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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
November 14, 1997
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Date of Report (Date of earliest event reported)
Community Trust Financial Services Corporation
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Georgia 0-19030 58-1856582
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(STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
1784 Atlanta Highway, Hiram, Georgia 30141
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (770) 445-1014
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Not Applicable
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(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 2. Acquisition or Disposition of Assets and Item 5. Other Events
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On November 14, 1997, Community Trust Financial Services Corporation
("Borrower") entered into a Loan and Stock Pledge Agreement (the "Loan
Agreement") with The Bankers Bank, a Georgia banking corporation (the "Lender").
Pursuant to the Loan Agreement, Borrower may borrow up to $2,500,000 from
Lender. As security for Borrower's obligations under the Loan Agreement and
related promissory note, Borrower has pledged to Lender all of the issued and
outstanding common stock (the "Pledged Stock") of Community Trust Bank ("Bank"),
Borrower's wholly-owned subsidiary. Under the terms of the Loan Agreement,
Borrower retains all incidents of beneficial ownership with respect to the
Pledged Stock (e.g., all voting rights and all rights to dividends) until the
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occurrence of a default under the Loan Agreement. The Pledged Stock consists of
409,676 shares of the Bank's $5.00 par value common stock.
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Item 7(c). Exhibits
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Exhibit Number Description Sequential Page Number
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2 Loan and Stock Pledge 4
Agreement, dated November
14, 1997, between Community
Trust Financial Services
Corporation and The Bankers Bank
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
/s/ Angel J. Byrd
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By:
Title: Principal Accounting Officer
November 17, 1997
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Date
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LOAN AND STOCK PLEDGE AGREEMENT
THIS LOAN AND STOCK PLEDGE AGREEMENT (the "Agreement"), entered into as of
November 14, 1997, between COMMUNITY TRUST FINANCIAL SERVICES CORPORATION, a
Georgia corporation (the "Borrower"), and THE BANKERS BANK, a Georgia banking
corporation (the "Lender").
On the date hereof the Borrower is borrowing the principal amount of Two
Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00) from the Lender
(the "Loan"), which will be evidenced by the Note. The Lender is willing to
make the Loan to the Borrower on the terms and conditions described below. The
Borrower and Lender agree that the payment and performance of all obligations
relating to the Loan will be secured through the pledge to the Lender of all the
issued and outstanding shares of capital stock owned or hereafter acquired by
the Borrower (the "Stock") in COMMUNITY TRUST BANK, having its main office at
1784 Atlanta Highway, Hiram, Georgia 30141-1700 (the "Bank"). Certain
capitalized terms used in this Agreement are defined in Section 22 of this
Agreement.
In consideration of the premises and the mutual agreements and representations
in this Agreement, the Lender and the Borrower agree as follows:
1. SECURITY INTEREST.
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(a) The Borrower hereby unconditionally grants and assigns to the Lender and
its successors and assigns a continuing security interest in and security title
to the Stock. The Borrower hereby delivers to the Lender all of its right, title
and interest in and to the Stock, together with certificates representing the
Stock and stock powers endorsed in blank, as security for (i) all obligations of
the Borrower to the Lender hereunder, and (ii) payment and performance of all
obligations of the Borrower to the Lender under the Note, whether direct or
indirect, absolute or contingent, now or hereafter existing, or due or to become
due. If the Borrower receives, for any reason whatsoever, any additional shares
of the capital stock of the Bank, such shares shall thereupon constitute Stock
to be held by the Lender under the terms of this Agreement and the Borrower
shall immediately deliver such shares to the Lender, together with stock powers
endorsed in blank by the Borrower. Beneficial ownership of the Stock, including
all voting, consensual and dividend rights, shall remain in the Borrower until
the occurrence of a Default.
(b) If, prior to repayment in full of the Loan, the aggregate book value of
the Stock becomes less than Five Million and No/100 Dollars ($5,000,000.00), the
Borrower shall promptly deliver to the Lender on demand additional collateral of
a type and value acceptable to the Lender (and the Lender's judgment in valuing
same shall be conclusive) so that the sum of the value of such additional
collateral plus the aggregate book value of the Stock is equal to or in excess
of Five Million and No/100 Dollars ($5,000,000.00). The Borrower shall also
execute any security documents the Lender may reasonably request to evidence and
perfect the Lender's rights in such additional collateral. If at any time such
additional collateral is no longer required pursuant to this Section 1(b), the
Lender shall release its security interest in such additional collateral upon
the request of the Borrower.
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2. REPRESENTATIONS AND WARRANTIES. The Borrower represents and warrants to
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the Lender as follows:
(a) The Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Georgia and is qualified to do
business in all jurisdictions where such qualification is necessary. The
Borrower is registered as a bank holding company with the Board of Governors of
the Federal Reserve System and the Georgia Department of Banking and Finance.
The chief executive office of the Borrower and the principal place of business
of the Borrower where the records of the Borrower are kept are located at 1784
Atlanta Highway, Hiram, Georgia 30141-1700, and the Borrower's U.S. employer
identification number is 58-1856582.
(b) The Bank is a banking corporation duly organized, validly existing, and
in good standing under the laws of the State of Georgia. The Borrower owns all
the Stock (consisting of 409,676 shares) and there are no other outstanding
shares of capital stock and no outstanding options, warrants or other rights
which can be converted into shares of capital stock of the Bank. The Bank has
all requisite corporate power and authority and possesses all licenses, permits
and authorizations necessary for it to own its properties and conduct its
business as presently conducted.
(c) Each financial statement of the Borrower or any Subsidiary which has been
delivered to the Lender presents fairly the financial condition of the Borrower
or such Subsidiary as of the date indicated therein and the results of its
operations for the periods shown therein. There has been no material adverse
change, either existing or threatened, in the financial condition or operations
of the Borrower or any Subsidiary since the date of such financial statement.
(d) The Borrower has full power and authority to execute and perform the
Financing Documents. The execution, delivery, and performance by the Borrower of
the Financing Documents (i) have been duly authorized by all requisite action by
the Borrower, (ii) do not violate any provision of law, and (iii) do not result
in a breach of or constitute a default under any agreement or other instrument
to which the Borrower or any Subsidiary is a party or which the Borrower or any
Subsidiary is bound. Each of the Financing Documents constitutes the legal,
valid, and binding obligation of the Borrower enforceable in accordance with its
terms.
(e) Except for the security interest created by this Agreement, the Borrower
owns the Stock free and clear of all liens, charges, and encumbrances. The Stock
is duly issued, fully paid and non-assessable, and the Borrower has the
unencumbered right to pledge the Stock.
(f) There is no action, arbitration, or other proceeding at law or in equity,
or by or before any court, agency, or arbitrator, nor is there any judgment,
order, or other decree pending, or to the best of Borrower's knowledge is there
any anticipated, or threatened against the Borrower or any Subsidiary or against
any of their properties or assets which might have a material adverse effect on
the Borrower, any Subsidiary, or their respective properties or assets, or which
might call into question the validity or enforceability of the Financing
Documents, or which might involve the alleged violation by the Borrower or any
Subsidiary of any law, rule or regulation.
(g) No consent or other authorization or filing with or of any governmental
authority or other public body on the part of the Borrower or any Subsidiary is
required in connection with the Borrower's execution, delivery, or performance
of the Financing Documents; or if required, all such prerequisites have been
fully satisfied.
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(h) None of the transactions contemplated in this Agreement (including,
without limitation, the use of the proceeds of the Loan) will violate or result
in a violation of Section 7 of the Securities Exchange Act of 1934, or any
regulations issued pursuant thereto.
(i) The following are attached as exhibits hereto: true, correct and complete
copies of (i) the Borrower's and the Bank's articles of incorporation as in
effect as of the date hereof (as certified by the Georgia Secretary of State on
November 3, 1997 and the Georgia Secretary of State on November 3, 1997,
respectively); (ii) certificates of existence for the Borrower issued by the
Georgia Secretary of State on November 3, 1997 and for the Bank issued by the
Georgia Secretary of State on November 3, 1997; (iii) the bylaws of the Borrower
in effect immediately prior to the adoption of the resolutions referred to below
(and such bylaws have not been further altered or amended and have been in full
force and effect at all times since the adoption of such resolutions through the
date hereof); (iv) the bylaws of the Bank as of the date hereof; (v) resolutions
(the "Resolutions") of the Board of Directors of the Borrower adopted by
unanimous consent on October 31, 1997. The Resolutions have been since adoption
and are now in full force and effect and have not been modified in any respect.
There have been no further amendments or other documents affecting or altering
the Borrower's or the Bank's articles of incorporation since the date of the
certifications referred to above through the date hereof, and the Borrower and
the Bank have remained in valid existence under the laws of Georgia and the
Georgia Secretary of State, respectively, since such dates.
3. AFFIRMATIVE COVENANTS. The Borrower agrees that so long as the Note is
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outstanding or this Agreement is in effect:
(a) The Borrower shall promptly furnish to the Lender: (i) not later than 120
days after the end of each fiscal year, audited consolidated financial
statements of the Borrower prepared in accordance with generally accepted
accounting principles ("GAAP") and certified by Porter Keadle Moore, LLP or
another independent accounting firm acceptable to the Lender; (ii) not later
than 60 days after each of the first three quarters of each fiscal year,
unaudited consolidated financial statements of the Borrower, prepared in
accordance with GAAP (subject to changes resulting from normal year-end
adjustments) and certified by the chief financial officer of the Borrower; (iii)
not later than 45 days after the end of each of the first three quarters of each
year, copies of the Report of Condition and the Report of Income and Dividends
of each of the Bank Subsidiaries; (iv) promptly after the occurrence of a
material adverse change in the business, properties, condition, management, or
prospects (financial or otherwise) of the Borrower or any Subsidiary, including,
without limitation, imposition of any letter agreement, memorandum of
understanding, cease and desist order, or other similar regulatory action
involving the Borrower or any Subsidiary, a statement of the Borrower's chief
executive officer or chief financial officer setting forth in reasonable detail
such change and the action which the Borrower or any Subsidiary proposes to take
with respect thereto; and (v) from time to time upon request of the Lender, such
other information relating to the operations, business, condition, management,
properties, or prospects of the Borrower or any Subsidiary as the Lender may
reasonably request (including meetings with the Borrower's or Subsidiary's
officers and employees).
(b) The Borrower and each Subsidiary shall punctually pay and discharge all
taxes, assessments and other governmental charges or levies imposed upon it
or upon its income or upon any of its property.
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(c) The Borrower and each Subsidiary shall comply in all material respects
with all requirements of constitutions, statutes, rules, regulations, and orders
and all orders and decrees of courts and arbitrators applicable to it or its
properties.
(d) The Borrower shall promptly notify the Lender of any change in senior
management or any significant change in the beneficial ownership of the
Borrower's stock by any 25% or greater shareholder of the Borrower.
4. NEGATIVE COVENANTS. The Borrower agrees that so long as the Note is
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outstanding or this Agreement is in effect:
(a) The Borrower shall not permit its Capital during the term of this
Agreement to be less than $5,000,000.
(b) The Borrower shall not permit the ratio of Tier 1 Capital to average
total assets (the Tier 1 Leverage Ratio) of any of the Bank Subsidiaries as of
the end of any fiscal year to be less than 6.0%.
(c) The Borrower shall not permit its Total Risk Based Capital Ratio as of
the end of any fiscal quarter during the term of this Agreement to be less than
10.0%.
(d) The Borrower shall not, and shall not permit any of the Bank Subsidiaries
to, fail to comply with any minimum capital requirement imposed by any of their
federal or state regulators.
(e) The Borrower shall not permit its Weighted Average Return on Assets for
each fiscal year to be less than .75%.
(f) The Borrower shall not permit the allowance for loan and lease losses of
any of the Bank Subsidiaries to be less than 1.00% of its gross loans for each
fiscal quarter.
(g) The Borrower shall not permit any of the Bank Subsidiaries to maintain an
Assessment Risk Classification other than either (i) Group 1, Subgroup A; (ii)
Group 1, Subgroup B; or (iii) Group 2, Subgroup A.
(h) The Borrower shall not receive a composite BOPEC rating, and shall not
permit any of the Bank Subsidiaries to receive a composite CAMEL rating, from
any of their respective regulators, other than two or better.
(i) The Borrower shall not incur or permit to exist any indebtedness or
liability for borrowed money in an aggregate in excess of $250,000.00 other than
to the Lender or a wholly-owned Subsidiary of the Borrower without prior Lender
approval, except that this covenant shall not apply to deposits, repurchase
agreements, federal funds borrowings, overdrafts, and other banking transactions
entered into by a Subsidiary in the ordinary course of its business.
(j) The Borrower shall not, directly or indirectly, become a guarantor,
except as previously disclosed to Lender, of any obligation of, or an endorser
of, or otherwise assume or become liable upon any notes, obligations, or other
indebtedness of any other Person (other than a Subsidiary) except in connection
with the depositing of checks in the normal and ordinary course of business.
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(k) The Borrower shall not, nor permit any Subsidiary to, transfer all or
substantially all of its assets to or consolidate or merge with any other
Person, or acquire all or substantially all of the properties or capital stock
of any other Person, or create any Subsidiary or enter into any partnership or
joint venture.
(l) The Borrower shall not permit any Subsidiary to issue, sell or otherwise
dispose or part with control of any shares of any class of its stock (other than
directors' qualifying shares) except to the Borrower or a wholly-owned
Subsidiary of the Borrower.
(m) The Borrower shall not sell or otherwise dispose or part with control of
any of the Stock or any other securities or indebtedness of any Subsidiary, and
the Borrower shall not pledge or otherwise transfer or grant a security interest
in any of the capital stock or other securities of any of its Subsidiaries.
5. ADVANCES UNDER THE LOAN. The Lender shall not be obligated to make any
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advance of the Loan to the Borrower unless:
(a) All representations and warranties of the Borrower contained in this
Agreement or the Note shall be true in all respects on and as of the date of
each advance of the Loan.
(b) The Borrower and each Subsidiary shall have performed in all material
respects all their agreements and obligations required by the Financing
Documents.
(c) No adverse change shall have occurred in the Borrower's or any
Subsidiary's condition (financial or otherwise), or in the business, properties,
assets, liabilities, prospects, or management of the Borrower or any Subsidiary
since the date of this Agreement.
(d) No Default or event which, with the giving of notice or passage of time
(or both), would constitute a Default under the terms of this Agreement shall
have occurred.
(e) All other matters incidental to the Loan shall be satisfactory to the
Lender.
6. DEFAULT. A "Default" shall exist if any of the following occurs:
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(a) Failure of the Borrower to make, within ten (10) days of when due, any
payment of any amount payable, whether principal or interest or other amount, on
any of the Liabilities, whether at maturity, or at a date fixed for any
prepayment or partial prepayment, or by acceleration, or otherwise.
(b) Any statement, representation, or warranty of the Borrower made in any of
the Financing Documents or at any time furnished by or on behalf of the Borrower
to the Lender shall be false or misleading in any material respect as of the
date made.
(c) Failure of the Borrower punctually and fully to comply with any of the
covenants in this Agreement if such failure under this clause is not remedied
within 30 days after notice from the Lender to the Borrower.
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(d) The occurrence of a default under any other agreement to which the
Borrower and the Lender are parties or under any other instrument executed by
the Borrower in favor of the Lender.
(e) If the Borrower or any Subsidiary becomes insolvent as defined in the
Georgia Uniform Commercial Code or makes an assignment for the benefit of
creditors; or if any action is brought by the Borrower or any Subsidiary seeking
dissolution of the Borrower or such Subsidiary or liquidation of its assets or
seeking the appointment of a trustee, interim trustee, receiver, or other
custodian for any of its property; or if the Borrower or any Subsidiary
commences a voluntary case under the Federal Bankruptcy Code; or if any
reorganization or arrangement proceeding is instituted by the Borrower or any
Subsidiary for the settlement, readjustment, composition or extension of any of
its debts upon any terms; or if any action or petition is otherwise brought by
the Borrower or any Subsidiary seeking similar relief or alleging that it is
insolvent or unable to pay its debts as they mature.
(f) Any action is brought against the Borrower or any Subsidiary seeking
dissolution of the Borrower or such Subsidiary or liquidation of any of its
assets or seeking the appointment of a trustee, interim trustee, receiver, or
other custodian for any of its property, and such action is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 60
days of the date upon which it was instituted; or any proceeding under the
Federal Bankruptcy Code is instituted against the Borrower or any Subsidiary and
(i) an order for relief is entered in such proceeding or (ii) such proceeding is
consented to or acquiesced in by the Borrower or such Subsidiary or is not
dismissed within 60 days of the date upon which it was instituted; or any
reorganization or arrangement proceeding is instituted against the Borrower or
any Subsidiary for the settlement, readjustment, composition, or extension of
any of its debts upon any terms, and such proceeding is consented to or
acquiesced in by the Borrower or such Subsidiary or is not dismissed within 60
days of the date upon which it was instituted; or any action or petition is
otherwise brought against the Borrower or any Subsidiary seeking similar relief
or alleging that it is insolvent, unable to pay its debts as they mature, or
generally not paying its debts as they become due, and such action or petition
is consented to or acquiesced in by the Borrower or such Subsidiary or is not
dismissed within 60 days of the date upon which it was brought.
(g) The Borrower or any Subsidiary is in default (or an event has occurred
which, with the giving of notice or passage of time, or both, will cause the
Borrower or any Subsidiary to be in default) on indebtedness to another Person,
and the amount of such indebtedness exceeds $25,000 or the acceleration of the
maturity of such indebtedness would have a material adverse effect upon the
Borrower or such Subsidiary.
(h) Any other material adverse change occurs in the Borrower's financial
condition or means or ability to pay the Liabilities.
(i) Any cease and desist or other order has been noticed, or entered against
the Borrower or any Subsidiary by any bank or bank holding company regulatory
agency or body, or the Borrower or any Subsidiary enters into any form of
memorandum of understanding, plan of corrective action, or letter agreement with
any such regulatory agency or body, or any other regulatory enforcement action
is taken against the Borrower or any Subsidiary relating to the capitalization,
management, or operation of the Borrower or any Subsidiary.
(j) The Borrower or any Subsidiary is indicted or convicted or pleads guilty
or nolo contendere to any charge that the Borrower or such Subsidiary has
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violated any drug,
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controlled substances, money laundering, currency reporting, racketeering, or
racketeering-influenced-and-corrupt-organization statute or regulations other
forfeiture statute.
(k) The Borrower ceases to own 100% of the issued and outstanding capital
stock of the Bank or ceases to control any of the other Bank Subsidiaries.
7. REMEDIES UPON DEFAULT. Upon the occurrence of a Default, the Lender shall
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be entitled, without limitation, to exercise the following rights at any time
and from time to time, which the Borrower hereby agrees to be commercially
reasonable:
(a) declare any of the Liabilities due and payable, whereupon they
immediately will become due and payable (notwithstanding any provisions to the
contrary, and without presentment, demand, notice or protest of any kind (all of
which are expressly waived by the Borrower));
(b) (i) receive all amounts payable in respect of the Collateral otherwise
payable to the Borrower; (ii) settle all accounts, claims, and controversies
relating to the Collateral; (iii) transfer all or any part of the Collateral
into the Lender's or any nominee's name; and (iv) execute all agreements and
other instruments; bring, defend and abandon all actions and other proceedings;
and take all actions in relation to the Collateral as the Lender in its sole
discretion may determine;
(c) exercise all of the rights, powers and remedies of the Borrower with
respect to the Stock thereunder, including the exercise of all voting rights and
other ownership or consensual rights of the Stock (but the Lender is not hereby
obligated to exercise such rights), and in connection therewith the Borrower
hereby appoints the Lender to be the Borrower's true and lawful attorney-in-fact
and IRREVOCABLE PROXY to vote the Stock in any manner the Lender deems advisable
for or against all matters submitted to a vote of shareholders, and such power-
of-attorney is coupled with an interest and irrevocable;
(d) sell, assign and deliver, or grant options to purchase, all or any part
of or interest in the Collateral in one or more parcels, at any public or
private sale at any exchange, any of the Lender's offices, or elsewhere, without
demand of performance, advertisement, or notice of intention to sell or of the
time or place of sale or adjournment thereof or to redeem or otherwise (all of
which are hereby expressly and irrevocably waived by the Borrower), for cash, on
credit, or for other property, for immediate or future delivery without any
assumption of credit risk, and for such price and on such terms as the Lender in
its sole discretion may determine; the Borrower agrees that to the extent that
notice of sale shall be required by law that at least five business days' notice
to the Borrower of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification; the
Lender shall not be obligated to make any sale of Collateral regardless of
notice of sale having been given; the Lender may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
any such sale may, without further notice, be made at the time and place to
which it was so adjourned; the Borrower hereby waives and releases to the
fullest extent permitted by law any right or equity of redemption with respect
to the Collateral, whether before or after sale hereunder, and all rights, if
any, of marshaling the Collateral and any other security for the Loan or
otherwise; at any such sale, unless prohibited by applicable law, the Lender may
bid for and purchase all or any part of the Collateral so sold free from any
such right or equity of redemption; and the Lender shall not be liable for
failure to collect or realize upon any or all of the Collateral or for any delay
in so doing nor shall any of them be under any obligation to take any action
whatsoever with regard thereto;
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(e) appoint and dismiss managers or other agents for any of the purposes
mentioned in the foregoing provisions of this Section 7, all as the Lender in
its sole discretion may determine; and
(f) generally, take all such other action as the Lender in its sole
discretion may determine as incidental or conducive to any of the matters or
powers mentioned in this Section 7 and which the Lender may or can do lawfully
and use the name of the Borrower for such purposes and in any proceedings
arising therefrom.
8. APPLICATION OF PROCEEDS. The proceeds of the public or private sale or
-----------------------
other disposition of any Collateral hereunder shall be applied to (i) the costs
incurred in connection with the sale, expressly including, without limitation,
any costs under Section 11(a) hereof; (ii) any unpaid interest which may have
accrued on any obligations secured hereby; (iii) any unpaid principal on any
obligations secured hereby; and (iv) damages incurred by the Lender by reason of
any breach secured against hereby, in such order as the Lender may determine,
and any remaining proceeds shall be paid over to the Borrower or others as by
law provided. If the proceeds of the sale or other disposition of the Stock are
insufficient to pay all such amounts, the Borrower shall remain liable to the
Lender for the deficiency.
9. ADDITIONAL RIGHTS OF SECURED PARTIES. In addition to its other rights and
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privileges under this Agreement, the Lender may exercise from time to time any
and all other rights and remedies available to a secured party when a debtor is
in default under a security agreement as provided in the Uniform Commercial Code
of Georgia, or available to the Lender under any other applicable law or in
equity, including without limitation the right to any deficiency remaining after
disposition of the Collateral. The Borrower shall pay all of the reasonable
costs and expenses (including reasonable attorneys' fees) incurred by the Lender
in enforcing its rights under this Agreement.
10. RETURN OF STOCK TO BORROWER. Upon payment in full of all principal and
---------------------------
interest on the Note and full performance by the Borrower of all covenants and
other obligations under this Agreement, the Lender shall return to the Borrower
(i) all of the then remaining Stock and (ii) all rights received by the Lender
as agent for the Borrower as a result of its possessory interest in the Stock.
11. DISPOSITION OF STOCK BY AGENT. The Stock is not registered under the
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various federal or state securities laws and disposition thereof after default
may be subject to prior regulatory approval and may be restricted to one or more
private (instead of public) sales in view of the lack of such registration. The
Borrower acknowledges that upon such disposition, the Lender may approach only a
restricted number of potential purchasers and that a sale under such
circumstances may yield a lower price for the Stock than if the Stock were
registered pursuant to federal and state securities laws and sold on the open
market. The Borrower, therefore, agrees that:
(a) if the Lender shall, pursuant to the terms of this Agreement, sell or
cause any of the Stock to be sold at a private sale, the Lender shall have the
right to rely upon the advice and opinion of any national brokerage or
investment firm having recognized expertise and experience in connection with
shares of companies in the banking industry (but shall not be obligated to seek
such advice and the failure to do so shall not be considered in determining the
commercial reasonableness of the Lender's action) as to the best manner in which
to expose the Stock for sale and as to the best price reasonably obtainable at
the private sale thereof; and
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(b) such reliance shall be conclusive evidence that the Lender has handled
such disposition in a commercially reasonable manner.
12. BORROWER'S OBLIGATIONS ABSOLUTE. The obligations of the Borrower under
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this Agreement shall be direct and immediate and not conditional or contingent
upon the pursuit of any other remedies against the Borrower or any other Person,
nor against other security or liens available to the Lender or its successors,
assigns or agents. The Borrower hereby waives any right to require that an
action be brought against any other Person or require that resort be had to any
security or to any balance of any deposit account or credit on the books of the
Lender in favor of any other Person prior to any exercise of rights or remedies
hereunder, or to require resort to rights or remedies of the Lender in
connection with the Loan.
13. NOTICES. Except as provided otherwise in this Agreement, all notices and
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other communications under this Agreement are to be in writing and are to be
deemed to have been duly given and to be effective upon delivery to the party to
whom they are directed. If sent by U.S. mail, first class, certified, return
receipt requested, postage prepaid, and addressed to the Lender or to the
Borrower at their respective addressees set forth below, such communications are
deemed to have been delivered on the second business day after being so posted.
If to the Lender: The Bankers Bank
2410 Paces Ferry Road
600 Paces Summit
Atlanta, Georgia 30339-4098
Attn: Ken T. Vassey, Senior Vice President
If to the Borrower: Community Trust Financial Services Corporation
2895 Atlanta Highway
Hiram, Georgia 30141-1700
Attn: Ronnie L. Austin, President
Either the Lender or the Borrower may, by written notice to the other,
designate a different address for receiving notices under this Agreement;
provided, however, that no such change of address will be effective until
written notice thereof is actually received by the party to whom such change of
address is sent.
14. BINDING AGREEMENT. The provisions of this Agreement shall be construed
-----------------
and interpreted, and all rights and obligations of the parties hereto
determined, in accordance with the laws of the State of Georgia. This
Agreement, together with all documents referred to herein, constitutes the
entire Agreement between the Borrower and the Lender with respect to the matters
addressed herein and may not be modified except by a writing executed by the
Lender and delivered by the Lender to the Borrower. This Agreement may be
executed in multiple counterparts, each of which shall be deemed an original but
all of which, taken together, shall constitute one and the same instrument.
15. PARTICIPATIONS. The Lender may at any time grant participations in or
--------------
sell, assign, transfer or otherwise dispose of all or any portion of the
indebtedness of the Borrower outstanding pursuant to the Financing Documents.
The Borrower hereby agrees that any holder of a participation in, and any
assignee or transferee of, all or any portion of any amount owed by the Borrower
under the Financing Documents (i) shall be entitled to the benefits of the
provisions of this Agreement as the Lender hereunder and (ii) may exercise any
and all rights of the banker's lien,
-9-
<PAGE>
set-off or counterclaim with respect to any and all amounts owed by the Borrower
to such assignee, transferee or holder as fully as if such assignee, transferee
or holder had made the Loan in the amount of the obligation in which it holds a
participation or which is assigned or transferred to it.
16. EXPENSES. All reports and other documents or information furnished to
--------
the Lender under this Agreement shall be supplied by the Borrower without cost
to the Lender. Further, the Borrower shall reimburse the Lender on demand for
all out-of-pocket costs and expenses (including legal fees) incurred by the
Lender in connection with the preparation, interpretation, operation, and
enforcement of the Financing Documents or the protection or preservation of any
right or claim of the Lender with respect to such agreements. The Borrower will
pay all taxes (if any) in connection with the Financing Documents. The
obligations of the Borrower under this section shall survive the payment of the
Liabilities and the termination of this Agreement.
17. INDEMNIFICATION. In addition to any other amounts payable by the
---------------
Borrower under this Agreement, the Borrower shall pay and indemnify the Lender
from and against all claims, liabilities, losses, costs, and expenses
(including, without limitation, reasonable attorneys' fees and expenses) which
the Lender may (other than as a result of the gross negligence or willful
misconduct of the Lender) incur or be subject to as a consequence, directly or
indirectly, of (i) any breach by the Borrower of any warranty, term or condition
in, or the occurrence of any default under, any of the Financing Documents,
including all fees or expenses resulting from the settlement or defense of any
claims or liabilities arising as a result of any such breach or default, (ii)
the Lender's making, holding, or administering the Loan or the Collateral, (iii)
allegations of participation or interference by the Lender in the management,
contractual relations or other affairs of the Borrower or any Subsidiary, (iv)
allegations that the Lender has joint liability with the Borrower or any
Subsidiary for any reason, and (v) any suit, investigation, or proceeding as to
which the Lender or such participant is involved as a consequence, directly or
indirectly, of its execution of any of the Financing Documents, or any other
event or transaction contemplated by any of the foregoing. The obligations of
Borrower under this Section 17 shall survive the termination of this Agreement.
18. RIGHT TO SET-OFF. Upon the occurrence of a Default hereunder, the
----------------
Lender, without notice or demand of any kind, may hold and set off against such
of the Liabilities (whether matured or unmatured) as the Lender may elect any
balance or amount to the credit of the Borrower in any deposit, agency, reserve,
holdback or other account of any nature whatsoever maintained by or on behalf of
the Borrower with the Lender at any of its offices, regardless of whether such
accounts are general or special and regardless of whether such accounts are
individual or joint. Any Person purchasing an interest in debt obligations
under this Agreement held by the Lender may exercise all rights of offset with
respect to such interest as fully as if such Person were a holder of debt
obligations hereunder in the amount of such interest.
19. FURTHER ASSURANCES. If at any time the Lender upon advice of its counsel
------------------
shall determine that any further document shall be required to effect this
Agreement and the transactions and other agreements contemplated thereby, the
Borrower shall, and shall cause its Subsidiaries to, execute and deliver such
document and otherwise carry out the purposes of this Agreement.
20. SEVERABILITY. If any paragraph or part thereof shall for any reason be
------------
held or adjudged to be invalid, illegal, or unenforceable by any court of
competent jurisdiction, such paragraph or part thereof shall be deemed separate,
distinct, and independent, and the remainder of this Agreement shall remain in
full force and effect and shall not be affected by such holding or adjudication.
-10-
<PAGE>
21. BINDING EFFECT. All rights of the Lender under the Financing Documents
--------------
shall inure to the benefit of its transferees, successors and assigns. All
obligations of the Borrower under the Financing Documents shall bind its heirs,
legal representatives, successors, and assigns.
22. DEFINITIONS.
-----------
(a) "Assessment Risk Classification" means the assessment risk classification
assigned to each of the Bank Subsidiaries for purposes of assessment of premiums
by the Federal Deposit Insurance Corporation for deposit insurance pursuant to
12 C.F.R. (S) 327.3(d) or the corresponding assessment risk classification, as
determined by the Lender, pursuant to any successor assessment risk
classification system.
(b) "Bank Subsidiaries" means each banking Subsidiary of Borrower, now or
hereafter in existence, including but not limited to the Bank.
(c) "Capital" means all capital or all components of capital, other than any
allowance for loan and lease losses and net of any intangible assets, as defined
from time to time by the primary federal regulator of the Borrower, the Bank, or
each of the other Bank Subsidiaries (as the case may be).
(d) "Collateral" means and includes all property assigned or pledged to the
Lender or in which the Lender has been granted security interest or to which the
Lender has been granted security title, whether under any of the Financing
Documents or any other agreement, instrument, or document, and the proceeds
thereof.
(e) "Financing Documents" means and includes this Agreement, the Note, and
all other associated loan and collateral documents including, without
limitation, all guaranties, suretyship agreements, stock powers, security
agreements, security deeds, subordination agreements, exhibits, schedules,
attachments, financing statements, notices, consents, waivers, opinions,
letters, reports, records, assignments, documents, instruments, information and
other writings related thereto, or furnished by the Borrower to the Lender in
connection therewith or in connection with any of the Collateral, and any
amendments, extensions, renewals, modifications or substitutions thereof or
therefor.
(f) "Liabilities" means all indebtedness, liabilities, and obligations of the
Borrower of any nature whatsoever which the Lender may now or hereafter have,
own or hold, and which are now or hereafter owing to the Lender regardless of
however and whenever created, arising or evidenced, whether now, heretofore or
hereafter incurred, whether now, heretofore or hereafter due and payable,
whether alone or together with another or others, whether direct or indirect,
primary or secondary, absolute or contingent, or joint or several, and whether
as principal, maker, endorser, guarantor, surety or otherwise, and also
regardless of whether such Liabilities are from time to time reduced and
thereafter increased or entirely extinguished and thereafter reincurred,
including without limitation the Note and any amendments, extensions, renewals,
modifications or substitutions thereof or therefor.
(g) "Note" shall mean the promissory note dated the date hereof in the
principal amount of Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000.00) and any amendments, extensions, renewals, modifications, or
substitutions thereof or therefor in effect at any particular time.
-11-
<PAGE>
(h) "Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
(i) "Subsidiary" means each of the Bank Subsidiaries and each other
corporation for which the Borrower has the power, directly or indirectly, to
direct its management or policies or to vote 25% or more of any class of its
voting securities.
(j) "Tier 1 Capital" means Tier 1 capital as defined by the capital
maintenance regulations of the primary federal bank regulatory agency of the
relevant Bank Subsidiary.
(k) "Weighted Average Return on Assets" means (i) with respect to the
Borrower, its net income for the previous calendar year plus the amount of any
interest payments by it on the Loan during the previous calendar year, divided
by its average assets during the previous calendar year, and (ii) with respect
to each Bank Subsidiary, its net income for the previous calendar year divided
by its average assets during the previous calendar year.
(l) "Weighted Average Return on Equity" means (i) with respect to the
Borrower, its net income for the previous calendar year plus the amount of any
interest payments by it on the Loan during the previous calendar year, divided
by its average equity during the previous calendar year, and (ii) with respect
to each Bank Subsidiary, its net income for the previous calendar year divided
by its average equity during the previous calendar year.
(m) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles in
effect from time to time.
-12-
<PAGE>
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and affixed
their seals by and through their duly authorized officers, as of the day and
year first above written.
BORROWER:
--------
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
By: /s/ Ronnie L. Austin
---------------------------
Ronnie L. Austin, President
Attest: /s/ Angel J. Byrd
-----------------
Angel J. Byrd, Chief Financial Officer
[CORPORATE SEAL]
LENDER:
------
THE BANKERS BANK
By: /s/ Edward J. Cooney
--------------------
Edward J. Cooney, Assistant Vice President
[BANK SEAL]
-13-
<PAGE>
SCHEDULES TO LOAN AND STOCK PLEDGE AGREEMENT
- --------------------------------------------
Schedule Attached or Omitted
- -------- -------------------
Articles of Incorporation of Community Omitted*
Trust Financial Services Corporation
Certificate of Existence of Community Omitted*
Trust Financial Services Corporation
issued by the Georgia Secretary of State
Bylaws of Community Trust Financial Omitted*
Services Corporation
Resolutions of The Board of Directors Omitted*
of Community Trust Financial Services
Corporation approving the Loan and
Stock Pledge Agreement and related
documents
Articles of Incorporation of Community Omitted*
Trust Bank
Certificate of Existence of Community Omitted*
Trust Bank issued by the Georgia Secretary
of State
Bylaws of Community Trust Bank Omitted*
Form of $2,500,000 Grid Promissory Attached
Note from Community Trust Financial
Services Corporation to The Bankers Bank
Form of Irrevocable Stock Power Attached
- ----------------
* Omitted schedules will, upon request, be furnished supplementally to the
Securities and Exchange Commission.
<PAGE>
GRID PROMISSORY NOTE
$2,500,000 NOVEMBER 14, 1997
FOR VALUE RECEIVED, the undersigned, COMMUNITY TRUST FINANCIAL SERVICES
CORPORATION, a Georgia corporation (the "Borrower"), promises to pay to the
order of THE BANKERS BANK (the "Lender" and, together with any holder hereof,
called the "Holder"), at 2410 Paces Ferry Road, 600 Paces Summit, Atlanta,
Georgia 30339-4098 (or at such other place as the Holder may designate in
writing to the Borrower), in lawful money of the United States of America, the
principal sum of Two Million Five Hundred Thousand and No/100 Dollars
($2,500,000), or so much thereof as may hereafter be disbursed hereunder,
together with interest on so much thereof as is from time to time outstanding
and unpaid, from the date of each advance of principal at a rate of interest as
hereinafter provided.
This Note is the Note made and given as described in that certain Loan and
Stock Pledge Agreement dated as of November 14, 1997, between the Borrower and
the Lender (the "Loan Agreement"). In the event of any inconsistency between
this Note and the Loan Agreement, this Note shall control. All capitalized
terms used herein shall have the meanings ascribed to such terms in the Loan
Agreement, except to the extent such capitalized terms are otherwise defined or
limited herein.
The Borrower shall be entitled to borrow funds hereunder pursuant to the terms
and conditions of the Loan Agreement, provided that no advance shall be made
after November 14, 1999.
The Borrower hereby authorizes the Holder to endorse on the Schedule annexed
to this Note all advances of funds made to the Borrower and all payments of
principal amounts in respect of the Loan, which endorsements shall, in the
absence of manifest error, be conclusive as to the outstanding principal amount
of the Loan; provided, however, that the failure to make such notation with
respect to any Loan or payment shall not limit or otherwise affect the
obligations of the Borrower under this Note.
The Borrower promises to pay interest on the unpaid principal amount
outstanding hereunder (the "Loan"), at a simple interest rate per annum equal to
the Prime Rate Basis. "Prime Rate Basis" shall mean, on any day, a simple
interest rate per annum equal to the Prime Rate less 50 basis points (0.50%).
"Prime Rate" shall mean, on any day, the rate of interest published as the
"Prime Rate" as of such day appearing in the "Money Rates" section of the
Eastern Edition of the Wall Street Journal or any successor to such section. If
-------------------
more than one such rate shall be published, then the Prime Rate shall be the
higher or highest of such rates. The Prime Rate in effect as of the close of
business of
<PAGE>
each day shall be the applicable Prime Rate for the day and each
succeeding non-business day in determining the applicable Prime Rate Basis.
Interest shall be calculated on the basis of a 360-day year for the actual
number of days elapsed.
Interest under this Note shall be due and payable quarterly in arrears on the
first day of each calendar quarter, commencing January 1, 1998, and continuing
to be due on the first day of each calendar quarter thereafter until this Note
is paid in full. Interest shall also be due and payable when this Note shall
become due (whether at maturity, by reason of acceleration or otherwise). After
default, interest shall also be due and payable upon demand from time to time by
the Holder as provided below.
Commencing December 1, 1999, and continuing on December 1 of each succeeding
calendar year, the indebtedness evidenced by this Note shall be due and payable
in nine (9) consecutive annual installments of principal, each in the amount of
ten percent (10%) of the outstanding principal balance as of November 14, 1999.
The entire outstanding balance of the indebtedness evidenced by this Note,
together with all accrued and unpaid interest, shall be due and payable in a
tenth (10th) and final installment on November 14, 2008.
Overdue principal shall bear interest for each day from the date it became so
due until paid in full, payable on demand, at a rate per annum (computed on the
basis of a 360-day year for the actual number of days elapsed) equal to the
Prime Rate Basis plus 3%.
In no event shall the amount of interest due or payable hereunder exceed the
maximum rate of interest allowed by applicable law, and in the event any such
payment is inadvertently paid by the Borrower or inadvertently received by the
Holder, then such excess sum shall be credited as a payment of principal, unless
the Borrower shall notify the Holder, in writing, that the Borrower elects to
have such excess sum returned to it forthwith. It is the express intent hereof
that the Borrower not pay and the Holder not receive, directly or indirectly, in
any manner whatsoever, interest in excess of that which may be lawfully paid by
the Borrower under applicable law.
All parties now or hereafter liable with respect to this Note, whether the
Borrower, any guarantor, endorser, or any other person or entity, hereby waive
presentment for payment, demand, notice of non-payment or dishonor, protest and
notice of protest, or any other notice of any kind with respect thereto.
Time is of the essence of this Note.
No delay or omission on the part of the Holder in the exercise of any right or
remedy hereunder or any Financing Document, or at law or in equity, shall
operate as a waiver thereof, and no single or partial exercise by the Holder of
any right or remedy hereunder, under the Loan Agreement or any Financing
Document, or at law or in equity, shall preclude or estop another or further
exercise thereof or the exercise of any other right or remedy.
-2-
<PAGE>
Should this Note, or any part of the indebtedness evidenced hereby, be
collected by law or through an attorney-at-law or under advice therefrom, the
Holder shall be entitled to collect reasonable attorneys' fees actually incurred
at standard hourly rates and all costs of collection.
This Note is entitled to the benefits of the Loan Agreement, which contains
provisions with respect to the acceleration of the maturity of this Note upon
the happening of certain stated events, and for prepayment of the Loan.
Borrower may prepay the Loan in whole or in part without premium, penalty or
restriction, provided that each and every such prepayment shall be applied first
to unpaid accrued interest through the date of such prepayment, and then to
principal.
The Holder shall be under no duty to exercise any or all of the rights and
remedies given by this Note and the Loan Agreement or under any of the other
Financing Documents and no party to this instrument shall be discharged from the
obligations or undertakings hereunder (a) should the Holder release or agree not
to sue any person against whom the party has, to the knowledge of the Holder, a
right to recourse, or (b) should the Holder agree to suspend the right to
enforce this Note or Holder's interest in any collateral pledged or any
guarantee given to secure this Note against such person or otherwise discharge
such person.
This Note shall be deemed to be made pursuant to the laws of the State of
Georgia.
IN WITNESS WHEREOF, the duly authorized officers of the Borrower have
executed, sealed, and delivered this Note, as of the day and year first above
written.
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
By: /s/ Ronnie L. Austin
--------------------
Ronnie L. Austin, President
Attest: /s/ Angel J. Byrd
-----------------
Angel J. Byrd, Chief Financial Officer
[CORPORATE SEAL]
-3-
<PAGE>
SCHEDULE TO GRID NOTE
<TABLE>
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| Date | Amount of | Amount of | Unpaid Principal | Signature of Person Making |
| | Advance | Principal Repaid | Balance of Note | Notation |
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| <S> | <C> | <C> | <C> | <C> |
| | $ | | $ | |
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============================================================================================================
</TABLE>
-4-
<PAGE>
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, the undersigned, COMMUNITY TRUST FINANCIAL SERVICES
CORPORATION, a Georgia corporation (the "Assignor"), has fully and irrevocably
granted, assigned and transferred and hereby does fully and irrevocably grant,
assign and transfer to THE BANKERS BANK, and the successors, transferees,
assigns and representatives thereof (hereinafter collectively referred to as the
"Assignee") the following property:
(a) 409,676 shares of the common stock of Community Trust Bank (the
"Bank") represented by certificate number R-1;
(b) such additional shares of the common stock of the Bank as is necessary
from time to time to cause the Assignee to hold at all times security
title to and a security interest in all of the issued and outstanding
shares of common stock of the Bank now owned or hereafter acquired by
the Assignor.
Assignor hereby irrevocably appoints Assignee to be Assignor's true and lawful
attorney-in-fact, with full power of substitution, and empowers Assignee, for
and in the name and stead of Assignor, to sell, transfer, hypothecate, liquidate
or otherwise dispose of all or any portion of the above-described securities,
from time to time, and, for that purpose, to make, sign, execute and deliver any
documents or perform any other act necessary for such sale, transfer,
hypothecation, liquidation or other disposition. Assignor acknowledges that
this appointment is coupled with an interest and shall not be revocable by
Assignor's dissolution or any other reason.
IN WITNESS WHEREOF, the undersigned has executed and sealed this power as of
November 14, 1997.
ASSIGNOR:
---------
COMMUNITY TRUST FINANCIAL CORPORATION
Signed and sealed in my presence
November 14, 1997. By: /s/ Ronnie L. Austin
--------------------
Ronnie L. Austin, President
- ---------------------------------
Notary Public
Attest: /s/ Angel J. Byrd
-----------------
Angel J. Byrd,
Chief Financial Officer
My Commission Expires:
(CORPORATE SEAL)
- ---------------------------------
[Notary Seal]
