Exhibit 10(h)

 

REVOLVING LINE OF CREDIT PROMISSORY NOTE AND SECURITY AGREEMENT (UNSECURED)

 

Borrower:

Frederick County Bancorp, Inc.

Lender:

Atlantic Central Bankers Bank

 

P.O. Box 1100

 

1400 Market Street

 

Frederick, MD 21702

 

P.O. Box 1109

 

 

 

Camp Hill, PA 17001-1109

 

 

 

 

PRINCIPAL AMOUNT:  $4,000,000.00

DATE OF NOTE: July 22, 2009

 

PROMISE TO PAY.  For value received, Frederick County Bancorp, Inc.
(“Borrower”), a Maryland corporation organized as the holding company of
Frederick County Bank (the “Bank”), hereby agrees to pay to Atlantic Central
Bankers Bank, a state banking institution chartered in the Commonwealth of
Pennsylvania, (“Lender”) the sum of Four Million and No/100 Dollars
($4,000,000.00), or so much of the principal as may be outstanding, together
with interest on the outstanding principal balance of each advance made by
Lender under this Revolving Line of Credit Promissory Note and Security
Agreement (Unsecured) (“Note”) at the rate set forth in this Note from the date
of each advance by Lender under this Note until the principal balance of each
advance under this Note is paid in full.

 

1.               INTEREST. The interest rate on the principal of this Note is
subject to change from time to time based on changes in the Index set forth in
this Note. The interest rate on the Loan mayo r may not be the lowest rate
available at any given time by Lender to its customers. Borrower understands
that Lender may make other similar loans to other customers at interest rates
different than the interest rate provided for in this Note. The interest rate is
a variable interest rate equal to the sum of: New York Wall Street Journal Prime
Rate (the “Index”) plus one half of one percent (0.50%), subject to a floor of
four and one-quarter of one percent (4.25%). Under no circumstances will the
interest rate on this Note exceed the maximum interest permitted under the laws
of the Commonwealth of Pennsylvania. The interest rate will be computed on a
year consisting of 360 days with interest charged and billed based on the actual
number of days elapsed.  Under no circumstances will the interest rate on the
Note exceed the maximum interest permitted under the laws of the Commonwealth of
Pennsylvania.

 

2.               PAYMENT. Borrower will pay this Loan in one payment of all
outstanding principal plus all accrued unpaid interest on July 22, 2010. In
addition, Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning September 1, 2009, with all
subsequent interest payments to be due on the same day of each month thereafter.
Unless otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal and any remaining amount to
any unpaid collection costs and late charges. The annual interest rate for this
Note is computed on a 365/360 basis; that is, by applying the ratio of the
annual interest rate over a year of 360 days, multiplied by the outstanding
principal balance, multiplied by the actual number of days the principal balance
is outstanding. Borrower will pay Lender at Lender’s address shown above or at
such other place as Lender may designate in writing.

 

3.               PREPAYMENT PENALTY. Borrower may at any time prepay any part or
the entire principal due under this Note without any premium or penalty. Any
prepayments shall first be applied to interest, late charges and costs, if any,
and then to principal.

 

4.   LATE CHARGE. If any payment to be made under this Note, including any
balloon payment, is fifteen (15) or more days late, a late charge will be
automatically assessed on the sixteenth day. The late charge will be the greater
of $25.00 or 5% of the payment not made.

 

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5.  REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to the best
of its knowledge, information and belief as follows:

 

5.1 Judgments. There are no judgments, injunction or similar order or decrees
outstanding against Borrower and there are no claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties which, if determined adversary to Borrower,
could result in any material adverse change in Borrower’s financial condition,
property or ability to perform its obligations under this Note and other
agreements, and Borrower is not, to its knowledge, in violation of or default
under any judgment, order, writ, injunction, decree, rule or regulation of any
court or governmental agency.

 

5.2 Financial Statements. The Borrower will furnish to Lender

 

a.                                       as soon as available, but in any event
not later than 90 days after the close of each fiscal year of the Borrower, the
annual audit report of the Borrower containing a consolidated balance sheet of
the Borrower and its Subsidiaries as of the end of such fiscal year and related
consolidated statements of income, cash flow, and changes in shareholders’
equity of the Borrower and its Subsidiaries for such fiscal year, all in
reasonable detail, prepared in accordance with GAAP applied on a consistent
basis, and certified without exception or qualification by independent certified
public accountants selected by the Borrower and satisfactory to Lender;

 

b.                                      as soon as available, but in any event
not later than 30 days after the close of each quarter of each fiscal year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries
as at the end of such quarterly period and related consolidated statement of
income for such quarterly period and for the period from the beginning of the
current fiscal year to the end of such quarterly period, prepared in accordance
with GAAP applied on a consistent basis (excluding disclosures in footnotes),
and certified by the principal financial or accounting officer of the Borrower
(subject to normal year-end adjustments);

 

c.                                       concurrently with the delivery of the
financial statements referred to in clause (a) above, a certificate of the
officer who certified such statements, setting forth the Bank’s (i) total
risk-based capital ratio, (ii) Tier 1 risk-based capital ratio, and (iii) Tier 1
leverage ratio, computed in accordance with the regulations and policies of the
Federal Reserve; and

 

d.                                      from time to time, such additional
financial and other information as Lender may reasonably request.

 

5.3 Capital. The Borrower will cause the Bank at all times to be “well
capitalized’’ as determined in accordance with the regulations of the Federal
Reserve. The Borrower will also cause the Bank to (i) have total risk-based
capital of at least 10% at all times, (ii) to have a Tier 1 risk-based capital
ratio of at least 6.0% at all times, and (iii) to have a Tier 1 leverage ratio
of at least 5.0% at all times

 

5.4 Notice of Regulatory Action. The Borrower shall promptly notify the Lender
of any action or proposed action taken by any federal or state bank regulatory
agency with respect to the Borrower, the Bank or any of its directors or
officers, including without limitation any cease and desist order, civil
monetary penalty, memorandum of understanding, or consent agreement.

 

6. INTEREST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to five percentage points (5%)
over the Index. The interest rate will not exceed the maximum rate permitted by
applicable law. If judgment is entered in connection with this Note, interest
will continue to accrue on this Note after judgment at the interest rate
applicable to this Note at the time judgment is entered.

 

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7. DEFAULT. A default under this Note shall be defined to include one, several
or all of the following (“Events of Default”):

 

7.1 Payment Default. If the Borrower fails to make any payment of principal
and/or interest when due under this Note.

 

7.2 Enforcement Action. The Borrower, the Bank or any of its directors or
officers shall have agreed to, entered into or become subject to any cease or
desist order, or memorandum of understanding with any federal or state bank
regulatory authority having jurisdiction with respect to the Bank or the
Borrower, including without limitation the Federal Deposit Insurance
Corporation, with respect to the financial condition or operations of the Bank
or the Borrower.

 

7.3 Other Defaults. If the Borrower fails to: (a) comply with or to perform any
other term, obligation, covenant, commitment or condition contained in this Note
or in any documents executed by Borrower in connection with this Note or in
connection with the Loan evidenced by this Note; or (b) fails to comply with or
perform any term, obligation, covenant, commitment or condition contained in any
other agreement between Borrower and Lender.

 

7.4 Default in Favor of Third Parties. Borrower or any grantor defaults under
any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower’s property or Borrower’s ability to repay this
Note or perform Borrower’s obligations under this Note or any of the related
documents.

 

7.5 False Statements. If any warranty, representation or statement made,
furnished or extended by Borrower, or on behalf of Borrower, to Lender set forth
in this Note or in any documents executed by and/or delivered by Borrower to
Lender in connection with this Note or in connection with the Loan evidenced by
this Note: (a) is untrue, false and/or misleading in any material respect at the
time the warranty, representation or statement is made; or (b) subsequently
becomes untrue, false and/or misleading in any material respect.

 

7.6 Death or Insolvency. If the Borrower is an individual: (a) the death of the
Borrower or (b) the filing by or against Borrower of any federal bankruptcy
proceeding. If the Borrower is a general, limited or limited liability
partnership, a corporation or a limited liability company: (a) the dissolution,
whether voluntary or involuntary, of Borrower, (b) the cessation of Borrower’s
business, (c) the appointment of a receiver for Borrower or any of Borrower’s
assets, (d) the assignment by Borrower of Borrower’s assets for the benefit of
creditors, (e) the filing of any dissolution, whether voluntary or involuntary,
receivership, winding up or liquidation proceedings by or against Borrower
and/or (f) the filing by or against Borrower of any federal and/or state
insolvency and/or bankruptcy proceeding.

 

7.7 Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help, repossession
or any other method, by any creditor of Borrower or by any governmental agency
against any collateral securing the loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender.  However, this
Event of Default shall not apply if there is a good faith dispute by Borrower as
to the validity or reasonableness of the claim which is the basis of the
creditor or forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount determined
by Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.

 

7.8 Events Affecting Guarantor. Intentionally omitted.

 

7.9 Change in Ownership. Any change in ownership interest of twenty-five percent
(25%) or more of the common stock of Borrower.

 

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7.10 Adverse Change. If there is a material adverse change in the financial
condition of Borrower of this Note or a change in the value and/or condition of
any assets of borrower pledged to Lender to secure this Note, which in the sole
discretion of Lender, Lender determines to reasonably impair the prospect of
payment in full of this Note.

 

7.11 Loan to Value & Margin Requirement. Intentionally omitted.

 

7.12 Insecurity. Lender in good faith believes itself insecure.

 

7.13 Entry of Judgment. Entry of any judgment against Borrower and a
determination by Lender that the same, when taken together with all other
judgments outstanding against Borrower, could result in any material adverse
change in Borrower’s financial condition, property or ability to pay and perform
its obligations to Lender, unless such judgment shall have been discharged or
execution thereof stay within thirty (30) days after entry thereof or discharged
within thirty (30) days after the expiration of any such stay.

 

8. CONFESSION OF JUDGMENT. Intentionally omitted.

 

9. LENDERS RIGHTS. Upon a default, and without the need for Lender to issue any
notice to or demand upon Borrower, except as may be required by law: (1) the
entire amount of unpaid principal and all accrued and unpaid interest, as well
as all late charges and costs, if any, shall be immediately due and payable in
full, thus abrogating any amortization provisions set forth in Paragraph 2 of
this Note; (2) the interest rate on the unpaid principal shall be automatically
increased by 3.00 percentage points above the interest rate in effect on the
date of default; and (3) Lender may exercise any and all rights and remedies
available to Lender under the statutes and Rules of Civil Procedure of the
Commonwealth of Pennsylvania and as provided for in this Note. All remedies
available to Lender are cumulative. Lender is under no obligation to proceed
first against any collateral described in Paragraph 10 of this Note prior to
proceeding against Borrower or any assets of Borrower not pledged by Lender.

 

10. RIGHT OF SET OFF. Borrower grants to Lender a contractual security interest
in, and hereby assigns, conveys, delivers, pledges and transfers to Lender all
of Borrower’s right, title and interest in and to all of Borrower’s present and
future accounts, funds and assets of Borrower in possession of Lender, except
any trust accounts or funds or assets which Lender holds as a fiduciary, to
secure this Note. Borrower hereby authorizes and empowers Lender, to the extent
permitted by law and by this Note, to charge or setoff all sums owing on this
Note against any and all such accounts, funds and assets, and, at Lender’s
option, to administratively freeze all such accounts to allow Lender to protect
Lender’s charge and setoff rights provided for in this paragraph.

 

11. CROSS DEFAULT. A default under this Note is a default under all present and
future obligations, agreements, instruments and commitments of Borrower to
Lender.

 

12. COLLATERAL. Intentionally omitted.

 

13. CROSS COLLATERAL. Intentionally omitted.

 

14. LOAN TO VALUE RATIO. Intentionally omitted.

 

15. INTEREST RATE ON JUDGMENT. The interest rate on any judgment entered on this
Note by confession or otherwise shall be the default rate as defined in
Paragraph 6 provided for in the Note, which is in effect as of the date of
judgment.

 

16. JURISDICTION AND VENUE. Borrower acknowledges that this Note was executed
and delivered to Lender and accepted by Lender at Lender’s office in Camp Hill,
Pennsylvania. If there is a lawsuit arising directly or indirectly out of or
based directly or indirectly on this Note or the Loan by Lender to Borrower
evidenced by this Note, Borrower agrees that the exclusive and sole jurisdiction
and venue for any lawsuit involving Borrower, whether as plaintiff or defendant,
shall reside either in the Court of Common Pleas of Cumberland County,
Pennsylvania or the United States District Court for the Middle District of
Pennsylvania. This Note shall be construed and interpreted under the laws of the
Commonwealth of Pennsylvania.

 

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17. WAIVER OF JURY TRIAL. Borrower knowingly and intelligently waives any trial
by jury with regards to any lawsuit arising directly or indirectly out of or
based directly or indirectly on this Note or the Loan by Lender to Borrower
evidenced by this Note, whether the lawsuit involves Borrower as a defendant or
plaintiff.

 

18. COUNSEL FEES AND COSTS. Borrower agrees to pay upon demand all of Lender’s
costs and expenses, including attorneys’ fees and Lender’s legal expenses,
incurred in connection with the enforcement of this Note and all documents
executed by Borrower in connection with the Loan evidenced by this Note. Lender
may pay someone else to help enforce this Note and all documents and instruments
executed by Borrower in connection with the Loan evidenced by this Note and
Borrower shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender’s attorneys’ fees and legal expenses, whether or not
there is a lawsuit, and attorneys’ fees and legal expenses for any bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment or post-appeal
collection services. Borrower also shall pay all court costs and such additional
fees as may be directed by the court.

 

19. DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $30.00 if Borrower
makes a payment on Borrower’s loan and the check or preauthorized charge with
which Borrower pays is later dishonored.

 

20. NATURE OF LOAN. The obligation evidenced by this Note does not represent or
evidence a “consumer credit transaction” as that term is defined in Rule 2950 of
Pennsylvania Rules of Civil Procedure but rather a business lending transaction.

 

21. WAIVERS. Borrower hereby waives all notices with regards to this Note,
including but not limited to presentment, demand for payment, protest, notice of
dishonor and/or any notices relating to commercial paper under Article 3 of the
Uniform Commercial Code, as enacted in the Commonwealth of Pennsylvania.
Additionally, Borrower waives any and all notices required under Article 8
and/or Article 9 of the Uniform Commercial Code with regards to the collateral
described in Paragraph 12 hereof, and/or disposition of the collateral described
in Paragraph 12 hereof. Borrower hereby waives the equitable and legal doctrines
of election of remedies and marshalling of assets.

 

22. MISCELLANEOUS PROVISIONS. The failure of Lender to enforce any right under
this Note or under any documents executed by Borrower in connection with the
Loan evidenced by this Note shall not be deemed a waiver of Lender’s right under
this Note or otherwise. Caption headings in this Note are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Note and do not constitute any part of the terms of this Note. This Note
shall be binding upon the heirs, successors, personal representatives and
assigns of Borrower. This Note shall inure to the benefit of Lender and its
successors and assigns. In the event anyone or more of the provisions contained
in this Note shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Note, but the Note shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained therein. This Note shall be governed by, construed, interpreted and
enforced according to the laws of the Commonwealth of Pennsylvania.

 

23. STOCK POWER. Intentionally omitted.

 

24. LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances
under this Note, as well as, directions for payment from Borrower’s accounts,
must be requested in writing by Borrower or by an authorized person. Borrower
agrees to be liable for all sums either: (a) advanced in accordance with the
instructions of an authorized person or (b) credited to any of Borrower’s
accounts with Lender. The unpaid principal balance owing on this Note at any
time may be evidenced by endorsements on this Note or by Lender’s internal
records, including daily computer printouts. Lender will have no obligation to
advance funds under this Note if: (a) Borrower or any guarantor is in default
under the terms of this Note or any agreement that Borrower or any guarantor has
with Lender, including any agreement made in connection with the signing of this
Note; (b) Borrower or any guarantor ceases doing business or is insolvent;
(c) any guarantor seeks, claims or otherwise attempts to limit, modify or revoke
such guarantor’s guarantee of this Note or any other loan with Lender;
(d) Borrower has applied funds

 

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provided pursuant to this Note for purposes other than those authorized by
Lender; or (e) Lender in good faith believes itself insecure.

 

PRIOR TO SIGNING THIS NOTE, EACH BORROWER HAS READ AND UNDERSTOOD ALL OF THE
PROVISIONS OF THIS NOTE. EACH BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY
OF THIS NOTE. THIS NOTE IS EXECUTED UNDER SEAL AND IT IS INTENDED THAT THIS NOTE
IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO
LAW.

 

BORROWER

 

 

 

Frederick County Bancorp, Inc.

 

 

 

By:

/s/ William R. Talley, Jr.

 

 

 

Name: William R. Talley, Jr.

 

Title: EVP and CFO

 

 

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