there shall be other outstanding
obligations of the Institution to the Bank that are not so guaranteed but that
are secured by the Collateral, then any sums realized from the Collateral, or
from any other Collateral pledged or furnished to the Bank by the Institution
under any other agreement, shall be applied first to the satisfaction of such
other nonguaranteed obligations and then to the Institution's guaranteed
obligations hereunder. The Institution agrees to pay all of the costs and
expenses of the Bank in the collection of the Indebtedness and enforcement and
preservation of the Bank's rights and remedies in case of default, including
without limitation, reasonably attorneys' fees. The Bank at its discretion may
apply any surplus after payment of Indebtedness, provisions for repayment to
the Bank of any amounts to be paid under outstanding Commitments and all costs
of collection and enforcement to third parties claiming a secondary security
interest in the Collateral, with any remaining surplus paid to the Institution.
The Institution shall be liable to the Bank for any deficiency remaining.
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Section 4.3 Payment of Prepayment Charges
Any prepayment fees or charges for which provision is made, whether under the
Confirmation of Advance or otherwise, with respect to any Advance shall be
payable at the time of any voluntary or involuntary payment of the principal of
such Advance prior to the originally scheduled maturity thereof. This shall
include, without limitation, payments that are made in connection with the
liquidation if the Institution or that become due as a result of an
acceleration by the Bank pursuant to Section 4.1; whether such payment is made
by the Institution, by a trustee, conservator, receiver, liquidator, custodian
or similar official, of or for the Institution, or by any successor to or any
assignee of the Institution. The Institution acknowledges and agrees that the
damages incurred by the Bank due to a prepayment of any Advance will be
difficult to ascertain at the time of such prepayment and, in lieu thereof, the
Institution and the Bank agree that the following constitutes a fair,
reasonable and good faith estimate of the damages suffered by the Bank in the
event of such prepayment and is therefore payable as a prepayment fee or
charge; the greater of (1) $100 or (2) the present value (using the current
Advance rate as the discount rate) of the difference between the scheduled
interest payments to be paid on an Advance through maturity and the interest
payments that would be collected on an Advance of the same principal amount and
remaining maturity as the Advance prepaid issued at the current rate on the day
of the prepayment.
Section 4.4 Default Rate
Any payment of principal or interest or any other sum due hereunder if not made
when due (whether at stated maturity, by acceleration or otherwise) shall bear
interest, to the maximum extent permitted by applicable law, at a rate per
annum for each day during the period commencing on the due date thereof until
such amount shall be paid in full equal to three percentage points above the
rate in effect and being charged by the Bank from time to time under the Line
of Credit program then being offered by the Bank.
Section 4.5 Curtain Provisions as to Sale of Collateral
In view of the possibility that federal and state securities and other laws may
impose certain restrictions on the method by which sale of the Collateral may
be effected, the Bank and the Institution agree that any sale of the Collateral
as a result of an Event of Default shall be deemed "commercially reasonable"
irrespective of whether the notice or manner of such sale contains provisions
or imposes, or is subject to, conditions or restrictions deemed appropriate to
comply with the Securities Act of 1933 or any other applicable federal or state
securities or other law. It is further agreed that from time to time the Bank
may attempt to sell the Collateral by means of private placement. In so doing,
the Bank may restrict the bidders and prospective purchasers to those who will
represent and agree that they are purchasing for investment only and not for
distribution or otherwise impose restrictions deemed appropriate by the Bank
for the purpose of complying with the requirements of applicable securities
laws. The Bank may solicit offers to buy such Collateral, for cash or
otherwise, from a limited number of investors deemed by the Bank to be
responsible parties who might be interested in purchasing such Collateral. If
the Bank solicits offers from at least three such investors, then the
acceptance by the Bank of the highest offer obtained therefrom (whether or not
these offers are obtained) shall be deemed to be a commercially reasonable
method of disposing of the Collateral.
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ARTICLE V
Miscellaneous
Section 5.1 General Representations and Warranties by Institution
The Institution hereby represents and warrants that as of the date hereof and
as of each date on which there shall be an outstanding Advance of Commitment:
(A) The Institution is not now, and neither the execution of nor
the performance of any of the transactions or obligations of
the Institution under this Agreement shall, with the passage
of time, the giving of notice, or otherwise, cause the
Institution to be: (1) in violation of its charter or articles
of incorporation, by-laws, the Act or the Regulations any
other law or administrative regulation, any court decree or
any order of a regulatory authority or (2) in default under or
in breach of any indenture, contract or other instrument or
agreement to which the Institution is a party or by which the
Institution or any of its property may be bound.
(B) The Institution has full corporate power and authority and has
received all corporate and governmental authorizations and
approvals as may be required to enter into and perform its
obligations under this Agreement and to borrow each Advance.
(C) The information given by the Institution in any document
provided, or in any oral statement made, in connection with an
application or request for an Advance or a Commitment, a
pledge, specification or delivery of Collateral, is true,
accurate and complete in all material respects.
Section 5.2 Good Faith; Liability of Bank
The Institution and the Bank shall have an obligation of good faith in the
performance and enforcement of every duty or right imposed or granted by this
Agreement, and any other actions or inactions taken or not taken with respect
to this Agreement. "Good Faith" shall mean honesty in fact (i.e., a subjective
standard rather than an objective standard). The Bank shall not be liable for
any costs, expenses, damages, liabilities or claims (including attorneys' and
accountants' fees) incurred by the Institution, except those costs, expenses,
damages, liabilities or claims arising out of the gross negligence or willful
misconduct of the Bank or any of its employees or duly appointed agents. In no
event shall the Bank be liable to the Institution or any third party for
special, indirect or consequential damages, or lost profits or loss of
business, arising under or in connection with this Agreement, even if
previously informed of the possibility of such damages and regardless of the
form of action.
Section 5.3 Assignment of Indebtedness
The Institution hereby gives the Bank the full right, power and authority to
pledge or assign to any party all or part of the Indebtedness, together with
all or any part of the Collateral, as security of Consolidated Federal Home
Loan Bank Obligations issued pursuant to the provisions of the Act or for any
other purpose authorized by the Act, the Regulations or the Federal Housing
Finance Board. In the case of any such pledge or assignment, the Bank shall
have no further responsibility with respect to Collateral transferred to the
pledgee or assignee, and all references herein to "the
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Bank" shall be read to refer instead to the pledgee or assignee with respect to
such Collateral. The Institution may not voluntarily or involuntarily or by
operation of law or otherwise assign or transfer any of its rights or
obligations hereunder or with respect to any Advances or Commitments without
the express prior written consent of the Bank.
Section 5.4 Discretion of Bank to Grant or Deny Advances
Nothing contained herein or in any documents describing or setting forth the
Bank's Credit Policy or other policies shall be construed as an agreement or
commitment on the part of the Bank to grant Advances hereunder, or to enter
into any other transaction, the right and power of the Bank in its discretion
to either grant (with or without conditions) or deny any Advance or other
transaction requested hereunder being expressly reserved.
Section 5.5 Access to Bank Records
The Bank shall grant to all governmental regulatory agencies having
jurisdiction over the Institution, to the Institution's independent public
accounts (to be named by written notice delivered to the Bank) and to the
Institution's internal auditors the right at any reasonable time to examine and
audit the Institution's records in the Bank's possession, the right to request
directly from the Bank any reports, summaries or information of the Bank
relating to the Institution and the right to observe the processing of reports
or examine the Institution's documents at the Bank; provided, however, the
Bank's obligations hereunder shall not apply to the extent that the records,
reports, summaries, information or documents sought or requested are contained
in or derived from data not provided by the Bank to the Institution or the
Institution to the Bank pursuant to this Agreement.
Section 5.6 Amendment; Waivers
No modification, amendment or waiver of any provision of this Agreement or
consent to any departure therefrom shall be effective unless executed by the
party against whom such change is asserted and shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on the Institution in any case shall entitle the Institution to any other or
further notice or demand in the same, or similar or other circumstance. Any
forbearance, failure or delay by the Bank in exercising any right, power or
remedy hereunder shall not be deemed to be a waiver thereof, and any single or
partial exercise by the Bank of any right, power or remedy hereunder shall not
preclude the further exercise thereof. Every right, power and remedy of the
Bank shall continue in full force and effect until specifically waived by the
Bank in writing.
Section 5.7 Jurisdiction; Legal Fees
In any action or proceeding brought by the Bank or the Institution in order to
enforce any right or remedy under this Agreement, the Parties hereby consent
to, and agree that they will submit to, the jurisdiction of the United States
District Court for the District of Kansas, or if such action or proceeding may
not be brought in federal court, the jurisdiction of the District Court of the
County of Shawnee, State of Kansas, to the exclusion of all other courts. The
Institution agrees that if any action or proceeding is brought by the
Institution seeking to obtain any legal or equitable relief against the Bank
under or arising out of this Agreement or any transaction contemplated hereby,
and such relief is not granted by the final decision after any and all appeals
of a court of competent jurisdiction, the Institution will pay all attorneys'
fees and other costs incurred by the Bank in connection therewith. The
Institution agrees to reimburse the Bank for all costs and expenses
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(including reasonable fees and out-of-pocket expenses of counsel for the Bank)
incurred by the Bank in connection with the enforcement or preservation of the
Bank's rights under this Agreement including, but not limited to, its rights in
respect of any Collateral and the audit or possession thereof.
Section 5.8 Applicable Law; Severability
This Agreement and all Advances granted under this Agreement shall be governed
by the statutory and common law of the United States and, to the extent federal
law incorporates or defers to state law, the laws (exclusive of choice of law
provisions) of the State of Kansas. Notwithstanding the foregoing, the Uniform
Commercial Code as in effect in the State of Kansas shall be deemed applicable
to this Agreement and to any Advance hereunder. In the event that any portion
of this Agreement conflicts with applicable law, such conflict shall not affect
other provisions of this Agreement that can be given effect without the
conflicting provisions, and to this end the provisions of the Agreement are
declared to be severable.
Section 5.9 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the successors
and permitted assignees of the Institution and the Bank.
Section 5.10 Notices
Any notice, advice, request, consent or direction given, made or withdrawn
pursuant to this Agreement shall be in writing or by machine-readable
electronic transmission, and shall be deemed to have been duly given to and
received by a party hereto when it shall have been mailed to such party at its
addresses given below, if delivered by first-class mail or if delivered by hand
or by machine-readable electronic transmission, when actually received by such
party at its principal office.
Section 5.11 Entire Agreement
This Agreement embodies the entire agreement and understanding between the
parties hereto relating to the subject matter hereof and supersedes all prior
agreements between such parties that relate to such subject matter.
Notwithstanding the above, Advances made by the Bank to the Institution prior
to the execution of this Agreement shall continue to be governed by the terms
of the Confirmation of Advance pursuant to which such Advances were made, and
otherwise by the terms and conditions of this Agreement.
Section 5.12 Counterparts
This Agreement may be executed in one or more counterparts, all of which shall
constitute but one Agreement.
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IN WITNESS WHEREOF, the Institution and the Bank have caused this Agreement to
be signed in their names by their duly authorized officers as of the dates
listed below.
Institution:
Date: October 21, 1997 First State Bank
-----------------------------------
Name of Institution
P.O. Box 730
Kimball, Ne. 69145
-----------------------------------
Address
By: /s/ Michael J. Nelson
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Authorized Signature
/s/ Michael J. Nelson, President
-----------------------------------
Typed Name and Title
Attest: /s/ Max W. Revell
Secretary
Federal Home Loan Bank of Topeka
2 Townsite Plaza
P.O. Box 176
Topeka, KS 66601-0176
Date: November 13, 1997 By: /s/ Robert L. Mackey
-------------------------------
Authorized Signature
/s/ Robert L. Mackey, SVP-Operations
------------------------------------
Typed Named and Title
Attest: /s/ Corporate Secretary
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Institution Acknowledgment and Notarization
State of Nebraska )
) ss:
County of Kimball )
On this 21st day of October, 1997, before me personally Michael J. Nelson came
to me known, who being by me duly sworn, did depose and state that he/she is
the President of said Institution; the Institution described in and which
executed the above instrument; that he/she knows the seal of said corporate
seal; that the seal affixed to said instrument is such corporate seal; that it
was so affixed by order of the board of directors or other governing body of
said Institution and that said Board of Directors acknowledged the execution of
said instrument to be the voluntary act and deed of said Institution.
(Corporate Seal) /s/ Winifred Peterson
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Notary Public Signature
Nebraska
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Notary Public in and for the State of
My commission expires 2-25-2000
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