LOAN PURCHASE AGREEMENT BY AND BETWEEN INTEGRA BANK NATIONAL ASSOCIATION, a National Banking Association AND CITIZENS DEPOSIT BANK AND TRUST, INC., a Kentucky Banking Corporation

(a)  

The consummation of the transactions contemplated under this Agreement (the "Closing") will take place on such date that is reasonably mutually acceptable to the parties as soon as reasonably practicable (but not before the 30th day after the date hereof, and in any event not later than June 30, 2010) following the satisfaction or waiver of conditions of all parties to close the transactions contemplated hereby that are set forth in this Agreement (the date so fixed, the "Closing Date").

(b)  

The Closing shall be held remotely via the electronic exchange of documents and signatures on the Closing Date.  The parties hereto acknowledge and agree that (i) all proceedings at the Closing shall be deemed to be taken and all documents to be executed and delivered by all parties at the Closing shall be deemed to have been taken and executed simultaneously, and no proceedings shall be deemed taken nor any documents executed or delivered until all have been taken, executed or delivered, and (ii) the Closing shall be deemed to have taken place at the executive offices of Seller in Evansville, Indiana.

(c)  

Except as expressly otherwise provided herein, the parties agree that the transactions contemplated hereby shall be effective as of the opening of business on the Closing Date.

(a)  

any Loan which is on a nonaccrual basis as of the Closing Date (which term shall include loans which the collateral securing same has been repossessed or in which collection efforts have been instituted);

(b)  

any Loan which, prior to Closing, is classified with a risk rating of eight (8) or nine (9); and

(c)  

any Loan as to which the borrower has filed a petition for relief under the United States Bankruptcy Code prior to the Closing Date.

(a)  

execute, acknowledge, and deliver to Seller an undertaking under which the Purchaser will assume and agree to perform, discharge and pay the obligations and Liabilities assumed by the Purchaser pursuant to this Agreement (an acceptable form of which is attached as Exhibit A hereto and made a part hereof);

(b)  

pay by wire transfer of immediately available funds on the Closing Date to an account designated by Seller an amount (each computed as of the opening of business on the Closing Date) equal to the sum of:

(i)  

an amount equal to ninety-eight percent (98%) of the aggregate unpaid principal balances of the Loans; plus

(ii)  

the aggregate interest receivable but unpaid on the Loans.

(c)  

execute and deliver such other documents as the parties may determine are reasonably necessary to consummate the transactions contemplated hereby.

(a)  

deliver to Purchaser a letter from the Federal Home Loan Bank of Indianapolis (the "FHLBI") releasing any liens that may have been created by Seller that may exist on the Loans;

(b)  

deliver to Purchaser a letter from the Federal Reserve Bank of St. Louis (the "FRB") releasing any liens that may have been created by Seller that may exist on the Loans;

(c)  

execute and deliver such other documents as the parties may determine are reasonably necessary to consummate the transactions contemplated hereby.

(a)  

Not later than five business days following the Closing Date, Purchaser or its designee may pick up at Seller’s principal offices in Evansville, Indiana, the Loan Files and the Loan Documents (reasonably organized and cataloged), in the medium (including imaged documents) then maintained by Seller; provided, however, that Purchaser understands that the FRB and the FHLBI may each take approximately 30 days to return to Seller original Loan Documents pertaining to Loans now pledged to the FRB or the FHLBI by the Seller as collateral security for advances made to Seller by either of them (but to be released on the Closing Date), and that Purchaser shall arrange for physical delivery of such original Loan Documents to Purchaser when and as received by Seller from the FRB and the FHLBI (copies of same will be provided to Purchaser at Closing);

(b)  

Not later than five business days following the Closing Date (except with respect to those items Purchaser shall reasonably request to be delivered in advance of such date, which items Seller shall use its best efforts to deliver at or immediately after the Closing Date), Seller shall complete appropriate endorsements and deliver the Loan Documents, along with assignments of real property security instruments in recordable form and assignments of financing statements, in a form reasonably satisfactory to Purchaser, including, but not limited to the following:

(i)  

For each of the Loans, a notice of transfer of Loan in form reasonably satisfactory to Purchaser's counsel as otherwise required by any legal requirement), informing each borrower under each of the Loans of the transfer of the Loans and related servicing to the Purchaser;

(ii)  

For each of the original notes, an endorsement (made pursuant to a label adhered to the note or pursuant to a separate allonge), in form reasonably satisfactory to Purchaser's counsel or as otherwise required by any legal requirement, which states “Pay to the order of Citizens Deposit Bank and Trust, Inc., without recourse”;

(iii)  

For each of the Loans, an assignment for the Loan Documents and related rights and liens, in form reasonably satisfactory to Purchaser's counsel or as otherwise required by any legal requirements with all blanks appropriately completed; and

(iv)  

For each of the Loans, one or more UCC-3 Assignments of Financing Statements to be filed with the Secretary of State where each borrower is formed and/or in the county where each real property is located, as applicable, evidencing the assignment to Purchaser of all Seller’s right, title and interest in and to any security interests in personal property and fixtures created by the Loan Documents and held by Seller which are in effect on the Closing Date.

(c)  

Seller shall take all such reasonable actions as requested by Purchaser to assist Seller in (i) obtaining the valid perfection of a lien or security interest in the collateral, if any, securing each Loan sold on the Closing Date in favor of Purchaser or its designated assignee as secured party, or (ii) notifying other banks or financial institutions in respect of the transfer or assignment of any participation agreement with respect to Loans, or (iii) otherwise transferring of record or beneficially the interests of Seller in Loans or the collateral therefor. Any such action shall be the responsibility of Purchaser and at Purchaser’s sole expense, and Purchaser shall reimburse Seller for all reasonable third party costs incurred in connection therewith.

(d)  

The Purchaser agrees that it will preserve and safely keep, for as long as may be required by applicable law, all of the files, books of account and records of the Loans referred to in this Agreement for the joint benefit of itself and the Seller, and that it will permit the Seller or its representatives, at any reasonable time and at the Seller's expense, to inspect, make extracts from or copies of, any such files, books of account or records as the Seller shall deem necessary of the files, books of accounts of records of the Loans prior to the Closing Date.

(a)  

Indemnification by Both Parties in Respect of Representations and Warranties; Survival; Deductible and Cap.  Purchaser, on the one hand, and Seller, on the other hand, mutually agree to indemnify and hold each other (and each other's respective employees, officers, directors, agents and affiliates) harmless from, and to reimburse each other promptly for, any and all losses, liabilities, damages, expenses and other costs (including court costs, costs of investigation and reasonable attorneys' fees) ("Losses") that one party may suffer as the result of the material breach by the other party of any representation or warranty of that other party set forth in this Agreement; provided, however, that:

(i)  

the representations and warranties of the parties shall survive only until the eighteen (18) months after the Closing Date and no indemnification claim shall be brought unless a request for such indemnification has been made within such period of survival, except that (i) the representations and warranties set forth in Sections 3.1 and 4.1, respectively (Corporate Organization) and in Sections 3.2 and 4.2, respectively (Corporate Authority) shall survive indefinitely (the "Fundamental Representations") (such time period is referred to as the "Survival Period") (for the avoidance of doubt, the parties hereto specifically intend that the statutes of limitations applicable to claims with respect to each of the representations and warranties be superseded and replaced by the relevant Survival Period);

(ii)  

all of the covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless and to the extent that non-compliance with such covenants or agreements is (i) waived in writing by the party entitled to such performance;

(iii)  

unless otherwise specified by this Agreement. there shall be no liability for Seller or Purchaser under this Section 2.6(a) unless the amount of Losses incurred by an indemnified party exceeds $25,000 in the aggregate (the "Deductible Amount"), provided that, once exceeded, the Deductible Amount is recoverable along with all other amounts for damages by an indemnified party; and

(iv)  

an indemnifying parties’ liability to an indemnified party under this Section 2.6(a) shall be limited to the aggregate amount of $1,000,000 (the "Indemnification Cap").

(b)  

Indemnification by Seller.  In addition to the indemnification provided by Section 2.6(a), and for the avoidance of doubt not subject to the Deductible Amount or Indemnification Cap specified by Section 2.6(a), Seller shall indemnify, hold harmless and defend Purchaser (and its employees, officers, directors, agents and affiliates) from and against any and all Losses arising out of any judicial, administrative or arbitral actions, suits, mediations, investigations, inquiries, proceedings (public or private)  or claims or demands (including counterclaims) by or before a governmental entity, including any civil, criminal, investigative or informal actions, audits, demands, claims, hearings, litigations, disputes, inquiries, investigations or other proceedings of any kind or nature (each such pending or threatened proceeding, claim or demand, a "Legal Proceeding") which Legal Proceeding arises out of, or is in any way related to, the administration of any of the Loans by Seller prior to the opening of business on the Closing Date.

(c)  

Indemnification by Purchaser.  In addition to the indemnification provided by Section 2.6(a), and for the avoidance of doubt not subject to the Deductible Amount or Indemnification Cap specified by Section 2.6(a), Purchaser shall indemnify, hold harmless and defend Seller (and its employees, officers, directors, agents and affiliates) from and against any and all Losses arising out of any Legal Proceeding which Legal Proceeding arises out of, or is in any way related to, the administration of any of the Loans by Purchaser subsequent to the opening of business on the Closing Date.

(d)  

Indemnification Procedures.

(i)  

A claim for indemnification by a person claiming entitlement to indemnification hereunder (an "Indemnified Party") for any matter not involving a claim asserted by a third party (a "Third Party Claim") may be asserted by written notice to the party claimed to be responsible for indemnification (the "Indemnifying Party"), which notice shall include a reasonable description of the basis for the claim, and shall be paid within ten business days of the receipt of such notice.

(ii)  

In the event that any Legal Proceedings shall be instituted or that any Third Party Claim is asserted, the Indemnified Party shall as soon as reasonably practicable cause written notice of the assertion of any Third Party Claim of which it has knowledge, which is covered by this Section 2.6 to be forwarded to the Indemnifying Party.  If the Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party hereunder against any Losses that may result from such Third Party Claim, the Indemnifying Party shall have the right, at its sole expense, to be represented by counsel and to defend against, negotiate, settle or otherwise deal with any Third Party Claim, which relates to any Losses for which indemnification is sought hereunder.  If the Indemnifying Party elects to defend against, negotiate, settle or otherwise deal with any Third Party Claim, which relates to any Losses for which indemnification is sought hereunder, it shall within ten calendar days (or sooner, if the nature of the Third Party Claim so requires) of receipt of notice of the Third Party Claim notify the Indemnified Party of its intent to do so.  If the Indemnifying Party elects not to defend against, negotiate, settle or otherwise deal with any Third Party Claim, which relates to any Losses for which indemnification is sought hereunder, or fails to notify the Indemnified Party of its election within the timeframe provided for herein, the Indemnified Party may then, but only then, defend against, negotiate, settle or otherwise deal with such Third Party Claim and the Indemnifying Party shall reimburse the Indemnified Party for the reasonable actual expenses of defending such Third Party Claim upon submission of periodic bills.  If the Indemnifying Party assumes the defense of the Third Party Claim, the Indemnified Party may participate, at its own expense, in the defense of such Third Party Claim; provided, that such Indemnified Party shall be entitled to participate in any such defense with separate counsel at the expense of the Indemnifying Party if (i) so requested by the Indemnifying Party to participate, (ii) upon the reasonable advice of counsel to the Indemnified Party a conflict or potential conflict exists between the interests of the Indemnified Party and the Indemnifying Party that would make such separate representation advisable, or (iii) such claim is based upon an investigation, inquiry, or other proceeding by a Governmental Entity; and provided, further, that the Indemnifying Party shall not be required to pay for more than one such counsel (and any appropriate local counsel) for the Indemnified Parties in connection with such Third Party Claim.  The parties hereto agree to cooperate fully with each other in connection with the defense, negotiation or settlement of any such Third Party Claim.

(iii)  

After any final judgment or award shall have been rendered by a governmental body of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the Indemnified Party and the Indemnifying Party shall have arrived at a mutually binding agreement with respect to a Third Party Claim hereunder, the Indemnified Party shall forward to the Indemnifying Party notice of any sums due and owing (including any bills, records or other documentation supporting such sums) by the Indemnifying Party pursuant to this Agreement with respect to such matter and the Indemnifying Party shall be required to pay all of the sums so due and owing to the Indemnified Party by wire transfer of immediately available funds within five business days after the date of such notice. Any indemnification payment pursuant to this Section 2.6 shall be effected by wire transfer of immediately available funds within five business days after the determination thereof.

(iv)  

The failure of the Indemnified Party to give reasonably prompt notice of any Third Party Claim shall not release, waive or otherwise affect the Indemnifying Party’s obligations with respect thereto except to the extent that the Indemnifying Party can demonstrate actual Loss and prejudice as a result of such failure or delay.

(e)  

Reduction for Insurance.  The amount which an Indemnifying Party is required to indemnify the Indemnified Party pursuant to this Agreement shall be reduced (including, without limitation, retroactively) by any insurance proceeds actually recovered by or on behalf of such Indemnified Party in reduction of the related indemnifiable loss (the "Indemnifiable Loss").  Amounts required to be paid, as so reduced, are hereafter called an "Indemnity Payment."  If an Indemnified Party shall have received or shall have had paid on its behalf an Indemnity Payment in respect of an Indemnifiable Loss and shall subsequently receive, directly or indirectly, insurance proceeds in respect of such Indemnifiable Loss, then such Indemnified Party shall pay to such Indemnifying Party a sum equal to the amount of such insurance proceeds up to an amount equal to the Indemnity Payment.

(f)  

Further Assurances.  From and after the date hereof, each party agrees to execute and deliver such instruments and to take such other actions as the other party hereto may reasonably request in order to carry out and implement this Agreement.  The covenants of each of the parties hereto pursuant to this Section 2.6 shall survive the Closing.

(a)  

Each Loan has been made for good, valuable and adequate consideration in the ordinary course of business of Seller, is evidenced by a note or other evidence of indebtedness and is a valid loan enforceable in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting creditors' rights and to general principles of equity; the Seller is the sole owner of each Loan, no participation therein having been sold; the Loan is not pledged or encumbered; the principal balance of the Loan as shown on the Seller's books and records is true and correct as of the last date shown thereon; no Loan has been adversely classified in any regulatory examination or by Seller's internal classification system and no Loan is 90 days or more past due, has been restructured or is classified as nonaccrual.  There are no material uncured violations or violations with respect to which material refunds or restitution may be required with respect to the Loans that have been cited in any compliance report to Seller as a result of examination by any regulatory authority and the loan documentation with respect to the Loans complies in all material respects with all applicable laws and applications.

(b)  

Each Loan was not known to be uncollectible at the time it was made, and accrues interest (except for Loans recorded as non-accrual) in accordance with the terms of the Loan.  Each Loan was made, funded and remains in material compliance with all applicable laws, orders and regulations. To the knowledge of the Seller, the records of the Seller regarding all Loans outstanding are accurate in all material respects and the risk classifications for the Loans outstanding are, in the best judgment of the management of the Seller, appropriate.  To the knowledge of the Seller, each Loan is the legal, valid and binding obligation of the obligor and any guarantor, subject to bankruptcy, insolvency, fraudulent conveyance and other law of general applicability relating to or affecting creditors' rights and to general principles of equity, and no defense, offset or counterclaim has been asserted with respect to any such Loan.

(c)  

With respect to any Loan secured by real property:

(i)  

the mortgage is a valid and subsisting lien on the property described in it;

(ii)  

the mortgaged property is free and clear of all encumbrances and liens having priority over the mortgage except for senior loans described in the Loan Documents and liens for real estate taxes and special assessments, that are not yet due and payable;

(iii)  

the Loan Documents include either an opinion of counsel, a property report verifying liens, judgments and taxes, or a mortgage title insurance policy insuring the mortgage and such title insurance policy is on a current ALTA form (or other generally acceptable form) issued by a generally acceptable insurance company;

(iv)  

at the time of origination, the mortgaged property was, and Seller has not received written notification that the mortgaged property is not, free and clear of all mechanic's liens, materialmen's liens or similar types of liens or the mortgage title insurance policy provides Purchaser with substantially the same protection as this warrant;

(v)  

To the knowledge of Seller, all taxes, government assessments, insurance premiums, water, sewer and municipal charges, leasehold payment or ground rents that have become due and payable with respect to the mortgaged property have been paid or an escrow of funds sufficient to pay them has been established;

(vi)  

Seller has no knowledge that any improvement on the mortgaged property is in violation of any applicable zoning law or regulation;

(vii)  

Seller has no knowledge that the mortgaged property is damaged by fire, wind or other cause of loss and there are not proceedings pending for the partial or total condemnation of the property;

(viii)  

to the best of Seller's knowledge, any improvements that are included in the appraised value of the mortgaged property are totally within the property's boundaries and building restriction lines and no improvements on adjoining property encroach on the mortgaged property;

(ix)  

a casualty insurance policy on the mortgaged property is in effect which is written by a generally acceptable insurance company and provides fire and extended coverages for an amount at least equal to the amount required by Seller's loan policies;

(x)  

to the best of Seller's knowledge, a flood insurance policy written by a generally acceptable insurance company, which policy meets current guidelines of the Federal Insurance Administration and is for an amount at least equal to the amount required by the National Flood Insurance Program's Mandatory Purchase Flood Insurance Guidelines, is in effect on the mortgaged property if any part of it is in an area listed in the Federal Register by the Federal Emergency Management Agency as an area with special flood hazards, and if insurance is available;

(xi)  

Seller has no knowledge of any material litigation, proceeding or governmental investigation pending, or any order, injunction or decree outstanding, existing or relating to the mortgaged property;

(xii)  

to the knowledge of Seller, the mortgaged property has never been used for the storage, treatment or disposal of any material amount of Hazardous Substances (other than by tenants in the ordinary course of tenancy or the owner in the ordinary course of business, and such storage, treatment or disposal of Hazardous Substances is or was in all material respects in accordance with all applicable legal requirements), nor has such mortgaged property ever been listed by any governmental agency as containing any Hazardous Substance in violation of legal requirement unless such Hazardous Substance has been remediated;

(xiii)  

the Loan Documents expressly allow the noteholder to advance at any time sums for unpaid insurance premiums, property taxes, or any other payments necessary to protect the value of the mortgaged property or the noteholder's rights in the mortgaged property and permit the noteholder to collect such amounts from the borrower on a deferred basis; and

(xiv)  

the Loan Documents obligate the borrower to maintain the mortgaged property in a way that prevents deterioration and to repair promptly any damage to the mortgaged property, whether or not such damage is covered by insurance.

(a)  

Except as set forth in this Article III, Seller makes no representation or warranty of any kind to the Purchaser relating to the Loans, which are being sold to Purchaser WITHOUT RECOURSE to Seller.  Without limitation of the foregoing sentence, Seller shall not be responsible for (i) the sufficiency, value or collectability of the Loans or any document, instrument or agreement in the loan files or the value of any collateral for the Loans, (ii) any representation, warranty or statement made by an obligor or other party in or in connection with any Loan, (iii) the financial condition or creditworthiness of any primary or secondary obligor under any Loan or any guarantor or surety or other obligor thereof, (iv) the performance by any guarantor, surety or other obligor or compliance with any of the terms or provisions of any of the documents, instruments and agreements relating to any Loan, or (v) inspecting any of the property, books or records of any guarantor, surety or other obligor.

(b)  

EXCEPT AS SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE SELLER EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE FIXED ASSETS, REAL PROPERTY, OR ANY OTHER ASSETS BEING TRANSFERRED TO OR LIABILITIES BEING ASSUMED BY THE PURCHASER, INCLUDING, WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE OR OF NON-INFRINGEMENT.

(a)  

at any time on or before the Closing Date by the mutual consent in writing of the Purchaser and the Seller;

(b)  

on the Closing Date by the Purchaser in writing if the conditions set forth in Article VI of this Agreement shall not have been met by the Seller or waived in writing by the Purchaser;

(c)  

on the Closing Date by the Seller in writing if the conditions set forth in Article VII of this Agreement shall not have been met by the Purchaser or waived in writing by the Seller,

(d)  

at any time on or before the Closing Date by the Purchaser or the Seller in writing if the other shall have been in breach of any representation or warranty in any material respect (as if such representation or warranty had been made on and as of the date hereof and on the date of the notice of breach referred to below), or in breach of any covenant, undertaking or obligation contained herein and such breach has not been cured by the earlier of thirty (30) days after the giving of notice to the breaching party of such breach or the Closing Date;

(e)  

by either the Seller or the Purchaser in writing if the transactions contemplated hereby are not consummated on or before June 30, 2010, unless the failure of such occurrence is due to the failure of the party seeking to so terminate to perform or observe any of its agreements and conditions set forth herein.

(a)  

each party will return to the party furnishing the same all documents, work papers and other materials of the other party relating to this transaction, whether obtained before or after the execution hereof; and

(b)  

all information received by either party hereto with respect to the business of the other party (other than information which is a matter of public knowledge or which has heretofore been or is hereafter published in any publication for public distribution or filed as public information with any governmental authority) shall not at any time be used for any business purpose by such party or disclosed by such party to third persons.

 

If to the Seller to:

Michael Alley

 

President and Chief Executive Officer

 

Integra Bank N.A.

 

227 Main Street

 

Evansville, IN  47705

 

Copy to:

Joseph DeGroff

 

Ice Miller LLP

 

One American Square, Suite 2900

 

Indianapolis, IN  46282

 

If to the Purchaser to:

 

Michael R. Mineer

 

President and Chief Executive Officer

 

Citizens Deposit Bank and Trust, Inc.

 

10 Second Street

 

P.O. Box 9

 

Vanceburg, KY  41179-0009

 

Copy to:

Robert W. Walker

 

President and Chief Executive Officer

 

Premier Financial Bancorp, Inc.

 

2883 Fifth Avenue

 

Huntington, WV  25702

 

Copy to:

Thomas J. Murray, Esquire

 

Huddleston Bolen LLP

 

611 Third Avenue

 

Huntington, WV  25701