SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993 Commission file number 2-99779
National Consumer Cooperative Bank
(Exact name of registrant as specified in its charter)
United States of America
(12 U.S.C. Section 3001 et. seq.) 52-1157795
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1401 Eye Street N.W., Suite 700 Washington, D.C. 20005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (202) 336-7700
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements of the past 90 days. Yes X No_____.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant: the registrant's voting stock is not traded on any market.
Subsidiaries of the registrant hold 3.2% of its Class B stock. All registrant's
Class C and Class D stock is held by non-affiliates.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Outstanding at December 31, 1993
Class C
(Common stock, $100.00 par value) 205,738
Class B
(Common stock, $100.00 par value) 596,711
Class D
(Common stock, $100.00 par value) 3
INDEX
PART I
Item 1 Business............................................. 1
Item 2 Properties........................................... 7
Item 3 Legal Proceedings.................................... 8
Item 4 Submission of Matters to a Vote
of Security Holders................................ 8
PART II
Item 5 Market for the Registrant's Common Stock and Related
Stockholder Matters................................ 9
Item 6 Selected Financial Data.............................. 10
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 11
Item 8 Financial Statements and Supplementary Data.......... 18
Item 9 Changes in and Disagreements with Accountants,
on Accounting and Financial Disclosure............. 47
PART III
Item 10 Directors and Executive Officers of the Registrant... 47
Item 11 Executive Compensation............................... 52
Item 12 Security Ownership of Certain
Beneficial Owners and Management................... 54
Item 13 Certain Relationships and Related Transactions....... 55
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K............................ 57
PART I
Item 1. BUSINESS
General
The National Consumer Cooperative Bank, which does business as the National
Cooperative Bank ("NCB"), is a financial institution organized under the laws of
the United States. NCB provides financial and technical assistance to eligible
cooperative enterprises or enterprises controlled by eligible cooperatives. A
cooperative enterprise is an organization which is owned by its members and
which is engaged in producing or furnishing goods, services, or facilities for
the benefit of its members or voting stockholders who are the ultimate consumers
or primary producers of such goods, services, or facilities. NCB is structured
as a cooperative institution whose voting stock can only be owned by its patrons
or those eligible to become its patrons.
In the legislation chartering NCB (the National Consumer Cooperative Bank
Act or the "Act"), Congress stated its finding that cooperatives have proven to
be an effective means of minimizing the impact of inflation and economic hard-
ship on members/owners by narrowing producer-to-consumer margins and price
spreads, broadening ownership and control of economic organizations to a larger
base of consumers, raising the quality of goods and services available in the
marketplace and strengthening the nation's economy as a whole. To further the
development of cooperative businesses, the Congress specifically directed NCB
(1) to encourage the development of new and existing cooperatives eligible for
its assistance by providing specialized credit and technical assistance; (2) to
maintain broad-based control of NCB by its voting shareholders; (3) to encourage
a broad-based ownership, control and active participation by members in eligible
cooperatives; (4) to assist in improving the quality and availability of goods
and services to consumers; and (5) to encourage ownership of its equity
securities by cooperatives and others.
NCB has attempted to fulfill its statutory obligations in two fashions.
First, NCB makes loans and offers other financing arrangements which afford
cooperative businesses substantially the same financing opportunities currently
available for traditional enterprises. Second, NCB provides financial and other
assistance to the NCB Development Corporation ("NCB Development") a non-profit
corporation without capital stock organized in 1982 which makes loans and
provides assistance to developmental cooperatives.
The Act was passed on August 20, 1978, and NCB commenced lending operations
on March 21, 1980. In 1981, Congress amended the Act (the "Act Amendments") to
convert the Class A Preferred Stock of NCB previously held by the United States
to Class A Notes as of December 31, 1981 (the "Final Government Equity Redemp-
tion Date"). Since the Final Government Equity Redemption Date, NCB's capital
stock, except for three shares of non-voting Class D stock, has been owned
exclusively by cooperatives. NCB maintains its executive offices at 1401 Eye
Street, N.W., Washington, D.C. 20005. The telephone number of its executive
offices is (202) 336-7700. NCB also maintains regional offices in Minneapolis,
New York, and Alaska.
LOAN REQUIREMENTS, RESTRICTIONS AND POLICIES
Eligibility Requirements. Cooperatives and legally chartered entities
primarily owned and controlled by cooperatives are eligible to borrow from NCB
if they are operated on a cooperative basis and are engaged in producing or
furnishing goods, services or facilities primarily for the benefit of their
members or voting stockholders who are the ultimate consumers of such goods,
services or facilities. In addition, to be eligible to borrow from NCB, the
borrower must, among other things, (1) be controlled by its members or voting
stockholders on a democratic basis; (2) agree not to pay dividends on voting
stock or membership capital in excess of such percentage per annum as may be
approved by NCB; (3) provide that its net savings shall be allocated or
distributed to all members or patrons, in proportion to their patronage, or
retain such savings for the actual or potential expansion of its services or the
reduction of its charges to the patrons, and (4) make membership available on a
voluntary basis, without any social, political, racial or religious
discrimination and without any discrimination on the basis of age, sex, or
marital status to all persons who can make use of its services and are willing
to accept the responsibilities of membership. NCB may also purchase obligations
issued by members of eligible cooperatives. In addition, organizations applying
for loans must comply with other technical requirements imposed by NCB.
Lending Authorities. The Board of Directors of NCB establishes its
policies governing its lending operations in compliance with the Act. The
policies adopted by the Board are carried out by the management of NCB pursuant
to written loan policies adopted by the Board. The management in turn adopts
and implements guidelines and procedures consistent with stated Board
directives. Lending policies and guidelines are reviewed regularly by the
Board of Directors and management to make needed changes and amendments.
The management of NCB may approve individual loan amounts of up to 75% of
the single borrower lending limit which is equal to 15% of NCB's capital (using
the definition of capital for national banks as set forth by the Office of the
Comptroller of the Currency) without prior approval of the Board. The President
of NCB may delegate authorities up to this limit to such committees and
individual officers as he may deem appropriate.
A loan committee has been established which consists of the President of
NCB and such other officers as the President may from time to time designate.
The loan committee makes loans and loan commitments, establishes the terms and
conditions for loans and commitments, approves waivers and modifications to loan
agreements and enters into loan participations and guarantees.
LENDING LIMITS
Single Borrower
The total amount of loans, letters of credit, leases and other financing
that may be made available to any one borrower may not exceed 15% of NCB's
capital. The approval of any loan to a single borrower which has a combined
total of financing from NCB in excess of 75% of the 15% limit is subject to the
prior approval of the Loan and Business Development Committee of the Board.
Cooperatives of Primary Producers
The total dollar value of loans to cooperatives that produce, market and
furnish goods, services and facilities on behalf of their members as primary
producers may not exceed 10% of the gross assets of NCB. The total dollar
volume of loans NCB will allow to be outstanding to any producer cooperative
may not exceed 20% of the amount available for loans to all producer
cooperatives.
INTEREST RATES
Generally
NCB charges interest rates approximately equal to the market rates charged
by other lending institutions for comparable types of loans. NCB seeks to price
its loans to yield a reasonable return on its portfolio in order to build and
maintain the financial viability of NCB and to encourage the development of new
and existing cooperatives. In addition, to ensure that NCB will have access to
additional sources of capital in order to sustain its growth, NCB seeks to
maintain a portfolio that is competitively priced and of sound quality.
Interest Rates for Real Estate Loans
Real estate loans are priced under rate guidelines issued by NCB's Real
Estate Lending Group for specific types of loans with specific maturities. NCB
takes the following factors into consideration in pricing its real estate loans:
loan-to-value ratios, lien position, cooperative payment history, reserves,
occupancy level and cash flow. NCB fixes rates based on a basis point spread
over U.S. Treasury securities with yields adjusted to constant maturity of one,
three, five or ten years. The index established by NCB conforms to the
adjustment period fixed; the interest rate for the initial period may be fixed
at the time of commitment for a commitment period of up to 60 days.
Interest Rates on Commercial Loans
NCB normally makes commercial loans at variable interest rates, except in
those transactions for which fixed rate loans are deemed to be more beneficial
to NCB. Loans are priced based on market conditions and to achieve overall
income and portfolio objectives. Rates are tied to specific loan products
offered by NCB with specific maturities. Typically, commercial loan repayment
schedules are structured by NCB with flat monthly principal reduction plus
interest on the outstanding balance.
Fees
NCB typically assesses fees to cover the costs to NCB of its consideration
of and handling of loan transactions, and to compensate NCB for setting aside
funds for future draws under a commitment. The legal fees paid to outside legal
counsel retained by NCB for loan transactions are charged to the borrower.
Evaluation Criteria
In evaluating applications for financing, NCB determines whether a loan
applicant has or will have a sound organizational and financial structure,
income in excess of its operating costs and assets in excess of its obligations,
and a reasonable expectation of a continuing demand for its production, goods,
commodities, or services, or the use of its facilities, so that the loan will be
fully repayable in accordance with its terms and conditions.
NCB seeks to identify cooperatives which have favorable operating and
financial potential and managements of established integrity and competence.
Loans are made in sufficient amounts to accomplish the purposes for which they
are intended.
Security
Loans made by NCB are generally secured by specific collateral. If
collateral security is required, the value of the collateral must be reasonably
sufficient to protect NCB from loss, in the event that the primary sources of
repayment of financing from the normal operation of the cooperative, or
refinancing, prove to be inadequate for debt repayment. Collateral security
alone is not a sufficient basis for NCB to extend credit. Unsecured loans
normally are made only to borrowers with strong financial conditions, operating
results and demonstrated repayment ability.
Repayment
NCB seeks to fix terms and conditions which will reasonably assure
repayment while maintaining or improving the borrower's financial position. NCB
requires that loans be supported by sufficient borrower equity and/or collateral
to afford NCB reasonable protection against loss. Except for loans with final
due dates not longer than five years from the date of the loan, loans are
amortized as to principal and interest.
Loans Benefiting Low-Income Persons
Under the Act, the Board of Directors must use its best efforts to insure
that at the end of each NCB fiscal year at least 35 percent of its outstanding
loans are to (1)cooperatives whose members are predominantly low-income persons,
as defined by NCB, and (2) other cooperatives that propose to undertake to
provide specialized goods, services, or facilities to serve the needs of
predominantly low-income persons. NCB defines a "low-income person," for these
purposes, as an individual whose family's income does not exceed 80% of the
median family income, adjusted for family size for the area where the
cooperative is located, as determined by the Department of Housing and Urban
Development.
Loans for Residential Purposes
Commencing on October 1, 1985, the Act prohibited NCB from making loans for
financing, construction, ownership, acquisition or improvement of any structure
used primarily for residential purposes if, after giving effect to such loan,
the aggregate amount of all loans outstanding for such purposes will exceed 30
percent of the gross assets of NCB.
To date, the 30% cap on residential real estate loans has not restricted
NCB's ability to provide financial services to residential borrowers. NCB has
been able to maintain its position in the residential real estate market without
increased real estate portfolio exposure by selling real estate loans to
secondary market purchasers of such loans. Since October 1, 1985, the
preponderance of NCB real estate volume has been predicated upon sale to
secondary market purchasers. There can, however, be no assurance that NCB's
future lending for residential purposes will not be impaired by the statutory
limit. As of December 31, 1993, approximately 23.1% of NCB's total assets
consisted of loans made for residential purposes.
Operations of Subsidiaries
NCB also attempts to fulfill its statutory mission by providing financing
opportunities to cooperatives through several subsidiaries.
NCB Business Credit Corporation ("NCBBCC") is a wholly-owned subsidiary
of NCB that offers cooperatives leasing arrangements for plant and capital
equipment comparable to those available to traditional, for-profit enterprises.
Cooperative Funding Corporation ("CFC") is a wholly-owned subsidiary of NCB
Business Credit Corporation. CFC provides fee compensated corporate financial
services for customers of NCB and for other corporations which may be members of
cooperatives, or which sponsor employee stock ownership plans. CFC is
registered as a broker-dealer with the Securities and Exchange Commission
and is a member of the National Association of Securities Dealers.
NCB Investment Advisers, Inc. ("NCBIA") has been organized to provide
investment advisory services to cooperatives. It is registered as an investment
adviser with the Securities and Exchange Commission.
NCB Financial Corporation ("NCBFC") is a Delaware chartered, wholly-owned,
S&L holding company whose sole subsidiary is NCB Savings Bank, FSB.
NCB Savings Bank, FSB ("NCBSB") is a federally chartered, federally insured
savings and loan with offices located in Hillsboro, Ohio.
NCB Mortgage Corporation ("NCBMC") is a majority-owned subsidiary of NCB
that originates and services loans to cooperatives.
NCB Insurance Brokers, Inc. ( "NCBIB") is engaged in the business of
brokering housing- related insurance to cooperatives.
NCB I, Inc. ("NCB I") is a wholly-owned, special purpose corporation that
holds credit enhancement certificates related to the securitization and sale of
cooperative real estate loans. NCB and NCB I are parties to an agreement under
which each agrees not to commingle the assets of NCB I with those of NCB.
COMPETITION
The Congress created and capitalized NCB because it found that existing
financial institutions were not making adequate financial services available to
cooperative, non-profit business enterprises. NCB's experience confirms that
far more cooperatives desire to utilize financial services than are being
provided to them by traditional commercial lending institutions. However, NCB
experiences considerable competition in lending to the most credit worthy
cooperative enterprises.
REGULATION
NCB is organized under the laws of the United States. NCB is examined
annually by the Farm Credit Administration and the General Accounting Office is
authorized to audit NCB. Reports of such examinations and audits are to be
forwarded to the Congress, which has the sole authority to amend or revoke NCB's
charter. NCB Savings Bank, FSB is regulated by the Federal Office of Thrift
Supervision.
TAXES
The Act Amendments provide that NCB shall be treated as a cooperative and
subject to the provisions of Subchapter T of the Internal Revenue Code. Section
1381 (a)(2)(Subchapter T) of the Internal Revenue Code provides for the federal
income tax requirements for a corporation operating on a cooperative basis. As
such, NCB, in determining its taxable income for federal income tax purposes, is
allowed a deduction for an amount equal to any patronage refunds in the form of
cash, of Class B or Class C stock, or allocated surplus that are distributed or
set aside by NCB during the applicable tax period. To date, NCB has followed
the policy of distributing or setting aside such patronage refunds during the
applicable tax period, and this has effectively reduced NCB's federal income tax
liability to insignificant amounts.
Section 109 of the Act, as amended, provides that NCB, including its
franchise, capital, reserves, surplus, mortgages or other security holding and
income, is exempt from taxation by any state, county, municipality or local
taxing authority, except that any real property held by NCB is subject to any
state, county, municipal or local taxation to the same extent according to its
value as other real property is taxed.
NCB's subsidiaries are subject to Federal and state income taxes.
AGREEMENT CONCERNING CLASS A NOTES
The Act, as amended, provided that the interest rate payable to the United
States on NCB's Class A notes was limited until October 1, 1990 to 25% of NCB's
net income. Following a passage of a technical amendment to the Act, NCB
entered into as of December 21, 1989, a Financing Agreement with the U.S.
Treasury to govern the interest rates payable on the Class A notes until their
final redemption on October 31, 2020. Pursuant to the issued to the U.S
Treasury four replacement Class A notes. As of December 31,1993, the amounts and
current maturities of the outstanding replacement notes were as follows:
<TABLE>
Current
Replacement Maturity
Note Date Amount Maturity
<S> <C> <C>
1 1/1/94 $53,867,950 3 months
2 10/1/96 $36,854,000 36 months
3 10/1/95 $55,281,000 60 months
4 10/1/00 $36,854,000 120 months
</TABLE>
When each note matures NCB has the right to borrow again from the Treasury
the maturing amount under the same terms and conditions. NCB intends to avail
itself of this right. Thus, until the final redemption of the Class A notes,
NCB will have outstanding to the U.S. Treasury four tranches of Class A notes in
the maturities stated above. At each maturity date, the interest rate to be
paid upon the note for the succeeding period will be calculated by the U.S.
Treasury based upon the prevailing interest rates for Treasury obligations of
comparable maturities.
FURTHER INFORMATION
For further information concerning the development of NCB's business in
1993, please see the response to Item 7.
Item 2. Properties
NCB leases space for its Washington, D.C. headquarters and for three
regional offices located in Minneapolis, New York City, and Alaska. NCB
Financial Corporation and NCB I, maintain offices in Wilmington, Delaware.
NCB's headquarters is 34,464 square feet in size and regional offices average
1500 square feet. The rental expense for the fiscal year ended December 31,
1993 was $1,258,814 for NCB's headquarters and regional offices. NCB considers
the regional offices suitable for its needs and the facilities are fully
utilized in its operations.
Minimum future rental payments, assuming present office space and space
leased for the new headquarters are retained without subtracting payments made
to NCB under subleases of such space, for the following fiscal years ended
December 31 are as follows:
<TABLE>
Year Headquarters Other Offices
<S> <C> <C>
1994 1,209,172 147,358
1995 1,233,356 120,904
1996 1,258,023 120,904
1997 1,283,183 120,904
1998 1,308,847 120,904
After 1998 4,434,657
</TABLE>
Item 3. Legal Proceedings
NCB is not involved in any pending legal proceeding, other than ordinary
routine litigation incidental to its business.
Item 4. Submission of Matters to a Vote of Security Holders
NCB did not submit any matters to a vote of its security holders during the
fourth quarter of 1993.
PART II
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters
There is no established public trading market for any class of NCB's common
equity. NCB's capital stock consists of Class B stock which may be held only by
borrowers from NCB; Class C stock which may be held only by NCB's borrowers or
organizations eligible to borrow from NCB; and Class D stock which may be held
by the public. NCB is authorized by the Act to create other classes of non-
voting capital stock with such rights, powers, privileges and preferences as the
Board of Directors may decide without the approval of the holders of Class C
stock (or of any other class of stock), subject to restrictions on distribution
rights so long as the Class A notes are outstanding.
As of December 31, 1993, there were 838 holders of Class B stock, 331
holders of Class C stock, and 3 holders of Class D stock.
Under the Act and its bylaws, NCB may not pay dividends on its Class B
stock, but it may pay dividends on its Class C stock. NCB has not paid any
dividends on any class of its stock to date and it has no intention of declaring
any dividends on Class C stock, or any other class of stock,at the present time.
Under the Act, so long as any Class A notes are outstanding, NCB may not pay
dividends on any class of its stock at a rate greater than the statutory
interest rate payable on the Class A notes, which was 6.7% during 1993.
Under the Act, NCB must make patronage dividends to its patrons. NCB's
stockholders, as such, are not entitled to any patronage dividends. They are
entitled to patronage dividends only in years when they have patronized NCB, and
the amount of their patronage dividend does not depend on the amount of their
stockholding. Such patronage dividends may be paid only from net earnings and
in the form of cash, Class B or Class C stock, or an allocated surplus.
In October, 1990, the NCB Board of Directors approved a new patronage
refund policy which became effective with the payment of refunds for patronage
during the calendar year 1991. Under the new policy, NCB will no longer issue
Class B or Class C stock as part of the patronage refund, but will instead make
the refund in the form of cash and allocated surplus. There can, however, be no
assurance that a cash patronage refund of any amount will be declared for any
year.
NCB has declared a patronage refund for the year ended December 31, 1993,
of approximately $7.0 million of which $3.15 million will be distributed in cash
and $3.85 million in allocated surplus.
NCB adopted in April 1992 a further change in its capitalization policy.
The Act requires borrowers from NCB to own NCB Class B stock in an amount whose
par value is no less than 1% of the amount of the loan from NCB. Until 1992,
borrowers generally satisfied this requirement by purchasing Class B stock from
NCB at its par value, and NCB generally agreed to repurchase such Class B stock
at its par value once the borrower paid off its loan. Under the new policy,
borrowers are no longer required to purchase any required holdings of Class B
stock from NCB but instead may purchase them at par value from existing holders
of Class B stock; NCB no longer agrees to repurchase such holding of Class B
stock once a borrower's loan is paid off but will honor any repurchase
commitments made prior to May 1992.
In connection with the adoption of the above policy, the Board also
determined to defer consideration of payment of dividends on, or redemption of,
any class of NCB stock until such actions might be appropriate in light of NCB's
income.
The Board of Directors of NCB appointed in November 1993 an ad hoc
committee to consider a revised patronage refund policy to be placed in effect
by 1995. The committee has not yet decided what changes, if any, to recommend
in the patronage refund policy.
Item 6. Selected Financial Data
<TABLE>
SELECTED FINANCIAL DATA
( dollars in thousands )
<CAPTION>
At December 31, 1993 1992 1991 1990 1989
- ------------------------- ------- ------ -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Loans and leases outstanding $457,713 $457,551 $447,484 $441,070 $373,567
Total assets 535,767 527,861 517,175 488,672 429,546
Total capital* 292,581 287,521 287,407 283,286 274,993
Subordinated Class A notes 182,542 182,857 184,270 184,270 184,270
Members' equity 110,039 104,664 103,137 99,016 90,723
Other borrowed funds
including deposits 230,868 228,512 217,929 191,373 143,045
For the years ended December 31,
Total interest income $ 38,997 $44,063 $45,997 $46,992 $40,876
Net interest income 18,334 20,145 19,178 27,196 27,283
Net income 8,616 6,060 5,864 12,687 14,438
Ratios
Capital to assets 54.6% 54.5% 55.6% 58.1% 64.0%
Return on average assets 1.6% 1.2% 1.2% 2.8% 3.8%
Return on average
members' equity 8.0% 5.8% 5.8% 13.1% 16.9%
Net yield on yield on interest
earning assets 3.7% 3.9% 4.0% 6.2% 7.2%
Average members' equity as a
percent of:
Average total assets 20.4% 19.8% 20.7% 21.6% 22.2%
Average total loans and lease
financing 24.3% 22.6% 23.9% 24.7% 26.2%
Net average loans and lease financing
to average total assets 81.9% 85.7% 84.8% 86.1% 83.5%
Net average earning assets to
average total assets 93.2% 96.5% 96.4% 97.6% 97.3%
Allowance for loan losses
to loans outstanding 2.7% 2.3% 1.9% 1.9% 1.5%
Provision for loan losses
to average loans outstanding 0.3% 0.5% 0.6% 0.5% 0.2%
<FN>
* - Capital includes members' equity and subordinated Class A notes
</TABLE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial summary
Net income of $8.6 million in 1993 increased from $6.1 million in 1992.
The 1993 results reflected substantial increases in non-interest income
including gains from sales of real estate loans and increases in income from
new lines of business. The impact of increases in non-interest income in 1993
was partially offset by increases in non-interest expenses such as contractual
services and the contribution to NCB's non-profit affiliate, NCB Development
Corporation ("NCBDC").
Credit quality in NCB's lending portfolio remained strong even as the
national economy lurched forward from the effects of an economic recession. For
the third continuous year, the provision for loan losses as a percentage of
average loans and leases has decreased from .5% and .6% in 1992 and 1991,
respectively, to .3% in 1993. In this same period, the allowance for loan
losses as a percentage of loans and leases has increased from 1.9% and 2.3% in
1992 and 1991, respectively, to 2.7% in 1993.
Net interest income decreased $1.8 million from 1992 due to the effect of
declining interest rates on NCB's portfolio and to the effect of real estate
loan sales which reduced the amount of higher yielding real estate assets in the
portfolio.
The return on average assets increased to 1.64% in 1993 from 1.15% in 1992.
The return on average equity increased to 8.04% in 1993 from 5.8% in 1992.
Total assets increased $7.9 million to $535.8 million as of December 31,
1993 from $527.9 million at year end 1992 due to growth in NCB's commercial loan
portfolio and growth in excess servicing fee receivables which resulted from
real estate loan sales. Loan originations of commercial and residential real
estate loans were ahead of last year.
Net interest income
Net interest income decreased $1.8 million or 10.0% in 1993 primarily as
a result of decreases in the average rates on the lending portfolio. The net
yield on interest earning assets has shown a steady decline since 1991 due to
decreasing interest rates. The net yield on interest earning-assets declined to
3.7% in 1993 from 3.9% in 1992 and 4.0% in 1991.
Total interest income declined in 1993 due primarily to lower market
interest rates. The average rate on earning assets declined 70 basis points
from 8.5% to 7.8%. As shown in Table 1, declining rates accounted for a
decrease of $3.4 million in total interest income in 1993 compared with 1992.
Average interest-earning assets have decreased 3.7% from the prior year as a
result of real estate loan sales and declines in the average commercial
portfolio.
The average yield on the real estate loan portfolio was 8.8% in 1993
compared with 9.4% in 1992 due to sales of real estate loans and tighter spreads
on new originations. The average yield for commercial loans and leases was 7.8%
compared with 8.4% in 1992 due to repricing of variable rate commercial assets
that are tied to short term interest rates.
Total interest expense decreased to $20.7 million in 1993 from $23.9
million in 1992. Average cost of funds declined from 5.8% in 1992 to 5.2% in
1993 due to lower short term interest rates in 1993. Nearly 40.2% of NCB's
interest bearing liabilities, including deposits held by NCB Savings Bank,
reprice within one year.
<TABLE>
Table1
CHANGES IN NET INTEREST INCOME
(dollars in thousands)
<CAPTION>
1993 Compared to 1992 1992 Compared to 1991
Increase (decrease) due to Increase (decrease) due to
change in: change in:
Average Average Average Average
For the years ended December 31, Volume* Rate Net** Volume* Rate Net**
--------- --------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Cash equivalents and
Investment Securities $ 115 $ (520) $ (405) $ 22 $ (1,104) $ (1,082)
Commercial loans and leases (1,249) (1,420) (2,669) (389) (3,243) (3,632)
Real estate loans (519) (1,473) (1,992) 3,895 (1,115) 2,780
---------- ---------- ----------- ---------- ---------- ------------
Total interest income (1,653) (3,413) (5,066) 3,528 (5,462) (1,934)
---------- ---------- ----------- ---------- ---------- ------------
Interest Expense
Deposits 388 (519) (131) 421 (845) (424)
Notes payable (1,709) (296) (2,005) 1,597 (1,931) (334)
Subordinated Class A notes (21) (1,098) (1,119) (94) (2,050) (2,144)
---------- ---------- ----------- ---------- ---------- ------------
Total interest expense (1,342) (1,913) (3,255) 1,924 (4,826) (2,902)
---------- ---------- ----------- ---------- ---------- ------------
Net interest income $ (311) $ (1,500) $ (1,811) $ 1,604 $ (636) $ 968
========== ========== =========== ========== ========== ============
<FN>
* Average monthly balances
** Changes in interest income and interest expense due to changes in rate and volume
have been allocated to "change in average volume" and "change in average rate "
in proportion to the absolute dollar amounts in each.
</TABLE>
<TABLE>
Table 2
Rate Related Assets and Liabilities
(dollars in thousands)
<CAPTION>
For the years ended December 31,
|------------- 1993----------| |--------------1992-------------| |------------1991---------|
Average Average Average
Average Income/ Rate/ Average Income/ Rate/ Average Income/ Rate/
Balance* Expense Yield Balance* Expense Yield Balance* Expense Yield
-------- ------- ------- -------- ------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest earning assets
Real estate loans $229,541 $ 20,134 8.77% $235,568 $ 22,126 9.39% $194,600 $ 19,347 9.94%
Commercial loans and leases 210,732 16,353 7.76% 226,139 19,022 8.41% 230,149 22,652 9.84%
-------- -------- -------- -------- -------- --------
Total loans and leases 440,273 36,487 8.29% 461,707 41,148 8.91% 424,749 41,999 9.89%
Investment securities and
cash equivalents 59,465 2,510 4.22% 57,127 2,915 5.10% 56,819 3,997 7.03%
-------- -------- -------- -------- -------- --------
Total interest earning assets 499,738 38,997 7.80% 518,834 44,063 8.49% 481,568 45,996 9.55%
-------- -------- -------- -------- -------- --------
Allowance for possible loan losses (11,217) (9,843) (8,565)
Non-interest earning assets
Cash 5,380 3,093 2,843
Other assets 29,985 15,142 14,752
-------- -------- --------
Total non-interest earning assets 35,365 18,235 17,595
-------- -------- --------
Total assets $523,886 $527,226 $490,598
======== ======== ========
Liabilities and members' equity
Interest bearing liabilities
Subordinated Class A notes $183,073 $ 9,822 5.37% $183,424 $ 10,941 5.96% $184,770 $ 13,085 7.08%
Notes payable 162,062 8,876 5.48% 180,154 10,880 6.04% 152,335 11,213 7.36%
Deposits 55,163 1,965 3.56% 45,692 2,097 4.59% 38,427 2,521 6.56%
-------- ------- -------- -------- -------- ------
Total interest bearing
liabilities 400,298 20,663 5.16% 409,270 23,918 5.84% 375,532 26,819 7.14%
------- -------- -------
Other liabilities 16,514 13,504 13,961
Members' equity 107,074 104,452 101,105
--------- -------- --------
Total liabilities and members'
equity $523,886 $527,226 $490,598
========= ======== ========
Net interest earning assets $ 99,440 $109,564 $106,036
Net interest revenues and spread $ 18,334 2.64% $ 20,145 2.65% $ 19,177 2.41%
Net yield on interest earning assets 3.67% 3.88% 3.98%
<FN>
* Based on monthly balances. Average loan balances include non-accrual loans
</TABLE>
Credit quality
Credit quality, as measured by levels of non-performing assets and
delinquencies, improved in 1993 compared with 1992.
An inevitable aspect of the lending or risk assumption process is the fact
that losses will be incurred. The extent to which losses occur depends on the
risk characteristics of the loan portfolio. NCB emphasizes continuous credit
risk management. Specific procedures have been established to eliminate undue
credit risk on the balance sheet. They include a multilevel approval process
and ongoing assessment of the portfolio's credit condition. In addition, the
risk rating system is designed to classify each loan according to the risks
unique to the loan. In turn, NCB's risk rating system and historical analysis
allow management to determine a risk-weighted allowance for loan losses.
To manage credit risk over a wide geographic area, NCB uses a centralized
credit approval process to ensure the consistency and quality of lending
decisions. Financial analyses of the industries and regions serviced are
regularly performed to keep abreast of economic events throughout the U.S.
Loans classified by NCB as unacceptable are assigned to the Special Assets
Division. The Division determines, on a case-by-case basis, the best course of
action necessary to restore a credit to an acceptable risk rating or to minimize
potential losses to NCB.
The allowance for loan losses seeks to protect NCB's capital against the
risk of losses inherent in the credit extension process. The allowance is
increased by the provision for possible credit losses and decreased by the
amount of charge-offs, net of recoveries. The adequacy of the allowance for
loan losses is determined based on risk ratings, current and projected economic
conditions, concentrations, diversification, and portfolio size, among other
relevant factors.
The provision for loan losses decreased 19.0% to $1.7 million in 1993. The
provision as a percentage of average loans and leases outstanding decreased to
.3% in 1993 from .5% in 1992. The lower provision for loan losses reflects
decreases in classified assets held by NCB.
The allowance for loan losses increased 18.3% to $12.3 million in 1993.
The allowance as a percentage of loans and leases outstanding increased to 2.7%
at December 31, 1993 from 2.3% at December 31, 1992. The allowance, as a
percentage of non-performing loans ( renegotiated and non-accruing loans ),
increased to 384.4% in 1993 compared with 136% in the prior year. Net
recoveries of $.2 million in 1993 improved compared to net charge-offs of $.4
million in 1992.
Total non-performing assets ( non-performing loans, real estate owned (REO)
and in-substance foreclosures ) decreased 67% to $3.2 million at December 31,
1993 from $10.0 million at year-end 1992. Non-performing assets as a percentage
of loans and leases outstanding plus REO and in-substance foreclosures decreased
to .7% in 1993 from 2.3% in 1992. The decrease resulted from the sale of a
foreclosed asset. Non-performing assets as a percentage of total capital were
.3% in 1993 compared with 3.6% in 1992.
<TABLE>
Table 3
Summary of Allowance for Loan Losses
(dollars in thousands)
<CAPTION>
For the years ended December 31, 1993 1992 1991 1990 1989
------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Balance, at beginning of year $10,419 $ 8,706 $ 8,272 $ 5,641 $ 5,091
Charge-offs
Commercial 159 416 2,095 794 214
Real estate- construction 0 0 0 0 0
Real estate- residential 93 0 9 430 26
-------- ------- ------- -------- --------
Total charge-offs 252 416 2,104 1,224 240
-------- ------- ------- -------- --------
Recoveries
Commercial 356 30 152 76 90
Real estate- construction 0 0 0 0 0
Real estate- residential 82 0 23 1,718 150
------- ------ ------- -------- --------
Total recoveries 438 30 175 1,794 240
------- ------ ------- -------- --------
Net charge-offs 186 (386) (1,929) 570 0
Provision for possible loan
losses 1,704 2,099 2,363 2,061 644
Valuation adjustments to the
allowance 0 0 0 0 (94)
------- -------- -------- -------- --------
Balance at end of year $12,309 $10,419 $ 8,706 $ 8,272 $ 5,641
======= ======== ======== ======== ========
</TABLE>
Non-accruing loans, as a percentage of loans and leases, improved to .2%
at year-end 1993 from .9% at year-end 1992. The reduction reflected movements
of non-accrual loans to accrual status. Interest lost on non-accrual and
restructured loans decreased to $.2 million from $.6 million, thereby lowering
the average yields on loans and leases by 5 basis points in 1993 compared with
a decrease of 13 basis points in 1992.
Renegotiated loans decreased to $2.3 million in 1993 compared with $3.4
million in 1992. The decrease was due to collections of principal on the
renegotiated accounts. As of year end, all renegotiated loans were current.
An additional sign of NCB's improving credit picture is the trend of
delinquencies within its portfolio. Total delinquencies greater than 30 days
have decreased from $6.4 million in 1992 to $2.7 million in 1993. Total
delinquencies as a percentage of the lending portfolio have improved from 1.4%
in 1992 to .6% in 1993.
The majority of NCB's loans are to cooperatives in basic industries such
as owner-occupied and multifamily residential housing, food distribution, health
care, and financial services. NCB bases credit decisions on the cash flows of
its customers and views collateral as a secondary source of repayment.
The real estate portfolio contains a concentration of loans in the New
York City area. However, property value deterioration has not adversely affect-
ed NCB's portfolio because the majority of loans are to seasoned housing
cooperatives with low loan-to-value ratios. All real estate loans in the New
York City area are contractually current at December 31, 1993. NCB also has
minimal credit exposure to highly leveraged transactions,commercial real estate,
and construction loans. NCB has no foreign loan exposure.
<TABLE>
Table 4
Allocation of Allowance for Loan Losses
(dollars in thousands)
<CAPTION>
At December 31, 1993 1992 1991 1990 1989*
---------------- ----------------- ----------------- ----------------- ------------------
Percent Percent Percent Percent Percent
Amount of Total Amount of Total Amount of Total Amount of Total Amount of Total
------- -------- ------- -------- ------ -------- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Loans and lease financing
Commercial $223,682 48.8% $199,442 43.5% $222,788 49.8% $238,771 54.2% $233,667 62.5%
Real estate- construction 5,779 1.3 5,080 1.1 5,101 1.1 1,451 0.3 777 0.2
Real estate- residential 210,846 46.1 236,379 51.5 200,103 44.7 178,240 40.4 120,147 32.3
Real estate- commercial 10,577 2.3 10,933 2.4 11,436 2.6 11,685 2.6 9,870 2.6
Lease financing 6,829 1.5 6,722 1.5 8,056 1.8 10,923 2.5 9,106 2.4
-------- ---- -------- ---- -------- ---- -------- ----- -------- ----
Total loans and lease
financing $457,713 100.0% $458,556 100.0% $447,484 100.0% $441,070 100.0% $373,567 100.0%
======== ===== ======== ====== ======== ===== ======== ===== ======== ======
Allocation of allowance for
loan losses
Commercial 0 0.0 0 0.0 0 0.0 0 0.0% 0 0.0%
Real estate- construction 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Real estate- residential 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Real estate- commercial 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Lease financing 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0
Unallocated 12,309 100.0% 10,419 100.0% 8,706 100.0% 8,272 100.0% 5,641 100.0%
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Total allowance for loan
losses $ 12,309 100.0% $ 10,419 100.0% $ 8,706 100.0% $ 8,272 100.0% $ 5,641 100.0%
======== ====== ======== ======= ======== ====== ======== ====== ======== ======
<FN>
* Amounts have been reclassified for comparative purposes
</TABLE>
<TABLE>
Table 5
Nonperforming assets
(dollars in thousands)
<CAPTION>
At December 31, 1993 1992 1991 1990 1989
-------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
In-substance foreclosures/
REO $ 172 $ 2,360 $ 4,297 $ 865 $ 989
======= ======= ======= ======= ========
Non- accruing $ 886 $ 4,207 $ 4,888 $ 7,143 $ 4,188
======= ======= ======= ======= =======
Restructured $ 2,283 $ 3,428 $ 2,491 $ 1,996 $ 8,021
======= ======= ======= ======= =======
</TABLE>
Non-interest income
Non-interest income increased 195.1% to $12.1 million in 1993. Non-
interest income is composed of gains from sales of blanket mortgages and share
loans to secondary market investors, servicing fees, origination fees, and
advisory fees. Gains on asset sales, net of hedging expenses, were $6.3 million
in 1993 which represented 52.1% of non-interest income. NCB realized gains
primarily from the increased spreads between coupon rates on mortgage pools and
secondary mortgage market rates for its mortgage-backed securities. NCB
maintains a conservative interest rate risk policy; as such,
warehoused loans were fully hedged in 1993.
Servicing income remained a stable source of non-interest income for NCB
in 1992. NCB earned servicing fee income of $1.4 million in 1993 compared with
$1.1 million in 1992. As of December 31, 1993, NCB serviced $845.5 million in
single and multifamily real estate loans for outside investors compared with
$638.2 million one year earlier.
Non-interest expenses
Non-interest expenses increased 24.5% from $15.5 million to $19.3 million.
Non-interest expenses as a percentage of average assets increased 3.0% in 1992
to 3.7 in 1993. Salaries and benefits, the single largest component of non-
interest expenses, increased 13.5% as a result of incentive bonuses offered to
NCB's personnel. Employees are eligible to receive maximum incentive awards of
20% of salaries when NCB reaches certain corporate benchmarks. Salaries and
employee benefits accounted for 43.5% of non-interest expenses in 1993 and 47.4%
of non-interest expenses in 1992 compared with 45.8% in 1991. As of December
31, 1992, NCB and its consolidated subsidiaries employed 129 employees compared
with 126 employees one year earlier.
Contractual services increased 39.3% from the prior year to $3.9 million.
The increase is due primarily to loan management fees paid to NCBDC and to
acceleration of certain expenses related to former consulting commitments.
Under the provisions of the National Consumer Cooperative Bank Act ( the
Act ), NCB makes tax deductible, voluntary contributions to the NCB Development
Corporation. These contributions are normally calculated based on NCB's net
income. The contribution to NCB Development Corporation was $2.0 million in
1993 compared with $.7 million in 1992. The increase in the NCBDC contribution
reflects the growth in NCB's income in 1993 compared with 1992 as well as an
acceleration of the 1994 contribution to 1993. Non-interest expenses as a
percentage of average assets, adjusted for the contribution to NCBDC, would have
increased slightly to 3.3% in 1993 compared with 2.8% in 1992.
Income taxes
Under the terms of the Act, NCB is exempt from most state and local taxes.
In addition, under provisions of the Act and Subchapter T of the Internal Reve-
nue Code, NCB substantially reduces its Federal tax liability through the
issuance of annual patronage dividends. The federal income tax provision is
determined on non-member income primarily generated by certain subsidiaries, NCB
Mortgage Corporation, NCB Business Credit Corporation, Cooperative Funding
Corporation and NCB Savings Bank, FSB. NCB's subsidiaries are also subject to
varying levels of state taxation.
Note 19 to the consolidated financial statements contains additional
discussions of NCB's tax status.
1992 vs 1991
Net income of $6.1 million in 1992 increased slightly from $5.9 million in
1991. Credit related expenses, such as the write- down of real estate owned and
an increased provision for loan losses, were a principal reason for the limited
earnings growth.
Net interest income increased $1.0 million or 5.0% in 1992 primarily as a
result of increased real estate loan volume in conjunction with wider spreads
between short and long-term rates. The net yield on interest earning-assets
declined to 3.9% in 1992 from 4.0% in 1991.
The provision for loan losses decreased 11.2% to $2.1 million in 1992. The
provision as a percentage of average loans and leases outstanding decreased to
.45% in 1992 from .56% in 1991.
Non-interest income decreased 19.1% to $4.1 million in 1992. Gains on
asset sales, net of hedging expenses, were $2.6 million in 1992 which
represented 26% of non-interest income. NCB earned servicing income of $1.1
million on a servicing portfolio of $638.2 million.
Non-interest expenses decreased less than 1% from $15.6 million to $15.5
million. Salaries and benefits increased 3.1% as a result of merit salary
increases. Contractual services decreased .6% from the prior year to $2.8
million. Most of the decrease resulted from lower loan workout fees in
connection with problem accounts. Occupancy and equipment expenses decreased
9.8% to $2.8 million primarily due to a decrease in lease rental expense as a
result of a new office lease for NCB's corporate headquarters.
Fourth quarter results
Net income for the fourth quarter of 1993 was $1.2 million compared with
$1.5 million in the fourth quarter of 1992. The decrease was due primarily to
decreases in net interest income due to declining interest rates.
The provision for loan losses increased from $.4 million in 1992 to $.6
million in 1993. This was due primarily to adjustments in 1993 to increase the
allowance for loan losses.
Non-interest income for the quarter increased from $1.2 million in 1992 to
$3.8 million in 1993 due primarily to $1.5 million gains and dividends from the
liquidation of a long term investment held by NCBMC, a subsidiary of NCB.
Non-interest expenses for the quarter increased from $3.9 million in 1992
to $5.5 million in 1993 due primarily to salary and benefit and contractual
service expenses. Salary and benefit expenses increased by $.8 million from the
previous quarter due to increases related to year end incentive bonuses.
Contractual services increased by $.3 million due to growth in legal and
advertising fees.
<TABLE>
Table 6
Consolidated Quarterly Financial Information(Unaudited)
(dollars in thousands)
<CAPTION>
For the Three Months Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Sept. 30* June 30* March 31*
---------- ---------- --------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest income $ 9,403 $ 10,067 $ 9,469 $ 10,058 $ 10,524 $ 10,927 $ 11,507 $ 11,105
Interest expense 4,970 5,155 5,046 5,492 5,876 5,905 6,060 6,077
-------- -------- -------- -------- -------- -------- -------- --------
Net interest income 4,433 4,912 4,423 4,566 4,648 5,022 5,447 5,028
Provision for loan losses 625 464 316 299 380 482 575 662
-------- -------- -------- -------- -------- -------- -------- --------
Income after provision for
loan losses 3,808 4,448 4,107 4,267 4,268 4,540 4,872 4,366
Non-interest income 2,810 4,826 2,400 2,092 1,219 840 1,024 998
-------- -------- -------- -------- -------- -------- -------- ---------
Net revenue 6,618 9,274 6,507 6,359 5,487 5,380 5,896 5,364
Non-interest expenses 5,506 5,461 4,346 3,983 3,857 3,773 3,777 4,088
-------- -------- -------- -------- -------- -------- -------- ---------
Income before income taxes and
cumulative effect of change
in accounting principle 1,112 3,813 2,161 2,376 1,630 1,607 2,119 1,276
Provision for income taxes (66) 500 140 272 162 159 227 114
-------- -------- -------- -------- -------- -------- -------- ---------
Income before cumulative effect
of change in accounting
principle 1,178 3,313 2,021 2,104 1,468 1,448 1,892 1,162
Cumulative effect of change in
accounting principle 0 0 0 0 0 0 0 90
-------- -------- -------- -------- -------- -------- -------- ---------
Net income $ 1,178 $ 3,313 $ 2,021 $ 2,104 $ 1,468 $ 1,448 $ 1,892 $ 1,252
======== ======== ======== ======== ======== ======== ======== =========
<FN>
* Quarterly results for the first three quarters of 1992 have been restated to reflect the
adoption in the fourth quarter effective January 1, 1992 of SFAS 109.
</TABLE>
Sources of Funds
Capital Markets Access
NCB maintains line of credit facilities provided by a consortium of banks.
At year-end, total borrowing capacity under these facilities was $180.0 million,
and the outstanding balance at December 31, 1993 was $31.5 million compared to
an outstanding balance of $26.0 million at December 31, 1992. Usage, as measured
by average outstanding balances during the year, decreased from $48.1 million in
1992 to $20.9 million in 1993 due to capital provided by other financing
opportunities.
NCB's loan sale activity is another source of funding. NCB originates most
of its real estate loans, including share loans originated by NCB Savings Bank,
FSB, for sale into the secondary market. In 1993, NCB sold $214.1 million of
cooperative real estate loans.
Deposits
At NCB's wholly owned subsidiary, NCB Savings Bank, FSB, ( NCBSB ) deposits
increased in 1993 from $52.2 million to $66.9 million. The increase reflects
NCBSB's deposit solicitation efforts in the local community and with NCB
members. NCBSB does not solicit brokered deposits. The weighted average
rate on deposits declined from 3.8% in 1992 to 2.9% in 1993. Although NCB
relies heavily on funds raised through the capital markets, deposits continue to
account for an increasing portion of interest bearing liabilities-- 16.2% in
1993 compared with 12.7% in 1992. Management anticipates that deposits will
represent an increasing portion of its capital structure.
Uses of funds
Loans and leases
Loans and leases outstanding decreased .1% from $458.6 million at year-end
1992 to $457.7 million. The majority of the decline occurred in NCB's real
estate warehouse which decreased from $70.0 million to $40.3 million. The
decline is the result of loan sales that occurred within the last quarter of
1993 for $46.2 million. NCB's residential loan portfolio increased slightly
from $166.4 million in 1992 to $170.6 million. The real estate portfolio was
substantially composed of multifamily blanket mortgages. NCB does not invest in
speculative commercial real estate transactions. Residential real estate loans
accounted for 95.3% of the real estate loan portfolio at year end 1993 compared
to 93.6% of the real estate portfolio at year-end 1992.
The commercial loan and lease portfolio increased from $206.2 million to
$230.5 million in 1993. As business activity moved forward during 1993, NCB's
commercial lending portfolio expanded with new business opportunities. The
growth in the commercial loan portfolio reflects increased lending in the retail
and wholesale food industries and increased lending as part of NCB's commercial
member loan program.
Cash, Cash Equivalents, Investments, and Trading Account Securities
In 1993, NCB adopted SFAS 115 which required that NCB re-evaluate its
investment portfolios based on management's future investment strategy. The
result of this implementation is to transfer trading account securities to
investments held for sale and to investments held to maturity. Cash, cash
equivalents, investments and trading account securities increased $3.1 million
to $61.1 million in 1993. This is consistent with management's strategy to
maintain sufficient liquidity for current operations without diluting its
earning asset base. Cash, cash equivalents, investments, and trading account
securities represent 11.8% of interest earning assets in 1993 compared with
11.2% in 1992.
Asset and Liability Management
Asset and liability management is the structuring of interest rate
sensitivities of the balance sheet to maximize net interest income under the
constraints of liquidity and interest-rate risk ("IRR"). NCB's liquidity and
IRR are managed by the Asset and Liability Committee ("ALCO"), which meets
monthly. The purpose of the ALCO is to develop and implement strategies,
including the buying and selling of off-balance sheet instruments such as swaps
and financial futures contracts, to ensure sufficient reward for known and
controlled risk.
Overall, NCB's ALCO adheres to the philosophy that a consistently balanced
position results in the safest and most predictable net interest earnings stream
over various interest rate cycles.
Liquidity
Liquidity is the ability to meet financial obligations either through the
sale or maturity of existing assets or through the raising of additional funds.
Maintaining adequate liquidity therefore requires careful coordination of the
maturity of assets and liabilities.
NCB's asset liquidity is generally provided by maintaining near-cash and
short term investments which can be converted to cash at little or no cost.
These investments include: fed funds, eurodollar investments, commercial paper,
certificates of deposit, and other short term obligations. These securities
normally have a maturity of less than ninety days and are not subject to price
variations. At December 31, 1993, NCB held $22.9 million in cash and cash
equivalents compared with $23.9 million in cash and cash equivalents for 1992.
These funds are normally used to fund business operations.
NCB's $29.7 million investment portfolio is a second source of asset
liquidity. The portfolio consists of high-grade corporate and government
obligations. The average maturity increased from 2.0 years at year end 1992 to
3.3 years at year-end 1993 in an effort to increase the yields of the portfolio.
Aside from its principal amortization (scheduled and non-scheduled) and
maturities, the loan portfolio is an excellent source of liquidity as
demonstrated by NCB's success in asset securitization. In fact, NCB has been
instrumental in developing the secondary market for loans made to cooperatives.
NCB also has $180 million of revolving lines of credit, $120 million of
which is committed until December 1996. Average outstanding balances were $20.9
million in 1993 compared to $48.1 million in 1992. The decline in average usage
is due primarily to paydowns on the line of credit in the first and second
quarter with proceeds from loan sales. NCB utilizes its short-term funding
facility to finance the temporary build-up of investment-grade, saleable
mortgages.
Finally, NCB's wholly-owned subsidiary, NCB Savings Bank, FSB raises both
local and national deposits from NCB members, which also serve as a source of
liquidity. In 1993, deposits increased from $52.2 million to $66.9 million.
The bulk of the growth relates to increased deposits raised from cooperatives.
NCB Savings Bank, FSB, uses cooperative deposits to fund co-originations of
blanket mortgages with NCB.
<TABLE>
Table 7
Maturity Schedule of Loans
(dollars in thousands)
<CAPTION>
One Year
One Year Through Over
or Less Five Years Five Years Total
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Commercial $ 37,958 $ 58,594 $127,131 $223,683
Real estate- construction 0 5,778 0 5,778
Real estate- residential 12,156 51,837 $146,853 210,846
Real estate- commercial 0 1,895 8,682 10,577
Leases 217 5,629 983 6,829
--------- ---------- -------- --------
Total loans and leases $ 50,331 $123,733 $283,649 $457,713
========= ========= ======== ========
Fixed interest rate loans $ 36,983 $ 77,128
Variable interest rate loans 86,750 206,521
-------- --------
$123,733 $283,649
======== ==========
</TABLE>
Interest Sensitivity
Interest Rate Risk (IRR) is the sensitivity of earnings and capital to
changes in market rates of interest. It arises through differences in the
repricing characteristics of both assets and liabilities.
To measure its risk, NCB utilizes a computer simulation model to forecast
its earnings and the market value of its portfolio equity under different rate
scenarios. The model incorporates the dynamics of balance sheet and interest
rate changes as well as embedded options. ALCO reviews the simulation output
and makes decisions accordingly.
Table 8 represents NCB's static interest-rate gap position at December 31,
1993. The gap, adjusted for derivative instruments activity, represents only a
one day snapshot of the amounts contractually scheduled to reprice or mature
(whichever comes first). Consequently, a static gap analysis, considered alone,
is not a complete indication of IRR. Generally speaking though, in a declining
rate environment, it is advantageous to be liability sensitive ("a negative
gap"). Conversely, in an increasing rate environment, it is advantageous to be
asset sensitive ("a positive gap").
<TABLE>
Table 8
Interest Rate Sensitivity (dollars in thousands)
December 31, 1993
<CAPTION>
Over 12
Interest Interest Interest Interest Interest Months and
-Sensitive -Sensitive -Sensitive -Sensitive -Sensitive Non-Interest
30 day 3 month 6 month 12 month Total Sensitive Total
---------- ---------- ----------- ---------- ---------- ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Cash and cash equivalents $ 31,300 $ 0 $ 0 $ 0 $ 31,300 $ 0 $ 31,300
Investment securities 3,252 630 3,095 2,390 9,367 20,420 29,787
Loans and leases 195,197 7,281 12,051 23,962 238,491 219,222 457,713
--------- -------- ---------- --------- --------- -------- ---------
Total interest-earning
assets 229,749 7,911 15,146 26,352 279,158 239,642 518,800
-------- -------- -------- --------- --------- -------- ---------
Interest-bearing liabilities:
Deposits 3,540 7,080 9,336 9,822 29,778 37,153 66,931
Short-term borrowings 31,541 0 0 0 31,541 0 31,541
Long-term debt 0 25,000 0 30,000 55,000 75,354 130,354
Subordinated Class A notes 53,553 0 0 0 53,553 129,436 182,989
-------- ------- -------- -------- --------- -------- ---------
Total interest-bearing
liabilities 88,634 32,080 9,336 39,822 169,872 241,943 411,815
-------- ------- -------- -------- --------- ------- ---------
Other:
Other net interest-bearing
assets 0 0 0 0 0 106,985 106,985
Effect of interest rate swaps
and financial futures (41,200) 75,000 61,000 (30,000) 64,800 (64,800) 0
--------- -------- -------- -------- --------- -------- ---------
Total 47,434 107,080 70,336 9,822 234,672 284,128 518,800
--------- -------- -------- -------- --------- -------- =========
Repricing difference $ 182,315 $(99,169) $(55,190) $ 16,530 $ 44,486 $(44,486)
========= ======== ======== ======== ========= =========
Cumulative gap $ 182,315 $ 83,146 $ 27,956 $ 44,486
========= ======== ======== ========
Cumulative gap as % of
total assets 35.14% 16.03% 5.39% 8.57%
========= ======== ======== =======
</TABLE>
It is clear from the Table that NCB had a 8.57% gap (as a percentage of
total assets) and a 5.39% gap at the one year and 180 day time horizons,
respectively. Consequently, NCB has little IRR over the one year horizon.
NCB is exposed to a tightening of the Prime/LIBOR ( London Interbank
Offered Rate ) spread relationship because much of its floating-rate assets
adjusts to Prime, while much of its floating rate obligations adjusts to one,
three and six month LIBOR.
Capital
NCB's strong capital position supports growth, ensures continuing access
to financial markets, and allows for greater flexibility during difficult
economic periods.
Historically, NCB has maintained a strong capital structure. NCB's equity
to average assets was 20.4% in 1993 compared with 19.8% and 20.7% in 1992 and
1991, respectively. When including NCB's subordinated Class A notes, NCB's
average total capital to average assets was 55.4% compared with 54.6% and 58.5%
during 1992 and 1991, respectively. The Bank Act limits NCB's outstanding debt
to ten times its capital and surplus (including the subordinated Class A notes).
As of December 31, 1993, NCB Savings Bank, FSB, had a risk based capital ratio
of 15.6%, well in excess of regulatory requirements.
Patronage policy
Each year, NCB declares patronage refunds approximately equal to its
taxable net income thereby reducing its Federal income tax liability to minimal
amounts. In April 1993, NCB distributed $6.6 million to its active member-
borrowers. Of this total, approximately $3.0 million was distributed in cash.
Item 8. Financial Statements and Supplementary Data
The registrant's financial statements and notes thereto are set
fourth
beginning at page 19 below. The registrant is not subject to any of the
requirements for supplementary financial information contained in Item 302 of
Regulation S-K.
<TABLE>
NATIONAL CONSUMER COOPERATIVE BANK
CONSOLIDATED BALANCE SHEETS
December 31,
Assets 1993 1992
------------ -----------
<S> <C> <C>
Cash and cash equivalents $ 22,938,795 $23,888,148
Restricted cash 8,361,519 6,503,725
Investment securities
Trading account 26,556,146
Available-for sale 26,406,171
Held-to-maturity 3,380,698
Loans and lease financing 417,438,593 388,536,377
Loans held for sale 40,274,829 70,019,625
Less: Allowance for loan losses (12,309,359) (10,418,687)
------------ ------------
445,404,063 448,137,315
------------ ------------
Excess servicing fees receivable 20,722,861 9,697,436
Premises and equipment,net 2,028,044 2,434,631
Other assets 6,524,825 9,643,959
------------ ------------
Total assets $535,766,976 $527,861,360
============ ============
Liabilities and Members' Equity
Liabilities
Deposits $ 66,931,434 $ 52,231,416
Patronage dividends payable in cash 3,147,860 2,970,925
Other liabilities 8,722,495 8,418,351
Borrowings
Short-term 31,541,577 26,051,848
Long-term 130,354,889 147,522,987
Other 2,040,406 2,705,474
------------ -------------
163,936,872 176,280,309
Subordinated Class A notes 182,989,162 183,296,223
------------ ------------
Total borrowings 346,926,034 359,576,532
------------ ------------
Total liabilities 425,727,823 423,197,224
------------ ------------
Members' Equity
Common stock
Class B 59,671,095 59,894,353
Class C 20,573,753 20,577,597
Class D 300 300
Retained earnings
Allocated 12,844,968 9,140,950
Unallocated 16,949,037 15,050,936
------------ ------------
Total members' equity 110,039,153 104,664,136
------------ ------------
Total liabilities and members' equity $535,766,976 $527,861,360
============ =============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
NATIONAL CONSUMER COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, 1993 1992 1991
----------- ------------ -----------
<S> <C> <C> <C>
Interest income
Loans and lease financing $36,487,048 $41,148,157 $41,999,862
Investment securities 2,510,185 2,914,735 3,996,702
----------- ----------- -----------
Total interest income 38,997,233 44,062,892 45,996,564
----------- ----------- -----------
Interest expense
Deposits 1,965,347 2,096,747 2,515,106
Short-term borrowings 1,309,956 2,992,857 4,716,974
Long-term debt, other borrowings
and subordinated Class A notes 17,387,865 18,828,081 19,586,941
---------- ---------- ----------
Total interest expense 20,663,168 23,917,685 26,819,021
---------- ---------- ----------
Net interest income 18,334,065 20,145,207 19,177,543
Provision for loan losses 1,703,907 2,098,986 2,362,616
---------- ---------- ----------
Net interest income after
provision for loan losses 16,630,158 18,046,221 16,814,927
---------- ---------- ----------
Non-interest income
Gain on sale of loans 6,292,956 2,570,297 1,615,162
Loan and deposit servicing fees 1,351,390 1,097,743 1,137,477
Other 4,483,383 413,197 2,292,305
---------- --------- ---------
Total non-interest income 12,127,729 4,081,237 5,044,944
---------- --------- ---------
Non-interest expenses
Compensation and employee benefits 8,398,715 7,352,879 7,129,935
Contractual services 3,892,031 2,764,191 2,918,119
Occupancy and equipment 2,833,457 2,772,456 3,073,017
Contribution to NCB
Development corporation 2,000,000 673,286 651,950
Other 2,171,707 1,932,950 1,793,214
---------- ---------- ----------
Total non-interest expenses 19,295,910 15,495,762 15,566,235
---------- ---------- ----------
Income before income taxes and
cumulative effect of change
in accounting principle 9,461,977 6,631,696 6,293,636
Provision for income taxes 845,998 662,144 429,678
--------- --------- ---------
Income before cumulative effect of
change in accounting principle 8,615,979 5,969,552 5,863,958
Cumulative effect of change in
accounting principle 90,025
---------- ----------- -----------
Net income $ 8,615,979 $ 6,059,577 $ 5,863,958
=========== =========== ===========
Distribution of net income
Patronage dividends $ 6,995,245 $ 6,602,055 $ 5,986,631
Retained earnings 1,620,734 (542,478) (122,673)
----------- ------------ ------------
$ 8,615,979 $ 6,059,577 $ 5,863,958
=========== ============ ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
NATIONAL CONSUMER COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS' EQUITY
For the years ended December 31, 1993, 1992 and 1991
Retained Retained Total
Common Earnings Earnings Members'
Stock Allocated Unallocated Equity
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance, January 1, 1991 $69,346,003 $15,689,008 $13,981,066 $ 99,016,077
Net income - - 5,863,958 5,863,958
Proceeds from issuance of
common stock 1,139,894 - - 1,139,894
Cancellation and redemption
of stock (1,272,335) - 1,088,254 (184,081)
1990 patronage dividends
Stock portion 13,094,333 (13,414,891) 320,558 -
1990 patronage dividends
Distributed in cash - - (2,698,407) (2,698,407)
Retained in form of equity - 3,298,049 (3,298,049) -
---------- ---------- ----------- -----------
Balance, December 31, 1991 82,307,895 5,572,166 15,257,380 103,137,441
Net income - - 6,059,577 6,059,577
Proceeds from issuance of
common stock 114,934 - - 114,934
Cancellation and redemption
of stock (1,950,579) - 336,034 (1,614,545)
1991 patronage dividends
Allocated surplus - (62,346) - (62,346)
1992 patronage dividends
Distributed in cash - - (2,970,925) (2,970,925)
Retained in form of
equity - 3,631,130 (3,631,130) - (3,6
---------- --------- ----------- -----------
Balance, December 31, 1992 80,472,250 9,140,950 15,050,936 104,664,136
Net income - - 8,615,979 8,615,979
Cancellation and redemption
of stock (227,102) - 277,367 50,265 2
1992 patronage dividends
Allocated surplus - (143,367) - (143,367)
1993 patronage dividends
To be distributed in cash - - (3,147,860) (3,147,860)
To be retained in form of
equity - 3,847,385 (3,847,385) -
----------- ----------- ----------- ------------
Balance, December 31, 1993 $80,245,148 $12,844,968 $16,949,037 $110,039,153
=========== =========== =========== ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
NATIONAL CONSUMER COOPERATIVE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1993 1992 1991
------------ ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Interest received $ 39,135,779 $ 46,536,824 $46,815,291
Commitment charges and other fees received 7,358,454 3,616,509 3,145,452
Proceeds from sales of loans held for sale 195,761,211 141,241,719 67,704,928
Loans originated for sale (170,405,348) (128,197,791) (75,631,140)
Gain (loss) on hedges of loans held for sale 473,677 (317,646) (770,168)
Increase in trading account securities, net - (3,858,228) (405,054)
Interest paid (21,821,079) (24,555,284) (27,342,540)
Transfer to restricted cash account (1,857,794) (6,503,725) -
Cash paid to suppliers and employees (22,528,798) (16,254,252) ( 2,178,890)
------------ ----------- ------------
Net cash used in investing activities 26,116,102 11,708,126 ( 2,178,890)
------------ ----------- ------------
Cash flows from investing activities
Proceeds from sales of investments available
for sale 10,217,820 - 42,185,001
Purchase of investments available for sale (9,155,694) - 3,000,000
Purchase of investments held to maturity (3,380,698) - (44,296,076)
Proceeds from sales of portfolio loans 23,114,212 11,318,144 7,125,147
Net increases in loans and lease financing (46,824,663) (39,927,688) (14,119,112)
Capital expenditures (166,838) (1,428,758) ( 564,022)
------------ ------------ ------------
Net cash used in investing activities (26,195,861) (30,038,302) ( 6,669,062)
------------ ------------ ------------
Cash flows from financing activities
Net increase in deposits 14,705,334 11,058,920 6,643,864
Net increase (decrease) in short-term
borrowings 5,489,729 (48,009,948) ( 9,081,649)
Proceeds from issuance of long-term debt - 50,000,000 35,000,000
Repayment on long-term debt (17,000,000) - ( 6,250,000)
Repayment on subordinated Class A notes (314,622) (1,413,050) -
Other borrowings - - 1,982,738
Repayment on other borrowings (665,068) (2,821,421) (1,896,250)
Gain on liability hedge - 482,342 203,343
Proceeds from issuance of common stock 15,545 114,934 1,139,894
Redemption of common stock (129,587) (261,900) (150,871) (
Patronage dividends paid (2,970,925) (2,698,407) (3,350,668)
------------ ----------- -----------
Net cash (used in) provided by
financing activities (869,594) 6,451,470 24,240,401
------------ ----------- -----------
(Decrease) increase in cash and cash
equivalents (949,353) (11,878,706) 15,392,449
Cash and cash equivalents, beginning of year 23,888,148 35,766,854 20,374,405
----------- ----------- -----------
Cash and cash equivalents, end of year $22,938,795 $23,888,148 $35,766,854
=========== =========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
NATIONAL CONSUMER COOPERATIVE BANK
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES
For the years ended December 31, 1993 1992 1991
----------- ----------- ----------
<S> <C> <C> <C>
Net income $ 8,615,979 $ 6,059,577 $ 5,863,958
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities
Increase in restricted cash account (1,857,794) (6,503,725)
Decrease (increase) in accrued
interest receivable 229,080 (110,878) 372,631
Net trading account activity (3,858,228) (405,054)
Decrease (increase) in loans held
for sale 25,355,863 13,043,928 (7,926,212)
Increase (decrease) in other assets,
net of real estate owned (4,068,396) 210,286 706,441
Increase (decrease) in accounts payable
and other accrued expenses 1,554,415 (709,986) (1,473,259)
Decrease in accrued interest payable (992,058) (471,979) (442,270)
(Decrease) increase in deferred income (53,292) 937,632 436,212
Provision for loan losses 1,703,907 2,098,986 2,362,616
Depreciation and amortization, net 2,917,286 2,577,868 1,101,541
Gain on sale of assets, net (7,975,854) (2,162,729) (2,510,695)
Increase (decrease) on hedges of loans
held for sale 473,677 (317,646) (770,168)
Other, net 213,289 915,020 505,369
----------- ----------- ------------
Net cash provided by (used in) operating
activities $26,116,102 $11,708,126 $(2,178,890)
=========== ============ ============
<FN>
See notes to consolidated financial statements. <PAGE>
</TABLE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Organization
National Consumer Cooperative Bank, doing business as National
Cooperative Bank (NCB), is a U.S. Government-chartered corporation organized
under the National Consumer Cooperative Bank Act (the Act). NCB provides loans
and financial services to cooperatives. NCB Mortgage Corporation, a majority-
owned subsidiary, originates, sells and services real estate and commercial
loans for cooperatives. NCB Capital Corporation (NCBCC), a wholly-owned
subsidiary until it was dissolved and its assets and liabilities were assumed by
NCB on December 15, 1993, borrowed funds in the capital markets. NCB Financial
Corporation, a wholly-owned subsidiary, is the holding company of NCB Savings
Bank, FSB (NCBSB), a federally-chartered thrift institution. NCB Business Credit
Corporation (NCBBCC), a wholly-owned subsidiary, provides equipment lease
financing and financial services to cooperatives. Cooperative Funding
Corporation, a wholly-owned subsidiary of NCBBCC, is a registered broker-dealer
and provides corporate financial services. NCB Investment Advisers, Inc., a
wholly-owned subsidiary of NCBBCC, provides investment advisory services to
cooperatives. NCB I, Inc., a wholly-owned subsidiary of NCB, is a special
purpose corporation that holds credit enhancement certificates related to the
securitization and sale of cooperative real estate loans.
The Act also provided for the formation of NCB Development
Corporation (NCBDC), an affiliate, which is a non-profit organization without
capital stock organized under the laws of the District of Columbia. NCBDC
provides loans and technical support to cooperative enterprises. NCBDC's bylaws
provide for six directors from the NCB board to serve on the NCBDC board, along
with three outside directors elected by NCB directors. Consistent with the Act,
NCB makes deductible, voluntary contributions to NCBDC.
Borrowers from NCB are required to own Class B Stock in NCB. Stock
owned by a borrower may be cancelled by NCB, at NCB's sole discretion, in case
of certain events, including default.
Principles of Consolidation
The consolidated financial statements include the accounts of NCB and
its subsidiaries. All significant intercompany balances and transactions have
been eliminated. The financial statements of NCB do not include the net assets
or results of operations of NCBDC.
Investments
Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" was issued in
May 1993 by the Financial Accounting Standards Board. At December 31, 1993, NCB
adopted the requirements of SFAS 115 to classify and account for debt and equity
securities as follows:
Trading Securities - Securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading
securities and reported at market value. Unrealized gains and losses are
included in non-interest income.
Available-for-sale - Securities that will be held for indefinite
periods of time, including those that may be sold in response to changes in
market interest rates and related changes in security's prepayment risk, needs
for liquidity and changes in the availability of and the yield of alternative
investments are classified as available-for-sale. These assets are carried at
fair value. Unrealized gains and losses are determined on an aggregate basis,
excluded from earnings and reported as a separate component of members' equity.
Gains and losses on the sale of investment securities are determined using the
adjusted cost of the specific security sold and are included in earnings.
Held-to-maturity - Securities that management has the positive intent
and ability to hold until maturity are classified as held-to-maturity. They are
reported at amortized cost.
Supplemental Cash Flow Information
NCB recorded a non-cash adjustment at December 31, 1993 which
resulted in a decrease of trading account securities and an increase in
investments available for sale of $27,556,146.
Interest Rate Futures and Forward Contracts
Gains and losses on futures and forward contracts and interest rate
agreements used to hedge certain interest-sensitive assets and liabilities are
deferred. Gains or losses are recognized at the time of disposition of the
assets or liabilities being hedged, or are amortized over the life of the hedged
asset or liability as an adjustment to interest income or interest expense.
Loans and Lease Financing
Loans are carried at their principal amounts outstanding, except for
loans held for sale which are carried at the lower of cost or market as
determined on an aggregate basis. NCB discontinues the accrual of interest on
loans when principal or interest payments are ninety days or more in arrears or
sooner when there is reasonable doubt as to collectibility. Loans may be
reinstated to accrual status when all payments are brought current and, in the
opinion of management, collection of the remaining balance can reasonably be
expected.
Leasing operations consist principally of leasing equipment under
direct financing leases expiring in various years through 1998. All lease
financing transactions are full payout direct financing leases. Lease income is
recorded over the term of the lease contract which provides a constant rate of
return on the unrecovered investment. Lease financing is carried net of
unearned income.
Allowance for Loan Losses
The allowance for loan losses is a valuation allowance which
management believes to be adequate to cover anticipated loan and lease financing
losses in the existing portfolio. A provision for loan losses is added to the
allowance and charged to expense. Loan and lease charge-offs,net of recoveries,
are deducted from the allowance. The factors utilized by management in
determining the adequacy of the allowance include, but are not limited to, the
following: the present and prospective financial condition of the borrowers and
the values of any underlying collateral, evaluation of the loan and lease
financing portfolio in conjunction with historical loss experience, portfolio
composition, and current and projected economic conditions. Changes in economic
conditions and economic prospects of borrowers can occur quickly and, as a
result, impact the estimates made by management.
Statement of Financial Accounting Standards ("SFAS") No. 114,
"Accounting by Creditors for Impairment of a Loan", was issued in May 1993 by
the Financial Accounting Standards Board. SFAS 114 requires creditors to
evaluate the collectibility of both contractual interest and contractual
principal of all loans when assessing the need for a loss accrual. When a loan
is impaired, a creditor shall measure impairment based on the present value of
the expected future cash flows discounted at the loan's effective interest rate
or the fair value of the collateral, less estimated selling costs, if the loan
is collateral- dependent and foreclosure is probable. The creditor shall
recognize an impairment by creating a valuation allowance. A loan is impaired
when, based on current information, it is probable that a creditor will be
unable to collect all amounts due to the contractual terms of the loan.
The Company adopted SFAS 114 as of January 1, 1993. In management's
judgement the allowance for loan losses at December 31, 1993 is adequate and
that the adoption of SFAS 114 does not have a significant impact on its
financial condition and results of operations.
Loan-Origination Fees, Commitment fees, and Related Costs
Loan fees received are accounted for in accordance with Financial
Accounting Standards Board Statement No. 91, Accounting for Nonrefundable Fees
and Costs Associated with Originating or Acquiring Loans and Initial Direct
Costs of Leases. Loan fees and certain direct loan origination costs are
deferred, and the net fee or cost is recognized as an adjustment to interest
income over the contractual life of the loans. Fees relating to expired
commitments are recognized as non-interest income. If a commitment is exercised
during the commitment period, the fee at the time of exercise is recognized over
the life of the loan as an adjustment of yield.
Loan-Servicing Rights
The cost of loan-servicing rights acquired is amortized in proportion
to, and over the period of, estimated net servicing revenues. When participating
interest in loans sold have an average contractual interest rate, adjusted for
normal servicing fees, that differs from the agreed yield to the purchaser,gains
or losses are recognized equal to the present value of such differential over
the estimated remaining life of such loans. The resulting "excess servicing
fees receivable" is amortized over the estimated life using a method
approximating the level-yield method.
The cost of loan-servicing rights purchased, the excess servicing
fees receivable, and the amortization thereon is periodically evaluated in
relation to estimated future net servicing revenues. NCB evaluates the carrying
value of the servicing portfolio by estimating the future net servicing income
of the portfolio based on management's best estimate of remaining loan lives.
Receivables Sold With Recourse
NCB is obligated under various recourse provisions related to the
sales of residential mortgages. Management has accrued a liability for estimated
probable losses to these recourse provisions. Management believes the recourse
provisions do not subject NCB to any material risk of loss other than that
provided for in other accrued expenses.
Premises and Equipment
Premises and equipment are carried at cost less accumulated
depreciation and include equipment owned under lease financing arrangements.
Depreciation is computed using an accelerated method. Leasehold improvements are
amortized on a straight-line basis over the terms of the leases.
Other Assets
Foreclosed property pending disposition is carried at fair value less
estimated costs to sell. Goodwill relating to the acquisition of NCBSB by NCB
Financial Corporation is being amortized over the estimated remaining lives of
the long-term interest-bearing assets acquired.
Income Taxes
The National Consumer Cooperative Bank Act Amendments of 1981 (P.L. 97-35)
provide that, effective January 1, 1982, NCB shall be treated as a cooperative
and subject to the provisions of Subchapter T of the Internal Revenue
Code. Under Subchapter T, NCB issues its member-borrowers patronage dividends,
which are tax deductible to NCB thereby reducing its taxable income. Section 109
of the Act, as amended, provides that NCB is exempt from state and local taxes
with the exception of real estate taxes. Certain NCB subsidiaries, however, are
subject to Federal and state income taxes.
NCB has adopted Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes" as of January 1, 1992 and has elected not
to apply the provisions retroactively. The adoption of SFAS 109 changes NCB's
method of accounting for income taxes from the deferred method to an asset and
liability approach. Previously, NCB deferred the past tax effects of timing
differences between financial reporting and taxable income. The asset and
liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences between
the carrying amounts and the tax bases of assets and liabilities that have been
recognized in NCB's financial statements or tax returns. The cumulative effect
of the adoption of SFAS 109 was to increase net income for the year ended
December 31, 1992 by $90,025.
Fair Value of Financial Instruments
Statement of Financial Accounting Standards ("SFAS") No. 107,
"Disclosure about Fair Value of Financial Instruments," requires disclosure of
fair value information about financial instruments, whether or not recognized in
the balance sheet, for which it is practicable to estimate that value. In cases
where quoted market prices are not available for identical or comparable
instruments, fair values are based on estimates using the present value of
estimated cash flows using a discount rate commensurate with the risks involved
or other valuation techniques. The resultant fair values are affected by the
assumptions used,including the discount rate and estimates as to the amounts and
timing of future cash flows. In that regard, the derived fair value estimates
cannot be substantiated by comparison to independent markets and, accordingly,
the fair values may not represent actual values of the financial instruments
that could have been realized as of year end or that will be realized in the
future.
The following methods and assumptions were used to estimate the fair
value of each class of financial instrument for which it is practicable to
estimate that value:
Cash and cash equivalents
The carrying amount approximates fair value.
Investments
Fair values are based on quoted market prices for identical or
comparable securities.
Loans and lease financing
For adjustable rate commercial loans that reprice frequently and with
no significant changes in credit risk, fair values are based on carrying values.
The fair market value of other adjustable rate loans is estimated by discounting
the future cash flows assuming that the loans mature on the next repricing date
using the rates at which similar loans would be made to borrowers with similar
credit quality and the same stated maturities. The fair value of fixed rate
commercial and of other loans and leases, excluding loans held for sale, is
estimated by discounting the future cash flows using the current rates at which
similar loans would be made to borrowers with similar credit quality and for the
same remaining maturities. The fair value of loans held for sale is based on
market prices for similar loans sold in the secondary market adjusted for
differences in loan characteristics.
Deposit liabilities
The fair value of demand deposits, savings accounts, and certain
money market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity certificates of deposit is estimated using a
discounted cash flow calculation that applies interest rates currently being
offered on certificates of deposits of similar remaining maturities.
Short-term and other borrowings
The carrying amounts of the revolving line of credit balances,
advances from the Federal Home Loan Bank and other borrowings approximate fair
value.
Long-term debt
The fair value of long-term debt, including the subordinated Class
A notes, is estimated by discounting the future cash flows using the current
borrowing rates at which similar types of borrowing arrangements with the same
remaining maturities could be obtained by NCB.
Interest rate swap agreements
The fair value of interest rate swaps (used for interest-rate risk
management purposes) is the estimated amount that NCB would receive or pay to
terminate the swap agreements at the reporting date, taking into account current
interest rates and the current creditworthiness of the swap counterparties.
Commitments to extend credit, standby letters of credit, and financial
guarantees written
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the counterparties.
For fixed-rate loan commitments, fair value also considers the difference
between current levels of interest rates and committed rates. The fair value of
guarantees and letters of credit is based on fees currently charged for similar
agreements or on the estimated cost to terminate them or otherwise settle the
obligations with the counterparties at the reporting date.
2. Financial Instruments with Off-Balance Sheet Risk
NCB is a party to financial instruments with off-balance sheet risk.
NCB uses such instruments in the normal course of business to reduce its own
exposure to fluctuations in interest rates. These financial instruments include
commitments to extend credit, standby letters of credit, interest rate swaps,
forward commitments to sell loans and financial futures contracts. Those
instruments involve, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the balance sheets. The contract or
notional amounts of those instruments reflect the extent of involvement, but not
exposure, that NCB has in particular classes of financial instruments.
NCB's exposure to credit loss in the event of nonperformance by the
other parties to the commitments to extend credit and standby letters of credit
written is represented by the contract or notional amounts of those instruments.
NCB uses the same credit policies in making commitments and conditional
obligations as it does for on-balance sheet instruments. For interest rate swap
transactions, forward commitments, and financial futures contracts, the contract
or notional amounts do not represent exposure to credit loss.
Unless noted otherwise, NCB does not require collateral or other
security to support financial instruments with credit risk.
In the normal course of business, NCB makes loan commitments which
are not reflected in the accompanying financial statements. The commitments to
extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments generally
have fixed expiration dates or other termination clauses and may require payment
of a fee. Since many of the commitments are expected to expire without being
completely drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. NCB evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained, if deemed necessary by
NCB upon extension of credit, is based on management's credit evaluation of the
counterparty. Collateral varies but may include accounts receivable, inventory,
property, plant, equipment, residential and income-producing commercial
properties.
Standby letters of credit are conditional commitments by NCB to
guarantee the payment performance of a customer to a third party. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers.
NCBSB enters into forward commitments to sell a portion of its
production of loans to Federal National Mortgage Association. The market value
of forward commitments is considered in the lower of cost or market valuation of
the loan portfolio held for sale.
Financial futures are contracts for delayed delivery of securities
at a specified future date of a specified instrument, at a specified price or
yield. These contracts are entered into to hedge the interest rate risk
associated with loans held for sale. Risks arise from movements in securities'
values and interest rates. NCB has minimal credit risk exposure on the
financial futures due to potential nonperformance of counterparties since
changes in the market value of financial futures on any given business day are
settled in cash on the following business day and payment is guaranteed by the
clearing house.
NCB has entered into a variety of interest rate swap agreements in
managing its interest rate exposure. Interest rate swap transactions generally
involve the exchange of fixed- and floating-rate interest payment obligations
without the responsibility for the underlying principal amounts. Entering into
interest rate swap agreements involves not only the risk of default by
counterparties but also the interest rate risk associated with unmatched
positions. The amounts potentially subject to credit risk are much smaller than
the notional amounts of the agreements. At December 31, 1993, NCB is exposed to
credit loss in the event of nonperformance by its counterparties in an aggregate
amount of $13,588,572, representing the estimated cost of replacing, at current
market rates, all those outstanding swaps for which NCB would incur a loss in
replacing the contracts. NCB does not anticipate nonperformance by any of its
counterparties. NCB requires that all counterparties maintain long-term debt
ratings of at least A- or be rated acceptable under NCB's credit risk system.
NCB also imposes maximum exposure limitations on any single counterparty.
The contract or notional amounts and the respective estimated fair
value of NCB's off-balance sheet financial instruments at December 31, are as
follows: (amounts in thousands):
<TABLE>
Contract or
Notional Amounts Estimated Fair Value
1993 1992 1993 1992
<S> <C> <C> <C> <C>
Financial instruments whose notional
or contract amounts exceed the
amount of credit risk:
Forward commitments $ 7,485 $ 4,961 $ 7,485 $ 4,961
Financial futures contracts 41,200 70,800 41,235 75,700
Interest rate swap agreements:
In a net receivable position 136,000 136,000 150,809 148,901
In a net payable position (136,000) (136,000) 136,044) (136,065)
Financial instruments whose contract
amounts represent credit risk:
Commitment to extend credit $128,960 $154,483 $ 744 $ 956
Standby letters of credit 24,174 9,927 132 111
</TABLE>
3. Cash and Cash Equivalents
Cash and cash equivalents consist of cash and investment securities
with original maturities of less than ninety days. The balances at December 31
are as follows:
1993 1992
Cash in bank $15,562,652 $ 3,186,979
Securities
Federal funds 4,559,252 15,717,835
Money market securities 177,049 177,560
Commercial paper 500,000 500,000
Certificates of deposit, mutual funds
and repurchase agreements 2,139,842 4,305,774
----------- -----------
$22,938,795 $23,888,148
=========== ===========
At December 31, 1993 and 1992, restricted cash of $8,361,519 and
$6,503,725 is held by a trustee for the benefit of certificate holders in the
event of a loss on certain loans sold of $37,300,000 and $92,623,000 in 1993
and 1992, respectively. The restricted cash will become available to NCB I,
Inc. as the principal balance of the respective loans decreases. The loans sold
have original maturities of ten to fifteen years.
4. Investment Securities
At December 31, 1993, NCB transferred $26,406,171 of securities
designated as trading to the available-for-sale category in order to reflect
management's future investment strategies and policies in accordance with SFAS
115. The securities consisted of $16,513,223 in corporate bonds and $9,892,948
in US Treasury and Agency obligations.
The maturities of investment securities available-for-sale at
December 31, 1993 are as follows:
Amortized Fair
Cost Value
Within 1 year $ 1,382,170 $ 1,303,335
After 1 year through 5 years 21,073,628 21,315,691
After 5 years through 10 years 2,780,812 2,788,395
After 10 years 998,750 998,750
$26,235,360 26,406,171
The composition of investment securities held-to-maturity at
December 31, 1993 is as follows:
<TABLE>
Held-to-Maturity
-----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
US Treasury and Agency
Obligations $1,986,393 $1,222 $ - $1,987,615
Other investments 1,394,305 1,394,305
---------- ------ -------- ----------
$3,380,698 $1,222 $ - $3,381,920
========== ====== ======== ===========
</TABLE>
At December 31, 1993, all securities held-to-maturity were due within
one year. There were no sales of securities classified as available-for-sale or
held-to-maturity during 1993, 1992, and 1991. The change in net unrealized
holding gain or (loss) on trading securities that has been included in earnings
for 1993, 1992, and 1991 are $170,813, $(18,827), and $311,632, respectively.
NCB held no investment securities at December 31, 1993 that were callable.
5. Loan Servicing
Mortgage loans serviced for others are not included in the
accompanying consolidated balance sheets. The unpaid principal balances of these
loans at December 31, 1993 and 1992 are $845,499,672 and $638,244,536,
respectively.
6. Loans and Lease Financing
Loans and leases outstanding by category at December 31 are as
follows:
1993 1992
Commercial loans $223,682,372 $199,441,908
Real estate loans
Construction 5,778,923 5,079,688
Residential 170,570,593 166,360,156
Loans held for sale 40,274,829 70,019,625
Commercial 10,577,263 10,933,115
Lease financing 6,829,442 6,721,510
------------ ------------
$457,713,422 $458,556,002
============ ============
NCB's commercial and real estate loan portfolio is diversified both
in terms of industry and geography. The following is the distribution of the
loans outstanding at December 31:
<TABLE>
Commercial Loans Real Estate Loans
---------------- -----------------
1993 1992 1993 1992
------ ------ ----- ------
<S> <C> <C> <C> <C>
By Region
Northeast 38.0% 41.5% 53.0% 58.1%
South Atlantic 11.0 14.9 21.4 18.2
Central 28.6 25.0 19.2 18.3
West 22.4 18.6 6.4 5.4
------ ------ ------ ------
100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======
</TABLE>
Percentage of Total
Loan Portfolio
1993 1992
By Borrower Type
Real estate
Construction 1.3% 1.1%
Residential 46.0 51.4
Commercial 2.3 2.4
Commercial
Food processing and distribution 22.9 19.7
Financial services 6.4 5.8
Medical service and supplies 5.1 4.8
Other 16.0 14.8
------ ------
100.0% 100.0%
====== =======
NCB originates multifamily blanket mortgages to predominantly owner-
occupied housing cooperatives. A significant portion of NCB's mortgage loans are
located within New York City due to that city's extensive cooperative market.
The blanket mortgages are collateralized by the building and proprietary leases
of the housing cooperative. The loans are repaid from operations of the real
estate cooperative.
NCB's commercial portfolio has a concentration in the food processing
and distribution industry. The loan types include lines of credit, revolving
credits, and term loans. These loans are typically collateralized with general
business assets (e.g., inventory, receivables, fixed assets, and leasehold
interests). The loans are expected to be repaid from cash flows generated by the
borrower's operating activities.
The carrying amounts and respective estimated fair values of loans
and leases outstanding at December 31 are as follows (amounts in thousands):
<TABLE>
Carrying Amount Estimated Fair Value
----------------------- ---------------------
1993 1992 1993 1992
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Commercial
Fixed rate loans $ 46,415 $ 63,670 $ 47,017 $ 63,488
Adjustable rate loans 177,267 135,772 201,410 136,519
Real Estate
Loans held for sale 40,275 70,020 43,256 72,134
Portfolio-fixed rate 25,637 19,180 25,982 18,889
Portfolio-adjustable 161,289 163,192 165,045 166,691
Lease financing 6,830 6,722 7,328 7,123
-------- -------- -------- --------
$457,713 $458,556 $490,038 $464,844
======== ======== ======== ========
</TABLE>
7. Nonperforming Assets
The loan portfolio includes loans on which NCB is not currently
accruing interest income. The total outstanding principal of these loans at
December 31, 1993, 1992, and 1991, and the effect on interest income for the
years then ended, are as follows:
1993 1992 1991
---------- ---------- ----------
Principal outstanding $ 886,313 $4,207,350 $4,887,613
========== ========== ==========
Gross amount of interest
that would have been
recorded at original rates $ 118,145 $ 597,623 $ 634,998
Less interest received 26,040 164,259 243,305
---------- ---------- ----------
Interest income not recorded $ 92,105 $ 433,364 $ 391,693
========== ========== ==========
The loan portfolio includes loans that have been renegotiated with
a reduced interest rate, or with an extension of payment of principal and
interest. The total outstanding principal of these loans at December 31,1993,
1992 and 1991, and the effect on income for the years then ended are as follows:
1993 1992 1991
---------- ---------- ----------
Principal outstanding $2,283,149 $3,428,208 $2,490,775
========== ========== ==========
Gross amount of interest
that would have been
recorded at original rates $ 296,697 $ 413,492 $ 268,808
Less interest received 178,491 259,672 53,444
---------- ---------- ----------
Interest income not recorded $ 118,206 $ 153,820 $ 215,364
========== ========== ==========
At December 31, 1993, there are no commitments to lend additional
funds to borrowers whose loans are non-performing.
At December 31, 1993 and 1992, NCB has real estate owned through
foreclosure and in-substance foreclosures of $171,663 and $2,405,943,
respectively, which are classified as other assets.
8. Transactions with Related Parties
Section 103 of the Act, as amended, requires that twelve of the
fifteen members of NCB's Board of Directors be elected by holders of Classes B
and C Stock and that they have actual cooperative experience. NCB stock is, by
law, owned only by borrowers and entities eligible to borrow. The election rules
require that candidates for the Board of Directors represent cooperative
organizations that currently hold Class B or Class C Stock. NCB has conflict of
interest policies which require, among other things, that a board member be
disassociated from decisions which pose a conflict of interest or the appearance
of a conflict of interest. Loan requests from cooperatives with which members
of the board may be affiliated are subject to the same eligibility and credit
criteria, as well as the same loan terms and conditions, as all other loan
requests.
In addition, NCB through its subsidiary, NCBSB, enters into
transactions in the normal course of business with its directors, officers, and
their family members.
For the year ended December 31, 1993 loans to affiliated
cooperatives, directors, officers, and their family members have the following
outstanding balances:
January 1, December 31,
1993 Additions Deductions 1993
----------- ----------- ----------- -----------
Loans to affiliated
cooperatives $26,539,598 $28,882,444 $15,955,227 $39,466,815
Loans to directors,
officers, and family
members 607,394 389,520 310,419 686,495
----------- ----------- ----------- -----------
$27,146,992 $29,271,964 $16,265,646 $40,153,310
=========== =========== =========== ===========
Percent of loans
outstanding 5.93% 8.8%
============ ============
There are additions of $9,584,806 in loans related to new
affiliations in 1993 and $7,014,125 of the deductions relate to affiliations
ceased in 1993. None of the related party loans outstanding at December 31,
1993 are on non-accrual status.
During 1993 and 1992, NCB recorded interest income of $4,009,647 and
$3,227,699, respectively on loans to related parties.
Included in the loans outstanding to affiliated cooperatives as of
December 31, 1993 is a $50 million loan to the Co-operative Central Bank. This
loan is serviced by NCB Mortgage Corporation and is 80% participated to outside
banks without recourse to NCB. NCB has adequately reserved for the $10 million
exposure associated with the 20% share it retained. The loan is secured by US
Government guaranteed obligations equal to 110% of the outstanding balance. The
Co-operative Central Bank is an organization with which the chairman of NCB's
Board of Directors is affiliated. The chairman will retire from NCB's Board
upon the expiration of his term in April 1994.
In 1984, the Community Enterprise Development Corporation of Alaska
(CEDC) entered into a contract to provide NCB with services related to loan
origination and servicing of loans within the State of Alaska. CEDC is an
organization with which a retired NCB director is affiliated. Fees paid by NCB
under this contract for the years ended December 31, 1993, 1992, and 1991,
totalled $267,000, $184,000, and $155,000, respectively. This contract expired
in 1993. The director retired from NCB's Board upon expiration of his term in
April, 1993.
Certain NCB affiliates, and certain directors and officers of NCB and
NCBSB have deposits with NCBSB. Such deposits, aggregated $1,293,422, and
$10,380,280 as of December 31, 1993 and 1992, respectively.
9. Allowance for loan Losses
The following is a summary of the activity in the allowance for loan
losses:
1993 1992 1991
----------- ---------- ----------
Balance at beginning of year $10,418,687 $8,706,011 $8,272,185
Provision for loan losses 1,703,907 2,098,986 2,362,616
Charge-offs (252,384) (416,269) (2,103,782)
Recoveries of loans previously
charged off 439,149 29,959 174,992
----------- ----------- ----------
Balance at end of year $12,309,359 $10,418,687 $8,706,011
=========== =========== ==========
The allowance for loan losses is 2.7%, 2.3%, and 1.9% of loans and
lease financings at December 31, 1993, 1992, and 1991, respectively.
10. Premises and Equipment
Premises and equipment as of December 31 consist of the following:
1993 1992
-------- ---------
Furniture and equipment $1,969,052 $1,904,241
Leasehold improvements 1,502,976 1,488,708
Other 1,237,262 1,188,734
---------- ----------
4,702,290 4,581,683
Less: Accumulated depreciation (2,681,246) (2,147,052)
and amortization ----------- -----------
$2,028,044 $2,434,631
=========== ===========
11. Leases
NCB leases its headquarters in Washington, D.C. through April 1,
2002. NCB also leases premises for its regional offices with expiration dates
between January 31, 1994 to January 6, 1999. These leases are all
non-cancelable operating leases.
Minimum future rental payments under non-cancelable operating leases
having remaining terms in excess of one year as of December 31, 1993 are as
follows:
1994 1,400,330
1995 1,372,189
1996 1,393,336
1997 1,417,968
1998 1,429,751
Thereafter 4,434,657
-----------
$11,448,231
===========
Rental expense in 1993, 1992, and 1991 is $1,669,165, $1,560,633, and
$1,600,497, respectively.
During 1992, NCB deferred incentives received in connection with a
new lease for office space. These incentives are being amortized over the ten
year life of the lease. At December 31, 1993 and 1992, the unamortized lease
incentive is $1,524,243 and $1,605,859, respectively.
12. Deposits
Deposits as of December 31 are summarized as follows:
<TABLE>
1993 1992
Weighted Weighted
Average Average
Balance Rate Balance Rate
----------- ---- ----------- -----
<S> <C> <C> <C> <C>
Balances by type
Passbook accounts $ 5,739,247 3.40% $ 6,074,481 3.42%
Money market demand and
NOW accounts 33,656,940 2.37 18,020,255 2.60
Fixed-rate certificates
Less than $100,000 17,007,650 4.08 21,680,264 4.81
More than $100,000 10,527,597 4.05 6,456,416 4.12
----------- -----------
$66,931,434 2.92% $52,231,416 3.78%
=========== ===========
The contractual maturity of certificate accounts at December 31 is
as follows:
Year Ending December 31 Amount
1994 $18,455,632
1995 5,461,778
1996 1,793,754
1997 841,319
1998 and thereafter 982,764
-----------
$27,535,247
===========
The estimated fair value of deposits is $66,901,000 and $52,291,000
at December 31, 1993 and 1992, respectively.
13. Short-Term Borrowings
Revolving credit facilities
NCB has $180,000,000 revolving lines of credit, $120,000,000 of which
is committed until December 31, 1996.
Interest expense from borrowings under the revolving line of credit
facilities is $774,657, $2,302,708, and $3,934,980, in 1993, 1992, and 1991,
respectively. The following is a summary of the borrowings under the facility
for the years ended December 31:
1993 1992
------------ ------------
Borrowings outstanding
at December 31 $ 31,500,000 $ 26,000,000
Available capacity
at December 31 148,500,000 144,000,000
Average line of credit borrowings
outstanding during the year 20,856,575 48,076,923
Maximum borrowings during the year 88,000,000 110,000,000
Weighted average borrowing rate
During the year 3.7% 4.8%
At December 31 3.6% 3.8%
Borrowing rates under the revolving credit facility are indexed off
the prime rate, Federal funds rate, certificate of deposit rates or the London
Interbank Offered Rate (LIBOR) and vary with the amount of borrowings
outstanding. Commitment fees for the line of credit are 5/16 of 1% on the total
facility. Total commitment fees paid for revolving credit facilities are
$538,630, $571,875, and $523,959 in 1993, 1992, and 1991, respectively. All
borrowings under the facility which are outstanding at expiration of the
facility are due at that time.
NCB is required under these revolving line of credit agreements to
maintain $25 million of cash, cash equivalents, and investments and have, among
other items, an effective net worth of not less than $265 million (defined as
total members' equity plus subordinated Class A notes). NCB shall not at any
time permit consolidated senior debt to exceed 650% of consolidated adjusted net
worth.
Estimated fair value
The carrying amounts and respective estimated fair values of short
term borrowings at December 31, 1993 and 1992 are as follows (amounts in
thousands):
</TABLE>
<TABLE>
Carrying Amount Estimated Fair Value
-------------------- ---------------------
1993 1992 1993 1992
------- ------- ------- -------
<S> <C> <C> <C> <C>
Line of Credit $31,532 $26,042 $31,492 $26,037
Advances from Federal Home
Loan Bank 10 10 10 10
Other 2,040 2,705 2,040 2,705
------- ------- ------- -------
$33,582 $28,757 $33,542 $28,752
======= ======= ======= =======
</TABLE>
14. Long-term Debt
The following is a schedule of outstanding long-term debt at December
31, 1993:
Amount Rate Maturity
$30,000,000 9.28 1994
25,000,000 9.00 1994
25,000,000 10.15 1995
19,000,000 8.18 1997
18,000,000 8.32 1997
13,000,000 8.44 1998
NCB has entered into a series of interest rate swap agreements which
have a combined notional amount of $96.0 million. The effect of the agreements
is to convert $96.0 million of the term debt from a weighted average fixed rate
of 8.21% to a floating rate based on LIBOR. The agreements expire in varying
amounts through 1998.
NCB is required under these lending agreements to, among other
things, maintain $25 million of cash, cash equivalents and investments and have
an effective net worth of not less than $265 million (defined as total members'
equity plus subordinated Class A notes). NCB shall not at any time permit
consolidated senior debt to exceed 650% of consolidated adjusted net worth.
The carrying amount and respective estimated fair value of long-term
borrowings at December 31, 1993 and 1993 are as follows ( amounts in thousands):
Carrying Amount Estimated Fair Value
------------------- ---------------------
1993 1992 1993 1992
-------- -------- -------- --------
Long-term debt $130,000 $147,000 $135,232 $152,191
15. Subordinated Class A Notes
On December 31, 1981, NCB issued unsecured subordinated Class A notes
to the U.S. Treasury (holder) in the amount of $184,270,000 as provided in the
Act, as amended, in full redemption of the Class A Preferred Stock previously
owned by the Government. The notes and all related payments are subordinated to
any secured and unsecured notes and debentures thereafter issued by NCB, but the
notes have first preference with respect to NCB's assets over all classes of
stock issued by NCB. NCB cannot pay any dividend on any class of stock at a
rate greater than the statutory interest rate payable on subordinated Class A
notes.
The notes require that proceeds from the sale of Classes B and C
Stock be applied annually toward the repayment of the notes. In 1993 and 1992,
$314,622 and $1,413,050 respectively were applied toward repayment of these
notes. These notes mature on October 31, 2020.
The Act states that the amount of NCB borrowings which may be
outstanding at any time shall not exceed 10 times the paid-in capital and
surplus which, as defined by the Act, includes the subordinated Class A notes.
The annual interest payments for each tranche are determined in
accordance with the following schedule which also includes the carrying amounts
and respective estimated fair values of the subordinated Class A notes at
December 31, 1993 (in thousands):
Next Carrying Estimated
Index Rate Repricing Date Amount Fair Value
91-day Treasury rate 2.98% January 1, 1994 $ 53,553 $ 53,547
3-year Treasury rate 4.24 October 1, 1996 36,903 36,596
5-year Treasury rate 8.47 October 1, 1995 55,281 58,322
10-year Treasury rate 8.82 October 1, 2000 37,252 44,227
-------- --------
$182,989 $192,692
======== ========
16. Common Stock and Members' Equity
NCB's common stock consists of Class B Stock owned by its borrowers,
Class C Stock owned by cooperatives eligible to borrow from NCB, and Class D
non-voting Stock owned by others.
1993 1992
---------------------------- ---------------------------
Class B Class C Class D Class B Class C Class D
---------------------------- ---------------------------
Par value per share $100 $100 $100 $100 $100 $100
Shares authorized 700,000 300,000 100,000 700,000 300,000 100,000
Shares issued and
outstanding 596,711 205,738 3 598,944 205,776 3
17. Regulatory Capital of NCBSB
Under Office of Thrift Supervision (OTS) regulatory capital
regulations and agreements, NCBSB must have : (i) core capital equal to at least
5% of adjusted total assets, (ii) tangible capital equal to at least 1.5% of
adjusted total assets, and (iii) total capital equal to at least 8% of risk-
weighted assets. In measuring a savings association's compliance with all three
FIRREA capital standards, savings associations must deduct from their capital
(with several exceptions primarily supervisory goodwill and certain non-
qualifying purchased loan servicing rights) their investments in, and advances
to, subsidiaries engaged (as principal) in activities not permissible for
national banks. Supervisory goodwill, as defined, is permitted to be included
in core capital and risk-based capital, not to exceed 1.5% of the savings
association's tangible assets and decreasing to zero during a phase-out period
ending December 31, 1994.
NCBSB's capital exceeds the minimum capital requirements at December
31, 1993. the following table summarized NCBSB's capital at December 31, 1993:
Tangible Core Risk-Based
Capital Capital Capital
----------- ----------- -----------
NCBSB's regulatory capital $ 7,449,787 $ 8,010,209 $ 8,427,195
regulatory capital
required 1,120,843 3,736,144 4,311,099
----------- ----------- -----------
NCBSB's regulatory capital
in excess of minimum
requirement $ 6,328,944 $ 4,274,065 $ 4,116,096
=========== =========== ===========
NCBSB's regulatory capital
as a percent of assets 9.97% 10.6% 15.6%
============ ============ ============
Minimum regulatory capital
required as a percent of assets 1.5% 5.0% 8.0%
============ ============ ============
Asset base used for capital
purposes $74,722,876 $74,722,876 $53,888,737
=========== =========== ===========
NCBSB's management believes that, under the current regulations,
NCBSB will continue to meet its minimum capital requirements in the foreseeable
future. However, events beyond the control of NCBSB, such as increased interest
rates or a downturn in the economy in areas where NCBSB have most of their
loans, could adversely affect future earnings and, consequently, the ability of
NCBSB to meet its future minimum capital requirements.
In August 1993, the OTS issued final regulations, effective January
1, 1994, adding an interest rate risk component to its risk-based capital
standards. Management believes NCBSB will continue to meet its risk-based
capital requirements under these new regulations.
OTS regulations impose certain restrictions on NCBSB's payment of
dividends. At December 31, 1993, retained earnings available for cash dividends
were approximately $2,239,000.
18. Employee Benefits
Substantially all employees are covered by a non-contributory,
defined contribution retirement plan. Total expense for the retirement plan for
1993, 1992, and 1991 is $241,309, $280,401, and $290,135, respectively.
NCB maintains an employee thrift plan organized under IRS Code
Section 401(k) and contributes up to 6% of each participant's salary.
Contributions and expense for 1993, 1992, and 1991 are $234,246, $248,417, and
$235,697, respectively.
19. Income Taxes
Each year under the Act, NCB must declare tax deductible patronage
dividends in the form of cash and stock which effectively reduce NCB's Federal
income tax to insignificant amounts. In 1993, NCB paid cash and issued allocated
surplus in lieu of stock. In 1994, NCB will declare a patronage dividend for
1993 of $6,995,245. The anticipated cash portion of the patronage dividend in
1994 of 1993 earnings is shown as dividends payable. The anticipated allocated
surplus portion of the patronage dividend in 1994 of 1993 earnings has been
added to allocated retained earnings at December 31, 1993. Patrons of NCB
receiving such patronage dividends consent to include them in their income.
At December 31, 1993, NCB has available for Federal income tax
purposes net operating loss (NOL) carryforwards of approximately $2,800,000
which expire in varying amounts through 1995. These net operating loss
carryforwards can only be used to offset future patronage sourced income and
thus do not create a deferred tax asset.
The provision for income taxes consists of the following:
Year Ended December 31
------------------------------------------
1993 1992 1991
------------------------------------------
Current tax expense
U.S. Federal $1,129,171 $ 669,453 $364,133
State and local 56,234 262,630 65,545
---------- --------- --------
Total current 1,185,405 932,083 429,678
---------- --------- --------
Deferred tax expense
U.S. Federal (351,602) (261,020)
State and local 12,195 (8,919)
---------- ----------
Total deferred (339,407) (269,939)
---------- ----------
Total provision $ 845,998 $ 662,144 $429,678
=========== ========== ========
The provision for income taxes differs from the amount of income tax
determined by applying the applicable U.S. statutory federal income tax rate to
pretax income as a result of the following differences:
Year Ended December 31
--------------------------------------
1993 1992 1991
--------------------------------------
Statutory U.S. tax rate $3,217,072 $2,254,777 $2,139,836
Patronage dividends (1,970,383) (1,632,001) (1,993,623)
FAS 96 adjustment for NCBSB's NOL 241,780
NOL carryforward (408,000) (272,000)
State and local taxes 45,163 169,614 65,545
State income tax deduction (22,285)
Other (37,854) 141,754 (1,575)
----------- --------- -----------
Income tax provision $ 845,998 $ 662,144 $ 429,678
=========== ========= ===========
Deferred tax assets and liabilities are comprised of the following
at December 31, 1993 and 1992 are as follows:
Year Ended December 31
----------------------
1993 1992
-------- -------
Deferred commitment fees $148,963 $190,195
Write-down of other assets 163,383
Allowance for loan losses 507,528 135,150
Other 62,276 29,102
Gross deferred tax assets 718,767 517,830
Valuation allowance (157,788)
--------- -------
Net deferred tax assets 560,979 517,830
--------- ---------
Gain on sale of loans (30,995) (157,866)
--------- ---------
Gross deferred tax liabilities (30,995) (157,866)
--------- ---------
$529,984 $359,964
========= =========
Management expects that all deferred tax assets will be realized
based on NCB's history of earnings and management's expectations that NCB will
generate taxable income in future years to offset the reversal of temporary
differences.
20. Income Available for Dividends on Class C Stock
Under an existing long-term debt agreement, the aggregate amount of
cash dividends on Class C Stock, together with patronage dividends payable in
cash, is limited to the sum of $15,000,000 plus 50% of NCB's consolidated
adjusted net income accumulation (or minus 100% of NCB's consolidated adjusted
net income in case of a deficit) from January 1, 1992 through the end of the
most current fiscal year ended. If the aggregate amount of cash dividends and
patronage dividends payable in cash exceeds the limitation previously described,
total patronage dividends payable in cash and cash dividends payable on any
calendar year may not exceed 20% of NCB's taxable income for such calendar year.
Notwithstanding the above restriction, NCB is prohibited by law from
paying dividends on its Class C Stock at a rate greater than the statutory
interest rate payable on subordinated Class A notes. Those rates for 1993, 1992,
and 1991 are 5.4%, 6.0%, and 7.1%, respectively. Consequently, the amounts
available for payment on the Class C Stock for 1993, 1992, and 1991 are
$1,110,983, $1,234,656, and $1,505,294, respectively.
Independent Auditors' Report
To the Board of Directors and
Members of National Cooperative Bank
We have audited the accompanying consolidated balance sheet of National
Cooperative Bank and subsidiaries as of December 31, 1993, and the related
consolidated statements of income, changes in members' equity, and cash flows
for the year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the
Company for the years ended December 31, 1992 and 1991 were audited by other
auditors whose report, dated January 29, 1993, expressed an unqualified opinion
on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such 1993 consolidated financial statements present fairly, in
all material respects, the consolidated financial position of National
Cooperative Bank and subsidiaries as of December 31, 1993, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, effective
January 1, 1992, the Company changed its method of accounting for income taxes
to conform with Statement of Financial Accounting Standards No.109.
/s/DELOITTE & TOUCHE
Washington, D.C.
January 27, 1994
Item 9. Changes in and Disagreements with Accountants, on
Accounting and Financial Disclosure
The registrant has previously reported the information required by
Item 304 of Regulation S-K concerning a change of Accountants in a current
report on Form 8-K dated February 5, 1993 and Amendment No.1 thereto filed on
March 12, 1993.
PART III
Item 10. Directors and Executive Officers of the Registrant
The directors and executive officers of NCB and the positions held by each
are as follows:
<TABLE>
Position Year First End of
Appointed Term Age
<S> <C> <C> <C> <C>
Jeremiah J. Foley Chairman of the Board of
Directors and Director 1988 1994 53
Charles E. Snyder President and Chief Executive
Officer 1983 - 40
Leo H. Barlow Director 1993 1996 41
Richard G. Biernacki Director 1988 1994 59
Harry J. Bowie Director 1991 1995 58
Jerry W. Davis Director 1990 1993 54
Edward J. Dirkswager,Jr. Director and
Vice Chairman of the Board 1990 1993 55
Thomas D. Henrion Director 1991 1994 50
Gordon E. Lindquist Director 1988 1994 64
Terry Lewis Director 1991 1994 46
Mary Ann Rothman Director 1993 1996 51
Wally Smith Director 1990 1994 46
Frank B. Sollars Director 1980 1993 72
John K. Stewart Director 1988 1993 59
Dr. Robert L.
Thompson Director 1989 1994 59
Margaret A. Cheap Corporate Vice President,
Executive Director, NCB
Development Corp. 1980 - 42
Charles H. Hackman Chief Financial Officer,
President, NCB Financial Corp.
President, NCB Savings Bank 1984 - 49
Grace A Huebscher Corporate Vice President,
Real Estate Division
President, NCB Mortgage Corp. 1984 - 34
Bradford T. Nordholm Corporate Vice President,
Corporate Banking Division
President, NCB Business
Credit Corporation
President, Cooperative
Funding Corporation
Marlon W. Pickles Corporate Vice President,
Special Assets 1985 - 62
Barry W. Silver Corporate Vice President,
Credit Policy 1992 - 47
Terry D. Simonette President, NCB Development Corp. 1991 - 44
</TABLE>
Nominees For Directorships
Richard C. Koven
Ralph Paige
Jeremiah J. Foley has been Vice President of Co-operative Central Bank and
Vice President of Co-operative Bank Investment Fund since 1984.
Charles E. Snyder was named President and Chief Executive Officer of NCB
in January 1992. He had been Corporate Vice President and Chief Financial
Officer of NCB since 1983, and President and Chief Executive Officer of NCB
Capital Corporation since 1987.
Leo H. Barlow has been President & Chief Executive Officer of Sealaska
Corporation since August 1, 1992. Previously, he served as President & Chief
Executive Officer of Sealaska Timber Corporation.
Richard G. Biernacki has served as President, Chief Executive Officer, and
Chairman of the Board of Fastener Industries, Inc. since 1980. Prior to 1980 he
was Treasurer of Fastener Industries, and has served on its Board of Directors
since 1972.
Harry J. Bowie is the President and Chief Executive Officer of Delta
Foundation, Inc. a community development corporation located in Greenville,
Mississippi. He has also served as a Director of the Southern Regional Council
located in Atlanta and the Housing Assistance Council located in Washington,
D.C.
Jerry W. Davis has been President and Chief Operating Officer of Affiliated
Foods Stores, Inc., Little Rock and Van Buren, Arkansas, since 1986. In 1988,
he became Chairman of the Board of Shurfine-Central Corporation and President of
the Retailer Owned Food Distributors Assn.
Edward J. Dirkswager, Jr. is Chief Executive Officer of LAMAT, Inc.
Thomas D. Henrion has been President and Chief Operating Officer of KFC
National Purchasing Cooperative, Inc., Louisville, Kentucky since 1980. He also
serves as President and Chief Executive Officer of KFC Mutual Insurance Company,
Ltd., Hamilton, Bermuda.
Terry Lewis has been President and Chief Executive Officer of the National
Association of Housing Cooperatives since 1987.
Gordon Lindquist served as President and Chief Executive Officer of Mutual
Service Insurance Companies from 1983 to 1989.
Mary Ann Rothman is Executive Director of the Council of New York
Cooperatives and also serves on the executive committee of the National
Association of Housing Cooperatives.
Wally Smith is President and Chief Executive Officer and member of the
Board of Directors of Recreational Equipment, Inc., Seattle, Washington. He also
serves as Chairman of the Board of Independent Colleges of Washington.
Frank B. Sollars is an Ohio farmer. He is a retired director and former
chairman of the board of Nationwide Mutual Casualty Insurance Company and
affiliates, and a director of the Fifth Third Bank of Columbus.
John K. Stewart has been President of the John Stewart Company for the past
ten years. Previously, he was an officer in a TRW-owned subsidiary corporation
which developed public and HUD-assisted and insured housing.
Dr. Robert L. Thompson is President and Chief Executive Office of Winrock
International. Previously, he was Dean of Agriculture, Purdue University,
Assistant Secretary for Economics of the U. S. Department of Agriculture, a
senior staff economist at the President's Council of Economic Advisors, and a
professor of agricultural economics at Purdue University.
Margaret A. Cheap has been Executive Director of NCB Development Corporation
since 1991. From 1986 to 1991, she was President of NCB Development Corporation.
Previously, Ms. Cheap, who has been with NCB since 1980, was in charge of
regional operations and then in charge of business development for NCB.
Charles H. Hackman became Corporate Vice President and Chief Financial
Officer in 1992. He was Corporate Vice President, Credit Policy, of NCB since
1984, and President of NCB Financial Corporation since its inception in 1988.
Previously, he was Vice President, Credit Administration of Equitable Bank,
N.A., Baltimore.
Grace A. Huebscher became Corporate Vice President, Real Estate Division
in 1992. She had been Senior Vice President, Banking Division since 1989 and
President of NCB Mortgage Corporation since 1990. Ms. Huebscher previously was
Vice President in charge of NCB's Eastern Region Office in New York.
Bradford T. Nordholm has been Corporate Vice President, Corporate Banking
Division, since 1988 and President of NCB Business Credit Corporation since
1990. Prior to that he was Senior Vice President of NCB from 1985 to 1988 and
was a Vice President from 1984 to 1985. In addition, Mr. Nordholm was named
President of NCB Mortgage Corporation in 1987. Previously, he was Manager,
Corporate Finance, of Interregional Service Corporation.
Marlon W. Pickles has been Corporate Vice President, Special Assets, of NCB
since 1985. Previously, he was a self employed management consultant to
financial institutions, primarily in the area of loan workouts.
Barry W. Silver has been Corporate Vice President, Credit Policy, of NCB
since January, 1993 and Senior Vice President, Credit Policy of NCB since
January, 1992. Previously, he served as a senior lending officer for NCB since
1980.
Terry D. Simonette has been the President and Chief Operating Officer of
NCB Development Corporation since 1992. From 1984 to 1991, he served as Vice
President of NCB Development Corporation.
Ralph C. Koven is a Senior Vice President of Amalgamated Life Insurance
Company. He also serves on the Board of Directors of the National Cooperative
Business Association, Cooperative Development Fund, National Leadership
Coalition Hare Care Reform, and the National Coalition of Health Care
Cooperatives.
Ralph Paige has been Executive Director of the Federation of Southern
Cooperatives/Land Assistance Fund since 1985.
COMPOSITION OF BOARD OF DIRECTORS
The Act provides that the Board of Directors of NCB shall consist of 15
persons serving three-year terms. An officer of NCB may not also serve as a
director. The President of the United States is authorized to appoint three
directors with the advice and consent of the Senate. Of the Presidential
appointees, one must be selected from among proprietors of small business
concerns which are manufacturers or retailers; one must be selected from among
the officers of the agencies and departments of the United States; and one must
be selected from among persons having extensive experience representing
low-income cooperatives eligible to borrow from NCB. Frank B. Sollars is the
Presidential appointee from among proprietors of small business concerns. There
is a vacancy for the Presidential appointee from among the officers of U.S.
agencies and departments. John K. Stewart is the Presidential appointee from
among persons representing low-income cooperatives.
The remaining 12 directors are elected by the holders of Class B and Class
C stock. Under the bylaws of NCB, each stockholder-elected director must have at
least three years experience as a director or senior officer of the class of
cooperatives which he or she represents. The five classes of cooperatives are:
(a) housing, (b) consumer goods, (c) low-income cooperatives, (d) consumer
services, and (e) all other eligible cooperatives. At all times each class must
have at least one, but not more than three, directors representing it on the
Board.
Committees of the Board
The Board of Directors directs the management of NCB and establishes the
policies of NCB governing its funding, lending, and other business operations.
In this regard, the Board has established a number of committees, including
Executive, Loan and Business Development, Finance, Audit, Low Income, and
Strategic Planning Committees.
Item 11. Executive Compensation
COMPENSATION OF THE OFFICERS
The following table sets forth the compensation during the three fiscal
years of NCB's Chief Executive Officer and its four other most highly
compensated executive officers.
<TABLE>
Annual Compensation All Other
Compensation*
-------------------------------------------
(a) (b) (c) (d) (i)
Name and
Principal Position Year Salary Bonus
($) ($)
- ----------------------------- ----- ------- ------ -------
<S> <C> <C> <C> <C>
Charles E. Snyder, Pres & CEO 1993 212,500 64,530 25,557
1992 210,230 40,500 27,750
1991 168,431 38,000 29,593
Bradford T. Nordholm
CVP, Banking 1993 165,000 55,660 22,627
1992 164,328 31,300 24,784
1991 162,635 36,350 26,359
Charles H. Hackman,
Chief Financial Officer 1993 168,000 51,180 22,320
1992 158,010 36,750 24,379
1991 140,373 31,750 27,331
Grace, A. Huebscher,
CVP, Real Estate 1993 140,000 44,820 19,920
1992 138,807 27,500 22,722
1991 128,366 29,000 24,498
Margaret A. Cheap,
CVP/ Exec. Director,
NCBDC 1993 140,000 44,820 19,282
1992 130,609 29,500 18,970
1991 134,446 29,000 26,360
<FN>
* The " All Other Compensation" reported for 1993 consists of NCB's
contributions to the defined contribution retirement plan accounts of the name
officers, NCB's matching contributions to the 401(k) plan accounts of the named
officers, and NCB's payments of term insurance premiums for the named officers
as follows:
</TABLE>
<TABLE>
Retirement Plan Matching 401(k) Term Insurance
Contribution Contribution Premiums
--------------- ------------- ------------
<S> <C> <C> <C>
Mr. Snyder $12,750 $9,687 $3,120
Mr. Nordholm 9,900 9,607 3,120
Mr. Hackman 9,600 9,600 3,120
Ms. Huebscher 8,400 8,400 3,120
Ms. Cheap 8,400 7,762 3,120
</TABLE>
NCB has entered into a severance agreement with Charles E. Snyder, which
provides for certain payments to Mr. Snyder if his employment as NCB's President
and Chief Executive Officer terminates other than for cause or as a result of
his unilateral voluntary resignation. The agreement provides that, for 90 days
after NCB gives notice of Mr. Snyder's termination, he is to receive his full
salary as in effect at the time notice is given ( or his prior salary if it had
been reduced in the 30 days prior to such notice ) as well as continued accrual
of vacation and sick leave benefits; and continued medical, dental, life
insurance and pension benefits. Following such 90 day period, Mr. Snyder is
entitled to receive payments of $11,000 per month for an additional nine months.
If, prior to the conclusion of payments under the agreement, Mr. Snyder obtained
a new executive position with another firm, payments under the agreement would
be terminated or reduced.
COMPENSATION OF THE BOARD
Under the Act, directors appointed by the President from among proprietors
of small businesses and from persons with experience in low-income cooperatives,
are entitled to (1) compensation at the daily equivalent of the compensation of
a GS18 civil servant which currently amounts to $387.36 a day, and (2) travel
expenses. Directors elected by shareholders are entitled to (1) annual
compensation of $7,000, (2) $1,000 for each board meeting attended and (3)travel
expenses. The Chairman of the Board is entitled to an additional $5,000 in
compensation in addition to the above amounts. Directors of subsidiary
corporations are entitled to (1) $500 for each board meeting attended when not
held in conjunction with NCB board meetings and (2) travel expenses.
Mr. Sollars is eligible for reimbursement of additional travel expenses up
to $7,000 incurred while attending functions or conducting business related to
cooperative business as an official representative of NCB.
NCB has entered into deferred compensation agreements with Mr. Lindquist
and Mr. Foley dated June 1, 1991 and April 20, 1992, respectively. Under the
terms of the agreement, fees payable to Messrs. Lindquist and Foley for their
services as Directors of NCB may be deferred at their option until retirement
from the Board. Interest will be credited, compounded quarterly, at an annual
rate equal to the yield on a 91 day US Treasury Bill plus 50 basis points
adjusted quarterly.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Stock Ownership of Certain Stockholders and Management
Several of NCB's stockholders owns in excess of 5 percent of the outstanding
shares of NCB's Class B or Class C stock. The shareholders purchased a portion
of this stock in connection with sizable loans made by NCB to them and received
a portion of the stock as patronage dividends from NCB. NCB's voting policy,
however, does not allocate voting rights solely based on the number of shares of
Class B or Class C stock held and prohibits any one stockholder from being
allocated more than five percent of the votes allocated in connection with any
stockholder action.
The following table shows those cooperatives which owned more than 5 percent
of NCB's Class B or Class C stock as of December 31, 1993.
Class B Stock Class C Stock
Name and Addresses of No. of Percent No. of Percent
Shareholders Shares of Class Shares of Class
- -------------------------- --------- -------- --------- -------
Co-operative Central Bank 30,500.00 5.11% 25,808.88 12.54%
265 Franklin Street
Boston, MA. 92110
Greenbelt Homes Inc 14,424.28 2.42% 28,843.47 14.02%
Hamilton Place
Greenbelt, MD. 20770
Group Health, Inc (1) 8,757.97 1.47% 11,108.24 5.40%
2829 Univ. Ave., S.E.
Minneapolis, MN 55414
Mutual Redevelopment 20,768.58 3.48% 10,697.36 5.20%
Houses, Inc.
321 Eighth Avenue
New York, NY 10001
(1) The holdings of Group Health, Inc. (GHI) include 2,769 shares of
Class C stock held of record by Central Minnesota Group Health Plan, which is
affiliated. GHI disclaims beneficial ownership of these shares.
Because the Act restricts ownership of NCB's Class B and Class C stock to
eligible cooperatives, NCB's officers and directors do not own any Class B or
Class C stock, although cooperatives with which they are affiliated may own such
stock.
Item 13. Certain Relationships and Related Transactions
Certain Transactions
The following table sets forth information concerning certain transactions
by which NCB and its subsidiaries have made loans or leases to organizations
with which NCB directors or executive officers are affiliated. The first column
lists the name of the director or executive officer who is affiliated with the
loan or lease recipient. The second column sets forth the name of the
organization to which the loan or lease was made. (Loans labeled as "personal"
were made to the named director of officer). The last three columns list loan
balances and interest rates as of the specified dates. The text following the
table further describes the nature of the transactions set forth in the table.
The following loans and leases were made in the ordinary course of NCB's
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and did not involve more than the normal risk of uncollectability
or present other unfavorable features.
National Cooperative Bank
<TABLE>
largest Interest
Balance Balance as rate as
Related since of of
Party 1/1/93 12/31/93 12/31/93
------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Jeremiah J. Foley Co-operative
Central Bank 10,000,000 10,000,000 4.50
National Rural
Development 210,245 178,815 7.50
Leo H. Barlow Sealaska 9,900,000 5,300,000 5.75
Sealaska 3,297,806 2,890,217 6.65
Richard C. Biernacki Fastener
Industries, Inc. 185,147 115,321 various
Jerry W. Davis Affiliated Food and
Drug 652,649 637,394 7.25
Affiliated Food and
Drug 2,831,633 1,625,615 7.00
Thomas Henrion Kentucky Food Corp.
National
Purchansing
Cooperative 0 0 0.00
Mary Ann Rothman 110-118 Riverside
Tenants 1,600,000 2,215,000 7.00
Barry S. Silver International Town/
Country 867,425 787,911 7.00
Richard C. Koven Amalgamated Life
Insurance 537,591 386,025 9.25
NCB Savings Bank, FSB
Terry Simonette Personal 172,345 171,179 9.25
Charles H. Hackman Personal 155,000 154,005 7.00
</TABLE>
NCB has a loan outstanding to the Co-operative Central Bank of which Mr.
Jeremiah Foley is Vice President. This revolving line of credit was established
prior to Mr. Foley's election to the Board of Directors. The Co-operative
Central Bank has a $50MM line of credit of which NCB owns a 10% interest. Ms.
Cindy Copple,wife of Mr. Foley, is a director of National Rural Development (NRD
). NCB currently has a loan with NRD.
NCB has two loans outstanding with Sealaska Corporation of which Mr. Barlow
has been President and Chief Executive Officer. The first loan was used to
provide working capital financing and the second loan was used to refinance a
real estate term loan.
NCB has made a loan to Fastener Industries, Inc. of which Mr. Richard G.
Biernacki is President and Chief Executive Officer. The loan was made in 1987
to finance the purchase of equipment and inventory and was repaid in 1992.
NCB has one loan outstanding to Affiliated Food and Drug, a wholly-owned
subsidiary of Affiliated Food Stores, Inc. of which Mr. Jerry W. Davis is
President and Chief Operating Officer. The loan was made in 1990 for the purpose
of purchasing twelve existing retail drug stores and purchasing a computer
system.
NCB has a line of credit transaction with Kentucky Fried Chicken National
Purchasing Cooperative ( "KFCNPC" ). The purpose of this facility is to
guarantee loan commitments made by NCB to members of the KFCNPC.
NCB has one loan outstanding to 110-118 Riverside Tenants of which Ms.
Rothman is a member of the cooperative. The loan was made to fund capital
improvements for the housing cooperative.
Mr. Hackman, an officer of NCB, is a resident shareholder of the Watergate
South Cooperative. Mr. Hackman serves as an advisor to the Watergate South's
board of directors.
Mr. Silver, an officer of NCB, is a member of the Board of the
International Town and Country Club. This loan predates Mr. Silver's membership
in the club.
In its normal course of business, NCB Savings Bank makes loans to employees
at competitive market rates. NCB Savings Bank has issued home mortgage loans to
Terry Simonette and Charles Hackman.
NCB believes that the foregoing transactions contain terms comparable to
those obtainable in an arm's length transaction.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) The following financial statements are filed as a part of this
report.
Financial Statements as of December 31, 1991, 1992, and 1993.
Page #
19 Consolidated Balance Sheets
20 Consolidated Statements of Income
21 Consolidated Statements of Changes in Members'
Equity
22-23 Consolidated Statements of Cash Flows
24-45 Notes to the Consolidated Financial Statements
46 Report of Independent Accountants
(a)(2) Not applicable
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements, or the
notes thereto.
(a)(3) The following exhibits are filed as a part of this
report.
Exhibit No.
(a) 3.1 National Consumer Cooperative Bank Act, as amended
through 1981.
(e) 3.2 1989 Amendment to National Consumer Cooperative Bank
Act.
(i) 3.3 Bylaws of NCB
(j) 4.1 Election Rules of the NCB. For other instruments
defining the rights of security holders, see Exhibits
3.1 and 3.2.
(k) 4.2 Form of Assumption Agreements and Amended and
Restated Senior Note Agreements
(k) 4.3 Schedule Concerning Senior Note Agreements
(k) 10.1 Second Amended and Restated Loan Agreement with
National Westminster Bank USA et al.
(j) 10.2 Deferred Compensation Agreement with Jeremiah J. Foley
10.3 [ No exhibit ]
*(i) 10.4 Severance Agreement with Charles E. Snyder
*(k) 10.5 Incentive Plan for NCB Executive Officers
*(a) 10.6 Insurance Plan for NCB Executive Officers
(b) 10.7 Subordination Agreement with Consumer Cooperative
Development Corporation (now NCB Development
Corporation)
10.11 [ No exhibit ]
(g) 10.12 Lease on Headquarters of NCB
(e) 10.13 Issuing and Paying Agreement with Security Pacific
National Trust Co.
*(j) 10.14 Employment Agreement with Marlon W. Pickles
(e) 10.15 Commercial Paper Dealer Agreement with Merrill Lynch
Money Markets, Inc.
(e) 10.16 Financing Agreement with U.S. Treasury.
10.17-20 [ No Exhibit ]
*(g) 10.21 Deferred Compensation Agreement with Gordon E.
Lindquist
(k) 22.1 List of Subsidiaries and Affiliates of the NCB
(c) 25.1 Power of Attorney by Frank B. Sollars
(k) 25.2 Power of Attorney by Leo Barlow
(f) 25.3 Power of Attorney by Jerry W. Davis
(h) 25.4 Power of Attorney by Harry J. Bowie
(h) 25.5 Power of Attorney by Thomas D. Henrion
(d) 25.6 Power of Attorney by Richard G. Biernacki
(k) 25.7 Power of Attorney by Mary Ann Rothman
(f) 25.8 Power of Attorney by Edward J. Dirkswager, Jr.
(f) 25.9 Power of Attorney by Wally Smith
(h) 25.10 Power of Attorney by Terry Lewis
(d) 25.11 Power of Attorney by Jeremiah J. Foley
(d) 25.12 Power of Attorney by Gordon E. Lindquist
(d) 25.13 Power of Attorney by John K. Stewart
(f) 25.14 Power of Attorney by Robert L. Thompson
* Exhibits marked with an asterisk are management contracts or compensatory
plans.
(a) Incorporated by reference to the exhibit of the same number filed as part
of Registration Statement No. 2-99779 (Filed August 20, 1985).
(b) Incorporated by reference to the exhibit of the same number filed as part
of Amendment No. 1 to Registration Statement No. 2-99779 (Filed May 7, 1986).
(c) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's annual report on Form 10-K for the year ended December 31,
1986 (File No. 2-99779).
(d) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's annual report on Form 10-K for the year ended December 31,
1988 (File No. 2-99779).
(e) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's annual report on Form 10-K for the year ended December 31,
1989 (File No. 2-99779).
(f) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's annual report on Form 10-K for the year ended December 31,
1990 (File No. 2-99779).
(g) Incorporated by reference to the exhibit of the same number filed as part
of Registration Statement No. 33-42403 ( filed September 6, 1991 ).
(h) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's annual report on Form 10-K for the year ended December 31,
1991 (File No. 2-99779).
(i) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's quarterly report on Form 10-Q for the three months ended
June 30, 1992 (File No. 2-99779).
(j) Incorporated by reference to the exhibit of the same number filed as part
of the registrant's annual report on Form 10-K for the year ended December 31,
1992 (File No. 2-99779).
(k) Filed herewith.
(b) The Registrant filed a Current Report on Form 8-K, dated February 5, 1993,
Item 4: Changes in Registrant's Certifying Accountant. The Registrant
filed an Amendment to Application or Report on Form 8, dated March 12,
1993, Item 4: Changes in Registrant's Certifying Accountant.
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf of the undersigned, thereunto duly authorized.
NATIONAL CONSUMER COOPERATIVE BANK
DATE March 31, 1994 BY/s/Charles E. Snyder
Charles E. Snyder
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates noted:
Signature Title
*/s/Jeremiah J. Foley Chairman of the Board and
Jeremiah J. Foley Director
/s/Richard L. Reed Vice President
Richard L. Reed (Principal Financial
Officer)
/s/Marietta J. Orcino Vice President (Principal
Marietta J. Orcino Accounting Officer)
*/s/Leo H. Barlow Director
Leo H. Barlow
*/s/Richard G. Biernacki Director
Richard G. Biernacki
*/s/Harry J. Bowie Director
Harry J. Bowie
*/s/Jerry W. Davis Director
Jerry W. Davis
*/s/Edward J. Dirkswager, Jr. Director
Edward J. Dirkswager, Jr.
Signature Title
*/s/Thomas D. Henrion Director
Thomas D. Henrion
*/s/Terry Lewis Director
Terry Lewis
*/s/Gordon E. Lindquist Director
Gordon E. Lindquist
*/s/Mary Ann Rothman Director
Mary Ann Rothman
*/s/Wally Smith Director
Wally Smith
*/s/Frank B. Sollars Director
Frank B. Sollars
*/s/John K. Stewart Director
John K. Stewart
*/s/Dr. Robert L. Thompson Director
Robert L. Thompson
* By /s/Richard L.Reed
Richard L. Reed
(Attorney-in-Fact)
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT
With this report, the registrant is furnishing to the Commission for its
information four copies of the registrant's proxy materials for its 1993 annual
meeting. The registrant's annual report to securityholders is filed as Exhibit
13 to this report.
INDEX TO EXHIBITS
Exhibit No. Description
4.2 Form of Assumption Agreements and Amended
and Restated Senior Note Agreements 68
4.3 Schedule Concerning Senior Note Agreements 168
10.1 Second Amended and Restated Loan Agreement 170
with National Westminster Bank USA et al.
10.5 Incentive Plan for NCB Executive Officers 275
22.1 List of Subsidiaries of NCB 277
25.2 Power of Attorney by Leo Barlow 278
25.7 Power of Attorney by Mary Ann Rothman 278
27 Financial Data Schedule 280
Supplemental Information
Registrant's 1994 Proxy Materials
Exhibit 4.2
[CO
NATIONAL CONSUMER COOPERATIVE BANK
Assumption Agreement
and
Amended and Restated Senior Note Agreement
Dated as of December 1, 1993
Amended and Restated 8.18% Series A Senior Notes Due
Amended and Restated 8.32% Series B Senior Notes Due December 24, 1997
$13,000,000
Amended and Restated 8.44% Series C Senior Notes Due June 24, 1998
TABLE OF CONTENTS
SECTION 1. BACKGROUND; AUTHORIZATION OF ASSUMPTION; AUTHORIZATION OF
AMENDMENT AND RESTATEMENT OF EXISTING NCBCC NOTE AGREEMENT AND
EXISTING NCBCC NOTES; AMENDMENT AND RESTATEMENT OF EXISTING NCBCC
NOTE AGREEMENT AND EXISTING NCBCC NOTES. . . . . . . . .
1.1 Background; Authorization. . . . . . . . . . . . . . . . .
1.2 Authorization of Amendment and Restatement of Existing NCBCC Note
Agreement and Existing NCBCC Notes; Amendment and Restatement of
Existing NCBCC Note Agreement and Existing NCBCC Notes . .
1.3 Purchase for Investment. . . . . . . . . . . .
1.4 Failure to Deliver . . . . . . . . . . . . . . . . .. . . . . . .
1.5 Expenses, Stamp Tax Indemnity. . .. . . . . . . . . . . . . . . .
SECTION 2. WARRANTIES AND REPRESENTATIONS .. . . . . . . . . . . . . . . . .
2.1 Subsidiaries and Affiliates. . . . . . . . . . . . . . . . . . . . . .
2.2 Corporate Organization and Authority . . . . . . . . . . . . . . . . .
2.3 Financial Statements; Material Adverse Change; Description of Business .
.osure. . . . . . . .
. 10
2.5 Pending Litigation and 2.5 Pending Litigation and Judgments . . . . .
2.6 Title to Properties. . .. . . . . . . . . . . . . . . . . . . . . . . .
2.7 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . .
2.8 Issuance is Legal and Authorized; Conflicting Agreements and Other
Matters . . . . . . . . . . . . . . . . . .
2.9 No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.10 Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . ..
2.11 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.12 Margin Securities, etc .. . . . . . . . . . . . . . . . . . . . . . .
2.13 Private Offering . ........ . . . . . . . . . . . . . . . . . . . . .
2.14 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . .
2.15 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.16 Restrictions on Company. .. . . . . . . . . . . . . . . . . . . . . . .
2.17 Employee Retirement Income Security Act of 1974. . . . . . . . . . . .
2.18 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . .
2.19 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . .
2.20 Outstanding Amount of Existing NCBCC Notes
2.21 Assumption of Rights and Obligations of NCBCC. . . . . . . . . . . . . .
SECTION 3. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . .
3.1 Opinions of Counsel. . . . . . . . . . . . . . . . . . .
3.2 Warranties and Representations True; No Prohibited Action. . . . . .
3.3 Compliance with this Agreement . . . . . .. . .
3.4 Officers' Certificates . . . . . . . . . .. . . .
3.5 Legality . . . . . . . . . . . . . . . . .. . . .
3.6 Proceedings Satisfactory . . . . . . . . .. . . .
3.7 Related Agreements . . . . . . . . . . . . . . . .
3.8 Private Placement Numbers. . . . . . . . . . . . . .
3.9 Dissolution of NCBCC.. . . . . . . . . . . . . . . .
SECTION 4. PURCHASER'S SPECIAL RIGHTS . . . . . . . . . . . . . . . . . . . .
4.1 Direct Payment . . . . . . . . . . . . . . . . . . . . .
4.2 Delivery Expenses. . . . . . . . . . . . . . . . . . . .
SECTION 5. PREPAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1 Limitation on Prepayments. . . . . . . . . . . . . . . . .
5.2 Optional Prepayment With Yield-Maintenance Premium . .
5.3 Notice of Optional Prepayment. . . . . . . .
5.4
5.5 Retirement of Notes. . . . . . . . . . . . . . . .
SECTION 6. REGISTRATION: SUBSTITUTION OF NOTES . . . . . . . . . .
6.1 Registration of Notes. . . . . . . . . . . . . . . . .
6.2 Exchange of Notes. . . . . . . . . . . . . . . . . . . .
6.3 Replacement of Notes . . . . . . . . . . . . . . . . .
SECTION 7. COVENANTS. . . . . . . . . . . . . . . . . . .
7.1 Payment of Taxes and Claims. . . . . . . . . . . .
7.2 Maintenance of Properties and Corporate Existence. . . .
7.3 Payment of Notes and Maintenance of Office . . . . . . .
7.4 Disposal of Shares of a Restricted Subsidiary. . . . .
7.5 Merger or Sale of Assets . . . . . . . . . . . . . . .
7.6 Liens. . . . . . . . . . . . . . . . . . . . . . . . . .
7.7 Permitted Debt . . . . . . . . . . . . . . . . . . . .
7.8 Limitations on Debt. . . . . . . . . . . . . . . . . . .
7.9 Long-Term Leases . . . . . . . . . . . . . . . . . . . .
7.10 Guarantees . . . . . . . . . . . . . . . . . . . . . . .
. 28
7.11 Maintenance of Consolidated Adjusted Net Worth
and Consolidated Effective Net Worth. . . . . . . . . . . . . .
7.12 Consolidated Earnings Available for Fixed Charges.. . . . . . . . . . . .
. 29
7.13 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . .
. 29
7.14 Limitation on Investments. . . . . . . . . . . . . . . . . . . . .
7.15 Transactions with Affiliates . . . . . . . . . . . . . .
7.16 Repurchase of Notes. . . . . . . . . . . . . . . . . . .
7.17 Issuance of Subordinated Debt. . . . . . . . . . . . .
7.18 Voluntary Retirement of Subordinated Debt.. . . . . . . .
7.19 Subordination Provisions . . . . . . . . . . . . . . . . .
7.20 Line of Business . . . . . . . . . . . . .. . . .
7.21 ERISA Compliance . . . . . . . . . . . . . . . . . .
7.22 Class A Notes. . . . . . . . . . . . . . .. . . . .
7.23 Incorporation of Affirmative and Negative Covenants. . . . . . .
SECTION 8. INFORMATION AS TO THE COMPANY. . . . . . . . . . . . . .
8.1 Financial and Business Information . . .. . . . . . . . . . . . . .
8.2 Officers' Certificates . . . . . . . . . . . . . . . . . . . . . .
8.3 Accountants' Certificates. . . . . . . . . . . . . . . .
8.4 Inspection . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9. EVENTS OF DEFAULT. . . .. . . . . . . . . . . . . . .
9.1 Nature of Events . . . . . . . . . . . . . . . . . . . .
9.2 Default Remedies . . . .. . . . . . . . . . . . . . . . .
9.3 Annulment of Acceleration of Notes . . . . . . .
SECTION 10. INTERPRETATION OF THIS AGREEMENT . . . . . . . . .
10.1 Terms Defined. . . . . . . . . . . . .
10.2 Accounting Principles. . . . . . . . . . . . . . . . . .
10.3 Directly or Indirectly . . . . . . . . . . . . . . . . .
10.4 Governing Law. . . . . . . . . . . . . . . . . . . . . .
SECTION 11. MISCELLANEOUS. . . . .. . . . . . . . . . . . . . . . . .
11.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . .
11.2 Survival . . . . . . . . . . . . . . . . . . . . . . . .
11.3 Successors and Assigns . . . . . . . . . . . . . . . . .
11.4 Amendment and Waiver . . . . . . . . . . . . . . . . . .
11.5 Reproduction of Documents. .. . . . . . . . . . . . . . .
11.6 Severability . . . . . . . .. . . . . . . . . . . .
11.7 Payments, When Received. . .. . . . . . . . . . . . . . .
11.8 Duplicate Originals. . . . .. . . . . . . . . . . . . . .
Annex 1 - Purchaser Schedule
Annex 2 - Disclosures of the Company
Exhibit A1 - Form of Series A Note
Exhibit A2 - Form of Series B Note
Exhibit A3 - Form of Series C Note
Exhibit B1 - Form of Company Counsel's Closing Opinion
Exhibit B2 - Form of Special Counsel's Closing Opinion
Exhibit C - Form of Certificate of Officers
Exhibit D - Form of Certificate of Secretary<PAGE>
National Cooperative Bank
1401 Eye Street, N.W., Suite 700
Washington, D.C. 20005
ASSUMPTION AGREEMENT
AND
AMENDED AND RESTATED SENIOR NOTE AGREEMENT
$19,000,000
Amended and Restated 8.18% Series A Senior Notes Due June 24, 1997
$18,000,000
Amended and Restated 8.32% Series B Senior Notes Due December 24, 1997
$13,000,000
Amended and Restated 8.44% Series C Senior Notes Due June 24, 1998
Dated
[Separately addressed to each of
the Purchasers listed on Annex 1]
Ladies and Gentlemen:
NATIONAL CONSUMER COOPERATIVE BANK, a banking corporation organized under the
laws of the United States which does business as the National Cooperative
Bank (together with its successors and assigns, the "Company") hereby agrees
with you as follows:
SECTION I. BACKGROUND; AUTHORIZATION OF ASSUMPTION; AUTHORIZATION OF AMENDMENT
AND RESTATEMENT OF EXISTING NCBCC NOTE AGREEMENT AND EXISTING NCBCC
NOTES; AMENDMENT AND RESTATEMENT OF EXISTING NCBCC NOTE AGREEMENT AND
EXISTING NCBCC NOTES
A. Background; Authorization of Assumption.
1. Background. NCB Capital Corporation ("NCBCC"), a Delaware
corporation and wholly- owned subsidiary of the Company, prior to the
dissolution referred to in the second paragraph of Section 1.1(a) of this
Agreement, authorized the issue of, and issued to you on June 25, 1992,
its (i) 8.18% Series A Senior Notes due June 24, 1997 (collectively,
as amended up to, but excluding, Assumption and Restatement,
the "Existing Series A Notes") in the origin Nineteen Million Dollars
($19,000,000), (ii) 8.32% Series B Senior Notes due December 24, 1997
(collectively, as amended up to, but excluding, the Date of Assumption and
Restatement, the "Existing in the original aggregate principal amount of
Eighteen Million Dollars ($18,000,000), and (iii) 8.44% Series
C Senior Notes due June 24, 1998 (collectively, as amended up to,
but excluding, the Date of Assumption and Restatement, the "Existing Series C
Notes") in the original aggregate principal amount of Thirteen
Million Dollars ($13,000,000) (the Existing Series A Notes, the Existing Series
B Notes and Notes are herein sometimes collectively referred to as the
"Existing NCBCC Notes" and individually referred to as an "Existing NCBCC
Note"), in each case, pursuant to, and in accordance with the terms of, those
certain separate Senior Note Agreements (collectively, as amended up to,
but excluding, the Date of Assumption and Restatement, the "Existing NCBCC Note
Agreement"), dated as of June 25, 1992, between NCBCC and each of Equitable
Variable Life Insurance Company, The Equitable Life Assurance Society of
the United States, First Plaza Group Trust, Principal Mutual Life Insurance
Company, IDS Certificate Company, SAFECO Life Insurance Company, Phoenix
Home Life Mutual Insurance Company, Provident Mutual Life Insurance
Company of Philadelphia, Provident Mutual Life and Annuity Company of America,
Lutheran Brotherhood and Mutual Service Life Insurance Company. The
Existing NCBCC Notes are substantially in the form of Exhibit A1, Exhibit A2
and Exhibit A3, as the case may be, attached to the Existing NCBCC Note
Agreement.
On the Date of Assumption and Restatement, a certificate of dissolution
filed with the Secretary of State of the State of Delaware in respect of NCBCC
became effective in accordance with Section 103 of the Delaware General
Corporation Law and NCBCC was, on such date, dissolved in accordance with
Section 275 of the Delaware General Corporation Law. The Company, as the
sole stockholder of NCBCC has by resolution duly adopted and by agreement,
succeeded to and expressly assumed all of NCBCC's obligations and undertakings
under the Existing NCBCC Note Agreement and the Existing NCBCC Notes.
The Company has requested the consent of the Purchasers to such assumption
and the amendment and restatement in its entirety of the Existing NCBCC Note
Agreement as provided for in this Agreement.
2. Authorization of Assumption; Assumption. The Company hereby authorizes
its assumption of, and (subject to your consent as provided in the second
sentence of this Section 1.1(b)) hereby assumes
and agrees to be fully liable in respect of, all of the liabilities,
obligations and undertakings of NCBCC, whether now existing or hereafter arising
provided for in the Existing NCBCC Note Agreement and the
Existing NCBCC Notes, including, without limitation, the obligation to duly
and punctually pay the principal of (and Yield-Maintenance Premium, if any),
including any required prepayments of principal, and interest
on, the Existing NCBCC Notes in accordance with the terms and provisions of
the Existing NCBCC Note Agreement and the Existing NCBCC Notes. You, by your
execution of this Agreement and subject to the satisfaction of the conditions
set forth in Section 3 of this Agreement, hereby consent to such assumption.
B. Authorization of Amendment and Restatement of Existing NCBCC Note
Agreement and Existing NCBCC Notes; Amendment and Restatement of Existing
NCBCC Note Agreement and Existing NCBCC Notes.
1. Authorization of Amendment and Restatement of Existing NCBCC Note
Agreement and Existing NCBCC Notes. The Company hereby authorizes, and agrees
and consents to, the amendment and restatement in their entirety of the
Existing NCBCC Note Agreement and the Existing NCBCC Notes,
as provided for herein.
a. The Series A Notes. The Existing Series A Notes, as amended
and restated by Exhibit A1 to this Agreement, shall be hereinafter referred to,
individually, as a "Series A Note" and, collectively, as the "Series A Notes."
The Company hereby authorizes the execution and delivery
to the Purchasers of Nineteen Million Dollars ($19,000,000) in aggregate
principal amount of the Series A Notes, which Series A Notes shall
(1) be substituted in the place of the Existing Series A Notes,
(2) be dated June 24, 1993, the last date on which interest was paid on
the Existing Series A Notes,
(3) mature on June 24, 1997,
(4) bear interest
(a) on the unpaid principal balance thereof from the date thereof
until the principal thereof shall become due and payable at the rate of eight
and eighteen one-hundredths percent (8.18%) per annum, payable semiannually on
the twenty-fourth (24th) day of each June and December in each year, and
(b) on overdue principal (including any overdue prepayment of
principal), and Yield-Maintenance Premium, if any, and (to the extent
permitted by applicable law) on any overdue installment of interest, at a rate
equal to the higher
of
(1) ten and eighteen one-hundredths percent (10.18%) per
annum or
(2) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York, New York (from time to time in
New York City) as its prime rate for preferred borrowers,
and
(5) be substantially in the form of Exhibit A1 attached to this Agreement.
The term "Series A Notes" as used herein shall include each Series A Note
delivered pursuant to
any provision of this Agreement or the other Separate Senior Note
Agreements referred to in
Section 1.2(c) hereof and each Series A Note delivered in substitution
or exchange for any such
Series A Note pursuant to any such provision.
b. The Series B Notes. The Existing Series B Notes, as amended and restated by
Exhibit A2 to this Agreement, shall be hereinafter referred to,
individually, as a "Series B Note" and,
collectively, as the "Series B Notes." The Company hereby authorizes the
execution and delivery
to the Purchasers of Eighteen Million Dollars ($18,000,000) in aggregate
principal amount of the
Series B Notes, which Series B Notes shall
(1) be substituted in the place of the Existing Series B Notes,
(2) be dated June 24, 1993, the last date on which interest was paid on
the Existing Series B Notes,
(3) mature on December 24, 1997,
(4) bear interest
(a) n the unpaid principal balance thereof from the date thereof until
the principal thereof shall become due and payable at the rate of eight
and thirty- two one-hundredths percent (8.32%) per annum, payable semi-
annually on thetwenty-fourth (24th) day of each June and December in each year,
and
(b) on overdue principal (including any overdue prepayment of
principal), and Yield-Maintenance Premium, if any, and (to the extent
permitted by applicable law) on any overdue installment of interest, at a rate
equal to the higher
of
(1) ten and thirty-two one-hundredths percent (10.32%)
per annum or
(2) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York, New York (from
time to time in New York City) as its prime rate for
preferred borrowers,
and
5) be substantially in the form of Exhibit A2 attached to this Agreement.
The term "Series B Notes" as used herein shall include each Series B Note
delivered pursuant to any provision of this Agreement or the other Separate
Senior Note Agreements referred to in Section 1.2(c) hereof and each Series
B Note delivered in substitution or exchange for any such
Series B Note pursuant to any such provision.
c. The Series C Notes. The Existing Series C Notes, as amended and
restated by Exhibit A3 to this Agreement, shall be hereinafter referred
to, individually, as a "Series C Note" and, collectively, as the "Series C
Notes." The Company hereby authorizes the execution and delivery
to the Purchasers of Thirteen Million Dollars ($13,000,000) in aggregate
principal amount of the Series C Notes, which Series C Notes shall
(1) be substituted in the place of the Existing Series C Notes,
(2) be dated June 24, 1993, the last date on which interest was paid on
the
Existing Series C Notes,
(3) mature on June 24, 1998,
(4) bear interest
(a) on the unpaid principal balance thereof from the date
thereof unti the principal thereof shall become due and payable at the
rate of eight and forty- four one-hundredths percent (8.44%) per
annum, payable semiannually on the twenty-fourth (24th) day of each
June and December in each year, and
(b) on overdue principal (including any overdue prepayment of
principal), and Yield-Maintenance Premium, if any, and (to the extent
permitted by applicable law) on any overdue installment of interest,
at a rate equal to the higher
of
(1) ten and forty-four one-hundredths percent (10.44%) per
annum or
(2) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York, New York (from time to time
in New York City) as its prime rate for preferred borrowers,
and
(5) be substantially in the form of Exhibit A3 attached to
this Agreement.
The term "Series C Notes" as used herein shall include each Series C Note
delivered pursuant to any provision of this Agreement or the other Separate
Senior Note Agreements referred to in Section 1.2(c) hereof and each Series C
Note delivered in substitution or exchange for any such Series C Note pursuant
to any such provision.
d. The Notes. The Series A Notes, the Series B Notes and the Series C
Notes are herein sometimes collectively referred to as the "Notes" and
individually referred to as a "Note."
2. Amendment and Restatement of Existing NCBCC Note Agreement and Existing NCBCC
Notes. Subject to the satisfaction of the conditions precedent set forth
in Section 3 of this Agreement, you, by your execution of this Agreement, hereby
agree and consent to the amendment and restatement in its
entirety of the Existing NCBCC Note Agreement by this Agreement and,
upon the satisfaction of such conditions precedent, the Existing NCBCC Note
Agreement shall be deemed so amended and restated.
Subject to the satisfaction of the conditions precedent set forth in Section
3 of this Agreement, you, by yourexecution of this Agreement, hereby agree and
consent to the amendment and restatement in their entirety
of the Existing Series A Notes, the Existing Series B Notes and the
Existing Series C Notes by the substitution of the Series A Notes, the Series B
Notes and the Series C Notes, respectively, therefor. On
December 15, 1993, or such other date as may be acceptable to each of
the Purchasers and the Company (the "Date of Assumption and Restatement"),
the Company agrees, subject to the satisfaction of the conditions precedent
set forth in Section 3 of this Agreement, to execute and deliver to you, at the
offices of Hebb & Gitlin, a professional corporation, One State Street,
Hartford, Connecticut, 06103, the aggregate principal amount of Notes
of each Series set forth opposite your name in the Purchaser
Schedule attached to this Agreement as Annex 1 (the "Purchaser Schedule"),
in replacement of Existing NCBCC Notes in an equal aggregate principal amount
held by you (or your nominee), as more particularly
set forth opposite your name in the Purchaser Schedule (such transactions,
together with each other transaction contemplated by this Agreement, are here-
inafter referred to collectively as the "Assumption and
Restatement"). Contemporaneously with the receipt by you of such Notes,
you agree to re-deliver to the Company for cancellation the Existing NCBCC Notes
held by you. All amounts owing under, and evidenced by, the Existing NCBCC
Notes as of the Date of Assumption and Restatement shall continue
to be outstanding under, and shall after the Date of Assumption and
Restatement be evidenced by, the Notes, and shall be repayable in accordance
with this Agreement. It is the intention of the parties hereto
that the assumption of the Existing NCBCC Notes by the Company and the
execution, delivery and full effectiveness of this Agreement be
simultaneously effected.
3. Other Purchasers. Contemporaneously with the execution and delivery
hereof, the Company is entering into a separate Assumption Agreement and
Amended and Restated Senior Note Agreement identical (except for the name
and signature of the purchaser) hereto (this Agreement and such
other separate Assumption Agreement and Amended and Restated Senior Note
Agreements being herein sometimes referred to collectively as the "Separate
Senior Note Agreements") with each other purchaser
(individually, an "Other Purchaser," and collectively, the "Other
Purchasers") listed on the Purchaser Schedule, providing for the execution
and delivery to each Other Purchaser of Notes in the aggregate principal
amount set forth below its name on the Purchaser Schedule in
replacement of the Existing NCBCC Notes in an equal aggregate principal amount
held by such Other Purchaser (or its nominee), as more particularly
set forth opposite its name in the Purchaser Schedule. The
execution and delivery of Notes, in exchange for Existing NCBCC Notes, to you
and to each Other Purchaser are separate transactions.
C. Purchase for Investment.
1. Purchase for Investment. You represent to the Company, and, by agreeing
to the assumption of the Existing NCBCC Notes by the Company, the amendment and
restatement thereof and the substitution of the Notes for the Existing NCBCC
Notes, it is specifically understood and agreed, that
you are acquiring the Notes for your own account or for one or more "separate
accounts" (as defined below) maintained by you for investment and with no
present intention of distributing or reselling the Notes or any part t
part of the Notes under a registration statement filed under the
Securities Act, or in a transaction exemptionfrom the registration
requirements of such Act and (ii) have dispositional control of all of your
assets. It is understood that, in making the representations set out
in Section 2.10 of this Agreement, the Company is relying, to the extent
applicable, upon your representation as aforesaid.
2. ERISA. You represent that at least one of the following statements is an
accurate representation as to the source of funds used by you to pay the
purchase price of the Existing NCBCC Notes purchased by you:
a. no part of such funds constituted assets allocated to any separate account
maintained by you in which any employee benefit plan (or its related trust)
has any interest;
b. to the extent that any part of such funds constituted assets allocated to
any separate account maintained by you, you disclosed to the Company the
names of each employee benefit plan whose assets in such separate account
exceeded ten percent (10%) of the total assets of such separate account
(it being understood that, for the purposes of this clause (ii), all employee
benefit plans maintained by the same employer or employee organization are
deemed to be a single plan); or
(iii) you acquired the Existing NCBCC Notes for an "investment
fund" managed by a "qualified professional asset manager" or "QPAM"
(as defined in part V of PTE 84-14, issued March 13, 1984), and the
purchase was exempt under PTE 84-14, and in connection therewith you
disclosed to the Company the name of each said investment fund,
the name of the QPAM managing said investment fund, and each
employee benefit plan which had an interest in said
investment fund; the Company advises you (and in making the
representations set forth in this clause (iii) you are relying
on such advice) that the Company and any "affiliate" of the Company (as
defined in Section V(c) of PTE 84-14) does not currently have,
and during the immediately preceding one (1) year has not exercised,
the authority to appoint or terminate such QPAM as
manager of the assets of any such employee benefit plan so disclosed
pursuant to this clause (iii) or to negotiate the terms of said
QPAM's management agreement on behalf of any such d employee
benefit plans.
As used in this Section 1.3, the terms "separate account" and "employee
benefit plan" shall have the respective meanings ascribed to them in ERISA.
EC Failure to Deliver.
If on the Date of Assumption and Restatement the Company fails to tender to
you the Notes to be acquired by you on such date or if the conditions specified
in Section 3 of this Agreement have not been fulfilled, you may
thereupon elect to be relieved of all further obligations under this Agreement.
Nothing in this Section shall operat to relieve the Company from any of its
obligations under this Agreement, the Existing NCBCC Note Agreement or
the Existing NCBCC Notes or to waive any of your rights against the Company.
E. Expenses, Stamp Tax Indemnity.
Whether or not the transactions herein contemplated shall be consummated,
the Company agrees to pay directly all of your out-of-pocket expenses
in connection with the preparation, execution and delivery of this
Agreement and the transactions contemplated hereby, including but not limited
to the reasonable charges and disbursements of Hebb & Gitlin, your special
counsel, duplicating and printing costs and charges for shipping the
Notes, adequately insured to you at your home office, your custodian bank or
at such other place as you may designate, and so long as you hold any of the
Notes,
1. all such expenses relating to any amendments, waivers or consents
pursuant to the provisions of this Agreement, whether or not such amendments,
waivers or consents shall be agreed to or become effective, and
2. the costs and expenses (including attorneys' fees)
incurred by you in enforcing any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process issued in
connection with this Agreement or the transactions contemplated
hereby or by reason of your having acquired any Note including, without
limitation, costs and expenses incurred in any bankruptcy case.
The Company also agrees that it will pay and save you harmless against any and
all liability with respect to stamp and other taxes, if any, which may be
payable or which may be determined to be payable in connection with the
execution and delivery of this Agreement or the Notes, whether or not any Notes
are then outstanding. TheCompany agrees to protect and indemnify you against
any liability for any and all brokerage fees and commissions
payable or claimed to be payable to any Person in connection with the
transactions contemplated by this Agreement.
Without limiting the generality of the foregoing, it is agreed and
understood that the Company will pay, onthe Date of Assumption and Restatement,
the statement for fees and disbursements of your special counsel
presented on such date and the Company will also pay upon receipt of any
statement thereof, each additionalstatement for reasonable fees and
disbursements of your special counsel rendered after the Date of Assumption
and Restatement in connection with the issuance of the Notes or the matters
referred to in the preceding clause (a) of this Section 1.5.
The obligations of the Company under this Section 1.5 shall survive
the payment or prepayment of the Notes and the termination of this Agreement.
SECTION II. WARRANTIES AND REPRESENTATIONS
The Company hereby warrants and represents to you, as of the Date of
Assumption and Restatement, that:
A. Subsidiaries and Affiliates.
Annex 2 to this Agreement states the name of each of
1. the Subsidiaries (specifying which thereof are
Restricted Subsidiaries), its jurisdiction of
incorporation, the percentage of its Voting Stock owned by the
Company and each other Subsidiary and,
to the best of the Company's knowledge, the identity and ownership
of any other holders of its Voting Stock, and
2. the Company's corporate or joint venture
Affiliates and the nature of the affiliation.
B. Corporate Organization and Authority.
Each of the Company and the Subsidiaries
1. is a corporation duly organized, validly
existing and in good standing under the laws of its
jurisdiction of incorporation,
2. has all requisite power and authority and all
necessary licenses and permits to own and
operate its Properties and to carry on its business as now
conducted and as presently proposed to be conducted, and
3. is duly authorized and has duly qualified to
do business and is in good standing as a
foreign corporation in each jurisdiction where the character
of its Properties or the nature of its activities
makes such qualification necessary.
C. Financial Statements; Material Adverse Change; Description
of Business.
1. Financial Statements. The consolidated
statements of financial condition of the Company
and the Subsidiaries as of December 31 in the years 1987, 1988,
1989, 1990, 1991 and 1992, inclusive, and
the related consolidated statements of income and cash flows and
changes in members' equity for the fiscal
years ended on such dates, in each case accompanied by reports
thereon containing opinions without
qualification, except as therein noted, by Price Waterhouse,
independent certified public accountants, and
the consolidated balance sheet of the Company and the
Subsidiaries as of September 30, 1993 and the
related consolidated statements of income and cash flows and
reconciliation of net income to net cash
provided by operating activities for the nine (9) month period
ended on such date, copies of which have
been delivered to you, have been prepared in accordance with
generally accepted accounting principles
consistently applied, and present fairly the financial
position of the Company and the Subsidiaries as of such
dates and the results of their operations for such periods.
All of the above-described consolidated financial
statements include the accounts of all Subsidiaries for the
respective periods during which a subsidiary
relationship has existed.
2. Material Adverse Change. Since December 31, 1992,
there has been no material adverse
change in the condition, financial or otherwise, of the
Company and the Subsidiaries, taken as a whole.
3. Description of Business. The description of
the business conducted and proposed to be
conducted by the Company and the Subsidiaries set forth on
Annex 2 is correct in all material respects.
D. Full Disclosure.
Neither the financial statements referred to in Section 2.3 of this
Agreement, nor any other written statement furnished by, or on behalf of, the
Company to you in connection with the negotiation of the Assumption and
Restatement, contains any untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein or herein not
misleading. There are no facts which the Company has not disclosed
to you in writing that in the aggregate materially affect adversely nor, so far
as the Company can now foresee, willin the future in the aggregate materially
affect adversely the Properties, business, prospects, profits or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a whole,
or the ability of the Company to perform its obligations under this Agreement,
the Notes or any other Financing Document.
E. Pending Litigation and Judgments.
There are no proceedings pending or, to the knowledge of the Company,
threatened against or affectingthe Company or the Subsidiaries in any court or
before any governmental authority or arbitration board or tribunal
that in the aggregate involve more than a remote possibility of materially and
adversely affecting the Properties, business, prospects, profits or condition
(financial or otherwise) of the Company or the Subsidiaries, taken as a
whole, or the ability of the Company to perform its obligations under this
Agreement, the Notes or any other Financing Document. Neither the Company
nor the Subsidiaries is in default with respect to any order of any court,
governmental authority or arbitration board or tribunal. No unsatisfied
judgment against the Company or any of thesubsidiaries is outstanding.
F. Title to Properties.
Each of the Company and the Subsidiaries has good and marketable
title in fee simple (or its equivalent under applicable law) to all the real
Property, and has good title to all the other Property, it purports to own,
includingthat reflected in the most recent balance sheet referred to in Section
2.3 of this Agreement (except as sold or
otherwise disposed of in the ordinary course of business). All such Property
owned by the Company is free from
Liens not permitted by Section :\NCB(a) of this Agreement. All leases necessary
in any material respect for the conduct
of the business of the Company and each of the Subsidiaries are valid and
subsisting and are in full force and effect.
G. Patents and Trademarks.
Each of the Company and the Subsidiaries owns or possesses all the
patents, trademarks, service marks,
trade names, copyrights, licenses and rights with respect to the foregoing
which are necessary for the present and
planned future conduct of its and their business, without any known conflict
with the rights of others, which, if
adversely determined, would have a materially adverse effect on the Properties,
business, prospects, profits or
condition (financial or otherwise) of the Company and the Subsidiaries, taken as
a whole, or the ability of the
Company to perform its obligations under this Agreement, the Notes or any other
Financing Document.
H. Issuance is Legal and Authorized; Conflicting Agreements
and Other Matters.
1. Issuance is Legal and Authorized. The
issuance, execution and delivery of the Notes by
the Company and compliance by the Company with all of the provisions
of this Agreement and of the
Notes are within the corporate powers of the Company.
2. Conflicting Agreements and Other Matters.
Neither the Company nor any Subsidiary is a
party to one or more contracts or agreements or subject to one or
more charter or other corporate
restrictions which in the aggregate materially and adversely affects
the Properties, business, prospects,
profits or condition (financial or otherwise) of the Company or the
Subsidiaries, taken as a whole, or the
ability of the Company to perform its obligations under this
Agreement, the Notes or any other Financing
Document. The execution and delivery of this Agreement and the
Notes, the offering, issuance, execution
and delivery of the Notes and the fulfillment of and compliance with
the terms and provisions of this
Agreement and of the Notes, will not conflict with, or result in a
breach of the terms, conditions or provisions
of, or constitute a default under, or result in any violation of,
or result in the creation of any Lien upon any
of the Property of the Company or any of the Subsidiaries pursuant
to, the charter or by-laws of the
Company or any of the Subsidiaries, any award of any arbitrator or
any agreement (including any
agreement with stockholders), instrument, order, judgment, decree,
statute, law, rule or regulation to which
the Company or any of the Subsidiaries is subject.
I. No Defaults.
No event has occurred and no condition exists that, upon the
amendment and restatement of the Existing
NCBCC Notes or the issuance of the Notes in substitution therefor, would
constitute a Default or an Event of Default.
The Company is not in violation in any respect of any term of its charter or
bylaws. The Company is not in violation
in any material respect of any term in any agreement or other instrument to
which it is a party or by which it or any
of its Property may be bound.
J. Governmental Consent.
Neither the nature of the Company or any of the Subsidiaries, or of
any of their respective businesses or
Properties, nor any relationship between the Company or any of the Subsidiaries
and any other Person, nor any
circumstance in connection with the amendment and restatement of the Existing
NCBCC Notes or the offer and
issuance of the Notes in substitution therefor, is such as to require a consent,
approval or authorization of, or filing,
registration or qualification with, any governmental authority on the part of
the Company as a condition to the
execution, delivery and performance of this Agreement or the offer, issue,
execution, delivery and performance of
the Notes.
K. Taxes.
All tax returns required to be filed by the Company or any of the
Subsidiaries in any jurisdiction have in fact
been filed, and all taxes, assessments, fees and other governmental charges
upon the Company or any of the
Subsidiaries, or upon any of their respective Properties, income or franchises,
shown to be due and payable on
said returns have been paid to the extent such taxes, assessments, fees and
charges have become due and
payable. Neither the Company nor any of the Subsidiaries knows of any proposed
additional tax assessments
against it. The Federal income tax liability of the Company and the
Subsidiaries has been finally determined by the
Internal Revenue Service and satisfied for all taxable years up to and including
the taxable year ended December
31, 1982, and no material controversy in respect of additional income taxes due
is pending or, to the knowledge
of the Company, threatened. The provisions for taxes on the books of the
Company and the Subsidiaries are
adequate for all open years, and for its current fiscal period.
L. Margin Securities, etc.
The proceeds realized upon the issuance of the Existing NCBCC Notes
were not used, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any "margin stock" as defined
in Regulation G (12 CFR Part 207) of the Board of Governors of the Federal
Reserve System (herein called "margin
stock") or for the purpose of maintaining, reducing or retiring any indebtedness
that was originally incurred to
purchase or carry any stock that was at the time of the issuance of the Existing
NCBCC Notes a margin stock or
for any other purpose that might constitute such transaction a "purpose credit"
within the meaning of such
Regulation G. None of the transactions contemplated in this Agreement will
violate or result in a violation of Section
7 of the Exchange Act or any regulations issued pursuant thereto, including,
without limitation, Regulations G, T and
X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter
II. The Company does not own
or intend to carry or purchase any margin stock. None of the proceeds from the
sale of the Existing NCBCC Notes
was or will be used to purchase, or refinance any borrowing the proceeds of
which were or will be used to
purchase, any "security" within the meaning of the Exchange Act.
M. Private Offering.
Neither the Company or any of the Subsidiaries, nor any agent acting
on their behalf, has, directly or
indirectly, offered the Existing NCBCC Notes, the Notes or any similar Security
of NCBCC or the Company for sale
or exchange to, or solicited any offers to buy the Existing NCBCC Notes, the
Notes or any similar Security of
NCBCC or the Company from, or otherwise approached or negotiated with respect to
the Existing NCBCC Note
Agreement or this Agreement with, any Person other than you and the Other
Purchasers, and neither the Company
or any of the Subsidiaries, nor any agent acting on their behalf, has taken or
will take any action that would subject
the issuance, amendment and restatement or substitution of the Existing NCBCC
Notes or the Notes, as the case
may be, to the provisions of Section 5 of the Securities Act or to the
provisions of any Securities or Blue Sky law
of any applicable jurisdiction.
N. Compliance with Law.
Neither the Company nor any of the Subsidiaries:
1. is in violation of any laws, ordinances, or
governmental rules or regulations to which it is
subject; or
2. has failed to obtain any licenses, permits,
franchises or other governmental authorizations
necessary to the ownership of its Property or to the conduct of
its business,
which violations or failures to obtain might in the aggregate materially
adversely affect the business, prospects, profits,
Properties or condition (financial or otherwise) of the Company or the
Subsidiaries, taken as a whole, or the ability
of the Company to perform its obligations under this Agreement, the Notes or any
other Financing Document.
O. Indebtedness.
Annex 2 to this Agreement correctly describes all Debt for borrowed
money of the Company outstanding
as of the close of business on the Date of Assumption and Restatement, and
indicates which of such indebtedness
(if any, and the amount thereof) is secured by a Lien. There is no Subordinated
Debt outstanding other than the
Class A Notes. The aggregate amount of indebtedness for borrowed money of the
Company outstanding as of
the Date of Assumption and Restatement does not exceed one thousand percent
(1000%) of the sum of the paid-in
capital and surplus of the Company at such time.
P. Restrictions on Company.
Neither the Company nor any of the Subsidiaries is a party to any
contracts or agreements, or subject to
any charter or other corporate restrictions, that in the aggregate materially
and adversely affect its business. The
Company is not a party to any contract or agreement that restricts its right or
ability to incur additional Debt, other
than this Agreement and the agreements relating to the Debt described in Annex 2
to this Agreement. The
Company has not agreed or consented to cause or permit in the future (upon
the happening of a contingency or
otherwise) any of its Property, whether now owned or hereafter acquired, to be
subject to a Lien not permitted by
Section 7.6(a) of this Agreement.
Q. Employee Retirement Income Security Act of 1974.
The present value of all benefits vested under all Pension Plans
did not, as of December 31, 1992, the last
annual valuation date for which a report is available, exceed the value of
the assets of the Pension Plans allocable
to such vested benefits. The consummation of the transactions herein provided
for and compliance by the
Company with the provisions of this Agreement, the Notes and each other
Financing Document will not involve any
"prohibited transaction" within the meaning of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as
amended. The Company, the Subsidiaries, their respective employee benefit plans
and any trusts thereunder are
in substantial compliance with ERISA. Neither any of the employee benefit plans
maintained by the Company or
the Subsidiaries, or to which the Company or the Subsidiaries makes any
contribution, nor any trusts thereunder
have been terminated or have incurred any "accumulated funding deficiency," as
such term is defined in Section
302 of ERISA (whether or not waived), since the effective date of ERISA, nor
have there been any "reportable
events," as that term is defined in Section 4043 of ERISA, since the effective
date of ERISA.
R. Investment Company Act.
The Company is not directly or indirectly controlled by, or acting on
behalf of any Person which is, an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
S. Related Agreements.
The agreements delivered to you pursuant to Section 3.7 of this
Agreement are true, complete and correct
copies of such agreements as in effect on the Date of Assumption and
Restatement, there have been no defaults
under any of such agreements at any time, and the Company is in compliance with
such agreements immediately
after, and after giving effect to, the Assumption and Restatement.
T. Outstanding Amount of Existing NCBCC Notes.
The outstanding principal balances of the Existing Series A Notes,
the Existing Series B Notes and the
Existing Series C Notes, as of the Date of Assumption and Restatement, are
Nineteen Million Dollars ($19,000,000),
Eighteen Million Dollars ($18,000,000) and Thirteen Million Dollars
($13,000,000), respectively, and the last day on
which interest was paid in respect of the Existing NCBCC Notes was
June 24, 1993.
U. Assumption of Rights and Obligations of NCBCC.
1. The Company possesses all the rights,
privileges, powers and franchises, of a public as
well as of a private nature, necessary to carry on the business
actually carried on by, and is not subject to
any restrictions, disabilities or duties that are more onerous than
those that applied to, NCBCC prior to the
Date of Assumption and Restatement.
2. All and singular, the rights, privileges,
powers and franchises of NCBCC, and all Property,
real, personal and mixed, and all debts due to NCBCC on whatever
account, for stock subscriptions as
well as all other things in action or belonging to NCBCC, are vested
in the Company.
3. All Property, rights, privileges, powers and
franchises, and all and every other interest is as
effectually the Property of the Company as they were of NCBCC, and
the title to any real estate vested by
deed or otherwise in NCBCC has not reverted and is not in any way
impaired for any reason.
4. All rights of creditors and all Liens upon any
Property of NCBCC are preserved unimpaired
and all debts, liabilities and duties of NCBCC have attached to the
Company and may be enforced against
it to the same extent as if such debts, liabilities and duties had
been incurred or contracted by the
Company.
SECTION III. CLOSING CONDITIONS
The amendment and restatement of the Existing NCBCC Notes and the
Existing NCBCC Note Agreement,
as provided in Section 1.2(b) of this Agreement, and the substitution of the
Notes for the Existing NCBCC Notes,
as provided in said Section 1.2(b), are subject to the satisfaction, on or
before the Date of Assumption and
Restatement, of the following conditions precedent:
A. Opinions of Counsel.
You shall have received from Shea & Gardner, counsel for the Company,
and from Hebb & Gitlin, a
Professional Corporation, your special counsel, the respective closing opinions
described in Exhibit B1 and Exhibit
B2 to this Agreement.
B. Warranties and Representations True; No Prohibited Action.
1. Warranties and Representations True. (i) The
warranties and representations contained in
Section :\NCB\S of this Agreement shall (except as affected by
transactions contemplated by this Agreement) be
true in all material respects on the Date of Assumption and
Restatement with the same effect as though
made on and as of that date, and (ii) no Default or Event of Default
shall exist immediately after, and after
giving effect to, the Assumption and Restatement.
2. No Prohibited Action. The Company shall not
have taken any action or permitted any
condition to exist which would have been prohibited by Section 7 of
this Agreement had this Agreement
been binding and effective at all times during the period from
December 31, 1992 to and including the Date
of Assumption and Restatement.
C. Compliance with this Agreement.
The Company shall have performed and complied with all agreements and
conditions contained herein
which are required to be performed or complied with by the Company before or on
the Date of Assumption and
Restatement.
D. Officers' Certificates.
You shall have received (a) a certificate, substantially in the form
of Exhibit C to this Agreement, dated the
Date of Assumption and Restatement and signed by the President or a Vice
President and the Treasurer or an
Assistant Treasurer of the Company, certifying that the conditions specified in
Section 3.2 and Section 3.3 of this
Agreement have been fulfilled, and certifying to the other matters set forth
therein, and (b) a certificate, substantially
in the form of Exhibit D to this Agreement, dated the Date of Assumption and
Restatement and signed by the
Secretary or an Assistant Secretary of the Company, with respect to the matters
therein set forth.
E. Legality.
The assumption of the Existing NCBCC Notes by the Company, the
amendment and restatement of the
Existing NCBCC Notes and the substitution of the Notes for the Existing NCBCC
Notes, and the amendment and
restatement of the Existing NCBCC Note Agreement, all as provided for in this
Agreement, shall not violate any
applicable law or governmental regulation (including, without limitation
, Section 5 of the Securities Act or Regulation
G, T or X of the Board of Governors of the Federal Reserve System) and shall
not subject you to any tax, penalty,
liability or other onerous condition under or pursuant to any applicable law or
governmental regulation, and you shall
have received such certificates or other evidence as you may request to
establish compliance
F. Proceedings Satisfactory.
All proceedings taken in connection with the Assumption and
Restatement and all documents and papers
relating thereto shall be satisfactory to you and your special counsel. You
and your special counsel shall have
received copies of such documents and papers as you or they may reasonably
request in connection therewith
or as a basis for your special counsel's closing opinion, all in form and
substance satisfactory to you and your
special counsel.
G. Related Agreements.
The Company shall have delivered to you true, correct and complete
copies of
1. the Bank Loan Agreement,
2. the Other Restated Note Agreements,
3. the Financing Agreement, and
4. each of the outstanding Class A Notes;
in each case as in effect on the Date of Assumption and Restatement
(including copies of any and all
amendments and waivers of any provision of any of such documents),
and each of such documents shall
be acceptable to you in all respects.
H. Private Placement Numbers.
The Company shall have obtained private placement numbers for each
Series of Notes from the CUSIP
Service Bureau of Standard & Poor's Corporation.
I. Dissolution of NCBCC.
The Company shall have delivered to you a true, correct and complete
copy of (a) the Agreement and Plan
of Liquidation between the Company and NCBCC and (b) the certificate of
dissolution filed with the Secretary of
State of the State of Delaware in respect of NCBCC. Such certificate shall have
became effective in accordance
with Section 103 of the Delaware General Corporation Law, and the dissolution of
NCBCC shall have become
effective in accordance with Section 275 of the Delaware General Corporation
Law. NCBCC shall have paid all
franchise taxes due to or assessable by the State of Delaware as required by
Section 277 of the Delaware General
Corporation Law. The Company shall have delivered to you a copy of each notice
of a claim received by the
Company, and each notice of the rejection of a claim delivered by the Company.
SECTION IV. PURCHASER'S SPECIAL RIGHTS
A. Direct Payment.
Notwithstanding any provision to the contrary in this Agreement or
the Notes, the Company will pay all
amounts payable to you with respect to any Notes held by you or your nominee, or
owned by any other institutional
holder (without any presentment thereof and without any notation of such payment
being made thereon), in the
manner and at the address set forth in the Purchaser Schedule or in such other
manner or to such other address
in the United States as may be designated by you or such subsequent holder in
writing and, if a bank account is
designated for you in the Purchaser Schedule or in any written notice to the
Company from you or any such
subsequent holder, the Company will initiate such payments in immediately
available funds to such bank account
before 11:00 a.m. (New York City time) on the date payment is due. The holder
of any Notes to which this Section
4.1 applies agrees that if it sells or transfers any Note it will, prior to the
delivery of such Note, make a notation on
such Note of the date to which interest has been paid thereon and of the
amount of any prepayments made on
account of the principal thereof.
B. Delivery Expenses.
If you surrender any Note to the Company pursuant to this Agreement,
the Company will pay the cost of
delivering to or from your home office or custodian bank from or to the Company,
insured to your satisfaction, the
surrendered Note and any Note issued in substitution or replacement for the
surrendered Note.
SECTION V. PREPAYMENTS
A. Limitation on Prepayments.
No sinking fund or other prepayments shall be required with respect
to any Series of Notes and, except
as specifically provided in Section 5.2 of this Agreement, the Notes shall not
be subject to prepayment at the option
of the Company.
B. Optional Prepayment With Yield-Maintenance Premium.
1. Optional Prepayments. The Notes shall be
subject to prepayment, in whole at any time
or from time to time in part (in multiples of Five Million Dollars
($5,000,000)), at the option of the Company,
at one hundred percent (100%) of the principal amount so prepaid plus
interest thereon to the prepayment
date and the Yield-Maintenance Premium, if any, with respect to the
amount so prepaid.
2. Effect of Prepayments. Each partial prepayment
of the Notes pursuant to this Section 5.2
shall be applied ratably to each Series of Notes in proportion to the
aggregate principal amounts of Series
A Notes, Series B Notes and Series C Notes then outstanding.
C. Notice of Optional Prepayment.
The Company shall give the holder of each Note irrevocable written
notice of any prepayment pursuant to
Section 5.2 of this Agreement not less than thirty (30) days nor more than sixty
(60) days prior to the prepayment
date, specifying
(a) such prepayment date,
(b) the principal amount of the Notes to be prepaid
on such prepayment date,
(c) that such prepayment is to be made pursuant to
Section 5.2 of this Agreement, and
(d) the calculation of an estimated Yield-
Maintenance Premium (assuming the date of
prepayment was the date of such notice) due in connection with such
prepayments, accompanied by a
copy of the applicable source of market data used in determining the
Reinvestment Yield in respect thereof.
Notice of prepayment having been so given, the principal amount of the Notes
specified in such notice, together
with interest thereon to the prepayment date and the Yield-Maintenance Premium,
if any, as herein provided, shall
become due and payable on such prepayment date. Two (2) Business Days prior
to such prepayment the
Company shall deliver to each holder of Notes a certificate of the President,
any Vice President or the Treasurer of
the Company specifying the calculation of such Yield-Maintenance Premium
(assuming the date of prepayment was
the date of such notice) payable on the date specified for prepayment,
accompanied by a copy of the applicable
source of market data used in determining the Reinvestment Yield in respect
thereof. If such applicable source of
market data at the time of such notice is not the same as the applicable source
of market data as of the Business
Day next preceding the prepayment date as specified in the definition of
"Reinvestment Yield" herein, then such
applicable source of market data as of such next preceding Business Day as
specified in such definition shall be
utilized for the purposes of calculating the Reinvestment Yield in respect of
the Yield-Maintenance Premium due with
such prepayment and notice thereof shall be delivered simultaneously with
such prepayment.
So long as you or any other institutional holder shall hold any Note,
the Company shall, on or before the
day on which it gives written notice of any prepayment pursuant to Section 5.2
of this Agreement, advise an
investment professional assigned to your or such other institutional holder's
corporate finance group by telephone
or telecopy of the principal amount of the Notes to be prepaid and the
prepayment date.
D. Partial Payments Pro Rata.
If at the time any optional prepayment is due there is more than one
Note of a particular Series outstanding,
the aggregate principal amount of each optional partial prepayment of such
Series of Notes shall be allocated
among the holders of Notes of such Series at the time outstanding in proportion,
as nearly as practicable, to the
respective unpaid principal amounts of the Notes of such Series then
outstanding, with adjustments, to the extent
practicable, to equalize for any prior prepayments of such Series not in such
proportion; provided, however, that
such allocation shall be made in integral multiples of One Hundred Thousand
Dollars ($100,000).
E. Retirement of Notes.
The Company shall not, and shall not permit any of the Subsidiaries
or Affiliates to, prepay or otherwise retire
in whole or in part prior to their stated final maturity (other than by
prepayment pursuant to Section 5.2 of this Agreement or upon acceleration of
such final maturity pursuant to Section 9.2 of this Agreement), or purchase or
otherwise acquire, directly or indirectly, Notes held by any holder unless the
Company or such Subsidiary or Affiliate shall have offered to prepay or
otherwise retire or purchase or otherwise acquire, as the case may be, the same
proportion of the aggregate principal amount of Notes held by each other holder
of Notes at the time outstanding upon the same terms and conditions. Any Notes
so prepaid or otherwise retired or purchased or otherwise
acquired by the Company or any of the Subsidiaries or Affiliates shall not be
deemed to be outstanding for any purpose under this Agreement.
SECTION VI. REGISTRATION: SUBSTITUTION OF NOTES
A. Registration of Notes.
The Notes issuable under this Agreement shall be registered notes.
The Company shall cause to be kept
at its office, maintained pursuant to Section 7.3 of this Agreement, a register
for the registration and transfer of the
Notes. The names and addresses of the holders of the Notes, the transfer
thereof and the names and addresses
of the transferees of the Notes shall be registered in the register. The
Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof for
all purposes of this Agreement, and
the Company shall not be affected by any notice or knowledge to the contrary.
B. Exchange of Notes.
Upon surrender of any Note at the office of the Company maintained
pursuant to Section 7.3 of this
Agreement, the Company, at the request of the holder thereof, will execute
and deliver, at the Company's expense
(except as provided below), new Notes of the same Series in exchange, in
denominations of at least One Hundred
Thousand Dollars ($100,000) (except as may be necessary to reflect any principal
amount not evenly divisible by
One Hundred Thousand Dollars ($100,000)), in an aggregate principal amount equal
to the unpaid principal amount
of the surrendered Note. Each such new Note shall be payable to such Person as
such holder may request and
shall be a registered note substantially in the form of such Series of Note set
forth in Exhibit A1, Exhibit A2 or Exhibit
A3, as the case may be, to this Agreement. Each such new Note shall be dated
and bear interest from the date
to which interest has been paid on the surrendered Note. The Company may
require payment of a sum sufficient
to cover any stamp tax or governmental charge imposed in respect of any
transfer.
C. Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of, and the loss,
theft, destruction or mutilation of, any Note and
1. in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided,
if the holder of the Note is an institutional investor, its own
unsecured agreement of indemnity shall be
deemed to be satisfactory), or
2. in the case of mutilation, upon surrender
and cancellation thereof,
the Company at its expense will execute and deliver in lieu thereof, a new Note
of the same Series, dated and
bearing interest from the date to which interest has been paid on such lost,
stolen, destroyed or mutilated Note.
SECTION VII. COVENANTS.
The Company covenants that on and after the Closing Date, so long as
any of the Notes are outstanding:
A. Payment of Taxes and Claims.
The Company and each Subsidiary will pay, before they become
delinquent,
1. all taxes, assessments and governmental charges
or levies imposed upon it or its Property,
and
2. all claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and
other like Persons which, if unpaid, might result in the creation of
a Lien upon its Property,
provided that items of the foregoing description need not be paid while being
contested in good faith and by
appropriate proceedings and, provided further, that adequate book reserves
have been established with respect
thereto and, provided further, that the owning company's title to, and its right
to use, its Property is not in the
aggregate materially adversely affected thereby. In the case of any item of the
type described in this Section 7.1
involving an amount in excess of Five Hundred Thousand Dollars ($500,000),
the appropriateness of the proceeding
will be supported by an opinion of the independent counsel responsible for such
proceeding and the adequacy
of such reserves shall be supported by the opinion of the independent public
accountant of the Company.
B. Maintenance of Properties and Corporate Existence.
The Company and each Subsidiary will:
1. Property - maintain, or cause to be maintained,
its Property in good condition and will make,
or cause to be made, all necessary renewals, replacements, additions,
betterments and improvements
thereto;
2. Insurance - maintain, with financially sound
and reputable insurers rated "A" or better by A.M.
Best Company (or accorded a similar rating by another nationally
recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of
rating insurers), insurance with respect
to its Properties and business against such casualties and
contingencies, of such types (including, without
limitation, public liability, embezzlement or other criminal
misappropriation insurance) and in such amounts
as is customary in the case of corporations of established
reputations engaged in the same or a similar
business and similarly situated;
3. Financial Records - keep true books of records
and accounts in which full and correct
entries will be made of all its business transactions, and will
reflect in its financial statements adequate
accruals and appropriations to reserves, all in accordance with
generally accepted accounting principles;
4. Corporate Existence and Rights - do or cause to
be done all things necessary to preserve
and keep in full force and effect its existence, rights and
franchises, except as otherwise permitted by
Section 7.5 of this Agreement; and
5. Compliance with Law - not be in violation of
any laws, ordinances, governmental rules and
regulations to which it is subject and will not fail to obtain
any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its
Properties or to the conduct of its business,
which violations or failures to obtain might in the aggregate
materially adversely affect the business, profits,
Properties or condition (financial or otherwise) of the Company or
any Subsidiary.
C. Payment of Notes and Maintenance of Office.
The Company will punctually pay or cause to be paid the principal,
Yield-Maintenance Premium, if any, and
interest to become due in respect of the Notes according to the terms thereof
and will maintain an office in the
District of Columbia where notices, presentations and demands in respect of this
Agreement or the Notes may be
made upon it. Such office shall be maintained at 1401 Eye Street, Suite 700,
Washington, D.C. 20005 (Telecopier
No. 202-336-7803) until such time as the Company shall notify the holders of
the Notes in writing of any change of
location of such office within the District of Columbia.
D. Disposal of Shares of a Restricted Subsidiary.
The Company shall not at any time sell or otherwise dispose of any
shares of the stock (or any options or
warrants to purchase stock or other Securities exchangeable for or convertible
into stock) of any Restricted
Subsidiary (said stock, options, warrants and other Securities herein called
"Subsidiary Stock"), nor shall the
Company permit any Restricted Subsidiary to issue its own Subsidiary Stock, or
to sell or otherwise dispose of any
shares of Subsidiary Stock issued by any other Restricted Subsidiary, if the
effect of the transaction would be to
reduce the proportionate interest of the Company and the other Restricted
Subsidiaries in the outstanding
Subsidiary Stock (the "Disposition Stock") of the Restricted Subsidiary (the
"Disposition Subsidiary") whose shares
are the subject of the transaction, provided that the foregoing restrictions do
not apply to:
1. the issue of directors' qualifying shares; and
2. the sale for a cash consideration at one time
(the "Stock Disposition Date") to a Person
(other than directly or indirectly to an Affiliate) of the entire
investment (whether represented by stock, debt,
claims or otherwise) of the Company and the other Restricted
Subsidiaries in such Disposition Subsidiary,
if all of the following conditions shall have been satisfied:
a. the sum of
(1) the Disposition Value of
the assets of the Disposition Subsidiary, plus
LOT the Disposition Value of
the assets of all Restricted Subsidiaries whose
Subsidiary Stock was subject to a disposition
pursuant to this Section 7.4 during the period
ending on the Stock Disposition Date and
commencing three hundred sixty-five (365) days
prior to the Stock Disposition Date, plus
(3) the aggregate Disposition
Value of assets owned by the Company or any
Restricted Subsidiaries the disposition of
which was made other than pursuant to this
Section 7.4 and consummated during the period
ending on the Stock Disposition Date
and commencing three hundred sixty-five
(365) days prior to the Stock Disposition Date,
does not exceed ten percent (10%) of Consolidated Assets
on the first day of such period;
b. in each of the three (3) fiscal
years of the Company most recently ended, the
contribution (expressed as a percentage and exclusive of
losses) to Consolidated Adjusted Net
Income for each of such fiscal years of
(1) the Disposition
Subsidiary, plus
(2) the Restricted
Subsidiaries whose Subsidiary Stock was subject to a
disposition subsequent to the commencement
of the first of such fiscal years, plus
(3) assets owned by the
Company or any Restricted Subsidiaries sold or
otherwise disposed of subsequent to the
commencement of the first of such fiscal years,
does not exceed ten percent (10%) of Consolidated Adjusted
Net Income for such fiscal year;
c. in the opinion of the Board of
Directors, the sale is for Fair Market Value and is in
the best interests of the Company;
d. the Disposition Subsidiary shall
have no continuing investment in the Company or
any other Restricted Subsidiary not being simultaneously
disposed of; and
e. immediately after the consummation
of the transaction and after giving effect thereto,
no Default or Event of Default would exist.
For purposes of this Section 7.4(b), the assets of any Restricted
Subsidiary that ceases to be a Restricted
Subsidiary in a manner other than by the disposition of Subsidiary
Stock shall be deemed disposed of at
the time of such cessation, provided that the requirements of this
Section 7.4(b) with regard to the receipt
of cash consideration equal to Fair Market Value shall not apply to
such deemed disposition.
E. Merger or Sale of Assets.
1. Sale of Assets. Except as specifically
permitted under Section 7.5(b) and Section 7.5(c) of
this Agreement, the Company shall not, and shall not permit any
Restricted Subsidiary to, sell, lease, transfer
or otherwise dispose of assets; provided that, the foregoing
restriction shall not apply to the sale of such
assets (the "Disposition Assets") for cash consideration at one time
(the "Asset Disposition Date") to a Person
other than directly or indirectly to an Affiliate, if all of the
following conditions are met:
a. the sum of
(1) the Disposition Value of
the Disposition Assets, plus
(2) the Disposition Value of
the assets of all Subsidiaries that have ceased to
be Restricted Subsidiaries during the period
ending on the Asset Disposition Date and
commencing three hundred sixty-five (365) days
prior to the Asset Disposition Date, plus
(3) the Disposition Value of the
assets of the Company and all other Restricted
Subsidiaries disposed of during the period
ending on the Asset Disposition Date and
commencing three hundred sixty-five (365) days
prior to the Asset Disposition Date,
does not exceed ten percent (10%) of Consolidated Assets
at such time;
b. in each of the three (3) fiscal
years of the Company most recently ended, the
contribution (expressed as a percentage and exclusive
of losses) to Consolidated Adjusted Net
Income for each of such fiscal years of
(1) the Disposition Assets,
plus
(2) the Restricted
Subsidiaries whose Subsidiary Stock was subject to a
disposition subsequent to the commencement of
the first of such fiscal years, plus
(3) all other assets of the
Company and the Restricted Subsidiaries disposed
of subsequent to the commencement of the first
of such fiscal years,
does not exceed ten percent (10%) of Consolidated Adjusted
Net Income for such fiscal year;
c. in the opinion of the Board of
Directors, the sale is for Fair Market Value and is in
the best interests of the Company;
d. immediately after the consummation
of the transaction and after giving effect thereto,
no Default or Event of Default would exist; and
e. in the case of any such transaction
relating to receivables, such transaction is
consummated in the ordinary course of the business of the
Company or such Restricted
Subsidiary.
For purposes of this Section 7.5(a), the assets of any Restricted
Subsidiary that ceases to be a Restricted
Subsidiary in a manner other than by the disposition of Subsidiary
Stock shall be deemed to have been
sold at the time of such cessation, provided that the requirements of
this Section 7.5(a) with regard to the
receipt of cash consideration equal to Fair Market Value shall not
apply to any such deemed disposition.
Notwithstanding the foregoing, any sale of assets shall be
deemed to be in compliance with the
provisions of the foregoing clause (i) and clause (ii) if the entire
proceeds of such sale, net of reasonable
and ordinary transaction costs and expenses incurred in connection
with such sale, are applied by the
Company or such Restricted Subsidiary to a Permitted Proceeds
Application.
2. Merger, Consolidation and Sale of All or
Substantially All Assets by the Company and
Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, (x) consolidate with,
or merge into, any other Person or permit any other Person to
consolidate with, or merge into, it (except
that a Restricted Subsidiary may consolidate with, or merge into, the
Company or another Restricted
Subsidiary) or (y) except as specifically permitted under Section
7.5(c) of this Agreement, sell all or
substantially all of its assets to any other Person.
3. Asset Securitizations. Notwithstanding the
provisions of Section 7.5(a) and Section 7.5(b)
of this Agreement, the Company and the Restricted Subsidiaries may,
at any time and from time to time,
sell receivables in connection with an Asset Securitization if:
a. such receivables are sold for a cash
consideration equal to the Fair Market Value
thereof; provided, however, that the Company may
(1) establish and maintain a
reserve account containing cash or Securities as
a credit enhancement in respect of any such
sale or
(2) purchase or retain a
subordinated interest in such receivables being sold;
b. the entire proceeds of such sale,
net of reasonable and ordinary transaction costs
and expenses incurred in connection with such sale, are
applied by the Company or such
Restricted Subsidiary to a Permitted Proceeds Application;
and
c. such sale is consummated in the
ordinary course of business of the Company or
such Restricted Subsidiary.
F. Liens.
1. Negative Pledge. The Company shall not, and
shall not permit any Restricted Subsidiary
to, (x) cause or permit or (y) agree or consent to cause or permit in
the future (upon the happening of a
contingency or otherwise), any of its Property, whether now owned or
hereafter acquired, to be subject to
a Lien, except that the Company and any of the Restricted
Subsidiaries may
a. suffer to exist Liens outstanding on
the date of this Agreement and described in
Annex 2 to this Agreement;
b. create, incur or suffer to exist
Liens arising in the ordinary course of business that
secure taxes, assessments or governmental charges or
levies or the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords
and other like Persons, provided the
payment thereof is not at the time required by Section 7.1
of this Agreement and that appropriate
reserves have been established therefor on the books of
the Company or such Restricted
Subsidiary in accordance with generally accepted
accounting principles;
c. create, incur or suffer to exist
Liens incurred or deposits made in the ordinary
course of business
(1) in connection with
worker's compensation, unemployment insurance and
other like laws, or
(2) to secure the performance
of letters of credit, bids, tenders, sales contract
leases, Eligible Derivatives, statutory
obligations, surety, appeal and performance bonds
and other similar obligations not incurred in
connection with the borrowing of money, the
obtaining of advances or the payment of the
deferred purchase price of Property;
EC create, incur or suffer to exist
attachment, judgment and other similar Liens arising
in connection with court proceedings not in excess of One
Million Dollars ($1,000,000) in the
aggregate for all such Liens, provided the execution or
other enforcement of such Liens is effectively
stayed and the claims secured thereby are being actively
contested in good faith and by
appropriate proceedings and that appropriate reserves have
been established therefor on the
books of the Company or such Restricted Subsidiary in
accordance with generally accepted
accounting principles;
e. create, incur or suffer to exist
Liens on Property of a Restricted Subsidiary, provided
such Liens secure only obligations owing to the Company or
a Restricted Subsidiary;
f. create, incur or suffer to exist
reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions, leases
and other similar title exceptions or
encumbrances affecting real Property, provided such
exemptions or encumbrances do not in the
aggregate materially detract from the value of said
Properties or materially interfere with their use in
the ordinary conduct of the owning company's business;
g. create, incur or suffer to exist
Liens existing at the date of acquisition on Property
acquired in bona fide liquidation, collection or other
realization upon, or settlement of, collateral held
to secure receivable obligations; provided that any such
Lien will not extend to any Property other
than the Property so acquired;
h. create, incur or suffer to exist
Liens to secure Debt incurred to finance the cost of
acquisition of any computer or other office equipment
useful and intended to be used in carrying
out the business of the Company or a Restricted
Subsidiary; provided that
(1) any such Lien shall
attach solely to the Property acquired;
(2) the aggregate amount
remaining unpaid on the purchase price shall not
be in excess of one hundred percent (100%) of
(a) the total
purchase price or
(b) the Fair
Market Value at the time of acquisition, whichever is low
and
(3) such Lien is created or
assumed with respect to such Property, at the time
of, or within twelve (12) months after, such
acquisition;
and
i. modify, extend, renew or replace
any Lien permitted by this Section 7.6(a) upon
the same Property theretofore subject thereto, or modify,
extend, renew or replace the Debt
secured thereby; provided, that in any such case the
principal amount (outstanding at the time of
such modification, extension, renewal or replacement) of
such Debt so modified, replaced,
extended or renewed shall not be increased.
2. Equal and Ratable Lien; Equitable Lien. In
case any Property is subjected to a Lien in
violation of this Section 7.6, the Company shall make or cause to be
made provision (the documents,
agreements and instruments by which such provision is effected being
subject to the approval of the
Required Holders) whereby the Notes will be secured equally and
ratably with all other obligations secured
thereby, and in any case the Notes shall have the benefit, to the
full extent that the holders may be entitled
thereto under applicable law, of an equitable Lien so equally and
ratably securing the Notes. Such violation
of this Section 7.6 shall constitute an Event of Default whether or
not any such provision is made pursuant
to this Section 7.6(b).
G. Permitted Debt.
Subject to Section 7.8 of this Agreement, the Company shall not, and
shall not permit any Restricted
Subsidiary to, incur, create, issue, assume or permit to exist any Debt
other than
1. Senior Debt of the Company;
2. Subordinated Debt of the Company;
3. liabilities (other than for borrowed money)
incurred in the regular operation of the business
of the Company or a Restricted Subsidiary and not more than three (3)
months overdue, unless contested
in good faith by appropriate proceedings and adequate reserves have
been set aside with respect thereto;
4. Debt of a Restricted Subsidiary to the Company
or to a Restricted Subsidiary;
5. Debt of the Company secured by Liens permitted
under the provisions of Section 7.6(a)(viii)
of this Agreement; and
6. Restricted Guarantees of the Company.
H. Limitations on Debt.
The Company shall not at any time permit
(a) Consolidated Debt to exceed eight hundred
percent (800%) of Consolidated Adjusted Net
Worth; or
(b) Consolidated Senior Debt to exceed six hundred
fifty percent (650%) of Consolidated
Adjusted Net Worth; or
(c) Qualified Assets to be less than one
hundred percent (100%) of the sum (at such time) of
(i) Company Senior Obligations, plus
(ii) the aggregate unpaid principal
amount of Subordinated Debt, less
(iii) the aggregate unpaid principal
amount of Class A Notes.
I. Long-Term Leases.
1. The Company shall not, and shall not permit any
Restricted Subsidiary to, become
obligated, as lessee, under any Long-Term Lease if, at the time of
entering into any such Long-Term Lease
and after giving effect thereto, the aggregate Rentals payable by the
Company and the Restricted
Subsidiaries, on a consolidated basis, in any one fiscal year
thereafter under all Long-Term Leases would
exceed five percent (5%) of Consolidated Adjusted Net Worth
determined as at the end of the most recently
ended fiscal year of the Company, at such time.
2. Any Person that becomes a Restricted Subsidiary
after the Date of Assumption and
Restatement shall be deemed to have entered into, at the time that it
becomes a Restricted Subsidiary, all
Long-Term Leases on which such Person is lessee existing immediately
after it becomes a Restricted
Subsidiary.
J. Guarantees.
The Company shall not, and shall not permit any Restricted Subsidiary
to, become or be liable in respect
of any Guarantee other than a Restricted Guarantee.
K. Maintenance of Consolidated Adjusted Net Worth and
Consolidated Effective Net Worth.
(a) The Company shall at all times keep and maintain
Consolidated Adjusted Net Worth in an amount
not less than the sum of (i) One Hundred Million Dollars ($100,000,000) plus
(ii) the sum, for all fiscal quarters of the
Company ended subsequent to January 1, 1993 and at or prior to such time, of the
greater, for each fiscal quarter,
of (A) Zero Dollars ($0) and (B) fifty percent (50%) of Consolidated Net
Earnings for each such fiscal quarter.
(b) The Company shall at all times keep and maintain
Consolidated Effective Net Worth in an amount
not less than the sum of (i) Two Hundred Sixty-Five Million Dollars
($265,000,000) plus (ii) the sum, for all fiscal
quarters of the Company ended subsequent to January 1, 1993 and at or prior
to such time, of the greater, for
each fiscal quarter, of (A) Zero Dollars ($0) and (B) fifty percent (50%) of
Consolidated Net Earnings for each such
fiscal quarter.
L. Consolidated Earnings Available for Fixed Charges.
The Company shall not permit Consolidated Earnings Available for
Fixed Charges for any period of four
(4) consecutive fiscal quarters of the Company to be less than one hundred ten
percent (110%) of Consolidated
Fixed Charges for such period.
M. Restricted Payments.
1. The Company shall not:
a. declare or pay any dividends, either
in cash or Property, on any class of its capital
stock, or otherwise, except
(A) Patronage Dividends
payable in cash and cash dividends payable on
Class B Stock and Class C Stock in any calendar
year in an aggregate amount for all such
Patronage Dividends and other dividends up to
(but not exceeding) twenty percent (20%)
of the sum of Consolidated Taxable Income plus,
to the extent deducted in the
determination of Consolidated Taxable Income,
Patronage Dividends, for such calendar
year; and
(B) Patronage Dividends and
other dividends, in each case payable by the
Company solely in common stock or allocated
surplus of the Company;
or
b. directly, or indirectly or through
any Subsidiary, purchase, redeem or retire any of
its capital stock or any warrants, rights or options to
purchase or otherwise acquire any shares of
its capital stock except
(1) in exchange for or out of
the substantially concurrent issue and sale of
shares of its capital stock, or warrants,
rights or options to purchase or otherwise acquire
any shares of its capital stock, so long as the
proceeds of such concurrent issue and sale
are not required by agreement, statute or
regulation to be otherwise applied by the
Company,
(2) out of a substantially
concurrent contribution to capital,
(C) repurchases of Class B1
Common Stock which the Company is required
to make from the holders thereof who no longer
have loans from the Company
outstanding, or
(D) redemptions or
cancellations of Class B Stock or Class C Stock pursuant
to Section 6.2(i) of the Company's by-laws as
in effect on the date hereof, so long as no
cash or other Property is paid to the holders
thereof; or
c. directly, or indirectly or through
any Subsidiary, make any other payment or
distribution in respect of its capital stock
(such declarations and payments of dividends, purchases, redemptions
or retirements of stock, warrants,
rights or options and all such other distributions, together with all
payments in respect of Subordinated Debt
pursuant to Section 7.18(c) of this Agreement being herein
collectively called "Restricted Payments"), if after
giving effect thereto the aggregate amount of Restricted Payments,
together with all Patronage Dividends
payable in cash and all cash dividends on Class B Stock and Class C
Stock, declared or made during the
period from and after December 31, 1991 to and including the date of
the declaration or making of the
Restricted Payment in question, would exceed the sum of
(1) Fifteen Million Dollars
($15,000,000), plus
(2) fifty percent (50%) of
Consolidated Adjusted Net Income (or minus one
hundred percent (100%) of Consolidated Adjusted
Net Income in the case of a deficit) for
the period commencing on January 1, 1992
and ending on the last day of the fiscal year
of the Company most recently ended on such
date, all computed on a cumulative basis
for said entire period.
2. The Company shall not declare any dividend
payable more than sixty (60) days after the
date of the declaration thereof.
3. For the purposes of this Section 7.13, the
amount of any Restricted Payment declared or
paid or distributed in Property of the Company or any Restricted
Subsidiary shall be deemed to be the
greater of book value or Fair Market Value, as determined in good
faith by the Board of Directors (in each
case after deducting any liabilities relating thereto which are,
concurrently with the receipt of such Restricted
Payment, assumed by the recipient thereof), of such Property at the
time of the making of the Restricted
Payment in question.
4. The Company shall not declare or make any
Restricted Payment if, after giving effect
thereto, a Default or an Event of Default would exist.
N. Limitation on Investments.
1. The Company shall not, and shall not permit any
Restricted Subsidiary to, make any
Restricted Investments.
2. Any corporation which becomes a Restricted
Subsidiary subsequent to the date of this
Agreement shall be deemed to have made, immediately after becoming a
Restricted Subsidiary, any
Restricted Investment that it shall have outstanding at the time it
shall become a Restricted Subsidiary.
O. Transactions with Affiliates.
1. The Company shall not, and shall not permit any
Restricted Subsidiary to, enter into any
transaction, including, without limitation, the purchase, sale or
exchange of Property or the rendering of any
service, with any AffIliate except (i) for the NCB Development
Corporation Contribution and (ii) in the ordinary
course of and pursuant to the reasonable requirements of the
Company's or such Restricted Subsidiary's
business and upon fair and reasonable terms no less favorable to the
Company or such Restricted
Subsidiary than would obtain in a comparable arm's-length transaction
with a Person not an Affiliate.
2. Any corporation that becomes a Restricted
Subsidiary subsequent to the date of this
Agreement shall be deemed to have entered into, at the date it
becomes a Restricted Subsidiary, all
transactions with Affiliates with respect to which such corporation
will be obligated immediately after it
becomes a Restricted Subsidiary.
P. Repurchase of Notes.
The Company shall not, and shall not permit any Restricted Subsidiary
or any Affiliate, directly or indirectly,
to, purchase or make any offer to purchase any Notes, unless the Company or
such Restricted Subsidiary or
Affiliate has offered to purchase Notes, pro rata from all holders of the Notes
and upon the same terms. In case
the Company purchases any Notes, such Notes shall thereafter be cancelled and
no Notes shall be issued in
substitution therefor.
Q. Issuance of Subordinated Debt.
The Company shall not create, issue, assume, guarantee or in any
manner become liable after the date
of this Agreement in respect of any Subordinated Debt having a maturity earlier
than June 25, 1998, or the benefit
of any mandatory sinking fund or similar provision for the prepayment thereof
prior to June 25, 1998.
R. Voluntary Retirement of Subordinated Debt.
The Company shall not, directly or indirectly or through any
Subsidiary, purchase, redeem or otherwise retire
or acquire prior to the respective stated maturities thereof, the whole or
any part of any issue of Subordinated Debt
except
1. subject to Section 7.17 of this Agreement, in
accordance with the applicable provisions
thereof or of any indenture, agreement or similar instrument under or
pursuant to which such Debt has
been issued, unconditionally requiring payments into a sinking fund,
periodic prepayments, or other
analogous payments for the amortization of such Debt, or
2. out of the proceeds of a substantially
concurrent issue or sale of capital stock or Debt
ranking on a parity with, or junior to, the Debt proposed to be
purchased, redeemed or otherwise retired
or acquired, or
3. out of funds that at the time are available
for Restricted Payments pursuant to, and within
the limitations of, Section 7.13 of this Agreement, it being
understood that the amounts so used pursuant
to this clause (c) shall reduce pro tanto the amount otherwise
available for Restricted Payments under
Section 7.13 of this Agreement.
S. Subordination Provisions.
The Company shall not, at any time, be a party to any amendment,
waiver or modification of any
subordination provisions or payment provisions applicable to any Subordinated
Debt.
T. Line of Business.
The Company shall, and shall cause each of the Restricted
Subsidiaries to, remain primarily in the business
conducted by the Company and the Restricted Subsidiaries on the Date of
Assumption and Restatement.
U. ERISA Compliance.
The Company and each Subsidiary shall promptly comply with all
provisions of ERISA applicable to any
of them which, if not complied with, might result in a Lien or charge upon any
Property of the Company or any
Subsidiary or might in the aggregate otherwise materially adversely affect the
business, profits, prospects, Properties
or condition (financial or otherwise) of the Company or any Subsidiary.
Without limiting the generality of the
foregoing, neither the Company nor any Subsidiary will cause any Pension Plan
maintained or participated in by
it to:
1. engage in any "prohibited transaction," as such
term is defined in Section 4975 of the
Internal Revenue Code of 1986, as amended; or
2. incur any material "accumulated funding
deficiency," as such term is defined in Section 302
of ERISA, whether or not waived.
V. Class A Notes.
(a) No Voluntary Prepayment. The Company shall
not, directly or indirectly or through any
Subsidiary, purchase, redeem or otherwise retire or acquire, prior
to the respective stated maturities thereof,
the whole or any part of any Class A Notes except out of the net
cash proceeds of a substantially
concurrent issue or sale of Class B Stock or Class C Stock.
(b) No Amendments. The Company shall not amend,
modify, terminate, or waive any of its
rights under the Financing Agreement or any of the Class A Notes (or
any other agreement or similar
instrument under or pursuant to which such Class A Notes have
been issued) without the prior written
consent of the Required Holders.
W. Incorporation of Affirmative and Negative Covenants.
1. During all such times as the Bank Loan
Agreement shall remain in force, (i) the Company
and the Restricted Subsidiaries shall comply and remain at all times
in compliance with the provisions of
Article 6 and Article 7 thereof and any Financial Covenant set forth
in any other provision thereof and (ii) all
of the provisions of Article 6 and Article 7 of the Bank Loan
Agreement and any other Financial Covenants
set forth therein, together with all relevant definitions pertaining
thereto, shall hereby be incorporated herein
by reference, mutatis mutandis.
2. No Financial Covenant incorporated herein by
virtue of Section 7.23(a) hereof shall
supersede, replace, amend, supplement or modify any other provision
of this Agreement, including any
covenant contained herein which addresses a subject matter similar to
that of such incorporated Financial
Covenant.
SECTION VIII. INFORMATION AS TO THE COMPANY
A. Financial and Business Information.
The Company shall deliver to you, if at the time you or your nominee
holds any Note, and to each other
institutional holder of the then outstanding Notes:
1. Quarterly Statements -- as soon as practicable
after the end of the first, second and third
quarterly fiscal periods in each fiscal year of the Company, and
in any event within sixty (60) days thereafter,
two (2) copies of:
a. consolidated balance sheets of the
Company and its consolidated Subsidiaries,
and the Company and the Restricted Subsidiaries, as at the
end of such quarter, and
b. consolidated statements of income
and cash flows of the Company and its
consolidated Subsidiaries, and the Company and the
Restricted Subsidiaries, for such quarter and
(in the case of the second and third quarters) for the
portion of the fiscal year ending with such
quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal
year, all in reasonable detail and certified as complete and correct,
subject to changes resulting from year-
end adjustments, by a principal financial officer of the Company;
2. Annual Statements -- as soon as practicable
after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter,
duplicate copies of:
a. consolidating and consolidated
balance sheets of the Company and its
consolidated Subsidiaries, and the Company and the
Restricted Subsidiaries, as at the end of such
year, and
b. consolidating and consolidated
statements of income, changes in members' equity
and cash flows of the Company and its consolidated
Subsidiaries, and the Company and the
Restricted Subsidiaries, for such year,
setting forth in comparative form the figures for the previous
fiscal year, all in reasonable detail, satisfactory
in scope to the Required Holders and
(1) except in the case of
the consolidating statements which may be certified
as complete and correct by a principal
financial officer of the Company, accompanied by
an opinion thereon, satisfactory in scope
and substance to the Required Holders, of
independent certified public accountants of
recognized national standing selected by the
Company, which opinion shall state that such
financial statements have been prepared in
accordance with generally accepted accounting
principles consistently applied (except for
changes in application in which such
accountants concur and which are noted in the
financial statements) and that the examination
of such accountants in connection with such
financial statements has been made in
accordance with generally accepted auditing
standards, and accordingly included such tests
of the accounting records and such other
auditing procedures as were considered
necessary in the circumstances,
(2) a statement from such
independent certified public accountants that such
consolidating statements were prepared using
the same work papers as were used in the
preparation of such consolidated statements,
and
(3) a certification by a
principal financial officer of the Company (in scope and
substance satisfactory to the Required Holders)
that such consolidating and consolidated
statements are true and correct;
3. Opinions Pursuant to Section 7.1 -- as soon as
practicable after the end of each fiscal year
of the Company, and in any event within ninety (90) days
thereafter, duplicate copies of any opinions
required pursuant to Section 7.1 of this Agreement;
4. Audit Reports -- promptly upon receipt thereof,
one (1) copy of each interim or special audit
made by independent accountants of the books of the Company or any
Subsidiary;
5. SEC Reports -- promptly upon their becoming
available (but in no event later than the date
of filing), one (1) copy of each regular or periodic report and
any registration statement or prospectus filed
by the Company or any Subsidiary with any securities exchange or
with the Securities and Exchange
Commission or any successor agency;
6. Materials Sent to Stockholders -- promptly
upon their becoming available (but in no event
later than the date of sending to stockholders), one (1) copy of
each financial statement, report, notice or
proxy statement sent by the Company or any Subsidiary to
stockholders (other than, in the case of any
Subsidiary, the Company) generally;
7. Notice of Event of Default -- promptly upon
becoming aware of the existence of any
condition or event which constitutes a Default or an Event of
Default, a written notice specifying the nature
and period of existence thereof and what action the Company is
taking and proposes to take with respect
thereto;
8. Notice of Claimed Default -- promptly upon
becoming aware that the holder of any Note
or of any evidence of indebtedness or other Security of the Company
or any Subsidiary has given notice
or taken any other action with respect to a claimed default or Event
of Default, a written notice specifying
the notice given or action taken by such holder and the nature of the
claimed default or Event of Default
and what action the Company or such Subsidiary is taking or proposes
to take with respect thereto;
9. Loan Portfolio Reports -- together with each
quarterly financial statement required to be
delivered pursuant to clause (a) of this Section 8.1, one (1) copy of
a. a monthly Loan Portfolio Report of
the Company setting forth, with respect to loans
held in its portfolio, classifications relating to
delinquency, non-performance, risk rating, loss
allowances and other related matters as of the end of the
last month of the fiscal quarters covered
by such financial statements, to be prepared on
substantially the same basis and to contain
substantially the same information as the Loan Portfolio
Report, dated July 7, 1993, in respect of the
month of June, 1993, a copy of which was delivered to you
prior to the Date of Assumption and
Restatement, and
b. a quarterly Report on Allowances for
Loan Losses and Reserves of the Company,
to be prepared on substantially the same basis and to
contain substantially the same information
as the Report on Allowances for Loan Losses and Reserves,
dated July 7, 1993, a copy of which
was delivered to you prior to the Date of Assumption and
Restatement,
provided that such monthly and quarterly reports need not, unless you
or any other holder of Notes shall
reasonably so request, disclose the names of the obligors on such
loans; and
10. Requested Information -- with reasonable
promptness, such other data and information with
respect to the Company and the Restricted Subsidiaries as from time
to time may be reasonably
requested, including, without limitation, information required by 17
C.F.R. 230.144A.
B. Officers' Certificates.
Each set of financial statements delivered to you or any other
institutional holder of the Notes pursuant to
Section 8.1(a) or Section 8.1(b) of this Agreement will be accompanied by a
certificate of the President or a Vice
President and the Treasurer or an Assistant Treasurer of the Company setting
forth:
1. Covenant Compliance -- the information
(including, where applicable, detailed calculations)
required in order to establish whether the Company was in compliance
with the requirements of Section
7 of this Agreement during the period covered by the financial
statements then being furnished;
2. Event of Default -- that the signers have
reviewed the relevant terms of this Agreement and
the Financing Agreement and have made, or caused to be made, under
their supervision, a review of the
transactions and conditions of the Company and the Subsidiaries from
the beginning of the accounting
period covered by the financial statements being delivered therewith
to the date of the certificate and that
such review has not disclosed the existence, during such period, of
any condition or event which constitutes
a Default or an Event of Default or, if any such condition or event
existed or exists, specifying the nature and
period of existence thereof and what action the Company has taken
or proposes to take with respect
thereto; and
3. Loan Portfolio Changes -- an explanation, in
reasonable detail, of the differences disclosed
in the Loan Portfolio Reports accompanying such financial
statements from the information set forth in the
Loan Portfolio Reports delivered after the end of the immediately
preceding fiscal quarter of the Company.
C. Accountants' Certificates.
Each set of annual financial statements delivered pursuant to Section
8.1(b) of this Agreement will be
accompanied by a certificate of the accountants who certify such financial
statements, stating that they have
reviewed this Agreement insofar as it relates to accounting matters and stating
further, whether, in making their audit,
such accountants have become aware of any condition or event which then
constitutes a Default or an Event of
Default, and, if any such condition or event then exists, specifying the nature
and period of existence thereof.
D. Inspection.
The Company will permit any of your representatives, while you or
your nominee holds any Note, or the
representatives of any other institutional holder of the Notes, at your or such
holder's expense so long as no Default
or Event of Default is then continuing and otherwise at the sole expense of the
Company, to visit and inspect any
of the Properties of the Company or any Subsidiary (and to take extracts from,
and make copies of, their respective
books and records) and to discuss their respective affairs, finances and
accounts with their respective officers,
employees and independent public accountants (and by this provision the Company
authorizes said accountants
to discuss with your representatives the finances and affairs of the Company and
the Subsidiaries) all at such
reasonable times and as often as may be reasonably requested.
SECTION IX. EVENTS OF DEFAULT
A. Nature of Events.
An "Event of Default" shall exist if any of the following occurs
and is continuing:
1. Principal or Yield-Maintenance Premium Payments
-- the Company fails to make any
payment of principal or Yield-Maintenance Premium on any Note on or
before the date such payment is
due;
2. Interest Payments -- the Company fails to make
any payment of interest on any Note on
or before the date such payment is due and such failure shall
continue for a period of three (3) Business
Days;
3. Particular Defaults -- the Company or any
Subsidiary fails to perform or observe any
covenant contained in Section 7.4 through Section 7.22 (other than
Section 7.14, Section 7.15 and Section
7.20) of this Agreement, inclusive; or the Company shall terminate or
modify any provision of the Financing
Agreement or shall fail to perform or observe any covenant contained
in the Financing Agreement;
4. Other Defaults -- the Company or any Subsidiary
fails to comply with any other provision
of this Agreement, and such failure continues for more than thirty
(30) days after any officer of the Company
has knowledge thereof;
5. Warranties or Representations -- any warranty,
representation or other statement by or on
behalf of the Company contained in this Agreement or in any
instrument furnished by or on behalf of the
Company in compliance with or in reference to this Agreement was or
shall have been false or misleading
in any material respect at the time made;
6. Default on Indebtedness or Other Security --
the Company or any Restricted Subsidiary
fails to make any payment due on any one or more Material Obligations
or any event shall occur or any
condition shall exist in respect of any one or more Material
Obligations of the Company or any Restricted
Subsidiary, or under any agreement securing or relating to any such
Material Obligations (and any such
failure, event or condition shall not have been cured, waived or
consented to by the holder or holders of
such Material Obligations or a trustee therefor), the effect of
which is
a. to cause (or permit any holder of
such Material Obligation or a trustee of such
holder to cause) such Material Obligation or Material
Obligations, or a portion thereof, to become
due prior to its or their stated maturity or prior to
its or their regularly scheduled dates of payment
(regardless of any limitations, such as those applicable
to Subordinated Debt, on the amount of
such Material Obligations which may be paid upon such
acceleration),
b. to permit a trustee or the holder of
any Security (other than common stock of the
Company or any Restricted Subsidiary) to elect a majority
of the directors on the board of directors
of the Company or such Restricted Subsidiary, or
c. to permit the holder of any such
Material Obligation to require the Company or any
Restricted Subsidiary to repurchase such Material
Obligation or a portion thereof from such holder;
7. Involuntary Bankruptcy Proceeding -- a
receiver, liquidator, custodian or trustee of the
Company or any Restricted Subsidiary, or of any of the Property of
any of such Persons, is appointed by
court order and such order remains in effect for more than ninety
(90) days; or the Company or any
Restricted Subsidiary is adjudicated bankrupt or insolvent; or any of
the Property of any of such Persons
is sequestered by court order and such order remains in effect for
more than ninety (90) days; or a petition
is filed against the Company or any Restricted Subsidiary under any
bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now
or hereafter in effect, and is not dismissed within thirty (30)
days after such filing;
8. Voluntary Petitions -- the Company or any
Restricted Subsidiary files a petition in voluntary
bankruptcy or seeking relief under any provisions of any bankruptcy,
reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or hereafter
in effect, or consents to the filing of any petition against it
under such law;
9. Assignments for Benefit of Creditors, etc. --
the Company or a Restricted Subsidiary makes
an assignment for the benefit of its creditors, is not paying its
debts generally as they become due, admits
in writing its inability to pay its debts generally as they become
due or consents to the appointment of a
receiver, trustee, custodian or liquidator of the Company or such
Restricted Subsidiary or of all or any part
of the Property of any of such Persons; or
10. Undischarged Final Judgments -- final judgment
or judgments for the payment of money,
aggregating in excess of Five Hundred Thousand Dollars ($500,000) for
all such judgments, is or are
outstanding against the Company or any of the Restricted Subsidiaries
and any one of such judgments
has been outstanding for more than thirty (30) days from the date of
its entry and has not been discharged
in full or stayed.
B. Default Remedies.
1. Acceleration on Event of Default. If an Event
of Default exists, then
a. if such Event of Default is an Event
of Default specified in clause (g), clause (h) or
clause (i) of Section 9.1 of this Agreement with respect
to
outstanding shall automatically become immediately due and
payable at par together with interest
accrued thereon, without presentment, demand, protest or
notice of any kind, all of which are
hereby waived by the Company, and
b. if such Event of Default is any
other Event of Default, the holder or holders of at leas
thirty-five percent (35%) in principal amount of any
Series of Notes then outstanding (exclusive of
Notes then held by any one or more of the Company, any
Restricted Subsidiary or any Affiliate)
may exercise any right, power or remedy permitted to such
holder or holders by law, and may, in
particular, at its or their option, by notice in writing
to the Company, declare all of such Series of
Notes to be, and all of such Series of Notes shall
thereupon be and become, immediately due and
payable, together with interest accrued thereon and
together with the Yield-Maintenance Premium,
if any, with respect to each Note in such Series, without
presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the
Company, provided that the Yield-
Maintenance Premium, if any, with respect to each such
Note shall be due and payable upon such
declaration only if
(1) such event is an Event
of Default specified in any of clause (a) to clause
(f), inclusive, or clause (j) of Section 9.1 of
this Agreement,
(2) the holders making such
declaration shall have given to the Company, at
least ten (10) Business Days before such
declaration, written notice stating its or their
intention so to declare such Series of Notes to
be immediately due and payable and
identifying one or more such Events of Default
whose occurrence on or before the date
of such notice permits such declaration and
(3) one or more of the Events
of Default so identified shall be continuing at the
time of such declaration.
2. Acceleration on Payment Default. During the
existence of an Event of Default described
in Section 9.1(a) or Section 9.1(b) hereof, and irrespective of
whether the Notes then outstanding shall have
been declared to be due and payable pursuant to Section 9.2(a)(ii)
hereof, any holder of Notes who or
which shall have not consented to any waiver with respect to such
Event of Default may, at his or its option,
by notice in writing to the Company, declare the Notes then held by
such holder to be, and such Notes
shall thereupon become, forthwith due and payable together with all
interest accrued thereon, without any
presentment, demand, protest or other notice of any kind, all of
which are hereby expressly waived, and
the Company shall forthwith pay to such holder the entire principal
of and interest accrued on such Notes
and, to the extent permitted by law, the Yield-Maintenance Premium
at such time with respect to such
principal amount of such Notes.
3. Valuable Rights. The Company acknowledges, and
the parties hereto agree, that the right
of each holder to maintain its investment in the Notes free from
repayment by the Company (except as
herein specifically provided for) is a valuable right and that the
provision for payment of a Yield-Maintenance
Premium by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event
of Default, is intended to provide compensation for the deprivation
of such right under such circumstances.
4. Other Remedies. If any Event of Default or
Default shall occur and be continuing, the holder
of any Note may proceed to protect and enforce its rights under this
Agreement and such Note by
exercising such remedies as are available to such holder in respect
thereof under applicable law, either by
suit in equity or by action at law, or both, whether for specific
performance of any covenant or other
agreement contained in this Agreement or in aid of the exercise of
any power granted in this Agreement.
No remedy conferred in this Agreement upon the holder of any Note is
intended to be exclusive of any
other remedy, and each and every such remedy shall be cumulative and
shall be in addition to every other
remedy conferred herein or now or hereafter existing at law or in
equity or by statute or otherwise.
5. Nonwaiver and Expenses. No course of dealing
on the part of any holder of Notes nor
any delay or failure on the part of any holder of Notes to exercise
any right shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers and
remedies. If the Company shall fail to pay
when due any principal of, or Yield-Maintenance Premium or interest
on, any Note, or shall fail to comply
with any other provision hereof, the Company shall pay to each holder
of Notes, to the extent permitted by
law, such further amounts as shall be sufficient to cover the costs
and expenses, including but not limited
to reasonable attorneys' fees, incurred by such holder in collecting
any sums due on such Notes or in
otherwise assessing, analyzing or enforcing any rights or remedies
that are or may be available to it.
C. Annulment of Acceleration of Notes.
If a declaration is made pursuant to Section 9.2(a)(ii) of this
Agreement in respect of any Series of Notes
by any holder or holders thereof then, and in every such case, the holders of
sixty-six percent (66%) in aggregate
principal amount of such Series of Notes then outstanding (exclusive of Notes
then owned by any one or more of
the Company, any Restricted Subsidiary or any Affiliate) may, by written
instrument filed with the Company, rescind
and annul such declaration, and the consequences thereof, provided that at the
time such declaration is annulled
and rescinded:
1. no judgment or decree has been entered for the
payment of any monies due pursuant
to such Series of Notes or this Agreement;
2. all arrears of interest upon all of the Notes
of such Series and all other sums payable under
such Series of Notes and under this Agreement (except any principal
of or interest on the Notes of such
Series which has become due and payable by reason of such declaration
under Section 9.2(a)(ii) of this
Agreement) shall have been duly paid; and
3. each and every other Default and Event of
Default shall have been waived pursuant to
Section 11.4 of this Agreement or otherwise made good or cured,
and provided further that no such rescission and annulment shall extend to or
affect any subsequent Default or
Event of Default or impair any right consequent thereon.
SECTION X. INTERPRETATION OF THIS AGREEMENT
A. Terms Defined.
As used in this Agreement, the following terms have (unless otherwise
limited by the context) the following
respective meanings (or the meanings set forth in the Section of this Agreement
referred to opposite such term)
and the following definitions shall be equally applicable to both the singular
and plural forms of any of the terms
herein defined:
"Adjusted Tangible Assets" -- at any time means all assets
(including, without duplication,
the capitalized value of any leasehold interest under any Capitalized Lease)
except:
(a) deferred assets and intangible assets,
(b) patents, copyrights, trademarks, trade names,
franchises, goodwill,
organizational expense, experimental expense and other similar
intangible assets,
(c) unamortized debt discount and expense, and
(d) assets located, and notes and receivables due from
obligors domiciled, outside
the United States of America, Puerto Rico or Canada.
"Affiliate" -- means a Person (other than a Restricted Subsidiary)
(a) which directly or indirectly through one or
more intermediaries controls, or
is controlled by, or is under common control with, the Company,
(b) which beneficially owns or holds five percent
(5%) or more of any class of
the Voting Stock of the Company or
(c) five percent (5%) or more of the Voting Stock
(or in the case of a Person
which is not a corporation, five percent (5%) or more of the equity
interest) of which is
beneficially owned or held by the Company or a Subsidiary.
The term "control" means the possession, directly or indirectly, of the power to
direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting
securities, by contract or otherwise.
"Agreement, this" -- means this agreement, as it may be amended
and/or restated from
time to time.
"Asset Disposition Date" -- Section 7.5(a) of this Agreement.
"Asset Securitization" -- means, with respect to any Person, a
transaction involving the sale
or transfer of receivables by such Person (an "Originator") to a special purpose
corporation or
grantor trust (an "SPV") established solely for the purpose of purchasing such
receivables from the
Company for cash in an amount equal to the Fair Market Value thereof; provided,
however, that
the Company may (A) establish and maintain a reserve account containing cash or
Securities as
a credit enhancement in respect of any such sale or (B) purchase or retain a
subordinated interest
in such receivables being sold.
"Asset Securitization Recourse Liability" -- means, at any time,
with respect to any Person,
the maximum amount of such Person's liability (whether matured or contingent)
under any
agreement, note or other instrument in connection with any one or more Asset
Securitizations in
which such Person has agreed to repurchase receivables or other assets, to
provide direct or
indirect credit support (whether through cash payments, the establishment of
reserve accounts
containing cash or Securities, an agreement to reimburse a provider of a letter
of credit for any
draws thereunder, the purchase or retention of a subordinated interest in such
receivables or other
assets, or other similar arrangements), or in which such Person may be otherwise
liable for all or
a portion of any SPV's obligations under Securities issued in connection with
such Asset
Securitizations.
"Assumption and Restatement" -- Section 1.2(b) of this Agreement.
"Bank Loan Agreement" -- means the Second Amended and Restated Loan
Agreement,
dated as of December 15, 1993, by and among the Company, the banks signatory
thereto and
National Westminster Bank USA, as agent, as may be amended from time to time.
"Board of Directors" -- at any time means the board of directors of
the Company or any
committee thereof which, in the instance, shall have the lawful power to
exercise the power and
authority of such board of directors.
"Business Day" -- at any time means a day other than a Saturday, a
Sunday or, in the case
of any Note with respect to which the provisions of Section 4.1 of this
Agreement are applicable,
a day on which the bank designated (by the holder of such Note) to receive (for
such holder's
account) payments on such Note is required by law (other than a general banking
moratorium or
holiday for a period exceeding four (4) consecutive days) 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.
"Class A Notes" -- means "class A notes" the terms of which are
defined in 12 U.S.C. 3014
as in effect on the Date of Assumption and Restatement.
"Class B Stock" -- means "class B stock" the terms of which are
defined in 12 U.S.C. 3014
as in effect on the Date of Assumption and Restatement.
"Class B1 Common Stock" -- means the series of Class B stock
comprising Class B stock
purchased for cash after June 28, 1984.
"Class C Stock" -- means "class C stock" the terms of which are
defined in 12 U.S.C. 3014
as in effect on the Date of Assumption and Restatement.
"Company" -- introductory sentence to this Agreement.
"Company Senior Obligations" -- at any time means, with respect to
the Company, the sum
of
(a) the aggregate unpaid principal amount of Senior
Debt of the Company,
plus
(b) the aggregate amount of all Capitalized Leases
of the Company plus
(c) Restricted Guarantees of the Company computed
on the basis of total
outstanding contingent liability, plus
(d) Asset Securitization Recourse Liabilities of
the Company (meeting the
conditions set forth in either clause (i) or clause (ii) below):
(i) to the extent, but only to the
extent, that such obligations arise from
the Company's obligation to repurchase receivables or
other assets as a result of
a default in payment by the obligor thereunder or any
other default in performance
by such obligor under any agreement related to such
receivables; or
(ii) if the Company shall maintain a
reserve account containing cash
or Securities in respect of any such obligations or
shall retain or purchase a
subordinated interest therein, to the extent, but only
to the extent, of the amount of
such reserve account or subordinated interest.
"Consolidated Adjusted Net Income" -- for any fiscal period of the
Company means net
earnings or net loss (determined on a consolidated basis) of the Company and
the Restricted
Subsidiaries after income taxes for such period, but excluding from the
determination of such
earnings the following items (together with the income tax effect, if any,
applicable thereto):
(a) the proceeds of any life insurance policy;
(b) any gain or loss arising from the sale of
capital assets;
(c) any gain arising from any reappraisal,
revaluation or write-up of assets;
(d) any gain arising from transactions of a
non-recurring or nonoperating and
material nature or arising from sales or other dispositions relating
to the discontinuance of
operations;
(e) earnings of any Restricted Subsidiary accrued
prior to the date it became
a Restricted Subsidiary;
(f) earnings of any corporation, substantially all
the assets of which have been
acquired in any manner, realized by such other corporation prior
to the date of such
acquisition;
(g) net earnings of any business entity (other than
a Restricted Subsidiary) in
which the Company or any Restricted Subsidiary has an ownership
interest, unless such
net earnings shall have actually been received by the Company or
such Restricted
Subsidiary in the form of cash distributions;
(h) any portion of the net earnings of any
Restricted Subsidiary which for any
reason is unavailable for payment of dividends to the Company or
any other Restricted
Subsidiary;
(i) the earnings of any Person to which assets of
the Company shall have
been sold, transferred or disposed of, or into which the Company
shall have merged, prior
to the date of such transaction;
(j) any gain arising from the acquisition of any
Securities of the Company or
any Subsidiary; and
(k) any amortization of deferred or other credit
representing the excess of the
equity in any Subsidiary at the date of acquisition thereof over
the amount invested in such
Subsidiary.
"Consolidated Adjusted Net Worth" -- at any time means, with
respect to the Company and
the Restricted Subsidiaries (determined on a consolidated basis):
(a) the amount of capital stock liability plus (or
minus in the case of a deficit)
the capital surplus and earned surplus of the Company and the
Restricted Subsidiaries,
less (without duplication) the sum of
(b) the net book value, after deducting any
reserves applicable thereto, of all
items of the following character which are included in the assets of
the Company and the
Restricted Subsidiaries:
(i) all deferred charges and prepaid
expenses other than prepaid
taxes and prepaid insurance premiums;
(ii) treasury stock;
(iii) unamortized debt discount and
expense and unamortized stock
discount and expense;
(iv) goodwill, the excess of the cost of
assets acquired over the book
value of such assets on the books of the transferor,
the excess of the cost of
investments in any Person (including any Subsidiary)
over the value of such
investments on the books of such Person at the time of
making such investments,
organizational or experimental expense, patents,
trademarks, copyrights, trade
names and other intangibles;
(v) all receivables (other than
Eurodollar deposits) owing by Persons
whose principal place of business or principal assets are
located in any jurisdiction
other than the United States of America or Canada; and
(vi) any increment resulting from any
reappraisal, revaluation or write-
up of capital assets subsequent to December 31, 1991.
If, notwithstanding Section 7.14, the Company shall have any Restricted
Investments outstanding
at any time, such Restricted Investments shall be excluded from Consolidated
Adjusted Net Worth.
"Consolidated Assets" -- at any time means the assets of the Company
and the Restricted
Subsidiaries that would be reflected on a consolidated balance sheet for the
Company and the
Restricted Subsidiaries at such time.
"Consolidated Debt" -- at any time means all Debt of the Company and
the Restricted
Subsidiaries, plus, without duplication, the aggregate amount of the
obligations of the Company
and the Restricted Subsidiaries set forth below, at such time:
1. the face amount of all letters of credit issued
by the Company or any
Restricted Subsidiary and all bankers' acceptances accepted by the
Company or any
Restricted Subsidiary; and
2. the aggregate amount of all assets with respect
to which the Company or
a Restricted Subsidiary has any Asset Securitization Recourse
Liabilities in respect of
promissory notes and other interest bearing obligations sold or
otherwise transferred by
the Company or any Restricted Subsidiary (regardless of whether such
aggregate amount
of assets is in excess of the amount of such Asset Securitization
Recourse Liabilities),
whether for the repurchase of defaulted notes or obligations or
otherwise.
"Consolidated Earnings Available for Fixed Charges" -- for any
fiscal period of the Company
means the sum of
(a) Consolidated Adjusted Net Income for such
period; plus
(b) to the extent deducted in determining
Consolidated Adjusted Net Income
for such period,
(i) all provisions for any Federal,
state or other income taxes made
by the Company and the Restricted Subsidiaries during
such period, and
(ii) Consolidated Fixed Charges during
such period;
plus
(c) the NCB Development Corporation Contribution.
"Consolidated Effective Net Worth -- at any time means the sum of
(a) Consolidated Adjusted Net Worth at such time;
plus
(b) the aggregate outstanding principal amount of
Class A Notes at such time.
"Consolidated Fixed Charges" -- for any fiscal period of the Company
means, on a
consolidated basis for the Company and the Restricted Subsidiaries, the sum of:
(a) all interest and all amortization of Debt
discount and expense on all Debt
for borrowed money of the Company and the Restricted Subsidiaries;
plus
(b) all Rentals payable during such period by the
Company and the Restricted
Subsidiaries.
"Consolidated Net Earnings" -- means, for any period, the net income
or loss of the
Company and the Restricted Subsidiaries, as applicable (determined on a
consolidated basis for
such Persons at such time), for such period, as determined in accordance with
generally accepted
accounting principles in effect at such time.
"Consolidated Senior Debt" -- at any time means the aggregate amount
of the obligations
of the Company and the Restricted Subsidiaries set forth below that would be
reflected on a
consolidated balance sheet for the Company and the Restricted Subsidiaries at
such time:
(a) the Notes;
(b) all other Debt of the Company or a Restricted
Subsidiary for borrowed
money that is not expressed to be subordinate or junior to any other
Debt;
(c) all Guarantees of the Company or a Restricted
Subsidiary;
(d) all obligations in respect of Capitalized
Leases;
(e) in respect of the Company or any Restricted
Subsidiary, the aggregate
amount of all demand and term deposits made by any Person with the
Company or such
Restricted Subsidiary (including, without limitation, certificates of
deposit issued by the
Company or such Restricted Subsidiary); and
(f) Asset Securitization Recourse Liabilities to
the extent, but only to the extent,
that such obligations have matured.
"Consolidated Taxable Income" -- means, in respect of the Company for
any calendar year,
the taxable income for such calendar year reported by the Company on its tax
return filed with the
Internal Revenue Service (or other successor federal agency) for such calendar
year.
"Date of Assumption and Restatement" -- Section 1.2(b) of this
Agreement.
"Debt" -- at any time with respect to any Person means all
obligations of such Person that
in accordance with generally accepted accounting principles would be classified
on a balance sheet
of such Person as liabilities of such Person (except as specified in clause (d)
below), including
(without limitation) all
(a) direct debt and other similar recourse and non-
recourse monetary
obligations of such Person,
(b) obligations secured by any Lien upon Property
owned by such Person,
even though such Person has not assumed or become liable for the
payment of such
obligations,
(c) obligations created or arising under any
conditional sale, financing lease,
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 such Property,
(d) Guarantees of such Person (whether or not such
Guarantees are classified
as liabilities on the balance sheet of such Person at such time),
(e) obligations in respect of Capitalized Leases,
and
(f) in respect of the Company or any Restricted
Subsidiary, the aggregate
amount of all demand and term deposits made by any Person with
the Company or such
Restricted Subsidiary (including, without limitation, certificates of
deposit issued by the
Company or such Restricted Subsidiary).
"Default" -- means an event or condition the occurrence of which
would, with the lapse of
time or the giving of notice or both, become an Event of Default.
"Disposition Assets" -- Section 7.5(a) of this Agreement.
"Disposition Stock" -- Section 7.4 of this Agreement.
"Disposition Subsidiary" -- Section 7.4 of this Agreement.
"Disposition Value" -- with respect to any Property means the greater
of
(a) the book value of such Property as reflected on
the balance sheet of the
owner of such Property and
(b) the Fair Market Value of such Property,
in each case as of the time of the disposition of such Property.
"Distribution" -- in respect of any corporation means:
(a) dividends or other distributions on capital
stock of the corporation (except
distributions in such stock); and
(b) the redemption or acquisition of such stock or
of warrants, rights or other
options to purchase such stock (except when solely in exchange for
such stock) unless
made, contemporaneously, from the net proceeds of a sale of such
stock.
"Eligible Derivatives" -- means derivative Securities which are sold
in the ordinary course of
the business of the Company and the Restricted Subsidiaries for the purpose of
hedging or
otherwise managing portfolio risk.
"ERISA" -- means the Employee Retirement Income Security Act of 1974,
as amended from
time to time.
"Event of Default" -- Section 9.1 of this Agreement.
"Exchange Act" -- means the Securities Exchange Act of 1934, as
amended.
"Existing NCBCC Note Agreement" -- Section 1.1(a) of this Agreement.
"Existing NCBCC Notes" -- Section 1.1(a) of this Agreement.
"Existing Series A Notes" -- Section 1.1(a) of this Agreement.
"Existing Series B Notes" -- Section 1.1(a) of this Agreement.
"Existing Series C Notes" -- Section 1.1(a) of this Agreement.
"Fair Market Value" -- at any time with respect to any Property, means the
sale value of such
Property that would be realized in an arm's-length sale at such time between an
informed and
willing buyer and an informed and willing seller, under no compulsion to buy or
sell, respectively.
"Financial Covenant" -- shall mean any covenant, agreement or
provision (including, without
limitation, the definitions applicable thereto) of or applicable to the Company
or any Restricted
Subsidiary contained in any agreement governing, or instrument evidencing, any
Debt (or
commitment to lend), other than Debt or a commitment to lend among the Company
and one or
more Restricted Subsidiaries, of the Company or any Restricted Subsidiary in an
aggregate
principal amount greater than Five Million Dollars ($5,000,000), which covenant,
agreement or
provision:
(i) requires the Company or any Restricted
Subsidiary to maintain specified
financial amounts or ratios or to meet other financial tests;
(ii) restricts the ability of the Company or any
Restricted Subsidiary to:
(a) make Distributions, investments,
capital expenditures or operating
expenditures of any kind;
(b) incur, create or maintain any Debt
(or other obligations) or Liens;
(c) merge, consolidate or acquire or be
acquired by any Person;
(d) sell, lease, transfer or dispose of
any Property (other than
restrictions imposed solely upon collateral, and not upon
Property of the Company
or any Restricted Subsidiary generally, by holders of
Liens thereon which are
permitted by this Agreement); or
(e) issue or sell any capital stock
of any kind;
(iii) is similar to any provision in Section 7 of
this Agreement; or
(iv) provides that a default or event of default
shall occur, or that the Company
or any Restricted Subsidiary shall be required to prepay, redeem or
otherwise acquire for
value any Debt or security as a result of its failure to comply with
any provision similar to any
of those set forth in any of the foregoing clauses (i), (ii) or
(iii).
"Financing Agreement" -- means the Financing Agreement, made as
of December 21,
1989, by and between the Department of the Treasury, an executive department of
the United
States government, and the Company, as in effect on the Date of Assumption and
Restatement.
"Financing Documents" -- means this Agreement, the Notes, the other
Separate Senior
Note Agreements, the Other Restated Note Agreements, the Other Restated Notes,
the Bank Loan
Agreement, and the other agreements and instruments to be executed pursuant to
the terms of
each of such Financing Documents, as each may be amended from time to time.
"Guarantees" -- at any time means, subject to the last sentence of
this definition, all
obligations of any Person guaranteeing or in effect guaranteeing any
indebtedness or obligation
or dividend of any other Person (the "primary obligor") in any manner, whether
directly or indirectly,
including, without limitation, all obligations incurred through an agreement,
contingent or otherwise,
by such Person
(a) to purchase any indebtedness or obligation
or any Property constituting security therefore,
(b) to advance or supply funds
(i) for the purchase or payment of any
indebtedness or obligation or
(ii) to maintain working capital, equity
capital or other balance sheet
condition or otherwise to advance or make available funds
for the purchase or
payment of any indebtedness or obligation,
(c) to purchase Property, Securities or services
primarily for the purpose of
assuring the owner of any indebtedness or obligation of the ability
of the primary obligor
to make payment of the indebtedness or obligation or
(d) otherwise to assure the owner of the
indebtedness or obligation of the
primary obligor against loss in respect thereof (including, without
limitation, contingent
reimbursement obligations under letters of credit).
For purposes of this definition, (i) liabilities or endorsements in the ordinary
course of business of
checks and other negotiable instruments for deposit or collection,
(ii) obligations of the Restricted
Subsidiaries to acquire assets from the Company in the ordinary course of
business, and (iii) Asset
Securitization Recourse Liabilities shall be deemed not to be "Guarantees."
"Investments" -- the definition of "Restricted Investments".
"Lien" -- means any interest in Property securing an obligation owed
to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on
the common law,
statute or contract, and including but not limited to the security interest lien
arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases and other
title exceptions and
encumbrances affecting Property. For the purposes of this Agreement, the
Company or a
Restricted Subsidiary shall be deemed to be the owner of any Property which it
has acquired or
holds subject to a conditional sale agreement, financing lease or other
arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security
purposes.
"Long-Term Lease" -- means any lease (other than a Capitalized Lease)
having an original
term, including any period for which the lease may be renewed or extended at the
option of the
lessor, of more than one (1) year at the time the lessee shall have entered into
such lease.
"Material Obligation(s)" -- means any one or more Debts or other
Securities having an
aggregate outstanding principal or stated amount for all such Debts or other
Securities of One
Million Dollars ($1,000,000) or more.
"NCBCC" -- Section 1.1(a) of this Agreement.
NCB Development Corporation Contribution -- means the contribution
made by the
Company to NCB Development Corporation in any fiscal period of the Company
pursuant to 12
U.S.C. 3051(d), as in effect on the Date of Assumption and Restatement.
"Notes" -- Section 1.2(a)(iv) of this Agreement.
"Other Purchaser(s)" -- Section 1.2(c) of this Agreement.
"Other Restated Note Agreements" -- means and includes
(i) the Assumption Agreement
and Amended and Restated Senior Note Agreement, dated as of December 1, 1993,
in respect
of the Company's Amended and Restated 10.15% Senior Notes due October 15, 1995,
(ii) the
Assumption Agreement and Amended and Restated Senior Note Agreement, dated as of
December 1, 1993, in respect of the Company's Amended and Restated 9% Senior
Notes due
April 26, 1994, and (iii) the separate Assumption Agreement and Amended and
Restated Senior
Note Agreements, dated as of December 1, 1993, in respect of the Company's
Amended and
Restated 9.28% Senior Notes due December 15, 1994, as each may be amended from
time to
time.
"Other Restated Notes" -- means and includes each of the senior notes
of the Company
issued under the Other Restated Note Agreements, as each may be amended from
time to time.
"Patronage Dividends" -- means "patronage dividend", as such term is
defined in 12 U.S.C.
3019(b)(2) as in effect on the Date of Assumption and Restatement.
"Pension Plans" -- means all "employee pension benefit plans", as
such term is defined in
Section 3 of ERISA, maintained or participated in by the Company or any of the
Subsidiaries, as
from time to time in effect.
"Permitted Proceeds Application" -- means, in connection with a sale
of assets in
accordance with Section 7.5 hereof or a sale of Subsidiary Stock in accordance
with Section 7.4
hereof, the application by the Company or a Restricted Subsidiary of the amount
of proceeds
specified in such Section to any of the following:
(a) the acquisition by the Company or such
Restricted Subsidiary of Adjusted
Tangible Assets to be used in the ordinary course of business of the
Company or such
Restricted Subsidiary within ninety (90) days of such sale, so long
as any proceeds to be
applied pursuant to this clause (a) are invested in accordance with
clause (c) hereof until
such time as such proceeds are so applied,
(b) the prepayment, allocated in proportion to the
respective outstanding
principal amounts thereof, of each of the Notes and the Other
Restated Notes in
accordance with Section 5.2 of this Agreement and Section 5.2 of each
of the Other
Restated Agreements, as the case may be, within ten (10) Business
Days following the
consummation of such sale, so long as any proceeds to be applied
pursuant to this clause
(b) are invested in accordance with clause (c) hereof until such time
as such proceeds are
so applied, or
(c) the investment of such proceeds in any
Investment specified in clauses (d)
to (k), inclusive, of the definition of "Restricted Investment" no
later than the next Business
Day following the consummation of such sale; provided that such
proceeds are applied
as provided in either of the foregoing clauses (a) or (b) of this
definition within the period
therein specified.
"Person" -- means an individual, partnership, corporation, trust or
unincorporated
organization, and a government or agency or political subdivision thereof.
"Property" -- means any interest in any kind of property or asset,
whether real, personal or
mixed, or tangible or intangible.
"Purchasers" -- means and includes each of the Persons listed in the
Purchaser Schedule.
"Purchaser Schedule" -- Section 1.2(b) of this Agreement.
"Qualified Assets" -- at any time means the sum of
(a) the principal amount of all promissory notes
and other interest bearing
obligations of the Company owned in the ordinary course of the
Company's business less
(i) reserves for credit losses applicable thereto, and
(ii) unearned income,
(b) the Company's cash on hand and in banks, and
(c) the Company's Investments other than Restricted
Investments.
"Reinvestment Yield" -- the definition of "Yield-Maintenance
Premium".
"Rentals" -- at any time means all fixed rentals (including as such
all payments which the
lessee is obligated to make to the lessor on termination of a lease or surrender
of leased Property)
payable by the Company or a Restricted Subsidiary, as lessee or sublessee under
a lease of
Property, exclusive of any amounts required to be paid by the Company or a
Restricted Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs,
insurance, taxes and similar charges. Fixed rents under any so-called
"percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee
regardless of sales volume or gross revenues.
"Required Holders" -- at any time means the holder or holders of at
least sixty-six and two-
thirds percent (662/3%) in aggregate principal amount of each of the Series A
Notes, the Series B
Notes and the Series C Notes at the time outstanding (exclusive of Notes then
owned by any one
or more of the Company, any Restricted Subsidiary and any Affiliates).
"Restricted Guarantees" -- at any time means all Guarantees by the
Company of obligations
of others that constitute sum certain obligations at the time such Guarantees
are incurred.
"Restricted Investments" -- at any time means all investments, made
in cash or by delivery
of Property, by the Company and the Restricted Subsidiaries (x) in any Person,
whether by
acquisition of stock, indebtedness or other obligations or Securities, or by
loan, advance or capital
contribution, or otherwise, or (y) in any Property (items (x) and (y) herein
called "Investments"),
except the following:
(a) Investments in and to Restricted Subsidiaries,
including any Investment in
a corporation which, after giving effect to such Investment, will
become a Restricted
Subsidiary and including Investments in a Restricted Subsidiary that
is designated as a
Subsidiary in compliance with the proviso to the definition of
"Restricted Subsidiary" so long
as such Investments were made prior to the date of such designation;
(b) Investments in Property to be used by the
Company and the Restricted
Subsidiaries in the ordinary course of their respective businesses;
(c) Investments in promissory notes and other
interest bearing obligations
acquired in the ordinary course of business of the Company or the
Restricted Subsidiaries;
(d) Investments in commercial paper of any
corporation which, at the time of
acquisition by the Company or a Restricted Subsidiary, is accorded
the highest rating by
Standard & Poor's Corporation, Duff & Phelps, Inc. or Moody's
Investors Service, Inc. (or
any other nationally recognized credit rating agency of similar
standing if none of such
corporations is then in the business of rating commercial paper);
(e) Investments in direct obligations of the United
States of America;
(f) Investments in marketable obligations fully
guaranteed or insured by the
United States of America or marketable obligations for which the full
faith and credit of the
United States of America is pledged for the repayment in full of all
principal and interest
thereon;
(g) Investments in marketable obligations issued or
fully guaranteed or insured
by any agency, instrumentality or corporation of the United States of
America established
by the United States Congress or marketable obligations for which the
credit of any such
agency, instrumentality or corporation is pledged for the repayment
in full of all principal and
interest thereon;
(h) Investments in marketable general obligations
of any state, territory or
possession of the United States of America, or any political
subdivision of any of the
foregoing, or the District of Columbia, given one of the three (3)
highest credit ratings in
respect of the type of such obligations by Standard & Poor's
Corporation or Moody's
Investors Service, Inc., and the obligor of which
(i) has general taxing authority and
the power to levy such taxes as
may be required for the payment of principal and interest
thereon, and
(ii) has unconditionally fully secured
the payment of principal and
interest on such obligations with its full faith and
credit;
(i) Investments in domestic and Eurodollar
negotiable time and variable rate
certificates of deposit issued by Selected Commercial Banks;
(j) Investments in marketable bankers' acceptances
and finance bills accepted
by Selected Commercial Banks;
(k) Investments in repurchase, reverse repurchase
and security lending
agreements fully collateralized by marketable obligations issued by
the United States of
America or by any agency or instrumentality thereof;
(l) Investments in federal funds or similar
unsecured loans to Selected
Commercial Banks having a maturity of not more than four (4) days
from the date of
acquisition thereof;
(m) Investments in marketable corporate debt
securities given a credit rating
of "A" or better by each of Standard & Poor's Corporation and Moody's
Investors Service,
Inc.;
(n) Investments in asset-backed securities issued
against a pool of receivables
which (i) have an average life or final maturity of not more than
five (5) years and (ii) have
been given a long-term rating of "AAA" or better by Standard & Poor's
Corporation or
Moody's Investors Service, Inc.; and
(o) Investments in mortgage-backed securities
issued against an underlying
pool of mortgages which (i) have an average life, as determined by
the dealer's
prepayment assumptions at the time of purchase, of not more than five
(5) years and (ii)
have been given a long-term rating of "AAA" or better by Standard &
Poor's Corporation
or Moody's Investors Service, Inc.;
provided, that notwithstanding the foregoing clauses (a) through (o), inclusive,
the term Restricted
Investments shall for all purposes include all Investments described in the
foregoing clauses (d)
through (k), inclusive, to the extent that they mature more than one (1) year
from the date of
acquisition thereof by the Company or a Restricted Subsidiary.
"Restricted Payments" -- Section 7.14(a) of this Agreement.
"Restricted Subsidiary" -- means a Subsidiary engaged in one or more
of the businesses
referred to in Section 2.3(c) of this Agreement:
(a) organized under the laws of the United States
of America or a jurisdiction
thereof;
(b) that conducts substantially all of its business
and has substantially all of its
Property within the United States of America and/or Canada;
(c) one hundred percent (100%) of all stock and
equity Securities (except
directors' qualifying shares) of which are legally and beneficially
owned, directly or indirectly,
by the Company, provided, however, if such Subsidiary is NCB Mortgage
Corporation, a
Delaware corporation, then, one hundred percent (100%) of all Voting
Stock and eighty
percent (80%) of all equity Securities (except directors' qualifying
shares) of which are legally
and beneficially owned, directly or indirectly, by the Company; and
(d) that is designated by the Board of Directors to
be included in the definition
of Restricted Subsidiary for all purposes of this Agreement;
provided, that any Subsidiary having been designated a Restricted Subsidiary may
thereafter
become a Subsidiary (other than a Restricted Subsidiary) by designation of the
Board of Directors
if at the time of such change in characterization and after giving effect
thereto
(i) no Default or Event of Default shall exist, and
(ii) after the elimination of the net earnings of
any such Subsidiary from
Consolidated Adjusted Net Income for the period subsequent to
December 31, 1991, the
Company would have been entitled, pursuant to the provisions of
Section 7.14, to declare
or make all Restricted Payments declared or made during such period.
"Securities Act" -- means the Securities Act of 1933, as amended.
"Security" -- shall have the same meaning as in Section 2(1) of the
Securities Act; provided,
however, that Asset Securitization Recourse Liabilities shall not constitute
"Securities" except (i) to the
extent that such obligations arise from the Company's obligation to repurchase
receivables or other
assets as a result of a default in payment by the obligor thereunder or any
other default in
performance by such obligor under any agreement related to such receivables or
(ii) if the
Company shall maintain a reserve account containing cash or Securities in
respect of any such
obligations or shall retain or purchase a subordinated interest therein, to the
extent of the amount
of such reserve account or subordinated interest.
"Selected Commercial Bank" -- means
(a) one of the one hundred (100) largest commercial
banks organized under
the laws of the United States of America or any state thereof and
accorded a rating of "B"
or better by Thomson BankWatch, Inc. (or accorded a comparable rating
by another
nationally recognized rating agency of similar standing if Thomson
BankWatch, Inc. is not
then in the business of rating commercial banks); or
(b) one of the fifty (50) largest commercial banks
organized under the laws of
the United States of America or any state thereof and accorded a
rating of "B/C" or better
by Thomson BankWatch, Inc. (or accorded a comparable rating by
another nationally
recognized rating agency of similar standing if Thomson BankWatch,
Inc. is not then in the
business of rating commercial banks).
"Senior Debt" -- means the Notes, all other Debt of the Company for
borrowed money that
is not expressed to be subordinate or junior to any other Debt, and Asset
Securitization Recourse
Liabilities to the extent, but only to the extent, that such obligations
have matured.
"Separate Senior Note Agreements" -- Section 1.2(c) of this Agreement
.
Series; Series of Notes -- means any one or more of the Series A
Notes, the Series B
Notes or the Series C Notes, as the context may require.
"Series A Notes" -- Section 1.2(a)(i) of this Agreement.
"Series B Notes" -- Section 1.2(a)(ii) of this Agreement.
"Series C Notes" -- Section 1.2(a)(iii) of this Agreement.
"SPV" -- has the meaning assigned to such term in the definition of
"Asset Securitization" in
this Section 10.1.
"Subordinated Debt" -- means (a) the Class A Notes and (b) all notes,
debentures or other
evidences of indebtedness of the Company for borrowed money of the Company which
shall
contain or have applicable thereto subordination provisions providing for the
subordination of such
indebtedness to the Notes and all other Senior Debt (but not to any other Debt)
of the Company
substantially in the following form:
"Anything in this subordinated note to the contrary
notwithstanding, the
indebtedness evidenced by this subordinated note shall be subordinate
and junior in right
of payment, to the extent and in the manner hereinafter set forth, to
all indebtedness of the
Company for money borrowed, whether outstanding at the date of this
subordinated note
or incurred after the date of this subordinated note, which is not by
its terms subordinate
or junior to any other indebtedness of the Company (such indebtedness
of the Company,
together with (i) all premiums (if any) due on such indebtedness,
(ii) all interest accrued on
such indebtedness (including, without limitation, any interest which
accrues after the
commencement of any case, proceeding or other action relating to the
bankruptcy,
insolvency or reorganization of the Company, whether or not such
interest is allowed under
applicable law), and (iii) all other amounts payable from time to
time to the holders of, or in
respect of, such indebtedness (including, without limitation, all
costs and expenses relating
thereto) to which this subordinated note is subordinate and junior
being herein called "Superior Indebtedness")
(a) in the event of any sale under or in
accordance with any judgment
or decree rendered in any proceeding by or on behalf of
the holder or holders of
this subordinated note or in the event of any
distribution, division or application,
partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all
or any part of the assets of the Company, or the proceeds
thereof, to creditors of
the Company occurring by reason of any liquidation,
dissolution or winding up of
the Company or in the event of any execution sale,
receivership, insolvency,
bankruptcy, liquidation, readjustment, reorganization or
other similar proceeding
relative to the Company or its debts or properties, then
in any such event the
holders of any and all Superior Indebtedness shall be
preferred in the payment of
their claims over the holder or holders of this
subordinated note, and such Superior
Indebtedness shall be first paid and satisfied in full
before any payment or
distribution of any kind or character, whether in cash,
property or securities (other
than securities which are subordinate and junior in right
of payment to the payment
of all Superior Indebtedness which may at the time be
outstanding pursuant to
terms substantially identical to the terms of this
subordinated note), shall be made
upon this subordinated note; and in any such event any
dividend or distribution
of any kind or character, whether in cash, property or
securities (other than in
securities which are subordinate and junior in right of
payment to the payment of
all Superior Indebtedness which may at the time be
outstanding pursuant to terms
substantially identical to the terms of this subordinated
note) which shall be made
upon or in respect of the indebtedness evidenced by this
subordinated note, or
any renewals or extensions hereof, shall be paid over to
the holders of such
Superior Indebtedness, pro rata, for application in
payment thereof unless and until
such Superior Indebtedness shall have been paid and
satisfied in full;
(b) in the event that pursuant to the
provisions hereof this
subordinated note is declared or becomes due and payable
before its expressed
maturity because of an occurrence of an event of default
described herein (under
circumstances when the foregoing clause (a) shall not be
applicable) or otherwise,
no amount shall be paid by the Company in respect of the
principal, interest or
premium on this subordinated note (or any other amounts
due in respect thereof),
except at the stated maturity hereof (all subject to the
foregoing clause (a) above),
unless and until all Superior Indebtedness outstanding
at the time this subordinated
note so becomes due and payable because of any such event
shall have been
paid in full in cash or payment thereof shall have been
provided for in a manner
satisfactory to the holders of such outstanding Superior
Indebtedness;
(c) without limiting the effect of any
of the other provisions hereof,
during the continuance of any default with respect to any
Superior Indebtedness
or any agreement relating thereto, or any default in the
payment of any Superior
Indebtedness, no payment of principal, sinking fund,
interest or premium (or any
other amount) shall be made on or with respect to the
indebtedness evidenced
by this subordinated note or any renewals or extensions
hereof; and
(d) during any period of time when,
pursuant to the foregoing
paragraphs (b) or (c), payment may not be made on the
indebtedness evidenced
by this subordinated note, then the holder of this
subordinated note shall take no
action against or with respect to the Company to seek or
to enforce collection of
the Notes or to exercise any of such holder's rights
with respect to this
subordinated note, which prohibition shall include,
without limitation, a prohibition
against any acceleration of this subordinated note,
the filing of a collection action,
or the initiation of a bankruptcy petition against the
Company.
The Company covenants and agrees, for the benefit of each
and every present
and future holder of Superior Indebtedness, that in the event that
pursuant to the provisions
hereof this subordinated note is declared or becomes due and payable
because of an
occurrence of an event of default described herein or otherwise, then
each holder of any
Superior Indebtedness then outstanding shall have the right to
declare immediately due
and payable on demand all or any part of such Superior Indebtedness
owing and payable
to such holder, regardless of any other maturity or terms of said
Superior Indebtedness;
and if and when any such default has occurred, or any notice of
default under the terms
hereof may be served upon the Company, then in each such event
the Company shall
and hereby agrees that it will immediately notify the holders of the
Superior Indebtedness
of such default or notice thereof, as the case may be.
No right of any present or future holder of any Superior
Indebtedness of the
Company to enforce subordination as herein provided shall at any time
or in any way be
prejudiced or impaired by any failure to act on the part of the
Company, or by any
noncompliance by the Company with the terms, provisions and covenants
of this
subordinated note, regardless of any knowledge thereof that any such
holder of Superior
Indebtedness may have or be otherwise charged with. The provisions
hereof are solely
for the purpose of defining the relative rights of the holders of
Superior Indebtedness on
the one hand, and the holder or holders of this subordinated note on
the other hand, and
nothing herein shall impair, as between the Company and the holder of
this subordinated
note, the obligation of the Company to pay to the holder hereof
the principal, premium, if
any, and interest hereon in accordance with its terms, nor shall
anything herein prevent the
holder of this subordinated note from exercising all remedies
otherwise permitted by
applicable law or hereunder upon default hereunder, subject to the
rights, if any, of holders
of Superior Indebtedness as herein provided. Each and every holder
of this subordinated
note by acceptance hereof shall undertake and agree for the benefit
of each holder of
Superior Indebtedness to execute, verify, deliver and file any proofs
of claim, consents,
assignments or other instruments which any holder of Superior
Indebtedness may at any
time require in order to prove and realize upon any rights or claims
pertaining to this
subordinated note and to effectuate the full benefit of the
subordination contained herein
and, upon failure of any such holder of this subordinated note so to
do, any such holder
of Superior Indebtedness shall be deemed to be irrevocably appointed
the agent and
attorney-in-fact of such holder of this subordinated note to execute,
verify, deliver and file
any such proofs of claim, consents, assignments or other instruments.
"
"Stock Disposition Date" -- Section 7.4 of this Agreement.
"Subsidiary" -- means a corporation organized under the laws of the
United States or
Canada, or a jurisdiction thereof, of which the Company owns, directly or
indirectly, more than fifty
percent (50%) of the Voting Stock.
"Subsidiary Stock" -- Section 7.4 of this Agreement.
"Voting Stock" -- means Securities of any class or classes of a
corporation the holders of
which are ordinarily, in the absence of contingencies, entitled to vote in the
election of the corporate
directors (or persons performing similar functions).
"Yield-Maintenance Premium" -- means, with respect to any Note in any
Series of Notes,
a premium equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note
over the sum of
(i) such Called Principal plus
(ii) interest accrued thereon subsequent to the most
recent scheduled interest
payment date up to and including the Settlement Date with respect
to such Called
Principal.
The Yield-Maintenance Premium shall in no event be less than zero (0).
As used in this definition,
"Called Principal" -- means, with respect to any Note in
any Series, the principal of
such Note that is to be prepaid pursuant to Section 5.2 of this
Agreement or is declared
to be immediately due and payable pursuant to Section 9 of this
Agreement, as the context
requires.
"Discounted Value" -- means, with respect to the Called
Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with
respect to such
Called Principal from their respective scheduled due dates to the
Settlement Date with
respect to such Called Principal, in accordance with accepted
financial practice and at a
discount factor (applied on a semiannual basis) equal to the
Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" -- means, with respect to the Called
Principal of any Note, the
yield to maturity implied by
(a) the yields reported, as of 10:00
a.m. (New York City time) on the
Business Day next preceding the Settlement Date with
respect to such Called
Principal, on the display designated as "Page 678" on the
Telerate Service (or such
other display as may replace Page 678 on the Telerate
Service) for actively traded
U.S. Treasury securities having a maturity equal to the
Remaining Average Life of
such Called Principal as of such Settlement Date, or if
such yields shall not be
reported as of such time or the yields reported as of such
time shall not be
ascertainable,
(b) the Treasury Constant Maturity
Series yields reported, for the latest
day for which such yields shall have been so reported as
of the Business Day next
preceding the Settlement Date with respect to such Called
Principal, in Federal
Reserve Statistical Release # H.15(519) (or any comparable
successor publication)
for actively traded U.S. Treasury securities having a
constant maturity equal to the
Remaining Average Life of such Called Principal as of such
Settlement Date.
Such implied yield shall be determined, if necessary, by
(i) converting U.S. Treasury bill
quotations to bond-equivalent yields
in accordance with accepted financial practice and
(ii) interpolating linearly between
reported yields.
"Remaining Average Life" -- means, with respect to the
Called Principal of any Note,
the number of years (calculated to the nearest one-twelfth (1/12)
year) obtained by dividing
(a) such Called Principal into
(b) the sum of the products obtained
by multiplying
(i) each Remaining Scheduled
Payment of such Called
Principal (but not of interest thereon) by
(ii) the number of years
(calculated to the nearest one-twelfth
(1/12) year) which will elapse between the
Settlement Date with respect to
such Called Principal and the scheduled due
date of such Remaining
Scheduled Payment.
"Remaining Scheduled Payments" -- means, with respect
to the Called Principal
of any Note, all payments of such Called Principal and interest
thereon that would be due
on or after the Settlement Date with respect to such Called Principal
if no payment of such
Called Principal were made prior to its scheduled due date.
"Settlement Date" -- means, with respect to the Called
Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to
Section 5.2 or is declared
to be immediately due and payable pursuant to Section 9, as the
context requires.
B. 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 any
purpose under this Agreement, it shall be done in accordance with generally
accepted accounting principles
at the time in effect on the date of, or at the end of the period covered by,
the financial statements from
which such asset, liability, item of income, or item of expense, is derived,
except where such principles are
inconsistent with the requirements of this Agreement.
C. 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
such action is taken directly or
indirectly by such Person.
D. Governing Law.
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH INTERNAL NEW YORK LAW.
SECTION XI. MISCELLANEOUS
A. Notices.
All communications under this Agreement or under the Notes shall
be in writing and shall be mailed
by registered or certified mail, telecopied or sent by overnight courier,
1. if to you, at your address shown on the
Purchaser Schedule, marked for attention
as therein indicated, or at such other address as you may have
furnished the Company in writing,
or
2. if to the Company, at its address set forth
in Section 7.3 of this Agreement, or at
such other address as it may have furnished in writing to you and all
other holders of the Notes at the time outstanding.
Any notice so addressed and mailed by registered or certified mail, telecopied
or sent by overnight courier
shall be deemed to be given when so mailed, telecopied or sent.
B. Survival.
All warranties, representations, and covenants made by the Company
herein or in any certificate
or other instrument delivered by it or on its behalf under this Agreement shall
be considered to have been
relied upon by you and shall survive the delivery to you of the Notes regardless
of any investigation made
by you or on your behalf. All statements in any such certificate or other
instrument shall constitute warranties
and representations by the Company under this Agreement.
C. Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of
each of the parties. The provisions of this Agreement are intended to be for
the benefit of all holders, from
time to time, of the Notes, and shall be enforceable by any such holder, whether
or not an express
assignment to such holder of rights under this Agreement has been made by you or
your successor or
assign.
D. Amendment and Waiver.
1. Amendment and Waiver. This Agreement may be
amended, and the observance
of any term of this Agreement may be waived, with (and only with) the
written consent of the
Company and the Required Holders; provided, that no such amendment or
waiver of any of the
provisions of Section 1 through Section 5 of this Agreement,
inclusive, shall be effective as to you
unless consented to by you in writing; and provided further, that no
such amendment or waiver
shall, without the written consent of the holders of all the Notes at
the time outstanding,
a. subject to Section 9.3 of this
Agreement, change the amount or time of any
payment of principal or Yield-Maintenance Premium or the
rate or time of payment of
interest,
b. amend or waive any provision of
Section 9.1(a), Section 9.1(b), Section 9.2
or Section 9.3 of this Agreement,
c. amend the definition of "Required
Holders" contained in Section 10.1
hereof, or
d. amend or waive any provision of this
Section 11.4.
2. Binding Effect. Any amendment or waiver shall apply
equally to all holders of Notes and
shall be binding upon them, upon each future holder of any Note and
upon the Company, whether
or not such Note shall have been marked to indicate such amendment or
waiver. No such
amendment or waiver shall extend to or affect any obligation,
covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right
consequent thereon.
E. Reproduction of Documents.
This Agreement and all documents relating thereto, including without
limitation,
1. consents, waivers and modifications which may
hereafter be executed,
2. documents received by either party to this
Agreement at the closing of the
Assumption and Restatement (except the Notes themselves), and
3. financial statements, certificates and other
information previously or hereafter
furnished to either party to this Agreement,
may be reproduced by either party to this Agreement by any photographic,
photostatic, microfilm, micro-
card, miniature photographic, digital or other similar process and either party
to this Agreement may, at its
option, destroy any original document so reproduced. The parties to this
Agreement agree and stipulate
that any such reproduction shall likewise be admissible in evidence as the
original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction
was made in the regular course of business) and that any enlargement, facsimile
or further reproduction
of such reproduction shall likewise be admissible in evidence.
F. Severability.
Should any part of this Agreement for any reason be declared invalid,
such decision shall not affect
the validity of any remaining portion, which remaining portion shall remain in
force and effect as if this
Agreement had been executed with the invalid portion thereof eliminated and
it is hereby declared the
intention of the parties to this Agreement that they would have executed the
remaining portion of this
Agreement without including therein any such part, parts, or portion which may,
for any reason, be hereafter
declared invalid.
G. Payments, When Received.
1. Payments Due on Holidays. If any payment due
on, or with respect to, any Note
shall fall due on a day other than a Business Day, then such payment
shall be made on the first
Business Day following the day on which such payment shall have so
fallen due; provided that if
all or any portion of such payment shall consist of a payment of
interest, for purposes of calculating
such interest, such payment shall be deemed to have been originally
due on such first following
Business Day, and such interest shall accrue and be payable to (but
not including) the actual date
of payment.
2. Payments Received after 1:00 p.m.. Any payment
actually received by you before
1:00 p.m. (New York City time), by federal funds wire transfer on any
Business Day, shall be
deemed to have been received by you on such day. Notwithstanding
Section 4.1 of this
Agreement, any payment actually received by you on or after 1:00 p.m.
(New York City time) by
federal funds wire transfer on any Business Day, shall be deemed to
have been received on the
next following Business Day. All payments received by you on a day
other than a Business Day,
or in a manner other than by federal funds wire transfer, shall be
deemed to have been received
by you on the Business Day such amounts actually become available to
you prior to 1:00 p.m.
(New York City time).
H. Duplicate Originals.
Two (2) or more duplicate originals of this Agreement may be signed
by the parties, each of which
shall be an original but all of which together shall constitute one and the
same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
NEXT PAGE IS SIGNATURE PAGE]<PAGE>
If this Agr
a counterpart of this Agreement and returning such counterpart to the Company,
whereupon this
Agreement will become binding between us in accordance with its terms.
Very truly yours,
NATIONAL CONSUMER COOPERATIVE BANK
By /s/ Charles E. Snyder
Name: Charles E. Snyder
Title: President
Accepted: [Separately executed by each
of the following Purchasers]
EQUITABLE VARIABLE LIFE INSURANCE COMPANY
By /s/ Robert M. Flowers
Name: Robert M. Flowers
Title: Investment Officer
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
By /s/ Robert M. Flowers
Name: Robert M. Flowers
Title: Investment Officer
MELLON BANK, N.A., as trustee for FIRST PLAZA GROUP TRUST
(as directed by Alliance Capital Management L.P.)
By /s/ Judith A. Manion The decision to participate in this investment,
any
representations made herein by the
participant, and any
Name: Judith A. Manion actions taken hereunder by the
participant has/have been made
Title: Paralegal solely at the discretion of the investment
fiduciary who has
sole investment discretion with
respect to this investment.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
By /s/ Jon C. Heiny
Name: Jon C. Heiny
Title: Counsel
By /s/ David Seevers
Name: David Seevers
Title: Director
Securities Research and Portfolio Management
IDS CERTIFICATE COMPANY
By /s/ Terry L. Seierstad
Name: Terry L. Seierstad
Title: Vice President - Investments
SAFECO LIFE INSURANCE COMPANY
By /s/ Ronald Spaulding
Name: Ronald Spaulding
Title: Vice President
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
By /s/ Nelson Correa
Name: Nelson Correa, CFA
Title: Managing Director
PROVIDENT MUTUAL LIFE INSURANCE COMPANY OF PHILADELPHIA
By /s/ Rosanne Gatta
Name: Rosanne Gatte
Title: Treasurer
PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF AMERICA
By /s/ Timothy P. Henry
Name: Timothy P. Henry
Title: Investment Officer
LUTHERAN BROTHERHOOD
By /s/ Charles E. Heeren
Name: Charles E. Heeren
Title: Vice President
MUTUAL SERVICE LIFE INSURANCE COMPANY
By /s/ Ronald L. Kaliebe
Name: Ronald L. Kaliebe
Title: Investment Officer, Securities
ANNEX 1
Purchaser Schedule
Purchaser Name EQUITABLE VARIABLE LIFE INSURANCE COMPANY
Name in Which Notes are
Registered EQUITABLE VARIABLE LIFE INSURANCE COMPANY
Series, Principal Amount R-1
and Registration Number Series A -- $7,000,000
of Existing NCBCC Notes for
which Notes will be Substituted R-1
on the Date of Assumption and Series B -- $2,000,000
Restatement
Series, Principal Amount and R-1
Registration Number of Notes Series A -- $7,000,000
to be Substituted for Existing R-1
NCBCC Notes on the Date of Series B -- $2,000,000
Assumption and Restatement
Payment on Account of Notes
Method Federal Funds Wire Transfer
Account Information The Chase Manhattan Bank, N.A.
110 West 52nd Street
New York, NY 10019
ABA No.: 021-000021
Account No.: 037-2-411256
Accompanying Information Each such wire transfer
shall set forth, for each Series of Notes,
the name of the Company, the full title
(including the coupon rate,
Series and final maturity date) of such
Notes, a reference to "PPN
63556* BC 9" for the Series A Notes and
"PPN 63556* BD 7" for
the Series B Notes, and the due date and
application (as among principal, premium
and interest of the payment being made.
Address for Notices
Related to
Payments Equitable Variable Life Insurance Company
c/o Alliance Capital Management, L.P.
135 West 50th Street, 6th Floor
New York, NY 10019
Attention: Cash Operations Department
Address for All other Notices Equitable Variable Life Insurance Company
c/o Alliance Corporate Finance Group
Incorporated
1285 Avenue of the Americas, 19th Floor
New York, NY 10019
Tax Identification Number 13-2729441
Purchaser Name THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
Name in Which Note is
Registered THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE
UNITED STATES
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-2
Series B -- $3,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-2
Series B -- $3,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information The Chase Manhattan Bank, N.A.
110 West 52nd Street
New York, NY 10019
ABA No.: 021-000021
Account No.: 037-2-409417
Accompanying Information Each such wire transfer
shall set forth the name of the Company,
the full title (including the coupon rate,
Series and final maturity
date) of such Notes, a reference to
"PPN 63556* BD 7" for the Series B Notes,
and the due date and application (as among
principal, premium and interest) of the
payment being made.
Address for Notices
Related to
Payments The Equitable Life Assurance Society of the
United States
c/o Alliance Capital Management L.P.
135 West 50th Street, 6th Floor
New York, NY 10020
Attn.: Cash Operations Department
Address for All other Notices The Equitable Life Assurance Society of the
United States
c/o Alliance Corporate Finance Group
Incorporated
1285 Avenue of the Americas, 19th Floor
New York, NY 10019
Tax Identification Number 13-5570651
Purchaser Name FIRST PLAZA GROUP TRUST
Name in Which Note is
Registered MELLON BANK, N.A., as trustee for FIRST
PLAZA GROUPTRUST
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-3
Series B -- $3,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-3
Series B -- $3,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Mellon Bank, N.A.,
One Mellon Bank Center,
Pittsburgh, PA 15258,
Attention: Collection Unit
ABA No.: 043000261
Account No.: 174-419
Accompanying Information Each such wire transfer shall
set forth the name of the Company,
the full title (including the coupon rate,
Series and final maturity
date) of such Notes, a reference
to "PPN 63556* BD 7" for the
Series B Notes, and the due date
and application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments First Plaza Group Trust
c/o Mellon Bank, N.A.
1935 One Mellon Bank Center
Pittsburgh, PA 15258
Attention: Judy Manion
with copies to:
First Plaza Group Trust
c/o Alliance Corporate Finance Group
Incorporated
1285 Avenue of the Americas, 19th Floor
New York, New York 10019
Attention: Partnership and Advisory
Accounting
Address for All other Notices First Plaza Group Trust
c/o Mellon Bank, N.A.
1935 One Mellon Bank Center
Pittsburgh, PA 15258
Attention: Judy Manion
with copies to:
First Plaza Group Trust
c/o Alliance Corporate Finance Group
Incorporated
1285 Avenue of the Americas, 19th Floor
New York, New York 10019
Tax Identification Number 25-6295264
Purchaser Name PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Name in Which
Registered PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-4
Series B -- $10,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-4
Series B -- $10,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Norwest Bank Iowa, N.A.
7th & Walnut Streets
Des Moines, Iowa 50309
Account No.: 014752
Accompanying Information Each such wire transfer shall set
forth the name of the Company,
the full title (including the coupon rate,
Series and final maturity
date) of such Notes, a reference
to "PPN 63556* BD 7" for the
Series B Notes, and the due date
and application (as among
principal, premium and interest)
of the payment being made.
Address for Notices
Related to
Payments Principal Mutual Life Insurance Company
711 High Street
Des Moines, Iowa 50392-0810
Attention: Investment Department --
Accounting and Treasury
Address for All other Notices Principal Mutual Life Insur
711 High Street
Des Moines, Iowa 50392-0800
Attention: Investment Department --
Securities Division
Tax Identification
umber 42-0127290
Purchaser Name IDS CERTIFICATE COMPANY
Name in Which Note is
Registered ISACO
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-2
Series A -- $8,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-2
Series A -- $8,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Norwest Bank Minneapolis, N.A.
7th & Marquette Ave.
Minneapolis, MN 55480
for credit to: ISACO
c/o - IDS Trust Company
ABA #091000019
Account No.: 00-38-500
Accompanying Information Each such wire transfer shall
set forth the name of the Company,
the full title (including the coupon
rate, Series and final maturity
date) of such Notes, a reference
to "PPN 63556* BC 9" for the
Series A Notes, and the due date
and application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments ISACO
c/o - IDS Trust Co.
NW-9744
P.O. Box 1450
Minneapolis, MN 55485
Address for All other Notices IDS Financial Services, Inc.
3000 IDS Tower - 10
Minneapolis, MN 55440-0010
Attention: Director - Senior Securities
Research Department
Tax Identification Number 41-0884926
Purchaser Name Safeco Life Insurance Company
Name in Which Note is
Registered ATWELL & CO.
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-3
Series A -- $4,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-3
Series A -- $4,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information U.S. TRUST/NYC/TRUST
Attn: Paul
Account No.: 899-242-00
ABA #: 021001318
Accompanying Information Each such wire transfer shall set
forth the name of the Company,
the full title (including the coupon
rate, Series and final maturity
date) of such Notes, a reference to
"PPN 63556* BC 9" for the
Series A Notes, and the due date and
application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments ATWELL & CO.
c/o U.S. Trust
P.O. Box 456
Wall Street Station
New York, NY 10005
Address for All other Notices SAFECO Life Insurance Company
Investment Department, T-14
SAFECO Plaza
Seattle, WA 98185
Tax Identification Number 91-0742147
Purchaser Name PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Name in Which Note
Registered PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
Series, Principal
Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-1
Series C -- $5,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-1
Series C -- $5,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Chase Manhattan Bank
BNF-SSG Private Income Processing/
AC-9009000200
Fed. ABA No. 021000021
Phoenix Home Life Mutual Insurance Company's
Account No: G05143
Accompanying Information Each such wire transfer shall set
forth the name of the Company,
the full title (including the coupon rate,
Series and final maturity
date) of such Notes,
a reference to "PPN 63556* BE 5" for the
Series C Notes, and the due date and
application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
Attention: Investment Department/Bonds
Address for All other Notices Phoenix Home Life Mutual Insurance Company
One American Row
Hartford, Connecticut 06115
Attention: Investment Department/Bonds
Tax Identification Number 06-049-3340
Purchaser Name PROVIDENT MUTUAL LIFE INSURANCE COMPANY
PHILADELPHIA
Name in Which Note is
Registered PROVIDENT MUTUAL LIFE INSURANCE COMPANY OF
PHILADELPHIA
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-2
Series C -- $2,500,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-2
Series C -- $2,500,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Provident National Bank
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101
General Account No.: 200-049-0
For Credit to: Provident Mutual Life
Insurance Company of Philadelphia
Accompanying Information Each such wire transfer shall set forth
the name of the Company,
the full title (including the coupon
rate, Series and final maturity
date) of such Notes, a reference to
"PPN 63556* BE 5" for the
Series C Notes, and the due date
and application (as among
principal, premium and interest) of the
payment being made.
Address for Notices
Related to
Payments Provident Mutual Life Insurance Company of
Philadelphia
P.O. Box 7378
Philadelphia, Pennsylvania 19101
Attention: Treasurer
if via courier:
1600 Market Street
Philadelphia, Pennsylvania 19103
Address for All other Notices Provident Mutual Life Insurance Company
of Philadelphia
P.O. Box 7378
Philadelphia, Pennsylvania 19101
Attention: Securities Investment Department
if via courier:
1600 Market Street
Philadelphia, Pennsylvania 19103
Tax Identification Number 23-099-045-0
Purchaser Name PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA
Name in Which Note is
Registered PROVIDENT MUTUAL LIFE AND ANNUITY COMPANY OF
AMERICA
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-3
Series C -- $1,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-3
Series C -- $1,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Provident National Bank
Broad and Chestnut Streets
Philadelphia, Pennsylvania 19101
Account No.: 507-549-1
Accompanying Information Each such wire transfer shall
set forth the name of the Company,
the full title (including the coupon
rate, Series and final maturity
date) of such Notes, a reference to
"PPN 63556* BE 5" for the
Series C Notes, and the due date
and application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments Provident Mutual Life and Annuity Company
of America
1600 Market Street
Philadelphia, Pennsylvania 19103
Attention: Treasurer
Address for All other Notices Provident Mutual Life and
Annuity Company of America
1600 Market Street
Philadelphia, Pennsylvania 19103
Attention: Securities Investment Department
Tax Identification Number 23-1619082
Purchaser Name LUTHERAN BROTHERHOOD
Name in Which Note is
Registered LUTHERAN BROTHERHOOD
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-4
Series C -- $4,000,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-4
Series C -- $4,000,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Norwest Bank Minnesota, N.A.
ABA #091000019
For credit to Trust Clearing Account #08-40
-245
Attn: Carol
A/C Lutheran Brotherhood
Account #12651300
By Mail:
Lutheran Brotherhood
Norwest Operations Center
255 Second Avenue South
Attn: Income Collections - LL3
Minneapolis, MN 55479-0047
Accompanying Information Each such wire transfer
shall set forth the name of the Company,
the full title (including the coupon
rate, Series and final maturity
date) of such Notes, a reference to
"PPN 63556* BE 5" for the
Series C Notes, and the due date and
application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments Lutheran Brotherhood
Attn: Investment Accounting
625 Fourth Avenue South
Minneapolis, MN 55415
Address for All other Notices Lutheran Brotherhood
Attn: Investment Division
625 Fourth Avenue South
Minneapolis, MN 55415
Tax Identification Number 41-0385700
Purchaser Name MUTUAL SERVICE LIFE INSURANCE COMPANY
Name in Which Note
Registered MUTUAL SERVICE LIFE INSURANCE COMPANY
Series, Principal Amount and
Registration Number of Existing
NCBCC Notes for which Notes
will be Substituted on the Date
of Assumption and
Restatement R-5
Series C -- $500,000
Series, Principal Amount and
Registration Number of Notes
to be Substituted for Existing
NCBCC Notes on the Date of
Assumption and Restatement R-5
Series C -- $500,000
Payment on Account of Note
Method Federal Funds Wire Transfer
Account Information Federal Reserve Bank of Minneapolis
for account of First Trust National
Association First Bank
Routing Symbol: FIRST MPLS/TRUST
ABA #091000022
Account No.: 10174810
Accompanying Information Each such wire transfer shall
set forth the name of the Company,
the full title (including the coupon
rate, Series and final maturity
date) of such Notes, a reference to
"PPN 63556* BE 5" for the
Series C Notes, and the due date
and application (as among
principal, premium and interest) of
the payment being made.
Address for Notices
Related to
Payments Mutual Service Life Insurance Company
P.O. Box 64035
St. Paul, MN 55164-0035
Attn: Investment Accounting
Address for All other Notices Mutual Service Life
Insurance Company
P.O. Box 64035
St. Paul, MN 55164-0035
Attn: Investments
Tax Identification Number 41-020-3970<PAGE>
ANNEX
Disclosures of the
Company
SUBSIDIARIES AND AFFILIATES (SECTION 2.1)
<TABLE>
Name of Subsidiary/Affiliate Jurisdiction of
Incorporation Nature and Extent of Affiliation
<S> <C> <C>
NCB Mortgage Corporation** Delaware The Company is the owner of all
outstanding voting stock of NCB
Mortgage Corporation
NCB Business Credit Corporation** Delaware Wholly owned subsidiary of the
Company
NCB Financial Corporation** Delaware Wholly owned subsidiary of the
Company
NCB Savings Bank, FSB** Federal Charter Wholly owned subsidiary of NCB
Financial Corporation
NCB Development Corporation District of Columbia non-profit
corporation The Company was directed by
12.U.S.C. 3051(b) to organize
NCBDC, which has no capital stock.
Six of its nine directors are directors
of the Company. The Company
makes annual contributions to
NCBDC and provides office space
and services for which the Company
is reimbursed at its cost.
Cooperative Funding Corporation** Delaware Wholly owned subsidiary of NCB
Business Credit Corporation
NCB Insurance Brokers, Inc.** New York Wholly owned
subsidiary of NCB
Mortgage Corporation
NCB Investment Advisers, Inc.** Delaware Wholly owned
subsidiary of NCB
Business Credit Corporation
NCB I, Inc.** Delaware Special purpose
corporation and
wholly owned subsidiary of the
Company
<FN>
** Restricted Subsidiary
</TABLE>
DESCRIPTION OF BUSINESS (2.3(c))
The Company and the Subsidiaries provide a broad array of financial
services and products to the Nation's cooperative-related business sector,
including but not limited to commercial and real estate lending,
mortgage banking, capital markets and advisory services, leasing and lease
financing, depository services, asset securitization, derivatives, and insurance
brokerage.
INDEBTEDNESS (SECTION 2.15)
As of the Date of Assumption and Restatement, the Company had
outstanding Debt for borrowed money as follows:
Investor Amount Maturity
<PAGE>
National Westminster Bank, et al. $170,000,000 ($0
outstanding) December 31, 1996
Signet Bank/Maryland $11,000,000
outstanding Upon demand
The Prudential Insurance Company
of America, et al. $25,000,000 December 15, 1994
$25,000,000 April 26, 1994
Lutheran Brotherhood $5,000,000 December 15, 1994
$4,000,000 June 24, 1998
Massachusetts Mutual
Life Insurance Company $25,000,000 October 15, 1995
Equitable Variable
Life Insurance Company $7,000,000 June 24, 1997
$2,000,000 December 24, 1997
The Equitable Life Assurance
Society of the United
States $3,000,000 December 24, 1997
Mellon Bank, N.A., as Trustee
for FirstPlaza GroupTrust
(as directed by Equitable Capital
Management Corporation) $3,000,000 December 24, 1997
Principal Mutual Life
Insurance Company $10,000,000 December 24, 1997
IDS Certificate Co. $ 8,000,000 June 24, 1997
Safeco Life Insurance Co. $ 4,000,000 June 24, 1997
Phoenix Home Life Mutual
Insurance Company $ 5,000,000 June 24, 1998
Provident Mutual Life
Insurance Company of
Philadelphia $ 2,500,000 June 24, 1998
Provident Mutual Life and Annuity
Company of
America $ 1,000,000 June 24, 1998
Mutual Service Life Insurance
Company $ 500,000 June 24, 1998
All such indebtedness is unsecured.
RESTRICTIONS ON DEBT (SECTION 2.16)
The National Westminster Bank indebtedness and all of the other
indebtedness, referred to in the above table, each restrict the Company's right
to incur Debt, but none of such restrictions are violated by
the sale of the Notes.
LIENS (SECTION 7.6)
Section 10.5 of the National Westminster Bank Loan Agreement
provides for a Lien and right of setoff in favor of the Agent and the
banks party thereto with respect to deposits or other sums due to the
Company from the Agent or such banks.
Each of the Company, NCB Mortgage Corporation and NCB Business
Credit Corporation sells mortgage loans, ESOP loans and other
loans from its portfolio in the ordinary course of business, structured
either as an Asset Securitization or a sale of whole loans. The SPV or other
purchaser typically provides for an alternative security interest and
files a financing statement covering the loans sold to it in order to
protect itself against a subsequent determination that such sale was not a sale
but rather a loan.
Exhibit 4.3
Exhibit 4.3
SCHEDULE CONCERNING AGREEMENTS AND AMENDED AND RESTATED SENIOR NOTE AGR
The registrant entered into, as of December 1, 1993, four
Assumption Agreements and Senior Note Agreements with purchasers
of its various senior notes. Except as set forth below,
all four agreements were identical in all material respects with that filed
as Exhibit 4.2.
Purchaser(s) Principal Amount Due Date
of Notes of Notes of Notes
Massachusetts Mutual Life $25 million October 15, 1995
Insurance Co.
The Prudential Ins. Co. of $30 million December 15, 1994
America; Prudential Property
and Casualty Insurance Co.;
Prudential Reinsurance Co.;
Lutheran Brotherhood
The Prudential Ins. Co. of $25 million April 26, 1994
America
Equitable Variable Life Ins. Co.;$19 million (Series A) June 24, 1987
The Equitable Life Assurance $18 million (Series B) December 24, 1997
Society of the United States; $13 million (Series C) June 24, 1998
Mellon Bank, N.A., as trustee;
Principal Mutual Life Ins. Co.;
IDS Certificate Co.; Safeco Life
Ins. Co.; Phoenix Home Life Mutual
Ins. Co.; Provident Mutual Life
Ins. Co. of Philadelphia; Provident
Mutual Life and Annuity Co. of
America; Lutheran Brotherhood;
Mutual Service Life Ins. Co.
Exhibit 10.1
SECOND AMENDED AND RESTATED LOAN AGREEMENT
AGREEMENT, made as of this 15th day of December, 1993, by and among:
NATIONAL CONSUMER COOPERATIVE BANK, a corporation chartered by Act of Congress
of the United States which conducts business under the trade name National
Cooperative Bank (the
"Borrower");
The Banks which have executed this Agreement (individually, a "Bank"
and, collectively, the "Banks");
and
NATIONAL WESTMINSTER BANK USA, as Agent for the Banks (in such
capacity, together with its successors in such capacity, the "Agent");
W I T N E S E T H:
WHEREAS, NCB Capital Corporation ("NCB Capital") has heretofore
entered into an Amended and Restated Loan Agreement dated as of
January 17, 1992 (as heretofore amended, supplemented or
modified, the "Existing Loan Agreement") with the Banks and the Agent, pursuant
to which the Banks agreed to make loans to NCB Capital in an
aggregate amount not to exceed One Hundred Seventy Million
($170,000,000) Dollars all upon and subject to the conditions thereof;
WHEREAS, on December 15, 1993, a Certificate of Dissolution filed
with the Secretary of State of Delaware in respect of NCB Capital became
effective in accordance with Section 103 of the Delaware
General Corporation Law and NCB Capital was, on such date, dissolved in
accordance with Section 275 of the Delaware General Corporation Law
(the "Dissolution") and the Borrower, as the sole stockholder of
NCB Capital has by resolution duly adopted and by agreement, succeeded to
and expressly assumedall of NCB Capital's obligations and
liabilities under the Existing Loan Agreement and the Existing Loan
Documents (as hereinafter defined);
WHEREAS, the parties hereto desire to further amend and restate the
Existing Loan Agreementon the Effective Date for the purpose of,
among other things, reflecting the Dissolution and making certain
other changes to the Existing Loan Agreement, all as set forth herein; and
WHEREAS, the Agent and the Banks are willing to so amend and restate
the Existing Loan Agreement on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained the parties hereto agree that the Existing Loan
Agreement is amended and restated in its entirety to read
as follows:
Article 1. Definitions; Effective Date.
(a) As used in this Agreement, the following terms
shall have the following meanings:
"A Commitment" - as to each Bank, the amount
set opposite such Bank's name on the signature pages hereof under the caption
"A Commitment" as may be reduced pursuant to Sections 2.2 and 2.3 and Article
8 hereof.
"A Commitment Termination Date" - December 31,
1996.
"A Credit Period" - the period commencing on
the Effective Date and ending on the A Commitment Termination Date.
"A Loan" and "A Loans" - as defined in
subsection 2.1(a) hereof. A Loans of different types made or converted
from A Loans of other types on the same day (or of the same type but
having different Interest Periods) shall be deemed to be separate A Loans for
all purposes of this Agreement.
"A Note" and "A Notes" - as defined i
n subsection 2.13(a) hereof.
"Additional Costs" - as defined in Section 2.20
hereof.
"Additional Interest" - 0.125% per annum with
respect to all outstanding LIBOR Loans, CD Loans and Fed Funds Loans
which aggregate more than or equal to $50,000,000 up to but
not exceeding $100,000,000, 0.25% per annum with respect to all such Loans which
aggregate more than or equal to $100,000,000 up to but not exceeding
$150,000,000 and 0.5% per annum with respect to all
such Loans which aggregate more than or equal to $150,000,000.
"Affected Loans" - as defined in Section
2.23 hereof.
"Affected Type" - as defined in Section 2.23
hereof.
"Affiliate" - as to any Person, any other
Person which directly or indirectly controls,or is under common control
with, or is controlled by, such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies
(whether through ownership of securities or partnership or other ownership
interests, by contract or otherwise), provided that, in any event:
(i) any Person which owns directly or indirectly 5% or more of the
securities having ordinary voting power for the election of directors or other
governing body of a corporation or 5% or more of the partnership or other
ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to control such corporation or
other Person; and (ii) each shareholder, director and officer of the
Borrower shall be deemed to be an Affiliate of the Borrower.
"Agreement" - this Second Amended and Restated
Loan Agreement as the same may from time to time be supplemented, amended or
modified.
"Applicable Lending Office" - with respect to
each Bank and Swing Line Lender,
with respect to each type of Loan or Swing Line Loan as applicable, the Lending
Office as designated for
such type of Loan or Swing Line Loan as applicable below its name on the
signature pages hereof or such
other office of such Bank or Swing Line Lender or of an affiliate of such Bank
or Swing Line Lender as such
Bank or Swing Line Lender may from time to time specify to the Agent and the
Borrower as the office at
which its Loans of such type or Swing Line Loans as applicable are to be made
and maintained.
"Applicable Margin" - (i) with respect to any
LIBOR Loan 0.375% per annum; (ii) with
respect to any CD Loan 0.50% per annum; and (iii) with respect to any Fed Funds
Loan 0.50% per annum.
"Assessment Rate" - at any time, the rate
(rounded upwards, if necessary, to the
nearest 1/100 of 1%) then charged by the Federal Deposit Insurance Corporation
(or any successor) to
the Reference Bank for deposit insurance for Dollar time deposits with the
Reference Bank at the Principal
Office as determined by the Reference Bank.
"Asset Securitization" - with respect to any
Person, a transaction involving the sale
or transfer of receivables by such Person to a special purpose corporation or
grantor trust (an "SPV")
established solely for the purpose of purchasing such receivables from the
Borrower for Cash in an amount
equal to the Fair Market Value thereof; provided, however, that the Borrower
may (A) establish and maintain
a reserve account containing Cash or Securities as a credit enhancement in
respect of any such sale, or
(B) purchase or retain a subordinated interest in such receivables being sold.
"Asset Securitization Recourse Liability" -
with respect to any Person, the maximum
amount of such Person's liability (whether matured or contingent) under any
agreement, note or other
instrument in connection with any one or more Asset Securitizations in which
such Person has agreed to
repurchase receivables or other assets, to provide direct or indirect credit
support (whether through cash
payments, the establishment of reserve accounts containing cash or Securities,
an agreement to reimburse
a provider of a letter of credit for any draws thereunder, the purchase or
retention of a subordinated interest
in such receivables or other assets, or other similar arrangements), or in
which such Person may be
otherwise liable for all or a portion of any SPV's obligations under Securities
issued in connection with such
Asset Securitizations.
"B Commitment" - as to each Bank prior to the
B Commitment Termination Date,
the amount set opposite each Bank's name on the signature pages hereof under
the caption "B
Commitment" as may be reduced pursuant to Sections 2.2 and 2.3 and Article 8
hereof, and on and after
the B Commitment Termination Date, $0.
"B Commitment Termination Date" - December 14,
1994, as such date may be
extended pursuant to subsection 2.1(b)(ii) hereof.
"B Credit Period" - the period commencing on
the Effective Date and ending on
the B Commitment Termination Date.
"B Loan" and "B Loans" - as defined in
subsection 2.1(b) hereof. B Loans of
different types made or converted from B Loans of other types on the same day
(or of the same type but
having different Interest Periods) shall be deemed to be separate B Loans for
all purposes of this
Agreement.
"B Note" and "B Notes" - as defined in
subsection 2.13(b) hereof.
"Borrowing Notice" - as defined in Section 2.3
hereof.
"Business Day" - any day other than Saturday,
Sunday or other day on which
commercial banks in New York City are authorized or required to close under the
laws of the State of New
York.
"Capitalized Lease" - 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.
"Cash" - as to any Person, such Person's cash
and cash equivalents, as defined
in accordance with GAAP consistently applied.
"CD Loans" - Loans the interest on which is
determined on the basis of rates
referred to in clause (b) of the definition of "Fixed Base Rate" in this
Article 1.
"Class A Notes" - the class A notes issued by
the Borrower to the Secretary of the
Treasury on behalf of the United States pursuant to Section 3026(a)(3)(A) of the
National Consumer
Cooperative Bank Act, as amended, 12 U.S.C. 3001, et seq. (the "Bank Act") on
the Final Government
Equity Redemption Date (the "Redemption Date") in full and complete redemption
of the class A stock of
the Borrower held by the Secretary of the Treasury on such Redemption Date and
replacement notes for
such Class A notes in a principal amount(s) not greater than those notes being
replaced and containing
identical terms of subordination as the Class A notes. The terms "class A
notes", "Final Government Equity
Redemption Date", and "class A stock" are defined in the Bank Act, which
definitions are incorporated by
this reference as if fully set forth herein.
"Class B1 Common Stock" - the series of Class B
stock comprising Class B stock
purchased for cash after June 28, 1984.
"Code" - the Internal Revenue Code of 1986, as
amended.
"Commitment Fee" - as defined in Section 2.4
hereof.
"Compliance Certificate" - a certificate
executed by the president or chief financial
officer of the Borrower to the effect that, as of the effective date of the
certificate, no Default or Event of
Default under this Agreement exists or would exist after action intended to be
taken by the Borrower, as
described in such certificate, including, without limitation, that the covenants
set forth in Section 6.9 would
not be breached after giving effect to such action, together with a calculation
in reasonable detail, and in
form and substance satisfactory to the Agent, of such compliance.
"Consolidated Adjusted Net Income" - for any
fiscal period of the Borrower, net
earnings or net loss (determined on a consolidated basis) of the Borrower and
its Subsidiaries after income
taxes for such period, but excluding from the determination of such earnings the
following items (together
with the income tax effect, if any, applicable thereto): (i) the proceeds of
any life insurance policy; (ii) any
gain or loss arising from the sale of capital assets; (iii) any gain arising
from any reappraisal, revaluation or
write-up of assets; (iv) any gain arising from transactions of a non-recurring
or non-operating and material
nature or arising from sales or other dispositions relating to the
discontinuance of operations; (v) earnings
of any Subsidiary accrued prior to the date it became a Subsidiary;
(vi) earnings of any corporation,
substantially all the assets of which have been acquired in any manner, realized
by such other corporation
prior to the date of such acquisition; (vii) net earnings of any business entity
(other than a Subsidiary) in
which the Borrower or any Subsidiary has an ownership interest unless such net
earnings shall have
actually been received by the Borrower or such Subsidiary in the form of cash
distributions, (viii) any portion
of the net earnings of any Subsidiary which for any reason is unavailable for
payment of dividends to the
Borrower or any other Subsidiary, (ix) the earnings of any Person to which
assets of the Borrower shall have
been sold, transferred or disposed of, or into which the Borrower shall have
merged, prior to the date of
such transaction, (x) any gain arising from the acquisition of any securities of
the Borrower or any of its
Subsidiaries, and (xi) any amortization of deferred or other credit representing
the excess of the equity in
any Subsidiary at the date of acquisition thereof over the amount invested in
such Subsidiary.
"Consolidated Adjusted Net Worth" - at any
time, with respect to the Borrower and
its Subsidiaries (determined on a consolidated basis):
(a) the amount of capital stock liability plus (or
minus in the case of a deficit) the capital
surplus and earned surplus of the Borrower and its Subsidiaries, less
(without duplication) the sum
of:
(b) the net book value, after deducting any
reserves applicable thereto, of all items of
the following character which are included in the assets of the
Borrower and its Subsidiaries:
(i) all deferred charges and prepaid
expenses other than prepaid taxes and
prepaid insurance premiums;
(ii) treasury stock;
(iii) unamortized debt discount and expense and
unamortized stock discount and
expense;
(iv) goodwill, the excess of the cost of
assets acquired over the book value of
such assets on the books of the transferor, the excess of
the cost of investments in any
Person (including any Subsidiary) over the value of such
investments on the books of such
Person at the time of making such investments,
organizational or experimental expense,
patents, trademarks, copyrights, trade names and other
intangibles;
(v) all receivables (other than
Eurodollar deposits) owing by Persons whose
principal place of business or principal assets are
located in any jurisdiction other than the
United States of America or Canada; and
(vi) any increment resulting from any
reappraisal, revaluation or write-up of
capital assets subsequent to December 31, 1991.
If the Borrower or any of its Subsidiaries shall have any Investments which are
not permitted under this
Agreement, such Investments shall be excluded from the calculation of
Consolidated Adjusted Net Worth.
"Consolidated Debt" - as at any date of
determination thereof, the aggregate
amount of all Indebtedness of the Borrower and its Subsidiaries, plus, without
duplication, the aggregate
amount of the obligations of the Borrower and its Subsidiaries set forth below,
at such time:
(a) the principal amount of all recourse
and non-recourse interest bearing
obligations of the Borrower or any Subsidiary including, without limitation, any
such obligations bearing an
implicit rate of interest, such as Capitalized Leases, and interest bearing
obligations secured by any Lien
upon Property owned by the Borrower or any Subsidiary, even though such Person
has not assumed or
become liable for the payment of such obligations;
(b) the aggregate amount of all demand
and term deposits made by any
Person with the Borrower or any Subsidiary (including, without limitation,
certificates of deposit issued by the
Borrower or any Subsidiary);
(c) the face amount of all letters of
credit issued by the Borrower or any
Subsidiary and all bankers' acceptances accepted by the Borrower or any
Subsidiary; and
(d) the aggregate amount of all assets
with respect to which the Borrower or
a Subsidiary has any Asset Securitization Recourse Liabilities in respect of
promissory notes and other
interest bearing obligations sold or otherwise transferred by the Borrower or
any Subsidiary (regardless of
whether such aggregate amount of assets is in excess of the amount of such Asset
Securitization Recourse
Liabilities), whether for the repurchase of defaulted notes or obligations or
otherwise.
"Consolidated Earnings Available for Fixed
Charges" - for any period shall mean
the sum of: (i) Consolidated Adjusted Net Income during such period; plus (ii)
to the extent deducted in
determining Consolidated Adjusted Net Income, (a) all provisions for any
Federal, state or other income
taxes made by the Borrower and its Subsidiaries during such period, and (b)
Consolidated Fixed Charges
during such period plus (iii) contributions made by the Borrower to Development
Corp.
"Consolidated Effective Net Worth" - at any
time means the sum of
(a) Consolidated Adjusted Net Worth at such time;
plus
(b) the aggregate outstanding principal amount of
Class A Notes at such time.
"Consolidated Fixed Charges" - with respect to
the Borrower on a consolidated
basis for any period shall mean the sum of: (i) all interest and all
amortization of Indebtedness, amortized
discount and expense on all Indebtedness for borrowed money of the Borrower and
its Subsidiaries, plus
(ii) all Rentals payable during such period by the Borrower and its
Subsidiaries.
"Consolidated Net Earnings" - for any period,
the net income or loss of the Borrower
and its Subsidiaries, as applicable (determined on a consolidated basis for such
Persons at such time), for
such period, as determined in accordance with generally accepted accounting
principles in effect at such
time.
"Consolidated Senior Debt" - all unsecured
Indebtedness of the Borrower and it
Subsidiaries on a consolidated basis (i) for borrowed money (including the
Indebtedness hereunder, the
Senior Notes and all demand and term deposits made by any Person with the
Borrower or any of its
Subsidiaries) which is not expressly subordinate or junior to any other
Indebtedness, plus, without
duplication, (ii) all "guarantees," as defined in Section 7.3 hereof, and (iii)
Asset Securitization Recourse
Liabilities to the extent, but only to the extent, that such obligations have
matured.
"Controlled Group" - all members of a
controlled group of corporations and all
trades or businesses (whether or not incorporated) under common control which,
together with the
Borrower, are treated as a single employer under Section 414(b), 414(c) or
414(m) of the Internal Revenue
Code of 1954, as amended, and Section 4001(a)(2) of ERISA.
"Debt Instrument" - as defined in Section 8.5
hereof.
"Default" - an event which with notice or lapse
of time or both would constitute an
Event of Default.
"Development Corp." - NCB Development
Corporation, a District of Columbia non-
profit corporation established pursuant to 12 U.S.C. 3051(b).
"Dollars" - and "$" - lawful money of the
United States of America.
"Effective Date" - December 15, 1993.
"Eligible Derivatives" - derivative Securities
which are sold in the ordinary course of
the business of the Borrower and its Subsidiaries for the purpose of hedging or
otherwise managing
portfolio risk.
"ERISA" - the Employee Retirement Income
Security Act of 1974, as it may be
amended from time to time, and the regulations thereunder.
"Event of Default" - as defined in Article 8
hereof.
"Existing Loan Agreement" - as defined in the
first preamble hereof.
"Existing Loan Documents" - the Existing Loan
Agreement, the promissory notes
issued thereunder and all other documents executed and delivered in connection
with the Existing Loan
Agreement, including all amendments, modifications and supplements of or to all
such documents.
"Fair Market Value" - at any time with respect
to any Property, the sale value of such
Property that would be realized in an arm's-length sale at such time between an
informed and willing buyer
and an informed and willing seller, under no compulsion to buy or sell,
respectively.
"Federal Funds Rate" - for any day, the rate
charged to the Reference Bank as
reasonably determined by the Reference Bank, on federal funds transactions
having maturities of seven
days with member banks of the Federal Reserve System arranged by federal funds
brokers, or if such day
is not a Business Day, on the next preceding Business Day.
"Fed Funds Loans" - Loans which bear interest
at a rate based upon the Federal
Funds Rate.
"Financial Statements" - the consolidated
statements of financial condition of the
Borrower and its Subsidiaries as of December 31 in the years 1987, 1988, 1989,
1990, 1991 and 1992,
inclusive, and the related consolidated statements of income and cash flows and
changes in members'
equity for the fiscal years ended on such dates, in each case accompanied by
reports thereon containing
opinions without qualification, except as therein noted, by Price Waterhouse,
independent certified public
accountants, and the consolidated balance sheet of the Borrower and its
Subsidiaries as of September 30,
1993 and the related consolidated statements of income and cash flows and
reconciliation of net income
to net cash provided by operating activities for the nine (9) month period ended
on such date.
"Fixed Base Rate" - with respect to any LIBOR
Loan or CD Loan for any Interest
Period therefor:
(a) if such Loan is a LIBOR Loan, the
rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) quoted by the Reference Bank at
approximately 10:00 a.m. London
time (or as soon thereafter as practicable) two London Business Days prior to
the first day of such Interest
Period for the offering by the Reference Bank to leading banks in the London
interbank market of Dollar
deposits having a term comparable to such Interest Period and in an amount
comparable to the principal
amount of the LIBOR Loan made by the Reference Bank to which such Interest
Period relates; and,
(b) if such Loan is a CD Loan, the rate
per annum (rounded upwards, if
necessary, to the nearest 1/20 of 1%) determined by the Reference Bank to be the
average of the bid rate
quoted to the Reference Bank at approximately 10:00 a.m. New York time (or as
soon thereafter as
practicable) on the first day of such Interest Period by at least two
certificate of deposit dealers in New York
of recognized national standing selected by the Reference Bank for the purchase
at face value of time certif-
icates of deposit of the Reference Bank having a term comparable to such
Interest Period and in an
amount comparable to the principal amount of the CD Loan made by the Reference
Bank to which such
Interest Period relates.
If the Reference Bank is not participating in any Fixed Rate Loans during any
Interest Period therefor
(pursuant to Section 2.22 hereof or for any other reason), the Fixed Base Rate
for such Loans for such
Interest Period shall be determined by reference to the amount of the Loan which
the Reference Bank
would have made had it been participating in such Loans.
"Fixed Rate" - for any Fixed Rate Loan for any
Interest Period therefor, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) determined by
the Agent to be equal
to the sum of (a) (x) the Fixed Base Rate for such Loan for such Interest Period
divided by (y) 1 minus the
Reserve Requirement for such Loan for such Interest Period plus (b) if such Loan
is a CD Loan, the
Assessment Rate in effect at the commencement of such Interest Period. The
Agent shall use its best
efforts to advise the Borrower of the Fixed Rate as soon as practicable after
each change in the Fixed Rate;
provided, however, that the failure of the Agent to so advise the Borrower on
any one or more occasions
shall not affect the rights of the Banks or the Agent or the obligations of the
Borrower hereunder.
"Fixed Rate Loans" - CD Loans and LIBOR Loans.
"GAAP" - generally accepted accounting
principles in the United States of America
as in effect on the date of this Agreement and applied on a basis consistent
with the Financial Statements.
"Indebtedness" - with respect to any Person,
all (i) liabilities or obligations, direct and
contingent, which in accordance with GAAP would be included in determining total
liabilities as shown on
the liability side of a balance sheet of such Person at the date as of which
Indebtedness is to be determined,
including, without limitation, contingent liabilities which, in accordance with
such principles, would be set forth
in a specific Dollar amount on the liability side of such balance sheet;
(ii) liabilities or obligations of others for
which such Person is directly or indirectly liable, by way of guaranty (whether
by direct guaranty, suretyship,
discount, endorsement, take-or-pay agreement, agreement to purchase or advance
or keep in funds or
other agreement having the effect of a guaranty) or otherwise; (iii)
liabilities or obligations secured by liens
on any assets of such Person, whether or not such liabilities or obligations
shall have been assumed by
it; (iv) liabilities or obligations of such Person, direct or contingent, with
respect to letters of credit issued for
the account of such Person and banker's acceptances credited for such Person;
(v) obligations in the form
of demand and term deposit accounts maintained by such Person; and (vi) Asset
Securitization Recourse
Liabilities to the extent, but only to the extent, that such obligations have
matured.
"Interest Period" -
(a) with respect to any LIBOR Loan, each
period commencing on the date
such Loan is made or converted from a Loan or Loans of another type, or the last
day of the next
preceding Interest Period with respect to such Loan, and ending on the same day
in the first, second, third,
sixth or ninth calendar month thereafter, as the Borrower may select as provided
in Section 2.3 hereof,
except that each such Interest Period which commences on the last London
Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent
calendar month) shall end on the last London Business Day of the appropriate
subsequent calendar
month;
(b) with respect to any CD Loan, each
period commencing on the date such
Loan is made or converted from a Loan or Loans of another type, or the last day
of the next preceding
Interest Period with respect to such Loan, and ending on the day thirty, sixty,
ninety, one-hundred eighty
or two-hundred seventy days thereafter, as the Borrower may select as provided
in Section 2.3 hereof.
Notwithstanding the foregoing: (i) any Interest Period which commences prior to
a Payment Date shall end
no later than such Payment Date if the aggregate principal amount of the Loans
or portions thereof to which
such Interest Period would be applicable would include any portion of the
aggregate principal amount of
the Loans which is due and payable on such Payment Date; (ii) each Interest
Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or, in the case
of an Interest Period for LIBOR Loans, if such next succeeding London Business
Day falls in the next
succeeding calendar month, on the next preceding London Business Day); (iii)
no more than ten (10)
Interest Periods for Fixed Rate Loans shall be in effect at the same time; (iv)
any Interest Period for any type
of A Loan which commences before the A Commitment Termination Date shall end no
later than the A
Commitment Termination Date and any Interest Period for any type of B Loan which
commences before
the B Commitment Termination Date shall end no later than the B Commitment
Termination Date; and (v)
notwithstanding clauses (i) and (iv) above, no Interest Period shall have a
duration of less than one month
(in the case of LIBOR Loans) or thirty days (in the case of CD Loans). In the
event that the Borrower fails
to select the duration of any Interest Period for any Loan within the time
period and otherwise as provided
in Section 2.3 hereof, such Loan will be automatically converted into a Prime
Rate Loan on the last day of
the preceding Interest Period for such Loan.
"Investment" - in any Person by the Borrower:
(a) the amount paid or committed to be
paid, or the value of property or
services contributed or committed to be contributed, by the Borrower for or in
connection with the
acquisition by the Borrower of any stock, bonds, notes, debentures,
partnership or other ownership interests
or other securities of such Person; and
(b) the amount of any advance, loan or
extension of credit to, or guaranty or
other similar obligation with respect to any Indebtedness of, such Person by
the Borrower and (without
duplication) any amount committed to be advanced, loaned, or extended to, or
the payment of which is
committed to be assured by a guaranty or similar obligation for the benefit of,
such Person by the Borrower.
"IRS" - Internal Revenue Service.
"Latest Balance Sheet" - as defined in Section
3.9 hereof.
"LIBOR Loans" - Loans the interest on which is
determined on the basis of rates
referred to in subparagraph (a) of the definition of "Fixed Base Rate" in this
Article 1.
"Lien" - any mortgage, deed of trust, pledge,
security interest, encumbrance, lien
or charge of any kind (including any agreement to give any of the foregoing),
any conditional sale or other
title retention agreement, any lease in the nature of any of the foregoing, and
the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction.
"Loan" and "Loans" - as defined in subsection
2.1(b) hereof.
"Loan Documents" - this Agreement, the Notes,
and all other documents executed
and delivered in connection herewith or therewith, including all amendments,
modifications and supplements
of or to all such documents.
"London Business Day" - a Business Day on which
dealings in Dollar deposits are
carried out in the London interbank market.
"Majority Banks" - Banks having 66-2/3% of the
aggregate amount of the Total
Commitments whether or not Loans or Swing Line Loans are outstanding
hereunder.
"NatWest USA" - National Westminster Bank USA
having an office at 175 Water
Street, New York, New York 10038.
"NCB Business Credit" - NCB Business Credit
Corporation, a Delaware corporation.
"NCB Mortgage" - NCB Mortgage Corporation,
a Delaware corporation.
"NCCB Senior Obligations" - at any date of
determination thereof, with respect to
the Borrower, the sum of:
(a) the aggregate unpaid principal
amount of Senior Debt, plus
(b) the aggregate amount of all
Capitalized Leases, plus
(c) Restricted Guarantees computed on
the basis of total outstanding
contingent liability, plus
(d) Asset Securitization Recourse
Liabilities of the Borrower (meeting the
conditions set forth in either clause (i) or clause (ii) below):
(i) to the extent, but only
to the extent, that such obligations arise from
the Borrower's obligation to repurchase receivables or other assets as a result
of a default in payment by
the obligor thereunder or any other default in performance by such obligor under
any agreement related
to such receivables; or
(ii) if the Borrower shall maintain
a reserve account containing Cash or
Securities in respect of any such obligations or shall retain or purchase a
subordinated interest therein, to
the extent, but only to the extent, of the amount of such reserve account or
subordinated interest.
"Note" and "Notes" - individually, each of the
A Notes, the B Notes and the Swing
Line Note, and collectively, all of them.
"Paid-in-Capital" - as determined in accordance
with GAAP.
"Payment Dates" - each Quarterly Date in each
year commencing with the
December Quarterly Date.
"PBGC" - as defined in Section 3.17 hereof.
"Permitted Liens" - (i) pledges or deposits by
the Borrower under workman's
compensation laws, unemployment insurance laws, social security laws, or similar
legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for the payment
of Indebtedness of the
Borrower), or leases to which the Borrower is a party, or deposits to secure
public or statutory obligations
of the Borrower or deposits of cash or U.S. Government Bonds to secure surety
, appeal, performance or
other similar bonds to which the Borrower is a party, or deposits as security
for contested taxes or import
duties or for the payment of rent; (ii) Liens imposed by law, such as carriers',
warehousemen's,
materialmen's and mechanics' liens, or Liens arising out of judgments or awards
against the Borrower with
respect to which the Borrower at the time shall currently be prosecuting an
appeal or proceedings for
review; (iii) Liens for taxes not yet subject to penalties for non-payment and
Liens for taxes the payment of
which is being contested as permitted by Section 6.6 hereof; and (iv) Liens
incidental to the conduct of the
business of the Borrower or to the ownership of its property which were not
incurred in connection with
Indebtedness of the Borrower, all of which Liens do not in the aggregate
materially detract from the value
of the properties to which they relate or materially impair their use in the
operation of the business of the
Borrower.
"Person" - an individual, a corporation, a
partnership, a joint venture, a trust or
unincorporated organization, a joint stock company or other similar
organization, a government or any
political subdivision thereof, a court, or any other legal entity, whether
acting in an undivided fiduciary or other
capacity.
"Plan" - at any time an employee pension
benefit plan which is covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code and is either (i)
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower, or by
the Borrower for any other member of such Controlled Group or (ii) maintained
pursuant to a collective
bargaining agreement or any other arrangement under which more than one employer
makes contribu-
tions and to which the Borrower or any member of the Controlled Group is then
making or accruing an
obligation to make contributions or has within the preceding five plan years
made contributions.
"Post-Default Rate" - (i) in respect of any
Loans not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due
date until such Loans are paid in full equal to (a) if such Loans are Prime Rate
Loans, 2% above the Prime
Rate as in effect from time to time for Prime Rate Loans, or (b) if such Loans
are Fixed Rate Loans, 2%
above the rate of interest in effect thereon at the time of such default until
the end of the then current Interest
Period therefor and, thereafter, 2% above the Prime Rate as in effect from time
to time for Prime Rate Loans,
or (c) if such Loans are Fed Funds Loans, 2% above the rate of interest then in
effect on CD Loans or
LIBOR Loans (at the option of the Majority Banks), having an Interest Period
equal to thirty (30) days; and
(ii) in respect of other amounts payable by the Borrower hereunder (other
than interest) not paid when due
(whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period commencing
on the due date until such other amounts are paid in full equal to 2% above
the Prime Rate as in effect from
time to time for Prime Rate Loans.
"Prime Rate" - the interest rate established
from time to time by NatWest USA as
its prime rate at the Principal Office. Notwithstanding the foregoing, the
Borrower acknowledges the fact
that NatWest USA may regularly make domestic commercial loans at rates of
interest less than the rate of
interest referred to in the preceding sentence. Each change in any interest
rate provided for herein based
upon the Prime Rate resulting from a change in the Prime Rate shall take effect
at the time of such change
in the Prime Rate.
"Prime Rate Loans" - Loans (including Swing
Line Loans) which bear interest at a
rate based upon the Prime Rate.
"Principal Office" - the principal office of
NatWest USA presently located at 175 Water
Street, New York, New York 10038.
"Property" - any interest in any kind of
property or asset, whether real, personal or
mixed, or tangible or intangible.
"Qualified Assets" - as at any date of
determination thereof, the sum of the following
items (a), (b) and (c) owned by the Borrower:
(a) the principal amount of all
promissory notes and other interest bearing
obligations acquired by the Borrower in the ordinary course of its business less
(i) reserves for credit losses
applicable thereto, and (ii) unearned income;
(b) Cash on hand and in banks; and
(c) Investments other than "Restricted
Investments" (as such term is defined
in the Senior Note Agreements as in effect on the date hereof).
"Quarterly Dates" - the last day of each
December, March, June and September,
the first of which shall be the first such day after the date of this Agreement,
provided that, if any such date
is not a Business Day or a London Business Day, the relevant Quarterly Date
shall be the next succeeding
Business Day (for Prime Rate or CD Loans or payments of the Commitment Fee) or
London Business Day
(for LIBOR Loans) (or, in the case of LIBOR Loans, if the next succeeding London
Business Day falls in the
next succeeding calendar month, then the next preceding London Business Day).
"Quarterly Fiscal Dates" - the last day of the
Borrower's fiscal quarters.
"Reference Bank" - (i) for purposes of
determining the rates referred to in clause (a)
of the definition of "Fixed Base Rate" in this Article 1, the non-United States
office or offices or international
banking facility or facilities of NatWest USA as NatWest USA may from time to
time select and (ii) for all other
purposes hereunder, the Principal Office.
"Refunded Swing Line Loans" - as defined in
subsection 2.1(c) hereof.
"Regulation D" - Regulation D of the Board of
Governors of the Federal Reserve
System, as the same may be amended or supplemented from time to time.
"Regulatory Change" - as to any Bank, any
change after October 1, 1989 in United
States federal, state or foreign laws or regulations (including Regulation D) or
the adoption or making after
such date of any interpretations, directives or requests applying to a class of
banks including such Bank
of or under any United States federal, state, or foreign laws or regulations
(whether or not having the force
of law) by any court or governmental or monetary authority charged with the
interpretation or administration
thereof.
"Rentals" - shall mean and include all fixed
rentals (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 Borrower, as lessee or sublessee under a lease of real or
personal property, but shall be
exclusive of any amounts required to be paid by the Borrower (whether or not
designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents
under any so-called "percentage leases" shall be computed solely on the basis of
the minimum rents, if any,
required to be paid by the lessee regardless of sales volume or gross
revenues.
"Reserve Requirement" - for any Fixed Rate
Loans for any Interest Period therefor,
the average maximum rate at which reserves (including any marginal, supplemental
or emergency reserves)
are required to be maintained during such Interest Period under Regulation D by
member banks of the
Federal Reserve System in New York City with deposits exceeding one billion
Dollars against (a) in the case
of LIBOR Loans, "Eurocurrency liabilities" (as such term is used in Regulation
D) or (b) in the case of CD
Loans, nonpersonal Dollar time deposits in an amount of $100,000 or more.
Without limiting the effect of
the foregoing, the Reserve Requirement shall reflect any other reserves required
to be maintained by such
member banks by reason of any Regulatory Change against (i) any category of
liabilities which includes
deposits by references to which the Fixed Base Rate for LIBOR Loans or CD Loans
(as the case may be)
is to be determined as provided in the definition of "Fixed Base Rate" in this
Article 1 or (ii) any category of
extensions of credit or other assets which include LIBOR Loans or CD Loans (as
the case may be).
"Restricted Guarantees" -- at any time means
all "guarantees" (as defined in Section
7.3 hereof) by the Borrower of obligations of others that constitute sum certain
obligations at the time such
Guarantees are incurred.
"Retained Earnings" - the consolidated retained
earnings account (whether allocated
or unallocated) of the Borrower and its Subsidiaries determined as of any date
in accordance with GAAP
consistent with those applied in the preparation of the Borrower's consolidated
statement of financial condi-
tion for the fiscal year ended December 31, 1992.
"Securities Act" - the Securities Act of 1993,
as amended.
"Security" - the meaning ascribed thereto in
Section 2(1) of the Securities Act;
provided, however, that Asset Securitization Recourse Liabilities shall not
constitute "Securities" except (i) to
the extent that such obligations arise from the Borrower's obligation to
repurchase receivables or other
assets as a result of a default in payment by the obligor thereunder or any
other default in performance by
such obligor under any agreement related to such receivables or (ii) if the
Borrower shall maintain a reserve
account containing Cash or Securities in respect of any such obligations or
shall retain or purchase a
subordinated interest therein to the extent of the amount of such reserve
account or subordinated interest.
"Selected Banks" - the Banks which are
signatories to this Agreement, Bank of
Delaware and the one hundred largest commercial banks which either are United
States national banking
associations or are chartered under the laws of a state of the United States and
which have ratings by
Thomson BankWatch, Inc. no lower than B/C.
"Senior Debt" - all Indebtedness of the
Borrower for borrowed money that is not
expressed to be subordinate or junior to any other Indebtedness, including,
without limitation, under this
Agreement or the Senior Note Agreements.
"Senior Notes" - the Senior Notes issued by the
Borrower in the aggregate principal
amount of $130,000,000 under the terms and conditions of the Senior Note
Agreements.
"Senior Note Agreements" - collectively,
(i) the separate Assumption Agreement
and Amended and Restated Senior Note Agreements dated as of December 1, 1993 in
respect of the
Borrower's Amended and Restated 9.28% Senior Notes due December 15, 1994,
(ii) the Assumption
Agreement and Amended and Restated Senior Note Agreement dated as of December 1,
1993 in respect
of the Borrower's Amended and Restated 10.15% Senior Notes due October 15, 1995,
(iii) the Assumption
Agreement and Amended and Restated Senior Note Agreement dated as of December 1,
1993 in respect
of the Borrower's Amended and Restated 9% Senior Notes due April 26, 1994, and
(iv) the separate
Assumption Agreement and Amended and Restated Senior Note Agreements, dated as
of December 1,
1993, in respect of the Borrower's (a) Amended and Restated 8.18% Series A
Senior Notes due June 24,
1997, (b) Amended and Restated 8.32% Series B Senior Notes due December 24,
1997, and (c) Amended
and Restated 8.44% Series C Senior Notes due June 24, 1998, as each may be
amended from time to
time.
"SPV" - the meaning assigned to such term in
the definition of "Asset Securitization"
in this Article 1 and NCB I, Inc. and any other Subsidiary of the Borrower
having powers limited to the
holding of regular or residual interests arising out of Asset Securitizations.
"Subsidiary" - with respect to any Person, any
corporation, partnership or joint
venture whether now existing or hereafter organized or acquired: (i) in the case
of a corporation, of which
a majority of the securities having ordinary voting power for the election of
directors (other than securities
having such power only by reason of the happening of a contingency) are at the
time owned by such
Person and/or one or more Subsidiaries of such Person or (ii) in the case of
partnership or joint venture in
which such Person is a general partner or joint venturer or of which a majority
of the partnership or other
ownership interests are at the time owned by such Person and/or one or more of
its Subsidiaries.
"Swing Line Loan Commitment" - $10,000,000 as
may be reduced pursuant to
Section 2.2 hereof.
"Swing Line Loan(s)" - as defined in subsection
2.1(c) hereof.
"Swing Line Lender" - NatWest USA in its
capacity as the maker of Swing Line
Loans.
"Total Commitment" - as to each Bank, the
sum of its A Commitment and its B
Commitment.
"Unused Commitment" - as at any date, for each
Bank, the difference, if any,
between: (i) the Total Commitment for such Bank as the same may be reduced
pursuant to Sections 2.1,
2.2 and 2.3 hereof; and (ii) the then aggregate outstanding principal amount of
all Loans and Swing Line
Loans made by such Bank.
Any accounting terms used in this Agreement
which are not specifically defined shall
have the meanings customarily given to them in accordance with GAAP, except that
references in Article 5
to GAAP shall be deemed to refer to such principles as in effect on the date of
the financial statements
delivered pursuant thereto.
(b) This Agreement shall become effective, and
the Existing Loan Agreement shall
be amended and restated pursuant hereto, on the Effective Date, provided that
all of the conditions
precedent set forth in Section 4.1 hereof shall have been satisfied on or before
such date.
<PAGE>
Article 2. Commitments and Loans.
Section 2.1 Loans.
(a) A Loans. Each Bank hereby severally
agrees to make loans to the
Borrower during the A Credit Period to and including the A Commitment
Termination Date in an aggregate
principal amount at any one time outstanding up to, but not exceeding, the A
Commitment of such Bank
as then in effect (individually an "A Loan" and, collectively, the "A Loans").
Subject to the terms of this Agree-
ment, during the A Credit Period, the Borrower may borrow, prepay (as provided
in Section 2.9 hereof) and
reborrow the amount of the A Commitments by means of Prime Rate Loans, CD Loans,
LIBOR Loans or
Fed Funds Loans, and convert A Loans of one type into A Loans of another type
(as provided in Section
2.8 hereof).
(b) B Loans. (i) Each Bank
hereby severally agrees to make loans to the
Borrower during the B Credit Period to and including the B Commitment
Termination Date in an aggregate
principal amount at any one time outstanding up to, but not exceeding, the B
Commitment of such Bank
as then in effect (individually a "B Loan" and, collectively, the "B Loans"; and
together with the A Loans,
collectively referred to as the "Loans" and individually a "Loan"). Subject to
the terms of this Agreement,
during the B Credit Period the Borrower may borrow, prepay (as provided in
Section 2.9 hereof) and
reborrow the amount of the B Commitments by means of Prime Rate Loans, CD Loans,
LIBOR Loans or
Fed Funds Loans, and convert B Loans of one type into B Loans of another type
(as provided in Section
2.8 hereof).
(ii) The B Commitment Termination Date
may be extended for a one year
period upon the satisfaction of the following conditions:
(A) The Borrower
shall have given notice to the Agent and the
Banks of its desire to extend the then current B Commitment Termination Date at
least one hundred twenty
(120) days prior to the then current B Commitment Termination Date; and
(B) All of the
Banks shall have agreed in writing to such
extension ninety (90) days prior to the then current B Commitment Termination
Date.
(c) Swing Line Loans.
(i) The Swing Line Lender
hereby agrees, subject to the limitations set
forth below with respect to the maximum amount of Swing Line Loans permitted to
be outstanding from
time to time, to make a portion of the Swing Line Lender's B Commitment
available to the Borrower from
time to time during the period from the Effective Date through but excluding the
B Commitment Termination
Date in an aggregate principal amount of up to the Swing Line Loan Commitment by
making Swing Line
Loans to the Borrower. In no event shall (A) the aggregate principal amount of
the Swing Line Loans
outstanding at any time exceed the Swing Line Loan Commitment, (B) the aggregate
principal amount of
B Loans made by the Swing Line Lender and the Swing Line Loans outstanding at
any time exceed the
B Commitment of the Swing Line Lender as may be reduced, or (C) the Swing Line
Loan Commitment
exceed the Swing Line Lender's B Commitment.
(ii) The Swing Line Lender's Swing Line
Loan Commitment shall expire on the
B Commitment Termination Date and the outstanding principal amount of the Swing
Line Loans shall be
paid in full no later than the B Commitment Termination Date. Amounts borrowed
by the Borrower under
this subsection 2.1(c) may be repaid and reborrowed by means of Prime Rate Loans
only.
(iii) (A) The Swing Line Lender shall
give each Bank notice of the making of
each Swing Line Loan on the date such Swing Line Loan is made and each Bank
hereby agrees, subject
to this subsection, to make a B Loan in an amount equal to such Bank's pro rata
share (according to but
not in excess of its B Commitment) of the amount of the Swing Line Loans
("Refunded Swing Line Loans")
outstanding on the next Business Day immediately following the date such notice
is given. In the case of
B Loans made by the Banks under the immediately preceding sentence, each such
Bank shall make the
amount of its B Loan available to the Swing Line Lender in same day funds at the
Principal Office not later
than 1:00 p.m. (New York time) on the Business Day next succeeding the Business
Day after the date such
notice is given regardless of whether the conditions precedent set forth in
Section 4.2 hereof to the making
of the Swing Line Loan are then satisfied provided such conditions precedent
were satisfied at the time the
Swing Line Lender made such Swing Line Loan. The proceeds of such B Loans shall
be immediately
delivered to the Swing Line Lender and applied to repay the Refunded Swing Line
Loans. On the day
such B Loans are made, Refunded Swing Line Loans shall be deemed to be paid with
the proceeds of
the B Loan made by each Bank and such portion of the Swing Line Loans deemed to
be so paid shall
no longer be outstanding as Swing Line Loans and shall be due as a B Loan made
by each Bank
(including NatWest USA).
(B) The Borrower
authorizes the Swing Line Lender to charge the
Borrower's account with the Swing Line Lender in order to immediately pay
the Swing Line Lender the
amount of such Refunded Swing Line Loans to the extent amounts received from the
Banks are not
sufficient to repay in full such Refunded Swing Line Loans.
(C) If any portion of
any amount paid (or deemed to be paid) to
the Swing Line Lender should be recovered from the Swing Line Lender by or on
behalf of the Borrower
in bankruptcy, by assignment for the benefit of creditors or otherwise, the loss
of the amount so recovered
shall be ratably shared among all Banks proportionately in accordance with their
respective B
Commitments; provided, however, that in the case of amounts recovered from the
Swing Line Lender in
respect of amounts charged against the Borrower's account, the loss of the
amount so recovered shall be
shared ratably by all the Banks whose B Loans made pursuant to this paragraph
were less than each such
respective Bank's pro rata share of the Refunded Swing Line Loans.
(D) Each Bank's
obligation to make the B Loans referred to
in this paragraph shall be absolute and unconditional provided that the
conditions precedent to the making
of Swing Line Loan(s) set forth in Section 4.2 hereof are satisfied at the time
the Swing Line Lender made
such Swing Line Loan and shall not be affected by any circumstance, including,
without limitation, (i) any
set-off, counterclaim, recoupment, defense or other right which such Bank may
have against the Swing Line
Lender, the Borrower, or any other Person for any reason whatsoever; (ii) the
occurrence or continuance
of an Event of Default; (iii) any adverse change in the condition (financial or
otherwise) of the Borrower or
any of its Subsidiaries; (iv) the acceleration or maturity of any Loans or the
termination of the B
Commitments after the making of any Swing Line Loan; (v) any breach of this
Agreement by any party to
this Agreement, Agent or any other Bank; or (vi) any other circumstance,
happening or event whatsoever,
whether or not similar to any of the foregoing.
(iv) In the event that the Borrower or
any of its Subsidiaries has filed for
protection under the bankruptcy code or otherwise if the Swing Line Lender
requests, each Bank shall
acquire without recourse or warranty an undivided participation interest equal
to such Bank's pro rata share
(according to but not in excess of its B Commitment) of any Swing Line Loan
otherwise required to be
repaid by such Bank pursuant to the preceding paragraph by paying to the Swing
Line Lender on the date
on which such Bank would otherwise have been required to make a B Loan in
respect of such Swing Line
Loans pursuant to the preceding paragraph in immediately available funds, an
amount equal to such
Bank's pro rata share (according to its B Commitment) of such Swing Line Loan
and no B Loans shall be
made by such Bank pursuant to the preceding paragraph. If such amount is not in
fact made available
to the Swing Line Lender by that Bank on the date when B Loans would otherwise
be required to be made
pursuant to the preceding paragraph, the Swing Line Lender shall be entitled to
recover such amount on
demand from that Bank together with interest accrued from such date at the
customary rate set by the
Swing Line Lender for the correction of errors among banks for three Business
Days and thereafter at the
rate of interest then applicable to Prime Rate Loans. From and after the date
on which any Bank purchases
an undivided participation interest in a Swing Line Loan pursuant to this
paragraph, the Swing Line Lender
shall promptly distribute to such Bank such Bank's pro rata share (according to
its B Commitment) of all
payments of principal and interest in respect of such Swing Line Loans.
(v) A copy of each notice given by the
Swing Line Lender to the Banks
pursuant to the subparagraph (iii) above shall be promptly delivered by the
Swing Line Lender to the
Borrower. Upon the making of a B Loan by a Bank, the amount so funded shall
become due under such
Bank's B Note and shall no longer be owed under the Swing Line Note.
(vi) Notwithstanding anything herein to
the contrary, the Swing Line Lender shall
not be obligated to make any Swing Line Loans if it has elected after the
occurrence and during the
continuation of an Event of Default not to make Swing Line Loans and has
notified the Borrower in writing
or by telephone (promptly confirmed in writing) of such election. The Swing
Line Lender shall promptly give
notice to the Banks of such election not to make Swing Line Loans.
Section 2.2 Reductions in Total Commitments.
The Borrower shall be entitled to reduce the
Total Commitments provided that the
Borrower shall give notice of such reduction to the Banks as provided in Section
2.3 hereof and that any
partial reduction of the Total Commitments shall be in an aggregate amount equal
to Ten Million
($10,000,000) Dollars or an integral multiple thereof. Any such reduction shall
be permanent and irrevocable.
Any reduction of the B Commitments made pursuant to this Section 2.2, Section
2.3 or Article 8 hereof
which reduces the B Commitments below the then current amount of the Swing Line
Loan Commitment
shall result in an automatic corresponding reduction of the Swing Line Loan
Commitment to the amount
of the B Commitment, as so reduced, without any further action on the part of
the Swing Line Lender.
Section 2.3 Notices Relating to Loans
and Swing Line Loans.
(a) The Borrower shall give the Agent
notice of each borrowing, reborrowing,
conversion and prepayment of each Loan and of the duration of each Interest
Period applicable to each
Fixed Rate Loan and each termination or reduction of Total Commitments (in each
case, a "Borrowing
Notice"), as hereinafter provided in this Section 2.3.
(i) In the case of the borrow
ing or reborrowing of a Prime Rate Loan
(other than a Swing Line Loan which is governed by subsection (b) hereof) or
a Fed Funds Loan, the
Borrower shall give notice (by telex, telegram or telecopier, or by telephone
confirmed in writing promptly
thereafter) to the Agent no later than 1:00 p.m., New York time, on the date of
such borrowing.
(ii) In the case of the borrowing or
reborrowing of a CD Loan, the Borrower
shall give notice (by telex, telegram or telecopier or by telephone confirmed in
writing promptly thereafter)
to the Agent one Business Day prior to such borrowing.
(iii) In the case of the borrowing or
reborrowing of a LIBOR Loan, the Borrower
shall give notice (by telex, telegram or telecopier or by telephone confirmed
in writing promptly thereafter)
to the Agent three London Business Days prior to such borrowing of the proposed
Loan hereunder.
(iv) In the case of each notice of
conversion of Loans of one type into Loans
of another type, prepayment and in the case of each reduction of Total
Commitments, the Borrower shall
give notice (by telex, telegram or telecopier or by telephone confirmed in
writing promptly thereafter) to the
Agent three Business Days prior to the date of the proposed conversion,
prepayment or reduction of Total
Commitments.
Without in any way limiting the Borrower's obligation to
confirm in writing any telephonic
notice, the Agent may act without liability upon the basis of a telephonic
notice believed by the Agent in
good faith to be from the Treasurer or Assistant Treasurer of the Borrower prior
to the receipt of written
confirmation. In each such case, the Borrower hereby waives the right to
dispute the Agent's record of the
terms of such telephonic notice. Each such notice of borrowing, reborrowing,
conversion or prepayment
shall specify the amount (subject to Section 2.1 hereof) and type of the Loans
(including whether the Loan
to be borrowed is an A Loan or a B Loan) to be borrowed, converted or prepaid
(and, in the case of a
conversion, the type of Loans to result from such conversion), the maturity
date if less than 270 days, the
duration of each Interest Period applicable to each Fixed Rate Loan, the date of
borrowing, reborrowing,
conversion or prepayment (which shall be a Business Day in the case of each
borrowing, reborrowing,
conversion, prepayment of Prime Rate Loans, Fed Funds Loans or CD Loans, and a
London Business
Day in the case of each borrowing, conversion or prepayment of LIBOR Loans).
Each such notice of the
duration of an Interest Period shall specify the Loans to which such Interest
Period is to relate. Each such
notice shall also direct the Agent to disburse the proceeds of such Loan by wire
transfer or otherwise, but
in any event, in immediately available funds, by depositing such proceeds in an
account of the Borrower,
designated by the Borrower, and maintained with the Agent. Any such Loans so
made shall be
conclusively presumed to have been made to or for the benefit of the Borrower
when deposited to any
account of the Borrower with the Agent even though Persons, other than those
authorized to borrow on
behalf of the Borrower, may have authority to draw against such account. With
respect to Fed Funds
Loans, each such notice shall state only the amount of such Loan and that it is
to bear interest at the Fed
Funds Rate. The Agent shall notify the Banks of the content of each such notice
promptly after its receipt
thereof.
(b) In the case of the borrowing or
reborrowing of a Swing Line Loan, the
Borrower shall give notice (by telex, telegram, or telecopier or by telephone
confirmed in writing promptly
thereafter) to the Swing Line Lender no later than 3:00 p.m., New York time, on
the date of such borrowing.
Section 2.4 Fees.
The Borrower shall pay to the Agent for the
account of each Bank a commitment
fee (the "Commitment Fee") on the amount of each Bank's Total Commitment, for
the period from the date
hereof to and including the earlier of the date such Bank's Total Commitment is
terminated or the A
Commitment Termination Date, at the rate of 0.3125% per annum on the Total
Commitments. The accrued
Commitment Fee shall be payable quarterly on the Quarterly Dates and on the
earlier of the date the Total
Commitments are terminated and the A Commitment Termination Date.
Section 2.5 Lending Offices.
The Loans of each type made by each Bank shall
be made and maintained at
such Bank's Applicable Lending Office for Loans of such type. The Swing Line
Loans made by the Swing
Line Lender shall be made and maintained at the Swing Line Lender's Applicable
Lending Office.
Section 2.6 Several Obligations.
The failure of any Bank to make any Loan to be
made by it on the date specified
therefor shall not relieve the other Banks of their respective obligations to
make their Loans on such date,
but no Bank shall be responsible for the failure of the other Banks to make
Loans to be made by such
other Banks.
Section 2.7 Borrowings.
(a) The Borrower shall give the Agent
notice of each borrowing hereunder as
provided in Section 2.3 hereof. Not later than 3:00 p.m. on the date specified
for each borrowing
hereunder (other than a borrowing in respect of a Swing Line Loan which is
governed by subsection 2.1(c)
hereof), each Bank shall transfer to the Agent, by wire transfer or otherwise,
but in any event in immediately
available funds, the amount of the Loan to be made by it on such date, and the
Agent, upon its receipt
thereof, shall disburse such sum in accordance with the directions of the
Borrower contained in the
Borrowing Notice relating to such Loan.
(b) Notwithstanding anything contained
in any Borrowing Notice to the contrary,
the Loans (other than Swing Line Loans) shall be disbursed in the following
order of priority: (i) first, the A
Loans, then (ii) the B Loans.
Section 2.8 Conversions of Loans.
The Borrower shall have the right to convert
Loans of one type into Loans of
another type from time to time, provided that: (i) the Borrower shall give the
Agent notice of each such
conversion as provided in Section 2.3 hereof; (ii) Fixed Rate Loans may be
converted only on the last day
of an Interest Period for such Loans; (iii) except as required by Sections 2.23,
or 2.24 hereof, no Prime Rate
Loan may be converted into a Fixed Rate Loan if on the proposed date of
conversion a Default or an Event
of Default exists; and (iv) no Fed Funds Loan may be converted into any
other type of Loan.
Notwithstanding the foregoing, Swing Line Loans may not be converted into Fixed
Rate Loans. The Agent
shall use its best efforts to notify the Borrower of the effectiveness of such
conversion, and the new interest
rate to which the converted Loans are subject, as soon as practicable after the
conversion; provided,
however, that any failure to give such notice shall not affect the Borrower's
obligations, or the Agent's or the
Banks' rights and remedies, hereunder in any way whatsoever.
Section 2.9 Prepayments.
(a) The Borrower shall have the right
to prepay the Prime Rate Loans (other
than the Swing Line Loans) from time to time in whole or in part, provided that
the Borrower shall give the
Agent notice of each such prepayment as provided in Section 2.3 hereof.
(b) All prepayments of the Loans shall
be made together with payment of all
interest accrued on the amount prepaid, but without premium or penalty.
Section 2.10 Use of Proceeds of Loans.
The proceeds of the Loans (including the Swing
Line Loans) made hereunder may
be used by the Borrower solely for its general corporate purposes and for
working capital purposes.
Section 2.11 Payment of Loans.
(a) With respect to each Prime Rate
Loan or Fixed Rate Loan made hereunder
in respect of the A Commitment, the Borrower shall pay to the Agent for the
account of the Banks on the
earliest of the A Commitment Termination Date or 270 days after the making
of such A Loan or such
shorter period as the Borrower shall specify in the Borrowing Notice in
connection with such A Loan, the
unpaid principal of such Prime Rate Loan or Fixed Rate Loan outstanding on such
date. With respect to
each Fed Funds Loan, the Borrower shall pay to the Agent for the account of the
Banks on the earlier of
the A Commitment Termination Date or the seventh Business Day next succeeding
the day such Fed
Funds Loan was made, the unpaid principal of such Fed Funds Loan outstanding on
such date.
(b) With respect to each Prime Rate Loan
or Fixed Rate Loan made hereunder
in respect of the B Commitment, the Borrower shall pay to the Agent for the
account of the Banks on the
earliest of the B Commitment Termination Date or 270 days after the making of
such B Loan or such
shorter period as the Borrower shall specify in the Borrowing Notice in
connection with such B Loan, the
unpaid principal of such Prime Rate Loan or Fixed Rate Loan outstanding on such
date. With respect to
each Fed Funds Loan, the Borrower shall pay to the Agent for the account of
the Banks on the earlier of
the B Commitment Termination Date or the seventh Business Day next succeeding
the day such Fed
Funds Loan was made, the unpaid principal of such Fed Funds Loan outstanding on
such date.
(c) With respect to each Swing Line Loan
made hereunder, the Borrower shall
pay to the Swing Line Lender on the B Commitment Termination Date the unpaid
principal of any Swing
Line Loan outstanding on such date.
Section 2.12 Interest.
The Borrower shall pay to the Agent for the
account of each Bank interest on the
unpaid principal amount of each Loan and the Swing Line Loan, if any, made by
such Bank for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the following rates per annum:
(a) During such periods such
Loan is a Prime Rate Loan, the Prime
Rate; provided, however, that the interest rate applicable to any Prime Rate
Loan on any day during the
period commencing on December 15 of any year and ending on January 2 of the
following year shall be
equal to the sum of (x) the federal funds rate charged to the Reference Bank
(as reasonably determined
by the Reference Bank) on overnight federal funds transfers arranged by federal
funds brokers with
member banks of the Federal Reserve System (or, if such day is not a Business
Day, on the next
preceding Business Day) plus (y) 1.5%;
(b) During such periods such
Loan is a CD Loan or a LIBOR Loan,
for each Interest Period relating thereto,
the Fixed Rate for such Loan for such Interest Period plus the Applicable
Margin; and
(c) During such periods such
Loan is a Fed Funds Loan, the Federal
Funds Rate plus the Applicable Margin.
During all such periods when the aggregate
outstanding principal amount of LIBOR
Loans, CD Loans and Fed Funds Loans shall be equal to or greater than
$50,000,000, the Borrower shall
pay to the Agent for the account of each Bank Additional Interest with respect
to the aggregate of such
Loans in excess of $50,000,000.
Notwithstanding the foregoing, the Borrower
shall pay interest on any Loan or any
installment thereof, and on any other amount payable by the Borrower hereunder
(other than interest) which
shall not be paid in full when due (whether at stated maturity, by acceleration
or otherwise) for the period
commencing on the due date thereof until the same is paid in full at the
applicable Post-Default Rate.
Except as hereinafter provided, accrued interest on each Loan shall be payable
(a) in the case of a Prime
Rate Loan, quarterly on the Quarterly Dates, (b) in the case of a Fixed Rate
Loan, on the last day of each
Interest Period for such Loan (and, if such Interest Period exceeds three
months' duration, quarterly,
commencing on the first quarterly anniversary of the first day of such Interest
Period), (c) in the case of a
Fed Funds Loan, on the due date of such Loan, and (d) in the case of any Loan
except a Fed Funds
Loan, upon the payment or prepayment thereof or the conversion thereof into a
Loan of another type (but
only on the principal so paid, prepaid or converted). Additional Interest will
be deemed to be payable first
on outstanding Fed Funds Loans, next on outstanding CD Loans and finally on
outstanding LIBOR Loans
and will be paid quarterly on the Quarterly Dates. Interest which is payable at
the Post-Default Rate shall
be payable from time to time on demand of the Agent or any Bank. Promptly after
the establishment of
any interest rate provided for herein or any change therein, the Agent will
notify the Banks and the Borrower
thereof.
Section 2.13 Notes.
(a) The A Loans made by each Bank shall
be evidenced by a single
promissory note of the Borrower (a "A Note" and, collectively, the "A Notes") in
substantially the form of
Exhibit A-1 hereto, dated the Effective Date, payable to the order of such Bank
in a principal amount equal
to such Bank's A Commitment as originally in effect and otherwise duly
completed. All A Loans made by
each Bank hereunder and all payments and prepayments made on account of the
principal thereof, and
all conversions of such A Loans shall be recorded by such Bank on the schedule
attached to the relevant
A Note (provided that any failure by such Bank to make any such endorsement
shall not affect the
obligations of the Borrower hereunder or under such A Note in respect of such A
Loans).
(b) The B Loans made by each Bank shall
be evidenced by a single
promissory note of the Borrower (a "B Note" and, collectively, the "B Notes") in
substantially the form of
Exhibit A-2 hereto, dated the Effective Date, payable to the order of such Bank
in a principal amount equal
to such Bank's B Commitment as originally in effect and otherwise duly
completed. All B Loans made by
each Bank hereunder and all payments and prepayments made on account of the
principal thereof, and
all conversions of such B Loans shall be recorded by such Bank on the schedule
attached to the relevant
B Note (provided that any failure by such Bank to make any such endorsement
shall not affect the
obligations of the Borrower hereunder or under such B Note in respect of such B
Loans).
(c) The Swing Line Loans made by the
Swing Line Lender shall be evidenced
by a single promissory note of the Borrower (the "Swing Line Note")
substantially in the form of Exhibit A-3
hereto, dated the Effective Date, payable to the order of the Swing Line Lender
in a principal amount equal
to the Swing Line Loan Commitment and otherwise duly completed. All Swing Line
Loans made by the
Swing Line Lender hereunder and all payments and prepayments on account of the
principal thereof shall
be recorded by the Swing Line Lender on the schedule attached to the Swing Line
Note (provided, that
any failure by the Swing Line Lender to make such endorsement shall not affect
the obligations of the
Borrower hereunder or under the Swing Line Note).
Section 2.14 Payments.
All payments of principal, interest, fees and
other charges (including indemnities)
payable by the Borrower hereunder shall be made in Dollars, in immediately
available funds, to the Agent
at the Principal Office not later than 11:00 a.m., New York City time, on the
date on which such payment
shall become due (and the Agent or any Bank for whose account any such payment
is to be made may,
but shall not be obligated to, debit the amount of any such payment which is not
made by such time to
any ordinary deposit account of the Borrower with the Agent or such Bank, as the
case may be).
Additional provisions relating to payments are set forth in Section 10.3 hereof.
Each payment received by
the Agent hereunder for the account of a Bank or the Swing Line Lender shall be
paid promptly to such
Bank or Swing Line Lender, in like funds, for the account of such Bank's or
Swing Line Lender's Applicable
Lending Office for the Loan or Swing Line Loan in respect of which such payment
is made.
Section 2.15 Pro Rata Treatment.
Except as otherwise provided herein: (i) each
borrowing from the Banks under
Section 2.1 hereof (other than the Swing Line Loan) will be made from the Banks
and each partial reduction
of the Total Commitments shall be applied to such Total Commitments of the
Banks, pro rata according
to their respective Unused Commitments; (ii) each payment of each fee shall be
made for the account of
the Banks pro rata according to their respective Total Commitments, (iii) each
conversion of Loans of a
particular type under Section 2.8 hereof (other than conversions provided for
by Section 2.21 or 2.22 hereof)
will be made pro rata among the Banks holding Loans of such type according to
the respective principal
amounts of such Loans held by such Banks; (iv) each payment and prepayment of
principal of or interest
on Loans of a particular type will be made to the Agent for the account of the
Banks holding Loans of such
type pro rata in accordance with the respective unpaid principal amounts of
such Loans held by such
Banks; and (v) Interest Periods for Loans of a particular type shall be
allocated among the Banks holding
Loans of such type pro rata according to the respective principal amounts of
such Loans held by such
Banks.
Section 2.16 Computations.
Interest on all Loans and the Commitment Fee
shall be computed on the basis of
a year of 360 days and actual days elapsed (including the first day but
excluding the last) occurring in the
period for which payable.
Section 2.17 Minimum Amounts of Borrowings,
Conversions, Prepayments and
Interest Periods.
(a) Except for borrowings, conversions
and prepayments which exhaust the
full remaining amount of the Total Commitments (in the case of borrowings)
or result in the conversion or
prepayment of all Loans of a particular type (in the case of conversions or
prepayments) or conversions
made pursuant to Section 2.23 hereof, each borrowing, each conversion of Loans
of one type into Loans
of another type and each prepayment of principal of Loans hereunder shall be in
an amount at least equal
to Two Million ($2,000,000) Dollars or a multiple of $1,000,000 (borrowings,
conversions and prepayment
of different types of Loans at the same time hereunder to be deemed separate
borrowings, conversions
and prepayments for purposes of the foregoing, one for each type).
(b) Except for borrowings which exhaust
the Swing Line Loan Commitment,
each borrowing of principal of the Swing Line Loans hereunder shall be in an
amount at least equal to Two
Million ($2,000,000) Dollars or a multiple of $1,000,000.
Section 2.18 Non-Receipt of Funds by the Agent.
Unless the Agent shall have been notified by
a Bank or the Borrower (the "Payor")
prior to the time upon which such Bank is to make payment to the Agent of the
proceeds of a Loan
(including a Refunded Swing Line Loan) to be made by it hereunder or the
Borrower is to make a payment
to the Agent for the account of one or more of the Banks, as the case may be
(such payment being herein
called the "Required Payment"), which notice shall be effective upon receipt,
that the Payor does not intend
to make the Required Payment to the Agent, the Agent may assume that the
Required Payment has been
made and may, in reliance upon such assumption (but shall not be required to),
make the amount thereof
available to the intended recipient on such date and, if the Payor has not in
fact made the Required
Payment to the Agent, the recipient of such payment shall, on demand, repay to
the Agent the amount
made available to it together with interest thereon in respect of each day
during the period commencing
on the date such amount was so made available by the Agent until the date the
Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such day (when
the recipient is a Bank)
or equal to the rate of interest applicable to such Loan (when the recipient is
the Borrower).
Section 2.19 Sharing of Payments, Etc.
The Borrower hereby agrees that, in addition to
(and without limitation of) any right
of set-off, banker's lien or counterclaim a Bank may otherwise have, each Bank
shall be entitled, at its option,
to offset balances held by it at any of its offices against any principal of or
interest on any of its Loans
hereunder, or any fee payable to it, which is not paid when due (regardless of
whether such balances are
then due to the Borrower), in which case it shall promptly notify the Borrower
and the Agent thereof, provid-
ed that its failure to give such notice shall not affect the validity thereof.
If a Bank shall effect payment of any
principal of or interest on Loans held by it under this Agreement through the
exercise of any right of set-off,
banker's lien, counterclaim or similar right, it shall promptly purchase from
the other Banks participations in
the Loans held by the other Banks in such amounts, and make such other
adjustments from time to time
as shall be equitable, to the end that all the Banks shall share the benefit of
such payment pro rata in
accordance with the unpaid principal and interest on the Loans held by each of
them. To such end all the
Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or other-
wise) if such payment is rescinded or must otherwise be restored. The Borrower
agrees that any Bank
so purchasing a participation in the Loans held by the other Banks may exercise
all rights of set-off, banker's
lien, counterclaim or similar rights with respect to such participation as fully
as if such Bank were a direct
holder of Loans in the amount of such participation. Nothing contained herein
shall require any Bank to
exercise any such right or shall affect the right of any Bank to exercise and
retain the benefits of exercising,
any such right with respect to any other indebtedness or obligation of the
Borrower.
Section 2.20 Additional Costs.
(a) (i) The Borrower shall pay
directly to each Bank from time to time such
amounts as such Bank may determine to be necessary to compensate it for any
costs incurred by such
Bank which such Bank determines are attributable to its making or maintaining
any Fixed Rate Loans or
its Total Commitment hereunder or any reduction in any amount receivable by such
Bank hereunder in
respect of any of such Loans or Total Commitments (such increases in costs and
reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which: (i) changes
the basis of taxation of any amounts payable to such Bank under this Agreement
or its Note in respect of
any of such Loans (other than taxes imposed on the overall net income of such
Bank or its Applicable
Lending Office for any of such Loans by the jurisdiction in which such Bank has
its principal office or such
Applicable Lending Office); or (ii) imposes or modifies any reserve, special
deposit or similar requirements
relating to or any deposits with or other liabilities of, such Bank (including
any deposits referred to in the
definition of "Fixed Base Rate" in Article 1 hereof); or (iii) imposes any other
conditions affecting this
Agreement in respect of the Fixed Rate Loans. Each Bank will notify the
Borrower and the Agent of any
event occurring after the date of this Agreement which will entitle such Bank to
compensation pursuant to
this Section 2.20 as promptly as practicable after it obtains knowledge thereof
and determines to request
such compensation. Each Bank will furnish the Borrower and the Agent with a
certificate setting forth the
basis and amount of each request for such Bank for compensation from the
Borrower under this Section
2.20. The Borrower may, by notice to such Bank (with a copy to the Agent),
require that such Bank's
Loans of the type with respect to which such compensation is requested be
converted into Prime Rate
Loans, LIBOR Loans or CD Loans, as the case may be, in accordance with Sections
2.8 and 2.23 hereof.
(ii) Without limiting the effect of the
foregoing provisions of this Section 2.20,
in the event that, by reason of any Regulatory Change, any Bank either
(i) incurs Additional Costs based
on or measured by the excess above a specified level of the amount of a category
of deposits or other
liabilities of such Bank which includes deposits by reference to which the
interest rate on CD Loans or
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other
assets of such Bank which includes CD Loans or LIBOR Loans or (ii) becomes
subject to restrictions on
the amount of such a category of liabilities or assets which it may hold, then,
if such Bank so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Bank
to make, and to convert
Loans of any other type into, Loans of such type hereunder shall be suspended
until the date such
Regulatory Change ceases to be in effect (and all Loans of such type of such
Bank then outstanding shall
be converted into Prime Rate Loans, LIBOR Loans or CD Loans, as the case may be,
in accordance with
Section 2.8 and 2.23 hereof).
(b) If any existing or future law or
regulation or the interpretation thereof by any
court or administrative or governmental authority charged with the
administration thereof, or compliance by
any Bank with any request or directive (whether or not having the force of law)
of any such authority, either
imposes, modifies, deems applicable or results in the application of, any
capital maintenance, capital ratio
or similar requirement against loan commitments made by any Bank and the result
thereof is to impose
upon such Bank or increase any capital requirement applicable as a result of the
making or maintenance
of such Bank's Total Commitment (which imposition of or increase in capital
requirements may be
determined by the Bank's reasonable allocation of the aggregate of such capital
impositions or increases)
then, upon demand by such Bank (a copy of which demand shall be delivered to the
Agent), the Borrower
shall immediately pay to the Bank from time to time specified by the Bank, such
additional fees as shall be
sufficient to compensate the Bank for such imposition of or increase in capital
requirements. Such Bank
will furnish the Borrower and the Agent with a certificate setting forth the
basis and amount of each request
by such Bank for compensation from the Borrower under this Section 2.20. The
Borrower may, by notice
to such Bank (with a copy to the Agent), require that such Bank's Loans of the
type with respect to which
such compensation is requested be converted into Prime Rate Loans, LIBOR Loans
or CD Loans, as the
case may be, in accordance with Section 2.8 and 2.23 hereof.
(c) Determinations by any Bank for
purposes of this Section 2.20 of the effect
of any Regulatory Change on its costs of making or maintaining Loans or on
amounts receivable by it in
respect of Loans, and of the additional amounts required to compensate such Bank
in respect of any
Additional Costs, shall be conclusive, absent manifest error.
Section 2.21 Limitation on Types of Loans.
Anything herein to the contrary
notwithstanding, if, on or prior to the determination
of an interest rate for any CD Loans or LIBOR Loans for any Interest Period
therefor:
(a) the Majority Banks determine (which
determination shall be conclusive
absent manifest error) that, by reason of any event affecting the money markets
in the United States or the
London interbank market, quotations of interest rates for the relevant deposits
are not being provided in the
relevant amounts or for the relevant maturities for purposes of determining the
rate of interest for such Loans
under this Agreement, or
(b) the Majority Banks determine (which
determination shall be conclusive
absent manifest error) that the rates of interest referred to in the definition
of "Fixed Base Rate" in Article 1
hereof upon the basis of which the rate of interest on any CD Loans or LIBOR
Loans for such period is
determined do not accurately reflect the cost to the Banks of making or
maintaining such Loans for such
period;
then the Agent shall give the Borrower and each Bank prompt notice thereof (and
shall thereafter give the
Borrower and each Bank prompt notice of the cessation, if any, of such
condition), and so long as such
condition remains in effect, the Banks shall be under no obligation to make
Loans of such type or to convert
Loans of any other type into Loans of such type and the Borrower shall, on the
last day(s) of the then
current Interest Period(s) for the outstanding Loans of the affected type either
prepay such Loans in
accordance with Section 2.9 hereof or convert such Loans into Loans of another
type in accordance with
Section 2.8 hereof.
Section 2.22 Illegality.
Notwithstanding any other provision in this
Agreement, in the event that it becomes
unlawful for any Bank or its Applicable Lending Office to (i) honor its
obligation to make LIBOR Loans
hereunder, or (ii) maintain LIBOR Loans hereunder, then such Bank shall promptly
notify the Borrower
thereof in writing (with a copy to the Agent), describing such illegality in
reasonable detail (and shall thereafter
promptly notify the Borrower and the Agent of the cessation, if any, of such
illegality), and such Bank's
obligation to make LIBOR Loans and to convert other types of Loans into LIBOR
Loans hereunder shall,
upon written notice given by such Bank to the Borrower, be suspended until such
time as such Bank may
again make and maintain LIBOR Loans and such Bank's outstanding LIBOR Loans
shall be converted into
Prime Rate Loans or CD Loans (as shall be designated in a notice from the
Borrower to the Agent
pursuant to Section 2.3 hereof) in accordance with Sections 2.8 and 2.23 hereof.
Section 2.23 Certain Conversions
Pursuant to Sections 2.20.
If the Loans of any Bank of a particular type
(Loans of such type being herein called
"Affected Loans" and such type being herein called the "Affected Type") are to
be converted pursuant to
Section 2.20 hereof, such Bank's Affected Loans shall be converted into Prime
Rate Loans, or LIBOR Loans
or CD Loans, as the case may be (the "New Type Loans") on the last day(s) of the
then current Interest
Period(s) for the Affected Loans (or, in the case of a conversion required by
Section 2.20(b) on such earlier
date as such Bank may specify to the Borrower with a copy to the Agent) and,
until such Bank gives notice
as provided below that the circumstances specified in Section 2.20 hereof which
gave rise to such
conversion no longer exist:
(a) to the extent that such
Bank's Affected Loans have been so
converted, all payments and prepayments of principal which would otherwise be
applied to such Affected
Loans shall be applied instead to its New Type Loans;
(b) all Loans which would
otherwise be made by such Bank as Loans
of the Affected Type shall be made instead as New Type Loans and all Loans of
such Bank which would
otherwise be converted into Loans of the Affected Type shall be converted
instead into (or shall remain as)
New Type Loans; and
(c) if Loans of the Affected
Type are subsequently converted into
Loans of another type (other than New Type Loans), such Bank's New Type Loans
shall be automatically
converted on the conversion date into Loans of such other type to the extent
necessary so that, after giving
effect thereto, all Loans held by such Bank and the Banks whose Loans are so
converted are held pro rata
(as to principal amounts, types and, to the extent applicable, Interest Periods)
in accordance with their
respective Total Commitments.
Section 2.24 Indemnification.
The Borrower shall pay to the Agent for the
account of each Bank, upon the
request of such Bank through the Agent, such amount or amounts as shall
compensate such Bank for
any loss (including loss of profit), cost or expense incurred by such Bank (as
reasonably determined by
such Bank) as a result of:
(a) any payment or prepayment or
conversion of a Fixed Rate Loan held by
such Bank on a date other than the last day of an Interest Period for such Fixed
Rate Loan or any payment
or prepayment of a Federal Funds Loan prior to maturity; or
(b) any failure by the Borrower to
borrow a Fixed Rate Loan held by such
Bank on the date for such borrowing specified in the relevant Borrowing Notice
under Section 2.3 hereof;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (a) the amount
of interest which would have accrued on the amount so paid, prepaid or converted
or not borrowed for
the period from the date of such payment, prepayment or conversion or failure to
borrow, convert or
prepay to the last day of the then current Interest Period for such Fixed Rate
Loan or, in the case of Fed
Funds Loans, the period of time remaining until maturity, Loans (or, in the case
of a failure to borrow, the
Interest Period for such Fixed Rate Loan which would have commenced on the date
of such failure to borrow) at the applicable rate of interest for such Fixed
Rate Loan provided for herein over (b) the amount
of interest (as reasonably determined by such Bank) such Bank would have bid in
the London interbank
market (if such Loan is a LIBOR Loan) or the United States certificate of
deposit market (if such Loan is a
CD Loan) for Dollar deposits of amounts comparable to such principal amount and
maturities comparable
to such period or the Prime Rate (if such Loan is a Fed Funds Loan).
Section 2.25 Termination of A Commitment
under Certain Circumstances.
(a) Any Bank may terminate its
A Commitment hereunder by giving written
notice of such termination to the Borrower, the Agent and each other Bank not
less than 364 days prior
to the effective date of such termination. Once given, such notice shall be
irrevocable. On the effective date
of any such termination, the Borrower may either pay to the terminating Bank
(the "Terminating Bank") all
amounts due and owing to the Terminating Bank under this Agreement including all
amounts due
pursuant to Section 2.24 in connection with the prepayment of A Loans, or find
a Bank or other financial
institution acceptable to the Banks which would be willing to assume the
Terminating Bank's A
Commitment. Such Bank (the "Assuming Bank") shall execute and deliver to the
Agent, an appropriately
completed assumption agreement or other written instrument consented to by the
Borrower and the Agent
at least 20 Business Days prior to the date such assumption is to be effective
providing for, among other
things, the purchase by the Assuming Bank of the Terminating Bank's outstanding
A Loans at a purchase
price equal to the unpaid principal amount of such A Loans plus accrued and
unpaid interest thereon to
the date of assumption. In addition, on the date of assumption, the Borrower
will pay to the Terminating
Bank all amounts payable to the Terminating Bank pursuant to Section 2.24 in
connection with the
prepayment of any A Loans. Notwithstanding any provision in this Agreement to
the contrary, no Bank
may terminate its A Commitment pursuant to this subsection 2.25(a) without the
consent of the Majority
Banks if on the effective date of any termination provided hereby, a Default
shall then have occurred and
be continuing.
(b) So long as no Default shall have
occurred and be continuing on the
effective date of the termination provided under this subsection 2.25(b), the
Borrower may terminate the
A Commitment hereunder by giving written notice of such termination to the Agent
and each of the Banks
not less than 364 days prior to the effective date of such termination. Once
given, such notice shall be
irrevocable. On the effective date of such termination, the Borrower shall pay
to the Agent and to each Bank all amounts due and owing under this Agreement
including amounts due under Section 2.24 in
connection with the prepayment of Loans.
(c) The Borrower and each Bank shall
execute and deliver such further
instruments as may be reasonably requested by the Agent to carry out the purpose
of this Section 2.25.<PAGE>
Article 3. Repres
The Borrower hereby represents and warrants to the Banks
and the Agent that:
Section 3.1 Organization.
(a) Each of the Borrower and its Subsidiaries
is duly organized and validly existing under the laws of its jurisdiction of
organization and has the power to own its assets and to transact the
business in which it is presently engaged and in which it proposes to be
engaged. Exhibit B annexed hereto accurately and completely lists the
jurisdiction of incorporation of the Borrower and its Subsidiaries,
and the authorized and outstanding shares of common stock of the Borrower and
its Subsidiaries. All ofthe shares which are issued and outstanding have been
duly and validly issued and are fully paid and non-
assessable. Except as set forth on Exhibit B, there are not outstanding any
warrants, options, contracts or
commitments of any kind entitling any Person to purchase or otherwise acquire
any shares of capital stock
of the Borrower or its Subsidiaries nor are there outstanding any securities
which are convertible into or
exchangeable for any shares of capital stock of the Borrower or any of its
Subsidiaries. Except as set forth
on Exhibit B, neither the Borrower nor any of its Subsidiaries has any
Subsidiary.
(b) There are no jurisdictions other than as
set forth on Exhibit B hereto in which
the character of the properties owned or proposed to be owned by the Borrower
or any of its Subsidiaries
or in which the transaction of the business of the Borrower or any of its
Subsidiaries as now conducted or
as proposed to be conducted requires or will require the Borrower or any of its
Subsidiaries to qualify to do business and as to which failure so to qualify
could have a material adverse effect on the business,operations, financial
condition or properties of the Borrower and its Subsidiary.
Section 3.2 Power, Authority, Consents.
(i) The Borrower has the power to execute, deliver and perform the Loan
Documents to be executed by it, (ii) the Borrower has the power to borrow
hereunder and has taken all necessary action to authorize the borrowing
hereunder on the terms and conditions of this Agreement, and
(iii) the Borrower has taken all necessary action, corporate or otherwise, to
authorize the execution, delivery and performance of the Loan Documents to be
executed by it. No consent or approval of any Person(including, without
limitation, any stockholder of the Borrower), no consent or
mortgagee, no waiver of any Lien or right of distraint or other similar right
and no consent, license, approval,
authorization or declaration of any governmental authority, bureau or agency, is
or will be required in connection with the execution, delivery or performance by
the Borrower, or the validity or enforcement of
the Loan Documents, except as set forth on Exhibit C annexed hereto, each of
which either has been dulyand validly obtained on or prior to the date hereof
and is now in full force and effect, or is designated Exhibit C as waived by the
Majority Banks.
Section 3.3 No Violation of Law or Agreements.
The execution and delivery by the Borrower of each Loan Document and
performance by it hereunder and thereunder, will not violate any provision of
law and will not, except as set forth on Exhibit C annexed hereto, conflict with
or result in a breach of any order, writ, injunction resolution, decree, or
other similar document or instrument of any court or goveror agency, domestic or
foreign, or any certificate of incorporation or by-or without the giving of
notice or lapse of time, or both) a default under or brenote or indenture to
which the Borrower is a party, or by which the Borrower properties or assets
is affected, or result in the imposition of any Lien of any nature whatsoever
upon any of the properties or assets owned by or used in connection with the
business of the Borrower.
Section 3.4 Due Execution, Validity,
Enforceability.
This Agreement and each other Loan Document has been duly executed and
delivered by the Borrower and each constitutes the valid and legally binding
obligation of the Borrower, enforceable in accordance with its terms, except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or here to or
affecting the enforcement of creditors' rights generally and experformance and
other equitable remedies are subject to judicial discretion.
Section 3.5 Properties.
All of the properties and assets owned by the Borrower or any of its
Subsidiaries are owned by each of them, respectively, free and clear of any
Lien of any nature whatsoever, except Permitted Liens and as permitted by
Exhibit D annexed hereto.
Section 3.6 Judgments, Actions, Proceedings.
Except as set forth on Exhibit E annexed hereto, there are no
outstanding judgments, actions or proceedings pending before any court or
governmental authority, bureau or agency, with respect to the Borrower or any of
its Subsidiaries or, to the best of the Borrower's knowledge, threatened
against or affecting the Borrower or any of its Subsidiaries, involving
proceeding, a claim in excess of $250,000, nor, to the best of the Borrow
reasonable basis for the institution of any such action or proceeding
there any such actions or proceedings in which the Borrower or any of its
Subsidiaries is a plaintiff or complainant.
Section 3.7 No Defaults, Compliance With Laws.
Except as set forth on Exhibit F annexed hereto, neither the Borrower
nor any of its Subsidiaries is in material default under any agreement,
ordinance, resolution, decree, bond, note, indenture, order or judgment to
which it is a party or by which it is bound, or any other instrument by which
any of the properties or assets owned by it or used in affected, and each of
the Borrower and its Subsidiaries has complied and is in compliance in all
material respects with all applicable laws, ordinances and regulations
non-compliance with which could have a material adverse effect on the
business, operations, financial condition or properties of the Borrower or any
of its Subsidiaries or on the ability of the Borrower or any of its
Subsidiaries to perform their respective obligations under the Loan Documents.
Section 3.8 Burdensome Documents.
Except as set forth on Exhibit G annexed hereto, neither the Borrower
nor its Subsidiaries is a party to or bound by, nor are any of its properties
or assets affected by, any agreement,ordinance, resolution, decree, bond, note,
indenture, order or judgment which materially and adversely affects its
business, assets or condition, financial or otherwise.
Section 3.9 Financial Statements.
Each of the Financial Statements is correct and complete and presents
fairly the consolidated and consolidating financial position of the Borrower
and its Subsidiaries, as the case may be, as at its date, and has been prepared
in accordance with GAAP. Neither the Borrower nor an Subsidiaries has any
material obligation, liability or commitment, direct or contingent, which is
not reflected in the Financial Statements. There has been no material adverse
change in operations of the Borrower or any of its Subsidiaries since the date
of the latest balance sheet included in the Financial Statements (the "Latest
Balance Sheet"). The fiscal year of the Borrower is twelve-month period
ending on December 31 in each year.
Section 3.10 Tax Returns.
The Borrower and each of its Subsidiaries has filed all federal, state
and local tax returns required to be filed by it and has not failed to pay any
taxes, or interest and penalties relating thereto, on or before the due dates
thereof. Except to the extent that reserves therefor Financial Statements,
(a) there are no material federal, state or local tax liabilities of the
Borrower and its Subsidiaries due or to become due for any tax year ended on
or prior to the date of the Latest Balance Sheet relating to such entity,
whether incurred in respect of or measured by the income of such entity, which
are not properly reflected in the Latest Balance Sheet, and (b) there are
the knowledge of the Borrower, proposed or threatened against the Borrower or
any of its Subsidiaries for past federal, state or local taxes, except those,
if any, as to which proper reserves are reflected in the Financial Statements.
Section 3.11 Intangible Assets.
The Borrower and each of its Subsidiaries possess all necessary patents,
trademarks, trademark rights, trade names, trade name rights and copyrights to
conduct its business as now conducted and as proposed to be conducted, without
any conflict with the patents, trademarks rights, trade names, trade name rights
and copyrights of others.
Section 3.12 Regulation U.
No part of the proceeds received by the Borrower from the Loans or
the Swing Line Loans will be used directly or indirectly for the purpose of
purchasing or carrying, or for payment in full or in part of Indebtedness which
was incurred for the purposes of purchasing or carry as such term is defined
in 221.3 of Regulation U of the Board of Governors of System, 12 C.F.R.,
Chapter II, Part 221.
Section 3.13 Name Changes.
Except for the Dissolution and as otherwise set forth on Exhibit H
annexed hereto, neither the Borrower nor any of its Subsidiaries has within the
six-year period immediately preceding the date of this Agreement changed its
name, been the surviving entity of a merger or consolidation, or acquired all or
substantially all of the assets of any Person.
Section 3.14 Full Disclosure.
None of the Financial Statements, nor any certificate, opinion, or any
other statement made or furnished in writing to the Agent or any Bank by or on
behalf of the Borrower or any of its Subsidiaries in connection with this
Agreement or the transactions contemplated herein, contain statement of a
material fact, or omits to state a material fact necessary contained therein or
herein not misleading, as of the date such statement known to the Borrower
which has, or would in the now foreseeable future have, a on the business,
prospects or condition, financial or otherwise, of the Borrower or of any of
its Subsidiaries, which fact has not been set forth herein, in the Financial
Statements, or a written statement so made or furnished to the Agent or the
Banks.
Section 3.15 Employee Grievances.
Except as set forth on Exhibit I annexed hereto, there are no actions or
proceedings pending or, to the best of the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries by or on behalf of, or with,
its employees, other than employee grievances arising in the ordinary course
of business which are not, in the aggregate, material.
Section 3.16 Condition of Assets.
All of the assets and properties of the Borrower and its Subsidiaries,
which are reasonably necessary for the operation of its business, are in good
working condition, ordinary wear and tear excepted, and are able to serve the
function for which they are currently being used.
Section 3.17 ERISA.
(a) Except as set forth on Exhibit J annexed hereto, neither the
Borrower nor any of its Subsidiaries have and has ever had, any Plan in
connection with which there could arise a direct or contingent liability of the
Borrower or any of its Subsidiaries to the Pension B ("PBGC"), the Department of
Labor or the Internal Revenue Service ("IRS"). Neither the Borrower nor any
of its Subsidiaries is a participating employer (i) in any Plan under which
more contributions as described in Sections 4063 and 4064 of ERISA, or (ii) in a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
(b) All references to the Borrower or its Subsidiaries in this
Section 3.17 or in any other Section of this Agreement relating to ERISA, shall
be deemed to refer to the Borrower and its Subsidiaries and all other
entities which are, together with the Borrower, part of a Controlled Group.
Article 4. Conditions to the Closing
and to the Making of the Loans.
Section 4.1 Conditions to the Closing and to
the Making of the Initial Loans.
This Agreement, and the amendment and restatement of the Existing Loan
Agreement pursuant hereto, shall become effective on the Effective Date,
provided that each of the following conditions precedent shall have been
fulfilled to the satisfaction of each of the Banks on or prior to the
Effective Date:
(a) The Borrower shall have executed and delivered to each Bank a copy of
this Agreement.
(b) (i) The Borrower shall have executed and delivered to each Bank its
A Note and B Note.
(ii) The Borrower shall have executed and delivered to the Swing Line
Lender the Swing Line Note.
(c) Messrs. Shea and Gardner, general counsel to the Borrower, shall have
delivered its opinion, to, and in form and substance satisfactory to, the
Banks and their counsel.
(d) The Agent shall have received a Borrowing Notice in accordance with
Section 2.3 hereof.
(e) The Agent shall have received copies of the following:
(i) The Financial Statements;
(ii) All of the consents, approvals and waivers referred to on Exhibit C
annexed hereto, except only those which, as stated on Exhibit C, shall not be
delivered;
(iii) The by-laws of the Borrower, certified by its Secretary or an
Assistant Secretary;
(iv) Copies of all corporate action taken by the Borrower to authorize
the execution, delivery and performance of each of the Loan Documents;
(v) An incumbency certificate with respect to the Borrower; and
(vi) A certified execution copy of the Senior Note Agreements.
(f) (i) The Borrower and each of its Subsidiaries shall have complied and
shall then be in compliance with all of the terms, covenants and conditions of
this Agreement applicable to them;
(ii) There shall exist no Event of Default or Default hereunder; and
(iii) The representations and warranties contained in Article 3 hereof
shall be true and correct on the Effective Date;
and the Agent shall have received a Compliance Certificate dated the Effective
Date certifying, inter alia, that the conditions set forth in this Subsection
4.1(f) are satisfied on such date.
(g) All legal matters incident to the closing of the transactions
contemplated by this Agreement shall be satisfactory to counsel to the Agent.
Section 4.2 Conditions to Subsequent Loans
and Swing Line Loans.
The obligation of each Bank to make each Loan (including the initial Loan)
and theobligation of the Swing Line Lender to make the Swing Line Loan, shall be
subject to the fulfillment (to thesatisfaction of the Agent or the Swing Line
Lender, as the case may be) of the following condition precedent:
(a) The Effective Date shall have occurred and all of the conditions set forth
in Section 4.1 shall have been satisfied on or before such date.
(b) The Agent shall have received a Borrowing Notice in accordance with
Section 2.3 hereof.
(c) On the date of each Loan or the Swing Line Loan, as the case may be,
all of the conditions set forth in subsection 4.1(f) shall have been satisfied
on such date and the Agent shallhave received a Compliance Certificate dated the
date thereof certifying, inter alia, that the conditions set forth in subsection
4.1(f) are satisfied on such date.
(d) All legal matters incident to such Loan or the Swing Line Loan shall be
satisfactory to counsel for the Agent.
Section 4.3 Return of Superseded Notes.
Upon receipt of its Notes hereunder and occurrence of the Effective Date,
each Bank holding a promissory note issued by NCB Capital pursuant to the
Existing Loan Agreement will mark that promissory note "superseded" and return
it to the Borrower.
Article 5. Delivery of Financial Reports,
Documents and Other Information.
While the Total Commitments are outstanding, and, in the event any Loan or
Swing Line Loan remains outstanding, so long as the Borrower is indebted
to the Banks, the Swing Line Lender or the Agent and until payment in full of
the Notes and full and complete performance of all of its other
obligations arising hereunder, the Borrower shall deliver to each Bank:
Section 5.1 Annual Financial Statements.
Annually, as soon as available, but in any event within 90 days after the
last day of each of its fiscal years, consolidated and consolidating statements
of financial condition, income and cash flows, a reconciliation of net income
and net cash provided by operating activities and consolidated
statements of changes in members' equity of the Borrower and its Subsidiaries,
and a consolidated balance sheet of the Borrower as at such last day of the
fiscal year, and the related consolidated statements of
income and retained earnings and cash flows of the Borrower, for such fiscal
year, each prepared in accordance with GAAP consistently applied, in reasonable
detail, and, as to the consolidated statements of the Borrower and its
Subsidiaries and the statements of the Borrower, certified without qualification
by independent certified public accountants satisfactory to
the Agent, or certified, as to the consolidating
statements, by the chief financial officer of the Borrower, as fairly presenting
the financial positions and the results of operations of the Borrower and its
Subsidiaries, as at and for the year ending on its date having been prepared in
accordance with GAAP.
Section 5.2 Quarterly Financial Statements.
As soon as available, but in any event within 45 days after the end of the
Borrower's first three fiscal quarterly periods, consolidated and consolidating
statements of financial condition, income and cash flows, a reconciliation of
net income and net cash provided by operating activities and
consolidated statements of changes in members' equity of the Borrower and its
Subsidiaries and a consolidated balance sheet of the Borrower as of the last day
of such quarter, and statements of income and retained earnings and cash flows
for the Borrower, for such quarter, and comparative figures for the
corresponding period of the immediately preceding fiscal year, all in reasonable
detail, each such statement to be certified in a certificate of the president or
chief financial officer of the Borrower as fairly presenting the
financial position and the results of operations of the Borrower and its
Subsidiaries as at its date and forsuch quarter and as having been prepared
in accordance with GAAP (subject to year-end audit adjustments).
Section 5.3 Other Information.
Promptly after a written request therefor, such other financial data or
information evidencing compliance with the requirements of this Agreement,
as any Bank may reasonably request from time to time.
Section 5.4 No Default Certificate.
At the same time as it delivers the financial statements required under the
provisions of Section 5.1 and 5.2, a certificate of the president or chief
executive officer of the Borrower to the effect that no Event of Default
hereunder and that no default under any other agreement to which the Borrower
or any of its Subsidiaries is a party or by which it
is bound, or by which, to the best of the knowledge of the
Borrower and any of its Subsidiaries, any of its properties or assets, taken as
a whole, may be materiallyaffected, and no event which, with the giving of
notice or the lapse of time, or both, would constitute such an Event of
Default or default, exists, or, if such cannot be so certified,
specifying in reasonable detail the exceptions, if any, to such statement.
Such certificate shall be accompanied by a detailed calculation
indicating compliance with the covenants contained in Section 6.9 hereof.
Section 5.5 Certificate of Accountants.
At the same time as it delivers the financial statements required under the
provisions of Section 5.1, a certificate of the independent certified
public accountants of the Borrower and its Subsidiaries, specifically
addressed to the Borrower and its Subsidiaries and to each of the Banks, to the
effect that during the course of their audit of the operations of the Borrower
and its Subsidiaries and its
condition as of the end of the fiscal year, nothing has come to
their attention which would indicate that an Event of Default or Default
hereunder has occurred or that there was any violation of the covenants of the
Borrower or any of its Subsidiaries contained in Section 6.9 or Article 7 of
this Agreement, or, if such cannot be so certified, specifying in reasonable
detail the exceptions, if any, to such statement.
Section 5.6 Copies of Documents.
Promptly upon their becoming available, copies of any (a) financial statements,
projections, non-routine reports, notices (other than routine correspondence),
requests for waivers and proxy statements, in each case, delivered by the
Borrower to any lending institution other than the Banks; (b)
correspondence or notices received by the Borrower from any federal, state or
local governmental authority which regulates the operations of the Borrower,
relating to an actual or threatened change or development
which would be materially adverse to the Borrower; (c) registration statements
and any amendments and supplements thereto, and any regular and periodic
reports, if any, filed by the Borrower with any securities
exchange or with the Securities and Exchange Commission or any governmental
authority succeeding to any or all of the functions of the said Commission; and
(d) letters of comment or correspondence sent to the Borrower by any such
securities exchange or such Commission in relation to the Borrower and its
affairs.
Section 5.7 Notices of Defaults.
(a) Promptly, notice of the occurrence of any event which constitutes,
or with notice to it or lapse of time, or both, would constitute, an Event of
Default hereunder, or would constitute or cause a material adverse change in
the condition, financial or otherwise, or the operations of the
Borrower.
(b) Promptly, notice of the occurrence of any event which constitutes or with
notice or lapse of time, or both would constitute, an event of default by the
Borrower under any material agreement of the Borrower, or would constitute or
cause a material adverse change in the condition,financial or otherwise, or
the operation of the Borrower.
Section 5.8 ERISA Notices.
(a) Concurrently with such filing, a copy of each Form 5500 which is
filed with respect to each Plan with the IRS; and
(b) Promptly, upon their becoming available, copies of: (i) all
correspondencewith the PBGC, the Secretary of Labor or any representative of the
IRS with respect to any Plan, relating to an actual or threatened change or
development which would be materially adverse to the borrower; (ii)
copies of all actuarial valuations received by the Borrower with respect to
any Plan; and (iii) copies of any notices of Plan termination filed by any Plan
Administrator (as those terms are used in ERISA) with the
PBGC and of any notices from PBGC to the Borrower with respect to the intent
of the PBGC to institute involuntary termination proceedings.
Article 6. Affirmative Covenants.
While the Total Commitments are outstanding, and, in the event any Loan
(or Swing Line Loan ) remains outstanding, so long as the
the Agent, and until payment in full of the Notes and full and complete
performance of all of its other obligations arising hereunder, the Borrower '
shall, and shall cause each of its Subsidiaries to:
Section 6.1 Books and Records.
Keep proper books of record and account in a manner reasonably satisfactory
to the Agent and the Swing Line Lender in which full, true and correct entries
shall be made of all dealings or transactions in relation to its business and
activities.
Section 6.2 Inspections and Audits.
Permit the Banks to make or cause to be made (and, after the occurrence of
and during the continuance of an Event of Default, at the Borrower's expense),
inspections and audits of any
books, records and papers of the Borrower and to make extracts therefrom and
copies thereof, or to make inspections and examinations of any properties and
facilities of the Borrower, on reasonable notice, at all
such reasonable times and as often as any Bank may reasonably require, in order
to assure that the Borrower is and will be in compliance with its
obligations under the Loan Documents.
Section 6.3 Maintenance and Repairs.
Maintain in good repair, working order and condition, subject to normal
wear and tear, all material properties and assets from time
to time owned by it and used in or necessary for the operation of its business,
and make all reasonable repairs, replacements, additions and improvements
thereto.
Section 6.4 Continuance of Business.
Do, or cause to be done, all things reasonably necessary to preserve and
keep in full force and effect its corporate existence and all permits, rights
and privileges necessary for the proper conduct of its business and continue
to engage in the same line of business.
Section 6.5 Copies of Corporate Documents.
Subject to the prohibitions set forth in Section 7.12 hereof, promptly
deliver to the Agent copies of any amendments or modifications
to its by-laws, certified by the secretary or assistant secretary of the
corporation.
Section 6.6 Perform Obligations.
Pay and discharge all of its obligations and liabilities, including,
without limitation, all taxes, assessments and governmental charges upon its
income and properties, when due, unless and to the extent only that such
obligations, liabilities, taxes, assessment and governmental charges shall
be contested in good faith and by appropriate proceedings and that, to
the effect, proper and adequate book reserves relating thereto are establiblish
to the extent that a bond is filed in cases where the filing of a bond is
necessary to avoid the creation of a Lien against any of its properties.
Section 6.7 Notice of Litigation.
Promptly notify the Agent in writing of any litigation, legal
proceeding or dispute, other than disputes in the ordinary course of business
or, whether or not in the ordinary course of business, involving amounts in
excess of Two Hundred and Fifty Thousand ($250,000) Dollars, affecting the
Borrower whether or not fully covered by insurance, and regardless of the
subject matter therof (excluding, however, any actions relating to workmen's
compensation claims or negligence claims relating to us motor vehicles, if
fully covered by insurance, subject to deductibles).
Section 6.8 Insurance.
(a) Maintain with responsible insurance companies such insurance
on such of its properties, in such amounts and against such risks as is
customarily maintained by similar businesses; file with the Agent upon its
request a detailed list of the insurance then in effect, insurance companies,
the amounts and rates of the insurance, dates of the expiration thereof and the
properties and risks covered thereby; and, within 10 days after notice in
writing from the Agent, obtain such additional insurance as the Agent may
reasonably request; and,
(b) Carry all insurance available through the PBGC or any
private insurance companies covering its obligations to the PBGC.
Section 6.9 Financial Covenants.
Have or maintain:
(a) At all times, Consolidated Effective Net Worth in an amount
not less than the sum of (i) Two Hundred Sixty-Five Million Dollars
($265,000,000) plus (ii) the sum, for all fiscal quarters of the Borrower
ended subsequent to January 1, 1993 and at or prior to such time, of the
greater, for each fiscal quarter, of (A) Zero Dollars ($0) and (B) fifty percent
(50%) of Consolidated Net Earnings for each such fiscal quarter.
(b) At all times, Consolidated Adjusted Net Worth in an amount
not less than the sum of (i) One Hundred Million Dollars ($100,000,000) plus
(ii) the sum, for all fiscal quarters of the Borrower ended subsequent to
January 1, 1993 and at or prior to such time, of the great quarter, of (A)
Zero Dollars ($0) and (B) fifty percent (50%) of Consolidated Net Earnings
for each such fiscal quarter.
(c) With respect to the Borrower at all times, Investments of
the types described in Section 7.9(i) through (xii) in an aggregate amount not
less than Twenty-Five Million ($25,000,000) Dollars.
(d) With respect to the Borrower for any period of four (4)
consecutive fiscal quarters of the Borrower, Consolidated Earnings Available for
Fixed Charges not less than one hundred ten percent (110%) of Consolidated Fixed
Charges for such period.
(e) With respect to the Borrower, Paid-in-Capital in each of
the following Subsidiaries in an amount not greater than the following amounts:
Amount of
Subsidiary Paid-in-Capital
NCB Financial Corporation $15,000,000
NCB Mortgage $15,000,000
NCB Business Credit $15,000,000
(f) With respect to the Borrower at all times, Investments
in Subsidiaries (other than as set forth in subsection 6.9(e) above and
excluding SPV's and secured loans to NCB Business Credit and NCB Mortgage) in an
aggregate amount with respect to all such Subsidiaries of not greater than
$15,000,000.
(g) At all times, a ratio of Consolidated Debt to
Consolidated Adjusted Net Worth in an amount not greater than 8.0 to 1.0. For
purposes of calculating this ratio only, Consolidated Debt shall include the
full balance of mortgage backed securities sold by the aries with any first
loss recourse provision against the Borrower or any of its Subsidiaries attached
thereto.
For purposes of calculating the ratio set forth in subsection 6.9(g) above and
in subsection 6.9(h) below only, "Consolidated Adjusted Net Worth" shall be
reduced by the amount by which the sum of 75% of (i) 90 day overdue accounts,
(ii) non-performing loans, (iii) real estate owned in substance foreclosure and
other miscellaneous repossessions and, (iv) modified loans, exceed the reserves
for credit losses established by the Borrower and its Subsidiaries.
(h) At all times, a ratio of Consolidated Senior Debt to
Consolidated Adjusted Net Worth in an amount not greater than 6.5 to 1.0.
(i) Qualified Assets of not less than one hundred (100%)
percent of the sum (at any date of determination thereof) of:
(i) NCCB Senior Obligations, plus
(ii) the aggregate unpaid principal amount of Subordinated
Debt (as defined in the Senior Note Agreements as in effect on the date
hereof), less
(iii) the aggregate unpaid principal amount of Class A
Notes.
Section 6.10 Reportable Events.
Promptly notify the Agent in writing of the occurrence of any Reportable
Event, as defined in Section 4043 of ERISA, if a notice of such Reportable
Event is required under ERISA to be delivered to the PBGC within 30 days after
the occurrence thereof, together with a description of such Reportable Event
and a statement of the action the Borrower intends to take with respect thereto,
together with a copy of the notice thereof given to the PBGC.
Section 6.11 Comply with ERISA.
Comply in all material respects with all applicable provisions of ERISA
now or hereafter in effect.
Section 6.12 Senior Note Agreements.
Comply and remain at all times in compliance with the Senior Note
Agreements.
Article 7. Negative Covenants.
While the Total Commitments are outstanding, and, in the event any
Loan (or Swing Line Loan) remains outstanding, so long as the Borrower is
indebted to the Banks, the Swing Line Lender or the Agent and until payment in
full of the Notes and full and complete performance of all of its obligations
arising hereunder, neither the Borrower nor any of its Subsidiarie permit to be
done, any of the following:
Section 7.1 Indebtedness.
Subject to subsections 6.9(f), (g) and (h), create, incur, permit to
exist or have outstanding any Indebtedness, except:
(a) Indebtedness to the Banks, the Swing Line Lender and the
Agent under this Agreement and the Notes;
(b) Taxes, assessments and governmental charges, non-interest
bearing accounts payable and accrued liabilities, in any case not more than 90
days past due from the original due date thereof (e.g., deferred compensation
and deferred taxes) and in each case incurred and continuing in the ordinary
course of business;
(c) Indebtedness under, and as permitted by, the Senior Note
Agreements;
(d) Indebtedness under the Class A Notes; and
(e) Indebtedness as set forth on Exhibit K annexed hereto.
Section 7.2 Liens.
Create, or assume or permit to exist, any Lien on any of the properties
or assets of the Borrower whether now owned or hereafter acquired, except:
(a) Permitted Liens;
(b) As set forth on Exhibit D annexed hereto; and
(c) To secure obligations in connection with Eligible
Derivatives; provided, however, in the event the Agent notifies the Borrower in
writing that either (i) the Total Commitments are
being terminated pursuant to the terms and conditions of the Loan Agreement, or
(ii) the Banks have elected not to extend or renew either of their respective A
Commitments or B Commitments upon maturity thereof, then the aggregate amount of
obligations in respect of Eligible Derivatives secu
shall not exceed the greater of: (A) $10,000,000, or (B) the aggregate amount of
such obligations outstanding on the date such notification is delivered to the
Borrower by the Agent pursuant to this subsection 7.2(c).
Section 7.3 Guaranties.
Assume, endorse, be or become liable for, or guarantee, the obligations
of any Person, except by the endorsement of negotiable instruments for deposit
or collection in the ordinary course of business. For the purposes hereof, the
term "guarantee" shall include any agreement, whether such agreement is on a
contingency or otherwise, to purchase, repurchase or otherwise acquire
indebtedness of any other Person, or to purchase, sell or lease, as lessee or
lessor, property or services, in any such case primarily for the purpose of
enabling another person to make payment of Indebtedness, or to make any
payment (whether as an advance, capital contribution, purchase of an equity
interest or otherwise) to assure a minimum equity, asset base, working capital
or other balance sheet or financial condition, in connection with the
Indebtedness of another Person, or to supply funds to or in any manner
invest in another Person in connection with such Person's Indebtedness.
Asset Securitization Recourse Liabilities shall not constitute "guarantees"
hereunder.
Section 7.4 Mergers, Acquisitions.
Except for the Dissolution, merge or consolidate with any Person
(whether or not the Borrower is the surviving entity), or, except as
permitted by Section 6.9(f), acquire all or substantially all of the
assets or any of the capital stock of any Person.
Section 7.5 Redemptions; Distributions.
(a) Except for redemptions by the Borrower of Class B1 Common
Stock from the holders thereof who no longer have loans from the Borrower
outstanding, purchase, redeem, retire or otherwise acquire, directly or
indirectly, or make any sinking fund payments with respect to, any shares of
any class of stock of the Borrower now or hereafter outstanding or set
apart any sum for any such purpose; or,
(b) Declare or pay any dividends or make any distribution of any
kind on the Borrower's outstanding stock, or set aside any sum for any such
purpose, except that the Borrower may declare or pay any dividend payable solely
in shares of its common stock and any Subsidiary may declard or pay any
dividend to the Borrower.
Section 7.6 Intentionally Omitted.
Section 7.7 Changes in Business.
Make any material change in its business, or in the nature of its
operation, or liquidate or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of
any material portion of its property, assets or business except in the ordinary
course of business and for a fair consideration or dispose of any shares of
stock or any Indebtedness, whether now owned or hereafter acquired.
Section 7.8 Prepayments.
Make any voluntary or optional prepayment of any Indebtedness of the
Borrower or any of its Subsidiaries for borrowed money incurred or permitted to
exist under the terms of this Agreement, other than (i) Indebtedness evidenced
by the Notes; (ii) Indebtedness described on Exhibit annexed hereto, and (iii)
any such Indebtedness which has a maturity of not more than one year from the
date of its incurrence.
Section 7.9 Investments.
Make, or suffer to exist, any Investment in any Person, including,
without limitation, any shareholder, director, officer or employee of the
Borrower or any of its Subsidiaries, except investments in:
(i) Demand deposits in and one-to-four day loans which bear
interest at the Federal Funds Rate or other similar short-term unsecured loans
to Selected Banks;
(ii) Marketable obligations of the United States;
(iii) Marketable obligations guaranteed by or insured by the United
States, or those for which the full faith and credit of the United States
is pledged for the repayment of principal and interest thereon;
(iv) Marketable obligations issued, guaranteed, or fully insured by any
agency, instrumentality, or corporation of the United States established or to
be established by the Congress, for which the credit of such agency,
instrumentality, or corporation is pledged for the repayment of the principal
and interest thereof;
(v) Marketable general obligations of a state, a territory or a
possession of the United States, or any political subdivision of any of the
foregoing, or the District of Columbia, unconditionally secured by the
full faith and credit of such state, territory, possession, political
subdivision or district provided that such state, territory, possession,
political subdivision or district has general taxing authority and the
power to levy such taxes as may be required for the payment of principal and
interest thereof;
(vi) Domestic and LIBOR, negotiable time and variable rate
certificates of deposit issued by Selected Banks;
(vii) Marketable bankers' acceptances and finance bills accepted by
Selected Banks;
(viii) Prime commercial paper having a credit rating equal to at least
A-2 issued by Standard & Poor's Corporation ("S&P"), P-2 issued by Moody's
Investors Service, Inc. ("Moody's) or Duff-2 issued by Duff & Phelps Inc.;
(ix) Marketable corporate debt securities having an A credit rating
issued by either S&P or Moody's;
(x) Repurchase, reverse repurchase agreements and security lending
agreements collateralized by securities of the type described in subsections
(ii) and (iv);
(xi) Asset-backed securities issued against a pool of receivables
which have a long-term rating of AAA or better by Standard & Poors, Moody's or
Duff & Phelps and which have an average life or final maturity of no more
than five years;
(xii) Mortgage-backed securities issued against an underlying pool
of mortgages which have a long-term rating of AAA or better by Standard &
Poors, Moody's or Duff & Phelps; provided such mortgage-backed securities
shall have an average life, as determined by the dealer's assumptions at
the time of purchase, of no more than five years;
(xiii) Subsidiaries, subject to the limitations stated in
subsection 6.9(e) hereof; and
(xiv) Promissory notes and other interest bearing obligations
acquired in the ordinary course of business and the issuance of letters of
credit in the ordinary course of business.
Section 7.10 Fiscal Year.
Change its fiscal year.
Section 7.11 ERISA Obligations.
(a) Be or become obligated to the PBGC other than in respect of
annual premium payments in excess of $50,000.
(b) Be or become obligated to the IRS with respect to excise or
other penalty taxes provided for in those provisions of Section 4975 of the
Code, as in effect or hereafter amended or supplemented, in excess of $50,000.
Section 7.12 Amendment of Documents.
(a) Modify, amend, supplement or terminate, or agree to modify,
amend, supplement or terminate its by-laws.
(b) Modify, amend or supplement or agree to modify, amend or
supplement the Class A Notes (including, without limitation, the subordination
provisions set forth therein) in any respect that could materially and adversely
affect the financial condition or business of the Borrower or its ability to
perform hereunder or could materially and adversely affect the rights of the Age
Section 7.13 Transactions with Affiliates.
Except as expressly permitted by this Agreement, directly or indirectly
and as set forth on Exhibit L annexed hereto: (i) make any Investment in an
Affiliate; or (ii) consolidate with or purchase or acquire assets
from an Affiliate; or enter into any other transaction directly or indirectly
with or for the benefit of any Affiliate (including, without limitation,
guarantees and assumptions of obligations of an Affiliate); provided, however,
that (a) any Affiliate who is an individual may serve as an employee or
director of the Borrower and receive reasonable compensation for his services
in such capacity, (b) the Borrower may enter into any transaction with an
Affiliate providing for the leasing of property, the rendering or receipt of
services or the purchase or sale of product, inventory and other assets in
the ordinary course of business if the monetary or business consideration
arising therefrom would be substantially as advantageous to the Borrower as
the monetary or business consideration which would obtain in a comparable
arm's length transaction with a Person not an Affiliate.
Article 8. Events of Default.
If any one or more of the following events ("Events of Default") shall
occur and be continuing, the Total Commitments shall terminate and the
entire unpaid balance of the principal of and interest on the Notes
outstanding and all other obligations and Indebtedness of the Borrorer to the
Banks the Swing Line Lender and the Agent arising hereunder and under the other
Loan Documents shall immediately become due and payable upon written notice
to that effect given to the Borrower by the Agent (except that in the case of
the occurrence of any Event of Default described in Section 8.7 no such notice
shall be required), without presentment or demand for payment, notice of
non-payment, protest or further notice or demand of any kind, all of which
are expressly waived by the Borrower; provided, however, that: (i) in case of
the occurrence of the Event of Default described in Section 8.1, no such
notice shall be required after the passage of ten (10) days after the
Grace Period provided for therein; and (ii) in case of the occurrence of the
Event of Default described in Section 8.7, no such notice shall be required.
Section 8.1 Payments.
Failure to make any payment or mandatory prepayment of principal or
interest upon any Note or any fee pursuant to this Agreement within three (3)
Business Days after the due date thereof (the "Grace Period"); or,
Section 8.2 Incurring of Indebtedness
during the Grace Period.
Incurring of any Indebtedness during the Grace Period including, without
limitation, the issuance of Senior Notes; or,
Section 8.3 Covenants.
Failure to perform or observe any of the agreements of the Borrower
contained in Section 6.9 or Article 7 hereof (except for the agreements of the
Borrower contained in Sections 7.9 or 7.13); or,
Section 8.4 Other Covenants.
Failure by the Borrower to perform or observe the agreements of the
Borrower contained in Sections 7.9 or 7.13 hereof or any other term, condition
or covenant of this Agreement or of any of the other Loan Documents to which it
is a party, including, without limitation, any of the Notes, which shall
remain unremedied for a period of fifteen (15) days after notice thereof
shall have been given to the Borrower by the Agent; or,
Section 8.5 Other Defaults.
(a) Failure by the Borrower or any of its Subsidiaries to perform or
observe any term, condition or covenant of any bond, note, debenture,
loan agreement, indenture, guaranty, trust agreement, mortgage or similar
instrument to which the Borrower or such Subsidiary is a party or by which
it is bound, or by which any of its properties or assets may
be affected including, without limitation, the Senior Note Agreements or any
other evidences of Indebtedness (a "Debt Instrument"), s
of any such failure to perform, the Indebtedness included therein or
secured or covered thereby may be declared due and payable prior to the date
on which such Indebtedness would otherwise become due and payable; or,
(b) Any event or condition referred to in any Debt Instrument shall occur or
fail to occur, so that, as a result thereof, the Indebtedness included
therein or secured or covered thereby may be declared due and payable prior
to the date on which such Indebtedness would otherwise become due
and payable; or,
(c) Failure to pay any Indebtedness for borrowed money when due under any
Debt Instrument, whether at final maturity or, in the case of Debt Instruments
payable on demand, upon demand.
Section 8.6 Representations and Warranties.
Any representation or warranty made in writing to the Banks, the Swing Line
Lender or the Agent in any of the Loan Documents or in connection
with the making of the Loans or the Swing Line Loans, or any certificate,
statement or report made or delivered in compliance with this Agreement, shall
have been false or misleading in any material respect when made or delivered;
or,
Section 8.7 Bankruptcy.
(a) The Borrower shall make an assignment for the benefit of creditors, file a
petition in bankruptcy, be adjudicated insolvent, petition or apply to any
tribunal for the appointment of a receiver, custodian, or any trustee
for it or a substantial part of its assets, or shall commence any proceeding
under any bankruptcy, reorganization, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, whether
now or hereafter in effect, or the Borrower shall take any action to
authorize any of the foregoing actions; or there shall have been filed
any such petition or application, or any such proceeding shall have been
commenced against it, which remains undismissed for a period of thirty
(30) days or more; or any order for relief shall be entered in any such
proceeding; or the Borrower by any act or omission shall indicate its
consent to, approval of or acquiescence in any such petition, application
or proceeding or the appointment of a custodian, receiver
or any trustee for it or any substantial part of any
of its properties, or shall suffer any custodianship, receivership
or trusteeship to continue undischarged fora period of thirty (30) days or
more; or,
(b) The Borrower shall generally not pay its debts as such debts become due;
or,
c) The Borrower shall have concealed, removed, or permitted to be concealed
or removed, any part of its property, with intent to hinder, delay or defraud
its creditors or any of them ormade or suffered a transfer of any of its
property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or shall have made any transfer of its property to or
for the benefit of a creditor at a time when other creditors
similarly situated have not been paid; or shall have suffered or permitted,
while insolvent, any creditor to obtain a Lien upon any of its property through
legal proceedings or distraint which is not vacated within thirty (30) days from
the date thereof; or,
Section 8.8 Judgments.
Any judgment against the Borrower or any attachment, levy of execution against
any of its properties for any amount in excess of $500,000 shall remain unpaid,
unstayed on appeal, undischarged, unbonded or undismissed for a period of sixty
(60) days or more; or,
Section 8.9 ERISA.
(a) The termination of any Plan or the institution by the PBGC of proceedings
for the involuntary termination of any Plan, in either case, by reason of, or
which results or could result in, a "material accumulated funding deficiency"
under Section 412 of the Code; or,
(b) Failure by the Borrower to make required contributions, in accordance with
the applicable provisions of ERISA, to each of the Plans hereafter established
or assumed by it.
Article 9. The Agent.
Section 9.1 Appointment, Powers and Immunities.
Each Bank hereby irrevocably appoints and authorizes the Agent to act as its
agent hereunder, and under the other Loan Documents with such
powers as are specifically delegated to the Agent by the terms of this
Agreement, and the other Loan Documents together with such other powers
as are reasonably incidental thereto. The Agent shall have no duties or
responsibilities except those expressly set forth in this
Agreement and the other Loan Documents and shall not be a trustee for any
Bank. The Agent shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in this Agreement, or
the other Loan Documents in any certificate or other document
referred to or provided for in, or received by any of them under, this
Agreement, or the other Loan Documents, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the other Loan Documents or any other document referred to
or provided for herein or therein. The Agent may employ agents and
attorneys-in-fact and shall not be answerable, except as to
money or securities received by it or its authorized agents, for the
negligence or misconduct of any suchagents or attorneys-in-fact selected by it
with reasonable care. Neither the Agent nor any of it's
officers, employees or agents shall be liable or responsible for any action
taken or omitted to be taken by it or them hereunder, the other Loan Documents
or in connection herewith or therewith, except for its or their
own gross negligence or willful misconduct.
Section 9.2 Reliance by Agent.
The Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper person or persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by the Agent. As to any matters not expressly
provided for by this Agreement or the other Loan Documents the Agent
shall in all cases be fully protected in acting, or in refraining from
acting, hereunder, or under the other Loan Documents in accordance with
instructions signed by the Majority Banks, and such instructions of the
Majority Banks and any action taken or failure to act pursuant thereto
shall be binding on all of the Banks.
Section 9.3 Events of Default.
The Agent shall not be deemed to have knowledge of the occurrence of a
Default (other than the non-payment of principal of or interest on Loans)
unless the Agent has received notice froma Bank or the Borrower specifying such
Default and stating that such notice is a "Notice of Default". In the
event that the Agent receives such a notice of the occurrence of a
Default, the Agent shall give notice thereof to the Banks (and shall give each
Bank notice of each such non-payment). The Agent shall (subject to
Section 9.7 hereof) take such action with respect to such Default as shall be
directed by the Majority Banks.
Section 9.4 Rights as a Bank.
With respect to its Total Commitment, and the Loans made by it, the Agent
in its capacity as a Bank hereunder shall have the same rights and powers
hereunder as any other Bank and may exercise the same as though it were not
acting as the Agent, and the term "Bank" or "Banks" shall,
unless the context otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may (without having to account therefor
to any Bank) accept deposits from, lend money to and generally
engage in any kind of banking, trust or other business with the Borrower or its
Affiliates, as if it were not acting as the Agent, and the Agent may
accept fees and other consideration from the Borrower or its
Affiliates, for services in connection with this Agreement, or any of the other
Loan Documents or otherwise without having to account for the same to the Banks.
Section 9.5 Indemnification.
(a) The Banks shall indemnify the Agent (to the extent not reimbursed by the
Borrower under Sections 10.1 and 10.2 hereof), ratably in accordance with the
aggregate principal amount of the Loans made by the Banks (or, if no
Loans are at the time outstanding, ratably in accordance with
their respective Total Commitments), for any and all liabilities, obligations,
losses, damages, penalties, actions,judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of this Agreement, or any of the other Loan Documents
(other than the Swing Line Note) or any other documents contemplated by or
referred to herein or therein or the transactions contemplated by or referred to
hereinor therein or the transactions contemplated h
expenses which the Borrower is obligated to pay under Sections 10.1 and 10.2
hereof, but excluding, unless a Default has occurred and is continuing,
normal administrative costs and expenses incident to the
performance of its agency duties hereunder or under the other
Loan Documents (other than the Swing LineNote)) or the enforcement of any of
the terms hereof or of the other Loan Documents, or of documents, provided that
no Bank shall be liable for any of the foregoing to the extent
they arise from the gross negligence or willful misconduct of the party to be
indemnified.
(b) The Banks shall indemnify the Swing Line Lender (to the extent not
reimbursed by the Borrower under Sections 10.1 and 10.2 hereof), ratably in
accordance with the aggregate principal amount of the B Loans made by
the Banks (or, if no B Loans are at the time outstanding, ratably in
accordance with their respective B Commitments), for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever which may be imposed
on, incurred by or asserted against the Swing Line Lender in
any way relating to or arising out of this Agreement, or the Swing Line Note
(including, without limitation, the costs and expenses which the Borrower
is obligated to pay under Sections 10.1 and 10.2 hereof) or the
enforcement of any of the terms hereof in respect of the Swing Line Loan
provisions and the Swing LineNote, provided that no Bank shall be liable for any
of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the party to be indemnified.
Section 9.6 Non-Reliance on Agent and Other Banks.
Each Bank agrees that it has, independently and without reliance on the Agent
or any other Bank, and based on such documents and information as it
has deemed appropriate, made its own credit analysis of the Borrower
and decision to enter into this Agreement and that it will, independently
and without reliance upon the Agent or any other Bank, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not
taking action under this Agreement, or the other Loan Documents. The Agent
shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Agreement, or the other Loan
Documents or any other document referred to or provided for herein or therein
or to inspect the properties required to be furnished t
shall not have any duty or responsibility to provide any Bank with any credit
or other information concerning the affairs, financial condition or business of
the Borrower, which may come into the possession of the
Agent or any of its Affiliates.
Section 9.7 Failure to Act.
Except for action expressly required of the Agent hereunder, or under the
other Loan Documents, the Agent shall in all cases be fully justified
in failing or refusing to act hereunder or thereunder unless it shall be
indemnified to its satisfaction by the Banks against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action.
Section 9.8 Resignation or Removal of Agent.
Subject to the appointment and acceptance of a successor Agent as provided
below, the Agent may resign at any time by giving not less than 10 days prior
written notice thereof to the Banks and the Borrower and
the Agent may be removed at any time with or without cause by the Majority
Banks. Upon any such resignation or removal, the Majority Banks shall have the
right to appoint a successor Agent. If no successor Agent shall have
been so appointed by the Majority Banks and shall have accepted such appointment
within 30 days after the retiring Agent's giving of notice of resignation or
the Majority Banks' removal of the retiring Agent, then the retiring Agent may,
on behalf of the Banks, after consultation with the Borrower, appoint a
successor Agent which shall be one of the Banks. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder and under the other Loan Document. After any retiring
Agent's resignation or removal hereunder as Agent, the provisions
of this Article 9 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent.
Article 10. Miscellaneous Provisions.
Section 10.1 Fees and Expenses; Indemnity.
The Borrower will promptly (and in any event within 30 days after its
receipt of an invoice or statement therefor) pay all costs of the Agent in
preparing the Loan Documents and all costs and expenses of the issue of the
Notes and of the Borrower's performance of and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with and the reasonable fees and expenses and disbursements
of counsel to the Agent, in connection with the preparation, execution
and delivery, administration, interpretation and enforcement of this
Agreement, the other Loan Documents and all other
agreements, instruments and documents relating to this transaction,
the consummation of the transactions contemplated by all such documents, the
negotiation, preparation and execution and delivery of any amendment,
modification or supplement of or to, or any consent or
waiver under, any such document (or any such instrument which is proposed but
not executed and delivered) and with any claim or action threatened,
made or brought against any of the Banks, the Swing Line Lender or the Agent
arising out of or relating to any extent to this Agreement, the other Loan
Documents or the transactions contemplated hereby or thereby. In addition, the\
Borrower will promptly (and in any event within 30 days after their
receipt of an invoice or statement therefor) pay all costs and
expenses (including, without limitation, reasonable fees and disbursements
of counsel) suffered or incurred by each Bank and the Swing Line
Lender in connection with its enforcement of the payment of the Notes
held by it or any other sum due to it under this Agreement or any of the
other Loan Documents or any ofits other rights hereunder or thereunder.
In addition to the foregoing, the Borrower shall indemnify each
Bank, the Swing Line Lender and the Agent against, and hold each of them
harmless from, any loss, liabilities, damages, claims, costs and expenses
(including reasonable attorneys' fees and disbursements)
suffered or incurred by any of them arising out of, resulting from or in any
manner connected with, theexecution, delivery and performance of this
Agreement and the other Loan Documents, the Loans, the
Swing Line Loans and any and all transactions related to or consummated in
connection with the Loans and the Swing Line Loans including, without
limitation, losses, liabilities, damages, claims, costs and
expenses suffered or by the Agent, the Swing Line Lender or any Bank in
investigating, preparing for, defending against, or providing evidence,
producing documents or taking any other action in respect of
any commenced or threatened litigation, administrative proceeding or
investigation under any federal securities law or any other statute
of any jurisdiction, or any regulation, or at common law or otherwise,
which is alleged to arise out of or is based upon (1) any untrue statement or
alleged untrue statement of any material fact of the Borrower
and its affiliates in any document or schedule filed with the Securities and
Exchange Commission or any other governmental body; (2) any omission or
alleged omission to state any material fact required to be stated in such
document or schedule, or necessary to make the statements
made therein, in light of the circumstances under which made, not
misleading; (3) any acts, practices or omissions or alleged acts, practices or
omissions of the Borrower or its agents related to the making of any
acquisition, purchase of shares or assets pursuant thereto, financing
of such purchases or the consummation of any other transactions
contemplated by any such acquisitions which are alleged to be
in violation of any federal securities law or of any other statute,
regulation or other law of any jurisdiction applicable to the making of any
such acquisition, the purchase of shares or assets pursuant thereto, the
financing of such purchases or the consummation of the other transactions
contemplated by any such acquisition; or (4) any withdrawals,
termination or cancellation of any such proposed acquisition for any
reason whatsoever; except to the extent any of the foregoing results
form the gross negligence or willful misconduct of the party to be indemnified.
The indemnity set forth herein shall be in addition to any other
obligations or liabilities of the Borrower to the Agent, the Swing Line Lender
and the Banks hereunder or at common law or otherwise. The provisions of this
Section 10.1 shall survive the payment of the Notes and the termination of
this Agreement.
Section 10.2 Taxes.
If, under any law in effect on the date of the closing of any Loan or Swing
Line Loan hereunder, or under any retroactive provision of
any law subsequently enacted, it shall be determined that
any Federal, state or local tax is payable in respect of the issuance
of any Note, as contemplated by this Agreement, then the Borrower will pay any
such tax and all interest and penalties, if any, and will indemnify
the Banks, the Swing Line Lender and the Agent against and save each of them
harmless from any loss or damage resulting from or arising out of
the nonpayment or delay in payment of any such tax. If any
such tax or taxes shall be assessed or levied against any Bank, the Swing
Line Lender or any other holder of a Note, such Bank, or such
other holder, as the case may be, may notify the Borrower and make
immediate payment thereof, together with interest or penalties in connection
therewith, and shall thereupon be entitled to and shall receive immediate
reimbursement therefor from the Borrower. Notwithstanding
other provision contained in this Agreement, the covenants and agreements
of the Borrower in this Section 10.2 shall survive payment of the Notes
and the termination of this Agreement.
Section 10.3 Payments.
As set forth in Section 2.14 hereof, all payments by the Borrower on account
of principal, interest, fees and other charges (including any indemnities)
shall be made to the Agent at the Principal Office of the Agent (except with
respect to Swing Line Loans which shall be payable in accordance
with subsection 2.11 hereof), in lawful money of the United States of America
in immediately available funds, by wire transfer or otherwise, not later than
11:00 A.M. New York City time on the date such payment
due. Any such payment made on such date but after such time shall, if the amount
paid bears interest, be deemed to have been made on and interest shall continue
to accrue and be payable thereon until the next succeeding Business Day. If any
payment of principal or interest becomes due on a day other than a
Business Day, then payment shall be due on the next Business Day and such
extension shall be included in computing interest in
connection with such payment. All payments hereunder and under the Notes shall
be made without set-off or counterclaim and in such amounts as
may be necessary in order that all such payments shall not be less
than the amounts otherwise specified to be paid under this Agreement and the
Notes (after withholding for or on account of (i) any present
or future taxes, levies, imposts, duties or other similar charges of
whatever nature imposed by any government or any political subdivision or taxing
authority thereof, other than any tax (except those referred to in clause (ii)
below) on or measured by the net income of the Bank or the Swing Line
Lender to which any such payment is due pursuant to applicable
federal, state and local income tax laws, and (ii) deduction of amounts
equal to the taxes on or measured by the net income of such Bank or the Swing
Line Lender payable by such Bank or the Swing Line Lender
with respect to the amount by which the payments required to be made under this
sentence exceed thes otherwise specified to be Note, the Bank holding such
Note shall mark the Note "Paid" and return it to the Borrower.
Section 10.4 Survival of Agreements and Representations; WAIVER OF TRIAL BY
JURY.
All agreements, representations and warranties made herein shall survive the
delivery of this Agreement and the Notes. THE BORROWER WAIVES TRIAL BY JURY IN
ANY LITIGATION IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH,
OR ARISING OUT OF, THIS AGREEMENT, THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS,
OR ANY INSTRUMENT ORDOCUMENT DELIVERED PURSUANT TO THIS AGREEMENT, OR THE
VALIDITY, PROTECTION, INTERPRETATION, COLLECTION OR ENFORCEMENT THEREOF.
Section 10.5 Lien on and Set-off of Deposits.
As security for the due payment and performance of all amounts payable
hereunder and under the Notes, the Borrower hereby grants to the Swing Line
Lender and the Agent for the ratable benefit of the Banks a Lien on
any and all deposits or other sums at any time credited by or due
from the Agent or any Bank to the Borrower, whether in regular or special
depository accounts or otherwise, and any and all monies, securities and other
property of the Borrower, and the proceeds thereof,noor for the Borrower,
whether for safekeeping, custody, pledge, transmission, co
any such deposits, sums, monies, securities and other property, may at
any time after the occurrence and during the continuance of any Event of Default
be set-off, appropriated and applied by any Bank, the Swing
Line Lender or the Agent against any of the Indebtedness of the Borrower to
the Banks and the Agent, whether or not any of such Indebtedness is then due.
Section 10.6 Modifications, Consents and
Waivers; Entire Agreement.
No modification, amendment or waiver of or with respect to any provision of
this Agreement, any notice, or any of the other Loan Documents and all other
agreements, instruments and documents delivered pursuant hereto or thereto, nor
consent to any departure by the Borrower from any of the terms or conditions
thereof, shall in any event be effective unless it shall be in writing and
signed by the Agent and each Bank except that: (i) any modification or
amendment of, or waiver or consent with respect to, Article 4 may be signed
only by the Agent and the Majority Banks (provided, however, that the
consummation of a Loan by a Bank shall be deemed, with respect to such Loan
only, to have the effect of the execution by such Bank of a waiver of, or
consent to a departure from, any term or provision of Article 4 which has
not been satisfied as of the date of the consummation of such Loan); (ii) any
modification or amendment of, or waiver or consent with respect to,
Articles 5, 6, 7, 8 (except for Sections 8.1 and
8.7 hereof) and 10 (other than this Section 10.6 and as stated in clause (iii)
hereof with respect to Section 7.12 hereof) may be signed only by the Agent and
the Majority Banks and (iii) any waiver or consent,
pursuant to Section 7.12 hereof, to a change in the by-laws of the Borrower that
the Agent determines tobe immaterial to the performance of the obligations of
the Borrower hereunder may be signed only by the Agent. Any such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No consent to or demand on the Borrower, in any case shall, of
itself, entitle it to any other or further notice or d
similar or other circumstances. This Agreement embodies the entire agreement
and understanding among the Banks, the Agent and the Borrower and supersedes all
prior agreements and understandings relating
to the subject matter hereof.
Section 10.7 Remedies Cumulative.
Each and every right granted to the Agent, the Swing Line Lender and the Banks
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed it by law or equity, shall be cumulative and may be
exercised from time to time. No failure on the part of the
Agent, the Swing Line Lender or any Bank or the holder of any Note to exercise,
and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise of any right preclude any
other or future exercise thereof or the exercise of any other right. The
due payment and performance of the Borrower's indebtedness, liabilities
and obligations under the Notes and this Agreement shall be without
regard to any counterclaim, right of offset or any other
claim whatsoever which the Borrower may have against any Bank, the Swing Line
Lender or the Agent and without regard to any other obligation of any
nature whatsoever which any Bank, the Swing Line Lender or the Agent may have
to the Borrower, and no such counterclaim or offset shall be asserted by the
Borrower in any action, suit or proceeding instituted by any Bank, the Swing
Line Lender or the Agent for payment or performance of t
edness, liabilities or obligations under the Notes, this Agreement or
otherwise.
Section 10.8 Further Assurances.
At any time and from time to time, upon the request of the Agent, the
Borrower, shall execute, deliver and acknowledge or cause to be executed,
delivered and acknowledged, such further documents and instruments and
do such other acts and things as the Agent may reasonably
request in order to fully effect the purposes of this Agreement, the Notes, the
other Loan Documents and any other agreements, instruments and documents
delivered pursuant hereto or in connection with the
Loans and the Swing Line Loans.
Section 10.9 Notices.
All notices, requests, reports and other communications pursuant to this
Agreement except for notices pursuant to Section 2.3 hereof
shall be in writing, either by letter (delivered by hand or commercial messenger
service or sent by certified mail, return receipt requested, except for routine
reports delivered in compliance with Article 5 hereof which may be sent by
ordinary first-class mail), telecopier or telegram, addressed as follows:
(a) If to the Borrower:
National Consumer Cooperative Bank
1401 Eye Street - Suite 700
Washington, D.C. 20005
Attention: Chief Financial Officer
Telecopier No.: 202-336-7803
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Attention: Martin J. Flynn, Esq.
Telecopier No.: 202-828-2195
(c) If to any Bank:
To its address set forth below its name on the signature pages
hereof, with a copy to the Agent; and,
d) If to the Agent and the Swing Line Lender:
National Westminster Bank USA
175 Water Street
New York, New York 10038
Attention: Margot Michalski
Vice President
Telecopier No.: 212-602-2663
with a copy (other than in the case of Borrowing Notices and
reports and other documents delivered in compliance with
Article 5 hereof) to:
Winston & Strawn
175 Water Street
New York, New York 10038
Attn: Richard S. Talesnick, Esq.
Telecopier No.: 212-952-1474
Any notice, request or communication hereunder shall be deemed to have been
given on the day on which it is delivered by hand or such commercial
messenger service to such party at its address specified above,
or, if sent by mail, on the third Business Day after the day deposited in the
mail, postage prepaid, in thecase of telegraphic notice, when delivered to the
telegraph company, addressed as aforesaid or in the cof telecopy notice when
sent by telecopy. Any party may change the person or a
notices are to be given hereunder, by notice duly given hereunder; provided,
however, that any such notice shall be deemed to have been given hereunder only
when actually received by the party to which it is addressed.
Section 10.10 Counterparts.
This Agreement may be signed in any number of counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
Section 10.11 Construction; GOVERNING LAW.
The headings used in this Agreement and the table of contents are for
convenience only and shall not be deemed to constitute a part hereof. All uses
herein of the masculine gender or ofsingular or plural terms shall be deemed to
include uses of the feminine or neuter gender or plural or
singular terms, as the context may require. THIS AGREEMENT, THE NOTES, T
DOCUMENTS AND ALL OTHER DOCUMENTS AND INSTRUMENTS EXECUTED AND DELIVERED
IN CONNECTION HEREWITH AND THEREWITH, SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
Section 10.12 Severability.
The provisions of this Agreement are severable, and if any clause or
provision hereof shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, in such jurisdiction and shall not
in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision in this Agreement in
any jurisdiction. Each of the covenants, agreements and conditions contained
in this Agreement is independent and compliance by the
Borrower with any of them shall not excuse non- compliance by the Borrower with
any other. The Borrower shall not take any action the effect of which shall
constitute a breach or violation of any provision of this Agreement.
Section 10.13 Binding Effect; No
Assignment or Delegation.
This Agreement shall be binding upon and inure to the benefit of the
Borrower and its successors and to the benefit of the Banks and the
Agent and their respective successors and assigns. The rights and
obligations of the Borrower under this Agreement shall not be
assigned or delegated withoutthe prior written consent of the Agent, and any
purported assignment or delegation without such consent shall be void.
Section 10.14 Participations.
(a) Each Bank may assign any or all of its rights or obligations hereunder to
any other Person; provided, however, that (a) the assignee thereof is acceptable
to the Borrower and the Agent and (b) such Bank's Total Commitment is
not, and following such assignment will not be, less than one-half of the
initial Total Commitment of such Bank. Nothing herein provided shall prevent
any Bank or its assignees from selling at any time a participation
in its Total Commitment, its Loans, any fees payable to it hereunder or any
other rights hereunder (the purchaser of any such participation being
hereinafter sometimes referred to as a "Participant"); provided,
however, that, (1) no such sale or participation shall alter
such Bank's obligations hereunder, (2) no Bank, its assignees or their
Participants may grant participations if such Bank, its assignees and their
Participants have outstanding at such time participations to an
aggregate of three (3) or more Participants, and (3) any agreement
pursuant to which any Bank may grantany such participation shall provide that
such Bank shall retain the sole right and responsibility and exercise
the rights of such Bank, and enforce the obligations of the Borrower relating to
the Total Commitment, the Loans, the fees payable hereunder and any other right
of such Bank including, without limitation, the right
to approve any amendment, modification or waiver of any provision of this
Agreement or any other Loan Document and the right to take action
to have the Loans declared due and payable. No Participant shall
have any rights under this Agreement or in respect of a Bank's Total
Commitment, Loans, fees payable to it hereunder or any other rights hereunder
other than to receive payments in respect of such Participant's
participation from such Bank. No sale or participation by a Bank of its Total
Commitment or Loans shall affect such Bank's right to receive amounts
payable to it pursuant to Sections 2.20, 2.24 and 10.2 hereof,
calculated on the basis of the full amount of such Bank's Loan or
Total Commitment. A Bank may furnish from time to time any information
concerning the Borrower and any of its Subsidiaries or any of the Loan
Documents to any Participant or prospective participant; provided that such
Bank shall use its best effortsto assure that any such Participant or
prospective participant shall maintain due confidentiality wit to such
information.
(b) Notwithstanding anything to the contrary contained herein, any Bank may
assign and pledge all or any portion of its right under this Agreement and its
Notes to any Federal Reserve Bank or the United States Treasury
as collateral security pursuant to Regulation A of the Board of Governors of
the Federal Reserve System and any Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of
the Notes and any other Indebtedness of the Borrower under this
Agreement made by the Borrower to the assigning and/or the pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned interest to
the extent of such payment. No such assignment shall release the assigning
Bank from its obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on the date first above written.
NATIONAL CONSUMER COOPERATIVE BANK,
D/B/A NATIONAL COOPERATIVE BANK
By__________________________________
Title
A Commitment NATIONAL WESTMINSTER BANK USA,
as Agent and as a Bank, and as a
$28,235,294.12 Swing Line Lender
By ______________________________
Title
B Commitment Lending Office for Prime Rate
Loans, LIBOR Loans, CD Loans, Fed
$11,764,705.88 Funds Loans and Address for Notices:
175 Water Street
New York, New York 10038
Attn: Margot Michalski
Vice President
Telephone No.: 212-602-2615
Telecopier No.: 212-602-2671
Telex No. 62610 NBNA UW
A Commitment CREDIT SUISSE
$21,176,470.59
By: _______________________________
B Commitment By: _______________________________
$8,823,529.41
Lending Office for Prime Rate Loans, LIBOR Loans, CD
Loans, Fed Funds Loans and address for notices:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attn: Yvette McQueen
Administrative Assistant
Telephone No.: 212-238-5362
Telecopier No.: 212-238-5389
Telex No.: 420-149
A Commitment COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A. ("Rabobank
$21,176,470.59 Nederland"), New York Branch
By: _______________________________
Title
By: _______________________________
Title
B Commitment Lending Office for Prime Rate
Loans, LIBOR Loans, CD Loans, Fed
$8,823,529.41 Funds Loans and address for notices:
245 Park Avenue
New York, New York 10167
Attn: Corporate Services
Telephone No.: 212-916-7994
Telecopier No.: 212-818-0233
Telex No.: 42 4337
A Commitment SIGNET BANK/VIRGINIA
$17,647,058.82
By:________________________________
B Commitment Lending Office for Prime Rate Loans, LIBOR Loans, CD
Loans, Fed
$7,352,941.18 Funds Loans and address for notices:
Signet Bank/Virginia
8330 Boone Boulevard
Vienna, Virginia 22182-2632
Attn.: Linwood White
Vice President
Telephone No.: 703-749-7624
Telecopier No.: 703-749-7622
Telex No.: 82-724-0507
A Commitment COMERICA BANK
$14,117,647.06
By:________________________________
Title
B Commitment Lending Office for Prime Rate Loans, LIBOR Loans, CD
Loans, and
$5,882,352.94 Fed Funds Loans:
Comerica Bank
500 Woodward Avenue
Mail Code 3280
Detroit, Michigan 48226
Attn.: Julie M. Burke-Smith
Vice President
Telephone No.: 313-222-9680
Telecopier No.: 313-222-3330
A Commitment NATIONAL CITY BANK, KENTUCKY
$8,823,529.41
By: _______________________________
B Commitment Lending Office for Prime Rate Loans, LIBOR Loans, CD
Loans and
$3,676,470.59 Fed Funds Loans and address for notices:
National City Bank, Kentucky
101 South Fifth Street
Louisville, Kentucky 40202
Attn: Donald R. Pullen, Jr.
Vice President
Telephone No.: 502-581-6352
Telecopier No.: 502-581-5122
Telex No.: 6842090 FIRST LOU LVL
A Commitment FIRST NATIONAL BANK OF MARYLAND
$8,823,529.41
By:_______________________________
Title
B Commitment Lending Office for Prime Rate Loans, LIBOR Loans, CD
Loans and
$3,676,470.59 Fed Funds Loans:
First National Bank of Maryland
Internal I.D. BANC 101-716
18th Floor
25 South Charles Street
Baltimore, Maryland 21201
or
P.O. Box 101-710
Baltimore, Maryland 21203
Attn: Robert R. Chafey
Vice President
Telephone No.: 301-244-4032
Telecopier No.: 301-244-4294
Telex No.: 684-9150 FNBUW
EXHIBITS
A-1 Form of A Note
A-2 Form of B Note
A-3 Form of Swing Line Note
B States of Incorporation and Qualification, and Capitalization and
Ownership of Stock of, Borrower
C Consents, Waivers, Approvals; Violation of Agreements
D Permitted Security Interests, Liens and Encumbrances
E Judgments, Actions, Proceedings
F Compliance with Laws, Regulations, Agreements
G Burdensome Documents
H Name Changes, Mergers, Acquisitions
I Employee Grievances
J Employee Benefit Plans
K Permitted Indebtedness and Guaranties
L Transactions with Affiliates
EXHIBIT A-1
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
FORM OF A NOTE
[A Commitment Amount] Due Decem
FOR VALUE RECEIVED, NATIONAL CONSUMER COOPERATIVE BANK D/B/A NATIONAL
COOPERATIVE BANK, (the "Borrower"), hereby promises to pay to the order of [ ]
(the "Bank") by payment to the Agent for the account of the Bank the
principal sum of [amount of A Commitment] ($__________) Dollars (or such
lesser amount as shall equal the aggregate unpaid principal amount of
the A Loans made by the Bank under the Loan Agreement hereinafter defined,
shown on the schedule annexed hereto and any continuation thereof), in lawful
money of the United States of America and in immediately available funds on
the date or dates determined as provided in the Loan Agreement but in
no event later than December 31, 1996.
The Borrower further promise to pay to the order of the Bank by payment to
the Agent for the account of the Bank interest on the unpaid principal amount
of each Loan from the date such Loan is made until paid in full, payable
at such rates and at such times as provided for in the Loan Agreement.
The Bank has been authorized by the Borrower to record on the schedules
annexed to this A Note (or on any continuation thereof) the amount,
type, due date and interest rate of each A Loan made by the Bank under the Loan
Agreement and the amount of each payment or prepayment of
principal and the amount of each payment of interest of each such A Loan
received by the Bank, it being understood, however, that
failure to make any such notation shall not affect the rights of the Bankor the
obligations of the Bank. Such notations shall be deemed correct, absent
manifest error.
This A Note is one of the Notes referred to in the Second Amended and
Restated Loan Agreement (the "Loan Agreement") dated as
of _____________, 1993 among the Borrower, the Banks,and National
Westminster Bank USA, as Agent for the Banks and evidences the A Loans made by
the Bank thereunder. This A Note supersedes the Note dated made by NCB
Capital Corporation to the order of the Bank in the original
principal amount of $ but does not constitute a novation,
extinguishment or termination of the obligations evidenced thereby.
Capitalized terms used in this Notehave the respective meanings assigned to
them in the Loan Agreement.
Upon the occurrence of an Event of Default, under the Loan Agreement, the
principal hereof and accrued interest hereon shall become, or may
be declared to be, forthwith due and payable in the
manner, upon the conditions and with the effect provided in the Loan Agreement.
The Borrower may at its option prepay all or any part of the principal of
this A Note beforematurity upon and subject to the terms provided in the Loan
Agreement.
The Borrower agrees to pay costs of collection and reasonable attorneys'
fees in case default occurs in the payment of this A Note.
Presentment for payment, notice of dishonor, protest and notice of protest
are hereby waived.
This A Note has been executed and delivered this _______ day of __________,
1993 in New York, New York, and shall be construed in accordance with and
governed by the laws of the State of New York.
NATIONAL CONSUMER COOPERATIVE BANK
D/B/A NATIONAL COOPERATIVE BANK
By:________________________________
Title
<PAGE>
SCHEDULE TO A NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF _____________________
This Note evidences the Loans made under the within described Agreement, in
the principal amounts, of the types (Prime Rate Loans, Fed Funds Loans, CD Loans
or LIBOR Loans) and on the dates set forth below, subject to the payments or
prepayments set forth below:
Date Made Principal Type of Due date Interest rate Amount of Balance
Amount of Loan on loan on loan payment or outstanding
Loan prepayment
Notation
made by
EXHIBIT A-2
TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
FORM OF B NOTE
[B Commitment Amount] Due [Insert Date 364 days from Closing]
FOR VALUE RECEIVED, NATIONAL CONSUMER COOPERATIVE BANK D/B/A NATIONAL
COOPERATIVE BANK (the "Borrower"), hereby promises to pay to the order of
[ ] (the "Bank") by payment to the Agent for the account of the Bank
the principal sum of [amount of B Commitment] ($__________) Dollars (or such
lesser amount as shall equal the aggregate unpaid principal amount of the B
Loans made by the Bank under the Loan Agreement hereinafter defined, shown on
the schedule annexed hereto and any continuation thereof), in lawful money of
the United States of America and in immediately available funds on the date or
dates determined as provided in the Loan Agreement but in no event later than
[Insert Date 364 days from Closing].
The Borrower further promises to pay to the order of the Bank by payment
to the Agent for the account of the Bank interest on the unpaid principal
amount of each Loan from the date such Loan is made until paid in full,
payable at such rates and at such times as provided for in the Loan Agreement.
The Bank has been authorized by the Borrower to record on the schedules
annexed to this B Note (or on any continuation thereof) the amount, type, due
date and interest rate of each B Loan made by the Bank under the Loan
Agreement and the amount of each payment or prepayment of principal and the
amount of each payment of interest of each such B Loan received by the Bank,
it being understood, however, that failure to make any such notation shall not
affect the rights of the Bank or the obligations of the Borrower hereunder or
under the Loan Agreement in respect of such Loans. Such notations shall be
deemed correct, absent manifest error.
This B Note is one of the Notes referred to in the Second Amended and
Restated Loan Agreement (the "Loan Agreement") dated as of _____________, 1993
among the Borrower, the Banks, and National Westminster Bank USA, as Agent for
the Banks and evidences the B Loans made by the Bank thereunder. This B Note
supersedes the Note dated made by NCB Capital Corporation to the order
of the Bank in the original principal amount of $ but does not
constitute a novation, extinguishment or termination of the obligations
evidenced thereby. Capitalized terms used in this Note have the respective
meanings assigned to them in the Loan Agreement.
Upon the occurrence of an Event of Default, under the Loan Agreement,
the principal hereof and accrued interest hereon shall become, or may be
declared to be, forthwith due and payable in the manner, upon the conditions
and with the effect provided in the Loan Agreement.
The Borrower may at its option prepay all or any part of the principal
of this B Note before maturity upon and subject to the terms provided in the
Loan Agreement.
The Borrower agrees to pay costs of collection and reasonable attorneys'
fees in case default occurs in the payment of this B Note.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
This B Note has been executed and delivered this _______ day of
__________, 1993 in New York, New York, and shall be construed in accordance
with and governed by the laws of the State of New York.
NATIONAL CONSUMER COOPERATIVE BANK
D/B/A NATIONAL COOPERATIVE BANK
By:________________________________
Title
SCHEDULE TO B NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF _____________________
This Note evidences the Loans made under the within described Agreement,
in the principal amounts, of the types (Prime Rate Loans, Fed Funds Loans, CD
Loans or LIBOR Loans) and on the dates set forth below, subject to the
payments or prepayments set forth below:
Date Made Principal Amount Type of Due Date Interest rate Amount of Balance
or Convertedof Loan Loan of Loan on loan payment or outstand
prepayment ing
Notation
made by
EXHIBIT A-3
TO THE LOAN AGREEMENT BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA,
AS AGENT FOR THE BANKS
FORM OF SWING LINE NOTE
$10,000,000 Due December
FOR VALUE RECEIVED, NATIONAL CONSUMER COOPERATIVE BANK D/B/A NATIONAL
COOPERATIVE BANK (the "Borrower"), hereby promises to pay to the order of
NATIONAL WESTMINSTER BANK USA (the "Bank") by payment to the Bank the
principal sum of TEN MILLION DOLLARS ($10,000,000) (or such lesser amount as
shall equal the aggregate unpaid principal amount of the Swing Line Loans made
by the Bank under the Loan Agreement hereinafter defined, shown on the
schedule annexed hereto and any continuation thereof), in lawful money of the
United States of America and in immediately available funds on the date or
dates determined as provided in the Loan Agreement but in no event later than
December 14, 1994.
The Borrower further promises to pay to the order of the Bank by payment
to the Bank interest on the unpaid principal amount of each Swing Line Loan
from the date such Swing Line Loan is made until paid in full, payable at such
rates and at such times as provided for in the Loan Agreement.
The Bank has been authorized by the Borrower to record on the schedules
annexed to this Swing Line Note (or on any continuation thereof) the amount,
due date and interest rate of each Swing Line Loan made by the Bank under the
Loan Agreement and the amount of each payment of principal and the amount of
each payment of interest of each such Swing Line Loan received by the Bank, it
being understood, however, that failure to make any such notation shall not
affect the rights of the Bank or the obligations of the Borrower hereunder or
under the Loan Agreement in respect of such Swing Line Loans. Such notations
shall be deemed correct, absent manifest error.
This Swing Line Note is the Swing Line Note referred to in the Second
Amended and Restated Loan Agreement (the "Loan Agreement") dated as of
December 15, 1993 among the Borrower, the Banks and National Westminster Bank
USA, as Agent for the Banks and evidences the Swing Line Loans made by the
Bank thereunder. Capitalized terms used in this Swing Line Note have the
respective meanings assigned to them in the Loan Agreement.
Upon the occurrence of an Event of Default, under the Loan Agreement,
the principal hereof and accrued interest hereon shall become, or may be
declared to be, forthwith due and payable in the manner, upon the conditions
and with the effect provided in the Loan Agreement.
The Borrower agrees to pay costs of collection and reasonable attorneys'
fees in case default occurs in the payment of this Swing Line Note.
Presentment for payment, notice of dishonor, protest and notice of
protest are hereby waived.
This Swing Line Note has been executed and delivered this 15th day of
December, 1993 in New York, New York, and shall be construed in accordance
with and governed by the laws of the State of New York.
NATIONAL CONSUMER COOPERATIVE BANK
D/B/A NATIONAL COOPERATIVE BANK
By:________________________________
Title
SCHEDULE TO SWING LINE NOTE
MADE BY NATIONAL CONSUMER COOPERATIVE BANK
IN FAVOR OF NATIONAL WESTMINSTER BANK USA
This Swing Line Note evidences the Swing Line Loans made under the
within described Agreement, in the principal amounts, and on the dates set
forth below, subject to the payments set forth below:
Date Made Principal Due Interest Rate Amount of Balance
Amount of Date on Loan Payment outstanding
Loan of Loan
EXHIBIT B PURSUANT TO SECTION 3.1
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
STATES OF INCORPORATION AND QUALIFICATION,
AND CAPITALIZATION AND OWNERSHIP OF STOCK
OF BORROWER AND SUBSIDIARIES.
None. Except:
Name Jurisdiction of
Incorporation Capitalization
National Consumer U.S. Congress Classes B, C, and D
Cooperative Bank, d/b/a 12 U.S.C. 3001-3051 shares in accordance
National Cooperative Bank 12 U.S.C. 3014
Corporation
NCB Business Credit Delaware Authorized Series A
Corporation (Qualified in the Preferred: 15,000
District of Columbia and Outstanding Series A
Michigan) Preferred: -0-
Authorized Class A
Common: 1,000
Outstanding Class A
Common: 1,000
Authorized Class B
Common: 20,000
Outstanding Class B
Common: -0-
NCB Mortgage Corporation Delaware (Qualified in the Authorized Class A
District of Columbia, New Preferred: 1,000
York, Illinois, California, Outstanding Class A
Maryland and Michigan) Preferred: 955
Authorized Class B
Preferred: 100
Outstanding Class B
Preferred: 50
Authorized Class C
Preferred: 1,000
Outstanding Class C
Preferred -0-
Authorized
Common: 10,000
Outstanding
Common: 10,000
NCB Financial Corporation Delaware Authorized
Common: 1,000
Outstanding
Common: 1,000
NCB Savings Bank, FSB U.S. (Qualified in Ohio) Authorized
Common: 1,000
Outstanding
Common: 1,000
Cooperative Funding
Corporation Delaware Authorized
Common: 1000
Outstanding
Common: 1000
NCB I, Inc. Delaware Authorized
Common: 1000
Outstanding
Common: 1000
NCB Investment Advisers,
Inc. Delaware (Qualified in Authorized
Alaska and Minnesota) Common: 3000
Outstanding
Common: 3000
NCB Insurance Brokers, Inc. New York Authorized
Common: 1000
Outstanding
Common: 100
EXHIBIT C PURSUANT TO SECTIONS 3.2 AND 3.3
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
CONSENTS, WAIVERS, APPROVALS,
VIOLATIONS OF AGREEMENTS
NONE
EXHIBIT D PURSUANT TO SECTION 3.5
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
PERMITTED SECURITY INTERESTS,
LIENS AND ENCUMBRANCES
NCB Savings Bank, FSB, ("NCBSB") has under pledge to the Federal Home Loan
Bank of Cincinnati (FHLBC) its mortgage loan portfolio under a Blanket
Agreement for Advances and Security Agreement which allows a blanket lien to
secure borrowings from FHLBC. As of October 31, 1993, and as of December 13,
1993, FHLBC outstanding advances to NCBSB are less than $9,500.
The Borrower extends lines of credit to NCB Business Credit and NCB Mortgage,
each secured by all assets of NCB Business Credit and NCB Mortgage pursuant to
certain Business Loan/Security Agreements.
Each of the Borrower, NCB Mortgage and NCB Business Credit sells mortgage
loans, ESOP loans and other loans from its portfolio in the ordinary course of
business, structured either as an Asset Securitization or a sale of whole
loans. The SPV or other purchaser typically provides for an alternative
security interest and files a financing statement covering such loans in order
to protect itself against a subsequent determination that such sale was not a
sale but rather a loan.
EXHIBIT E PURSUANT TO SECTION 3.6
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
Pending Actions:
Jack L. Ayers, Jr., et. al. v. Oahu Freight Association, et al., Civ.
No. 89-3980-12 (D. Hawaii)
Wayne H.T. Kano, et. al., Plaintiffs v. National Consumer Cooperative
Bank, et. al., Defendants and Jack L. Ayers, Jr. and Elsie M. Ayers,
Third Party Plaintiffs v. George R. Madden, Jr., Third Party Defendant,
and National Consumer Cooperative Bank, et. al., Third Party Plaintiffs
v. George R. Madden, Jr., Third Party Defendant, Civ. No.l 90-00184 HMF
(D. Hawaii). Complaint was dismissed on Summary Judgment on September
15, 1992, and plaintiffs have appealed to the U.S. Court of Appeals for
the Ninth Circuit.
Probable Claims:
None.
EXHIBIT F PURSUANT TO SECTION 3.7
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
COMPLIANCE WITH LAWS, REGULATIONS AND AGREEMENTS
NONE
EXHIBIT G PURSUANT TO SECTION 3.8
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
BURDENSOME DOCUMENTS
NONE
EXHIBIT H PURSUANT TO SECTION 3.13
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
NAME CHANGES, MERGERS, ACQUISITIONS
1. In September, 1988, NCB Savings Association was the surviving entity
upon consummation of a merger with Anchor Savings Association. On or
about December 7, 1991, it converted from an Ohio to a federal savings
bank charter and changed its name to NCB Savings Bank, FSB.
2. In September, 1991, NCB Capital Markets, Inc., changed its name to
Cooperative Funding Corporation.
EXHIBIT I PURSUANT TO SECTION 3.16
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
EMPLOYEE GRIEVANCES
NONE
EXHIBIT J PURSUANT TO SECTION 3.17
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
EMPLOYEE BENEFIT PLANS
Benefit Plans: The Borrower maintains a defined contribution retirement plan
which covers substantially all its employees, after one year of eligibility.
Under the plan, the Borrower makes an annual contribution of six percent of
the compensation (up to $200,000 and not including overtime or bonuses) of
plan participants. The contribution is non-integrated. Participants' rights
in the plan vest over six years.
The Borrower also maintains an employee thrift plan pursuant to
Section 401(k) of the Internal Revenue Code in which all employees are
eligible to participate. Under the plan, the Borrower will match employee
contributions to the plan up to six percent of net compensation.
Participants' rights in the plan vest upon contribution.
EXHIBIT K PURSUANT TO SECTION 7.1(F)
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
PERMITTED INDEBTEDNESS AND GUARANTIES
Indebtedness of NCB Business Credit and NCB Mortgage to the Borrower.
EXHIBIT L PURSUANT TO SECTION 7.13
OF SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK
AND
CERTAIN BANKS NAMED THEREIN
AND
NATIONAL WESTMINSTER BANK USA, AS AGENT FOR THE BANKS
TRANSACTIONS WITH AFFILIATES
Annual charitable contributions by the Borrower to Development Corp.
SECOND AMENDED AND RESTATED LOAN AGREEMENT
BY AND AMONG
NATIONAL CONSUMER COOPERATIVE BANK, D/B/A
NATIONAL COOPERATIVE BANK, AS BORROWER
AND
THE BANKS' SIGNATORY HERETO
AND
NATIONAL WESTMINSTER BANK USA,
AS AGENT
DATED AS OF DECEMBER 15, 1993
TABLE OF CONTENTS
Article 1. Definitions; Effective Date . . . . . . . . . . . . . . . . . .
Article 2. Commitments and Loans . . .. . . . . . . . . . . . . . . . . . . . .
Section 2.1 Loans . . . . . . . . . . . . . . . . . . .
Section 2.2 Reductions in Total Commitments . . . . . .
Section 2.3 Notices Relating to Loans
and Swing Line Loans.
Section 2.4 Fees. . . . . . . . . . . . . . . . . . . . . .
Section 2.5 Lending Offices . . . . . . . . . . . . . . .
Section 2.6 Several Obligations . . . . . . . . . . . . .
Section 2.7 Borrowings. . . . . . . . . . . . . . . . . .
Section 2.8 Conversions of Loans. . . . . . . . . . . . .
Section 2.9 Prepayments . . . . . . . . . . . . . . . . .
Section 2.10 Use of Proceeds of Loans . . . . .
Section 2.11 Payment of Loans . . . . . . . . .
Section 2.12 Interest . . . . . . . . . . . . .
Section 2.13 Notes. . . . . . . . . . . . . . .
Section 2.14 Payments . . . . . . . . . . . . .
Section 2.15 Pro Rata Treatment . . . . . . . .
Section 2.16 Computations . . . . . . . . . . .
Section 2.17 Minimum Amounts of Borrowings,
Conversions, Prepayment
and Interest Periods.
Section 2.18 Non-Receipt of Funds by the Agent .
Section 2.19 Sharing of Payments, Etc.... . .
Section 2.20 Additional Costs . . . . . .. . . .
Section 2.21 Limitation on Types of Loans . .. .
Section 2.22 Illegality . . . . . . . . . . ..
Section 2.23 Certain Conversions
Pursuant to Sections 2.20
Section 2.24 Indemnification
Section 2.25 Termination of A Commitment
under Certain Circumstances..
Article 3. Representations and Warranties . . . . . . . . . . . . . . . . . . .
Section 3.1 Organization. . . . . . . . . . . . . . . . ..
Section 3.2 Power, Authority, Consents. . . . . . . . . . .
Section 3.3 No Violation of Law or Agreements . . . . . . .
Section 3.4 Due Execution, Validity,
Enforceability. . . . . . . . . . . .
Section 3.5 Properties. . . . . . . . . . . . . . . . . .
Section 3.6 Judgments, Actions, Proceedings . . . . . . .
Section 3.7 No Defaults, Compliance With Laws . . . . .
Section 3.8 Burdensome Documents. .
Section 3.9 Financial Statements. . . . . . . . . . . . .
Section 3.10 Tax Returns. . . . . . . . . . .
Section 3.11 Intangible
Section 3.12 Regulation U . . . . . . . . .. . .
Section 3.13 Name Changes . . . . . . . . . . .
Section 3.14 Full Discl
Section 3.15 Employee Grievances. . . . . . .. .
Section 3.16 Condition of Assets. . . . . . .
Section 3.17 ERISA. . . . . . . . . . . . . ..
Article 4. Conditions to the Closing
and to the Making of the Loans . .
Section 4.1 Conditions to the Closing and to
the Making of the Initial Loans . . . . . .
Section 4.2 Conditions to Subsequent Loans
and Swing Line Loans.. . . . . . . . . . . .
Section 4.3 Return of Superseded Notes. . . . . . . . . .
Article 5. Delivery of Financial Reports,
Documents and Other Information. .
Section 5.1 Annual Financial Statements . . . . . . . . .
Section 5.2 Quarterly Financial Statements. . . . . . . .
Section 5.3 Other Information . . . . . . . . . . . . . .
Section 5.4 No Default Certificate. . . . . . . . . . . .
Section 5.5 Certificate of Accountants. . . . . . . . . .
Section 5.6 Copies of Documents . . . . . . . . . . . . .
Section 5.7 Notices of Defaults . . . . . . . . . . . . .
Section 5.8 ERISA Notices . . . . . . . . . . . . . . . .
Article 6. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . .
Section 6.1 Books and Records . . . . . . . . . . . . . .
Section 6.2 Inspections and Audits. . . . . . . . . . . .
Section 6.3 Maintenance and Repairs . . . . . . . . . . .
Section 6.4 Continuance of Business . . . . . . . . . . .
Section 6.5 Copies of Corporate Documents . . . . . . . .
Section 6.6 Perform Obligations . . . . . . . . . . . . .
Section 6.7 Notice of Litigation. . . . . . . . . . . . .
Section 6.8 Insurance . . . . . . . . . . . . . . . . . .
Section 6.9 Financial Covenants . . . . . . . . . . . . .
Section 6.10 Reportable Events. . . . . . . . .
Section 6.11 Comply with ERISA. . . . . . . . .
Section 6.12 Senior Note Agreements . . . . . .
Article 7. Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . .
Section 7.1 Indebtedness. . . . . . . . . . . . . . . . .
Section 7.2 Liens . . . . . . . . . . . . . . . . . . . .
Section 7.3 Guaranties. . . . . . . . . . . . . . . . . .
Section 7.4 Mergers, Acquisitions . . . . . . . . . . . .
Section 7.5 Redemptions; Distributions. . . . . . . . . .
Section 7.6 Intentionally Omitted . . . . . . . . . . . .
Section 7.7 Changes in Business . . . . . . . . . . . . .
Section 7.8 Prepayments . . . . . . . . . . . . . . . . .
Section 7.9 Investments . . . . . . . . . . . . . . . . .
Section 7.10 Fiscal Year. . . . . . . . . . . .
Section 7.11 ERISA Obligations. . . . . . . . .
Section 7.12 Amendment of Documents . . . . . .
Section 7.13 Transactions with Affiliates . . .
Article 8. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . .
Section 8.1 Payments. . . . . . . . . . . . . . . . . . .
Section 8.2 Incurring of Indebtedness
during the Grace Period
Section 8.3 Covenants . . . . . . . . . . . . . . . . . .
Section 8.4 Other Covenants . . . . . . . . . . . . . . .
Section 8.5 Other Defaults. . . . . . . . . . . . . . .
Section 8.6 Representations and Warranties. . . . . . . .
Section 8.7 Bankruptcy. . . . . . . . . . . . . . . . . .
Section 8.8 Judgments . . . . . . . . . . . . . . . . . .
Section 8.9 ERISA . . . . . . . . . . . . . . . . . . . .
Article 9. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 9.1 Appointment, Powers and Immunities. . . . . .
Section 9.2 Reliance by Agent . . . . . . . . . . . . . .
Section 9.3 Events of Default . . . . . . . . . . . . . .
Section 9.4 Rights as a Bank. . . . . . . . . . . . . . .
Section 9.5 Indemnification . . . . . . . . . . . . . . .
Section 9.6 Non-Reliance on Agent and Other Banks . . . .
Section 9.7 Failure to Act. . . . . . . . . . . . . . . .
Section 9.8 Resignation or Removal of Agent . . . . .
Article 10.Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . .
Section 10.1 Fees and Expenses; Indemnity . . .
Section 10.2 Taxes. . . . . . . . . . . . . . .
Section 10.3 Payments . . . . . . . . . . . . .
Section 10.4 Survival of Agreements and Repre- sentations;
WAIVER OF TRIAL BY JURY. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 10.5 Lien on and Set-off of Deposits . . . . . . . . . . . .
Section 10.6 Modifications, Consents and
Waivers; Entire Agreement .. . . . . . . . . . . . . . . . . . . . .
Section 10.7 Remedies Cumulative.. . . . . . . . . . . . . . . . .
Section 10.8 Further Assurances . . . . . . . . . . . . . . . . . .
Section 10.9 Notices. . . . . . . . . . . . . . . . . . . . . . . .
Section 10.10 Counterparts . . . . . . . . . . . . . . . . . . . . .
Section 10.11 Construction; GOVERNING LAW. . . .
Section 10.12 Severability . . . . . . . . . . .
Section 10.13 Binding Effect; No
Assignment or Delegation
Section 10.14 Participations . . . . . . . . .
Exhibits 10.5
SENIOR MANAGEMENT INCENTIVE PLAN FOR 1994
The goals for 1994 were adjusted to increase the emphasis on new business and
low income originations. The weight of new business was increased from 25% to
30%, low income was increased from 10% to 15%, net income was decreased from
25% to 20%, and liquidity was decreased from 10% to 5%. The individual
objectives were developed based upon the 1994 budget with some adjustments in
excess of the budget. Incentives were added to commercial outstandings and
low income volume.
1. CREDIT QUALITY (30%)
The following objectives are weighted 30%, 30%, 20%, 10% and 10%
respectively:
A. As of year end the percentage of the total loan portfolio carried
as non-performing (non-accruing, and OREO) will not exceed 1.5%.
If non-performing assets are 1% or less of total loans at
year end then the credit quality component of the Incentive
Plan is weighted 40%.
B. As of year end the dollar percentage of classified (substandard
and doubtful) loans in the portfolio will not exceed 6%.
If classified loans are 5% of total loans or less then this
objective is weighted 40%.
C. Of loans closed in 1994, 98% by volume and 90% by number shall
have the same or better risk rating at year end as when
originated.
D. Overall loan administration objectives shall be achieved as
reported by Credit Policy and measured by the Deloitte & Touche
audit, FCA examination, OTS examination, rating agencies, and
evaluations of institutional lenders.
E. Generate cash recoveries on previous write offs of at least
$300,000.
2. LOAN ORIGINATION (30%)
The following objectives are weighted 30%, 30%, 30% and 10%
respectively.
A. Real Estate Origination $160,000,000
B. Share Loan Origination $ 50,000,000
C. Month end average outstanding commercial loans and leases of
$241 million for FYE '94, adjusted downward by the gross
amount of any loans funded in capital markets and any net
decrease in RLOC outstanding.
If average outstandings are $250 million or more the weight
of the loan origination goal is increased to 35%.
D. A 12% (21) increase in the number of new commercial cooperative
customers by year end.
3. NET INCOME (20%)
The following objectives are weighted 30%, 25%, 25%, 10%, and 10%
respectively:
A. Meet budgeted net income.
B. Book $2.9 million of real estate loan fees and net gains on
sales with approximately $2.2 million from blanket loans
and $.7 million from single family and share loans.
C. Book $800,000 of fee income from corporate finance transactions
and $400,000 from new lines of business.
D. Achieve 1.35% return on assets.
E. Operating efficiency ratio (Operating expenses less NCBDC
contribution less other income divided by net interest income
will be equal or less than 50%).
4. LOW INCOME/ AFFORDABLE HOUSING (15%)
The following objectives are weighted 50%, 25% and 25% respectively
and represent business developed jointly with NCBDC:
A. Low income originations of $43,000,000.
If originations equal $50 million the weight of the low
income goal is increased to 20% and this objective is
weighted 75%.
B. Evaluate financing opportunities for 4,000 units of affordable
housing.
C. Evaluate 80 commercial low income deals.
5. LIQUIDITY (5%)
Achieve Asset/Liability objectives as conditions warrant during the
year. Objectives may include increased deposits, the sale of loans,
maintaining a matched portfolio, completing private placement and
maintaining relations with bank consortium.
6. AWARD LEVELS
50% - 64.9% Up to 15%
65% - 79.9% Up to 25%
80% - 89.9% Up to 30%
90% and over Up to 35%
The first column is the achievement required based upon the
objectives in this plan, and the second column is the award based
upon year end base salary.
7. PARTICIPANTS
C. E. Snyder
C. Blakely
C. H. Hackman
G. A. Huebscher
B. T. Nordholm
M. W. Pickles
B. W. Silver
Exhibit 22.1
LIST OF SUBSIDIARIES AND AFFILIATES
NCB Business Credit Corporation (wholly-owned) (Delaware)
NCB Mortgage Corporation (voting stock wholly-owned) (Delaware)
NCB Financial Corporation (wholly-owned) (Delaware)
NCB Savings Association, FSB (wholly-owned) (Federal)
NCB Investment Advisers, Inc. (wholly-owned) (Delaware)
NCB Insurance Brokers, Inc. (wholly-owned) (New York)
Cooperative Funding Corporation (wholly-owned) (Delaware)
NCB I, Inc. (wholly-owned) (Delaware)
(special purpose corporation)
NCB Development Corporation (non-profit corporation without
capital stock) (District of Columbia)
Exhibit 25.2
POWER OF ATTORNEY
Know all men by these presents:
That I, Leo H. Barlow ,
of Sealaska Corporation ,
a member of the Board of Directors of THE NATIONAL CONSUMER COOPERATIVE BANK, do
hereby make, constitute and appoint as my true lawful attorney in fact Richard
L. Reed or Hans C. Gray for me and in my name, place and stead to sign any and
all of the following and amendments thereto executed on behalf of THE NATIONAL
CONSUMER COOPERATIVE BANK and filed with the Securities and Exchange Commission,
as follows:
Annual Reports on Form 10-K for the NATIONAL CONSUMER COOPERATIVE BANK.
IN WITNESS WHEREOF, I have hereunto set my hand this 28th day
of March , 1994 .
/s/ Leo H. Barlow
Signature
State of Alaska )
) SS:
County of Juneau )
On this 28th day of March , 1994 , before me personally
appeared the above, to me known and known to me to be the person mentioned and
described in and who executed the foregoing instrument and he duly acknowledged
to me that he executed the same.
/s/ Mary E. Miller
Notary Public
My Commission expires: 5/13/97
Exhibit 25.7
POWER OF ATTORNEY
Know all men by these presents:
That I, Mary Ann Rothman ,
of New York, NY, USA ,
a member of the Board of Directors of THE NATIONAL CONSUMER COOPERATIVE BANK, do
hereby make, constitute and appoint as my true lawful attorney in fact Richard
L. Reed or Hans C. Gray for me and in my name, place and stead to sign any and
all of the following and amendments thereto executed on behalf of THE NATIONAL
CONSUMER COOPERATIVE BANK and filed with the Securities and Exchange
Commission, as follows:
Annual Reports on Form 10-K for the NATIONAL CONSUMER COOPERATIVE BANK.
IN WITNESS WHEREOF, I have hereunto set my hand this 28 day
of March , 1994 .
/s/ Mary Ann Rothman
Signature
State of New York )
) SS:
County of New York )
On this 28th day of March , 1994 , before me personally
appeared the above, to me known and known to me to be the person mentioned and
described in and who executed the foregoing instrument and he duly acknowledged
to me that he executed the same.
/s/ Gustavo Velez
Notary Public
My Commission expires: February 5, 1996
Exhibit 27
This schedule contains summary financial information extracted from National
Cooperative Bank's Consolidated Financial Statements and is qualified in its
entirety by reference to such financial statements.
Appendix C to Item 601(c) of Regulation S-K
Bank Holding Companies and Savings and Loan Holding Companies
Article 9 of Regulation S-X
Item
Number Item Description 1993 Amount
9-03(1) Cash and due from banks $15,562,652
9-02(2) Interest-bearing
deposits 2,139,842
9-03(3) Federal funds sold-
purchased securities
for resale 4,559,252
9-03(4) Trading account assets 0
9-03(6) Investment and mortgage
backed securities held
for sale 26,406,171
9-03(6) Investment and mortgage
backed securities held
to maturity-carrying
value 3,380,698
9-03(6) Investment and mortgage
backed securities held
to maturity-market
value 3,381,920
9-03(7) Loans 417,438,593
9-03(7)(2) Allowance for losses 12,309,359
9-03(11) Total assets 535,766,976
9-03((12) Deposits 66,931,434
9-03(13) Short-term borrowings 31,541,577
9-03(15) Other liabilities 8,722,495
9-03(16) Long-term debt 130,354,889
9-03(19) Preferred stock-
mandatory redemption 0
<PAGE>
9-03(20) Preferred stock-no
mandatory redemption 0
9-03(21) Common Stocks 80,245,148
9-03(22) Other stockholders'
equity 29,794,005
9-03(23) Total liabilities and
stockholders' equity 535,766,976
9-04(1) Interest and fees on
loans 36,487,048
9-04(2) Interest and dividends
on investments 2,510,185
9-04(4) Other interest income 0
9-04(5) Total interest income 38,997,233
9-04(6) Interest on deposits 1,965,347
9-04(9) Total interest expense 20,663,168
9-04(10) Net interest income 18,334,065
9-04(11) Provision for loan
losses 1,703,907
9-04(13)(h) Investment securities
gains/losses 155,989
9-04(14) Other expenses 2,171,707
9-04(15) Income/loss before
income tax 9,461,977
9-04(17) Income/loss before
extraordinary items 8,615,979
9-04(18) Extraordinary items,
less tax 0
9-04(19) Cumulative change in
accounting principles 0
9-04(20) Net income or loss 8,615,979
9-04(21) Earnings per share-
primary 10.74
9-04(21) Earnings per share-
fully diluted 10.74
This schedule contains summary financial information extracted from National
Cooperative Bank's Consolidated Financial Statements and is qualified in its
entirety by reference to such financial statements.
Appendix C to Item 601(c) of Regulation S-K
Bank Holding Companies and Savings and Loan Holding Companies
Industry Guide 3
Guide
Number Item Description 1993 Amounts
I.B.5 Net yield-interest earning
assets-actual 3.67
III.C.1(a) Loans on non accrual 886,313
III.C.1(b) Accruing loans past due 90
days or more 0
III.C.1(c) Troubled debt restructuring 2,283,149
III.C.2 Potential problem loans 0
IV.A.1 Allowance for loan loss-
beginning of period 10,418,687
IV.A.2 Total chargeoffs 252,384
IV.A.3 Total recoveries 439,149
IV.A.4 Allowance for loan loss-end
of period 12,309,359
IV.B.1 Loan loss allowance
allocated to domestic loans 12,309,359
IV.B.2 Loan loss allowance
allocated to foreign loans 0
IV.B.3 Loan loss allowance-
unallocated 12,309,359
Supplemental information
February 14, 1994
Dear Stockholder:
RE: 1994 Board of Directors
Election
I am pleased to present the Official Ballot and other
information needed by your company to cast its vote(s) in the
1994 election of Directors. The Board of Directors has fixed
December 31, 1993 as the record date for the determination of
stockholders entitled to notice of and to vote during the 1994
election. The vote(s) allocated to your company are shown below.
The stockholders will elect four candidates to fill four
vacancies in the twelve stockholder-elected directorships. All
directors are elected to serve three-year terms.
To be counted, all ballots must be received by the indepen-
dent Election Teller in the enclosed postage-paid, self-addressed
envelope by the regular mail delivery on April 8, 1994. Please
be sure to complete the Certification Form on the reverse side of
the Official Ballot. Ballots received without proper
certification will not be counted. Hand-delivered ballots will
not be accepted, nor will ballots received after April 8, 1994.
On behalf of the Board of Directors, we appreciate your
participation and patronage.
Very truly yours,
Jeremiah J. Foley
Chairman of the Board
___________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held April 21, 1994
_________________________
The 1994 Annual Meeting of the Stockholders of National
Cooperative Bank will be held on Thursday, April 21, 1994 from
3:30 to 5:00 p.m., at the National Museum of Women in The Arts,
1250 New York Avenue, N.W., Washington, DC
The Board of Directors and management look forward to
greeting personally those stockholders able to attend and to
responding to questions you may have concerning NCB.
A copy of the 1993 Annual Report of NCB will be mailed
independently to stockholders.
On Behalf of the Board of Directors
Very truly yours,
Louise M. Grant
Corporate Secretary
National Cooperative Bank
Washington, DC
ELECTION OF DIRECTORS
An election is being held by the holders of Class B and
Class C stock to elect four among the sis (6) candidates
nominated to fill four vacancies on the board.
Pursuant to NCB bylaws, the number of directors constituting
the entire board shall be elected by the holders of Class B and
Class C stock. Nominees for election are qualified as repre-
sentatives of four classes of cooperatives. The Election Rules
require that the election be concluded in such a manner so as to
ensure that each of the five cooperative classes shall be repre-
sented by at least one and no more than three directors.
Listed below, by class, are all of the stockholder-elected
directorships currently filled by incumbent directors who will
continue to serve out their terms; and the number of director-
ships available in each class.
Stockholder-Elected Directorships
<TABLE>
Class of Incumbent Available
Cooperative Minimum Maximum Seats 1994 Seats 1994
<S> <C> <C> <C> <C>
Consumer Goods 1 3 0 3
Consumer
Services 1 3 3 0
Low Income 1 3 2 1
Other 1 3 2 1
Housing 1 3 1 2
</TABLE>
Under the Election Rules, the four nominees receiving the
highest vote shall be elected, subject to the maximum limitations
imposed on each class. Stockholders may vote for any four nomi-
nees.
<PAGE>
Executive Director, Federation of Southern Cooperatives/Land
Assistance Fund, one of the largest low income cooperatives in
the Country. FSC/LAF is a non-profit, tax-exempt association of
more that 100 low income cooperatives, credit unions, and
community-based organizations involving 25,000 low income rural
families. He possesses outstanding organizing and community
economic development skills. He has significant experience as a
board member of national organizations, including the National
Save the Family Farm Coalition, and the National League of Rural
Voters.
Ralph Paige
Low Income
STATEMENT
If elected to the National Cooperative Bank (NCB) Board, I
would bring 23 years experience in cooperative development by
virtue of working with over 100 cooperatives throughout the South
including credit unions, marketing co-ops, agricultural co-ops
and housing ventures. For the past eight years I have also
served as Executive Director of the Federation of Southern
Cooperatives/Land Assistance Fund (Federation/LAF) which oversees
more than 100 cooperatives and encourages the development of
others.
In addition to cooperative development, I have had the
unique experience of working within low-income communities in the
region where cooperatives have often made a difference in the
sustainability of those communities. Self-held projects often
require creative financing, legal and management technical
assistance and we at the Federation/LAF have provided these
services whenever possible.
I also offer other assets to the NCB Board. As I am affili-
ated with many national and regional rural advocacy and farming
organization, I could be instrumental in expanding the Bank's
influence and membership from these organization and their
constituents.
As a Board member I would also bring the recognition the
Federation/LAF has received under my leadership, such as the 1989
United Nation's Work Habitat Day Award for the Federation/LAFs
"significant contribution of adequate shelter" for low-income
communities, the 1989 Fannie Mae's "Excellence in Low Income
Housing Development Award" and a "Co-op of the Month" Award from
the National Cooperative Business Association in 1992.
Finally, should I be elected to the NCB Board, my experience
in cooperative development and my capacity as Executive Director
of the Federation/LAF would lend itself to the continuing devel-
opment of the National Cooperative Bank by increasing its influ-
ence and visibility throughout the 15 states Southeast region.<PAGE>
President and CEO
of the FoodService Purchasing Cooperative since
it commenced operations in 1980; Board of Directors since 1980.
Director of Purchasing & Distribution, Director of Asset Planning
& Control Director of Commodities of KFC Corporation. Served as
Financial Analyst & Supervisor of Financial Planning of the
Quaker Oats Company.
Thomas D. Henrion
Consumer Goods
STATEMENT
NCB has been very successful over the last several years,
and I am committed to seeing this success continue. During my
first term, the Board faced major challenges. In 1990, the Bank
was required to start paying interest on U.S. Treasury Notes
which helped finance its formation. My fellow Board members and
I, through the excellent management team at the bank, ably dealt
with this financial burden as well as a change in top management.
While other banks were faltering, the National Cooperative Bank
continued along a successful track. My experience on the Board
during such challenges will allow me to better serve NCB in the
future.
NCB has strived to provide many specialized services for its
customers. To achieve these objectives it has formed several
subsidiaries. My service on the Board of Directors for the last
three years has given me a better understanding of this complex
organization. I have served on the Audit and Finance Committees
and as a Board member of NCB Development Corporation, NCB
Financial Corporation and NCB Capital Corporation. I presently
serve as Chairman of the Finance Committee, (previously served as
Chairman of the Board of the Bank's Capital Corporation) and a
member of the Executive Committee. I have been asked to head a
task force to review the Bank's patronage dividend policy.
As the President and CEO for 13 years of a cooperative with
annual sales of over $500 million reporting to a 15 member Board,
I have gained comprehensive and varied business skills and
knowledge that have enabled me to serve as an effective Board
member.
I am seeking reelection because I believe my experience will
help the Bank continue its excellent financial performance and
move to an even higher level.<PAGE>
President and CEO, REI, Sumner, WA. Served on
Board of Directors
of Outdoor Industry Conservation Alliance, Sumner, WA., Board of
Directors of Independent College of Washington, Seattle, Board
member of Recreation Roundtable Washington, DC, and Board member
on Washington Wildlife and Recreation Coalition, Olympia, WA.
Wally Smith
Consumer Goods
STATEMENT
The National Cooperative Bank is one of the great success
stories in several arenas; business in general, banking in
particular, and in the sector of our economy.
NCB's clientele, the various types of cooperative business
and organization in the U.S. has been strengthened and well
served by the Bank's leadership, expertise, and understanding of
the unique and varying needs of cooperatives. NCB has a proven
record of innovation in developing new products and new markets
that provide financing flexibility and additional financing
options for its members.
The Bank's performance over the last several years has been
excellent, reflecting the excellence of the management and
employee team. My organization, REI, has benefited from the
Bank's expertise and willingness to go the extra mile to meet our
various financial needs.
I would like to continue to be involved, and lend my experi-
ence to helping the Bank grow, prosper, and continue to fulfill
its mission as a most important resource to our nation's coopera-
tives, now and in the future.
<PAGE>
President, National Association of Housing Cooperatives, Member,
director and President of Forest Hills Cooperative, Ann Arbor,
MI; Property Manager of Claudia Mywzke, Ann Arbor, MI.
Terry Lewis, Esq.
Housing
STATEMENT
For the past 2 1/2 years I have served as a Director of the
National Cooperative Bank. During that period, I have served as a
member of NCB's Loan and Business Development Committee, which I
currently chair, and as a member of the Board of the NCB Develop-
ment Corporation, of which I am currently the Vice-Chair. In
these roles, I have worked to strengthen the activity of the Bank
and Development Corporation in the cooperative housing sector --
both the expansion of lending in the "affordable housing" and
"share loan" markets and the emergence of NCB as the nation's
leader in the private and public placement of cooperative housing
loans. I have also actively supported the evolution of NCB's
approach to other cooperative sectors from relatively prosaic
lending to the provision of complex financial services to a
growing variety of cooperatives.
As a Director of NCB and NCBDC, in my work with the Coopera-
tive Development Foundation, and especially in my role as Presi-
dent of the National Association of Housing Cooperatives, I have
been an effective advocate for cooperatives; obtaining and
strengthening government support for this form of ownership and
increasing knowledge and awareness of cooperative ownership among
housing consumers and developers, as a tool of economic
development in both urban and rural areas, and as an effective
format for providing a wide array of services from health care to
education.
To these efforts I have brought substantial knowledge, both
personal and professional, of the structure and operations of
cooperative corporations, in the valuation of commercial proper-
ty, and, increasingly, of the structures and requirements of the
financial markets in which NCB deal.
I have learned a great deal during my tenure on the NCB
Board. I hope I have been an effective Director. I would like
to have the opportunity to continue my efforts on NCB's behalf
for three more years.
<PAGE>
Since July 1993, president and CEO of Winrock International, an
operating foundation with agricultural and rural development
projects in 40 countries, plus the south-central United States.
Dean of Agriculture at Purdue University from 1987-1993.
Assistant Secretary for Economics with the U.S. Department or
Agriculture from 1985-1987. Appointed to National Cooperative
Bank's Board of directors in 1985 by the President of the United
States to serve a three year term as a representative of the
departments and agencies of the Federal government. Elected by
the Board in 1990 to fill an unexpired term and the membership
to a full term in 1991. Currently serves on the finance commit-
tee, was a member of the audit committee for two years, the loan
and business development committee for one year, the Board of NCB
Capital Corporation for three years, and the Board of NCB
Financial Corporation for three years, and the Board of NCB
Financial Corporation for one year. It is a member of the
national advisory of Minorities in Agriculture Resources, and
Related Sciences.
Robert L. Thompson
Other
STATEMENT
When named to my first term on the NCB Board as a Presiden-
tial Appointee in 1985, my only previous cooperative background
had been that gained growing up on a dairy farm that brought feed
from AGWAY and sold milk through Dairymen's League. While study-
ing in Denmark, I had also observed the great role that nonagri-
cultural cooperatives can play. As an NCB board member, I have
invested a significant amount of time to learn about the Bank and
its business. It has been most gratifying during my tenure to see
the great progress the Bank has made. NCB has thrived during a
time when many U.S. Banks did not; and it is providing leadership
in editing new areas of cooperative development throughout the
U.S.
I feel my greatest contribution to the Bank is the analyti-
cal skills I bring to the Board as a professional economist. As
a university professor I taught economics for over 10 years. I
served for two years each on the senior staff of the President's
Council of Economic advisors and as chief economist for the U.S.
Department of Agriculture, one of the largest cabinet departments
of the Federal government. For the last 10 years, I have had
significant management responsibility with staffs of up to 2,000
and annual budgets of up to $100 million. I have also served for
six years on the board of Indiana's principal public utility,
PSI Resources, and was recently elected to the Board of the
Vigoro Corporation. In my current position, I lead an operating
foundation whose mission is to reduce hunger and poverty through
sustainable agricultural and rural development.
Robert L. Thompson Page 2
In summary, I bring to the Bank board broad financial and
economic analytical skills, extensive management experience, as
well as a strong commitment to the role of cooperatives in
economic development of low-income communities.
<PAGE>
Senior Vice president, Amalgamated Life Insurance Company;
Director National Cooperative Business Association; Director,
Cooperative Development Fund; National Leadership Coalition
Health Care Reform; Director, National Coalition for Health Care
Cooperative; Member, AFL-CIO Health Care Task Force.
Richard C. Koven
Other
STATEMENT
As a director of National Cooperative Bank, I would bring 18
years of management experience in cooperative business along with
a working knowledge of the NCB's operations and its role in the
national cooperative movement. With many years of front line
involvement in insurance cooperatives, including leadership of
proto type health insurance cooperatives and significant partici-
pation in the current national debate on health care reform, I
believe I can help the NCB profit from the profound change
occurring in the health care economy. With my current leadership
role in working with trade unions to develop innovative financial
services for diverse, multi-cultural, largely immigrant popula-
tions, I believe I can help the bank develop a strong position in
a milieu that has historically been fertile ground for cooper-
ative development. As a New Yorker, I believe I can help the bank
continue to build on its strong patronage base here. With the
experience of having founded two employee owned business and
having led a trade association of such businesses, I believe I
can help the Bank continue its important work in ESOP finance.
With a long term involvement in the National Cooperative Business
Association I believe I can help keep the NCB connected to the
national cooperative scene. With past and ongoing working
relations with NCB's key board members and management, I believe
I can contribute immediately as a director with little need for
orientation.
Finally, with an abiding belief in cooperative principles,
an appreciation for cooperative traditions, and a strong sense of
the important role that cooperatives and NCB can plan in the
future economy of the United States, I believe I can make a
commitment to NCB to contribute to its historical mission and
future promise.
OFFICIAL BALLOT
National Cooperative Bank
1994 Board of Directors Election
Voting Instructions
Please read these instructions carefully.
1. Only votes cast on this Official Ballot will be counted.
Votes should be cast by placing an "X" in the box next to
the name of each candidate you wish to elect. You may vote
for up to 4 candidates. If you wish, your organization may
vote for fewer than 4 candidates. Please double-check your
marks. If you vote for more than 4 candidates, your ballot
will not be counted. Do not number your choices.
2. if you mark the wrong box, please cross out that candidate's
name by drawing lines through it. Only those candidates
listed on the Official Ballot are eligible for election.
Write-ins will not be counted.
*3. Certify your ballot by completing the Certification Form on
the reverse side of the Official Ballot. Mail the Certified
Official Ballot in the self-addressed, postage-paid envelope
enclosed.
4. In order to be counted, the Official Ballot/Certification
Form must be received by Merkle Computer Systems, Inc. no
later than the last mail delivery on April 8, 1994. Hand-
delivered ballots will not be counted.
NOMINEE'S NAME CATEGORY
__ Ralph Paige Low Income
__ Thomas D. Henrion Consumer Goods
__ Wally Smith Consumer Goods
__ Terry Lewis, Esq. Housing
__ Dr. Robert L. Thompson Other
__ Richard C. Koven Other
*TO BE VALID -- OFFICIAL BALLOT MUST BE CERTIFIED
AS INSTRUCTED ON THE REVERSE SIDE OF THIS FORM.
<PAGE>
CERTIFICATION FORM
National Cooperative Bank
1994 Board of Directors Election
Instructions
1. In order for the Official Ballot to be valid, this
Certificate Form must be completed and signed by the
authorized individual for your organization.
2. In order to be counted, the Official Ballot/Certification
Form must be received by Merkle Computer Systems, Inc., no
later than the last mail delivery on April 8, 1994.
CERTIFICATION STATEMENT
I, do hereby certify that
Name/Title (Please print)
is a stockholder of record of the
Cooperative Name (Please print)
National Cooperative Bank and have cast the vote(s) on behalf of
the organization for the 1994 Board of Directors Election, and
that I am duly authorized to sign this ballot on behalf of the
organization
Attest: By:
Signature/Title Signature
