Exhibit 10.1
RBC Centura LOAN AGREEMENT
(Secured)
THIS LOAN AGREEMENT ("Loan Agreement"), entered into effective as of the date
stated in the LOAN AGREEMENT SUPPLEMENT AND INFORMATION SCHEDULE ("Information
Schedule"), by and between the person identified in the INFORMATION SCHEDULE as
the Borrower (whether one or more, "Borrower") and RBC CENTURA BANK, a North
Carolina banking corporation ("Bank").
A. Borrower has applied to Bank for a loan or loans as described below
(whether one or more, "Loan").
B. Borrower will use the proceeds of the Loan for the purposes described on
the INFORMATION SCHEDULE.
C. Bank is willing to make the Loan based on the terms and conditions set
forth in this Loan Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Borrower and Bank hereby agree as follows:
Article I. Definitions.
Section 1.1. DEFINITIONS. For the purposes hereof:
(a) "Affiliate" means, with respect to any person, any
person that owns or controls directly or indirectly such person, any
person that controls or is controlled by or is under common control
with such person, and each of such person's senior executive officers,
directors, executives, managers, members or partners;
(b) "Collateral" shall have the meaning set forth in ARTICLE
III;
(c) "Contractual Obligation" means as to any person, any
provision of any security issued by such person, or of any agreement,
instrument or undertaking to which such person is a party or by which
it or any of its property is now or hereinafter bound, whether such
Contractual Obligation is verbal, written or electronic, direct or
indirect, fixed or contingent;
(d) "Closing" means the date of funding of the Term Loan or
the date of the first disbursement on either the Non-Revolving Line of
Credit or the Revolving Line of Credit, as applicable hereunder, which
may occur on a date different than the Closing Date;
(e) "Closing Date" means the date as of which this Loan
Agreement is executed by Borrower and Bank;
(f) "Commitment" means Bank's commitment letter to Borrower
described on the INFORMATION SCHEDULE;
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(g) "Default Condition" means the occurrence or existence of
an event or condition which, upon the giving of notice or the passage
of time, or both, would constitute an Event of Default;
(h) "Draw Request" means a written request by Borrower for a
disbursement of proceeds by Bank under the Non-Revolving Line of
Credit or the Revolving Line of Credit, such request to be in a form
and containing such information and certifications as Bank may deem
necessary or appropriate to document and determine the propriety of
the request for a disbursement;
(i) "Event of Default" means an Event of Default as defined
in ARTICLE X;
(j) "Financing Statements" means the UCC financing
statements filed in order to perfect Bank's lien on certain personal
property and fixtures as more particularly described therein and
includes initial statements, continuation statements, amendment
statements and all other statements permitted under the UCC;
(k) "GAAP" means generally accepted accounting principles
which are (1) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors or
successors and (2) such that a certified public accountant would,
insofar as the use of accounting principles is pertinent, be in a
position to deliver an unqualified opinion as to financial statements
in which such principles have been properly applied;
(l) "Governmental Authority" means any nation or government,
any state or other political subdivision thereof, and any person
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government;
(m) "Indebtedness" means the indebtedness evidenced by the
Note, and extensions, renewals, modifications, amendments,
substitutions and replacements therefor and thereof, in whole and in
part, as assigned to Bank;
(n) "Knowledge" or "to best of knowledge" are synonymous and
means actual knowledge or such level of knowledge or awareness as
would be obtained or should have been known at the time by a prudent
business person under substantially similar circumstance after
reasonable investigation, and with respect to Borrower means the
knowledge of (1) the person executing this Loan Agreement on behalf of
Borrower, (2) any person executing any certification on behalf of
Borrower that is being delivered to or given to Bank in connection
with the Loan and (3) any person employed by Borrower who is primarily
responsible for a matter for which a representation, warranty or
certification is being given to Bank by Borrower where such
representation, warranty or certification is limited to knowledge;
(o) "Loan" refers to the loan or loans made pursuant to this
Loan Agreement and evidenced by the Note, and, (1) as stated on the
INFORMATION SCHEDULE can include one or more of a Term Loan, a
Non-Revolving Line of Credit or a Revolving Line of Credit and (2) if
more than one loan is made pursuant to this Loan Agreement, the term
can reference one, any combination of, or all of the loans, as the
context so requires;
(p) "Loan Agreement" means this Loan Agreement, as amended,
supplemented, modified, extended and restated from time to time;
(q) "Loan Amount" means the loan amounts stated on the
INFORMATION SCHEDULE for each of the Term Loan, the Non-Revolving Line
of Credit and the Revolving Line of Credit, as applicable;
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(r) "Loan Documents" means the Commitment, this Loan
Agreement, the Note and any other instruments, documents, statements
and agreements evidencing or securing the Loan (as amended,
supplemented, modified, extended and restated from time to time),
which may include, without limitation, deeds to secure debts, security
deeds, mortgages, deeds of trust, assignments, security agreements,
pledge agreements, guaranty agreements, control agreements and
financing statements;
(s) "Non-Revolving Line of Credit" means and refers to a
loan under which the proceeds are advanced from time to time over a
period of time up to the Loan Amount for the Non-Revolving Line of
Credit but may not be reborrowed once repaid, and under this Loan
Agreement, if so indicated on the INFORMATION SCHEDULE or so stated in
the Note, the Loan includes a Non-Revolving Line of Credit and
references in this Loan Agreement to the Non-Revolving Line of Credit
shall be to such Loan;
(t) "Note" means the promissory note or promissory notes of
Borrower in favor of Bank evidencing the Loan, together with any
amendments, modifications, extensions, renewals, substitutions and
replacements thereto or therefor, and (1) unless otherwise
specifically provided in this Loan Agreement and to the extent
applicable, the Term Loan, the Non-Revolving Line of Credit and the
Revolving Line of Credit shall each be evidenced by a separate
promissory note identified on the INFORMATION SCHEDULE and (2) if more
than one loan is made pursuant to this Loan Agreement, the term can
reference one, any combination of, or all of the promissory notes, as
the context so requires;
(u) "Organization" means and includes any of the following -
a Registered Organization, a Government Authority, a business trust,
an estate, a trust, a partnership or association, two or more persons
having a joint or common interest, and any other legal or commercial
entity;
(v) "Permitted Encumbrances" means liens, security
interests, encumbrances, easements and other matters listed as
exceptions to the title to the Collateral, all of which must be
approved by Bank prior to Closing;
(w) "Registered Organization" means an Organization
organized solely under the law of a single state or the United States
and as to which the state or the United States must maintain a public
record showing the Organization to have been organized;
(x) "Related Person" shall have the meaning set forth in
SECTION 8.7;
(y) "Requirement of Law" means as to any person, the
certificate of incorporation and by-laws or other organizational or
governing documents of such person, and any law, treaty, rule,
regulation, ordinance, determination of an arbitrator, order of a
court and determination, advisory opinion, order, guideline, finding
or requirement of any other Governmental Authority, in each case
applicable to and binding upon such person or any of its properties or
to which such person or any of its properties is subject, either
individually or jointly with another person or persons;
(z) "Revolving Line of Credit" means and refers to a loan
under which loan proceeds may be borrowed, repaid, reborrowed and
repaid from time to time so long as the maximum amount outstanding at
any time does not exceed the Loan Amount for the Revolving Line of
Credit, and under this Loan Agreement, if so indicated on the
INFORMATION SCHEDULE or so stated in the Note, the Loan includes a
Revolving Line of Credit and references in this Loan Agreement to the
Revolving Line of Credit shall be to such Loan;
(aa) "Subsidiary" means any Registered Organization or other
Organization (1) the majority (by number of votes) of the outstanding
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voting interests of which is at the time owned or controlled by
Borrower, or by one or more Subsidiaries of Borrower, or Borrower and
one or more Subsidiaries of Borrower, or (2) otherwise controlled by
or within the control of Borrower or any Subsidiary; and
(bb) "Term Loan" means and refers to a loan under which all
of the proceeds thereof are advanced at one time at Closing with the
Borrower not having any right to reborrow once paid, and under this
Loan Agreement, if so indicated on the INFORMATION SCHEDULE or so
stated in the Note, the Loan includes a Term Loan and references in
this Loan Agreement to the Term Loan shall be to such Loan.
Section 1.2. USE AND APPLICATION OF TERMS. To the end of achieving the full
realization by Bank of its rights and remedies under this Loan Agreement and the
other Loan Documents, including payment in full of the Loan, in using and
applying the various terms, provisions and conditions in this Loan Agreement and
the other Loan Documents, the following shall apply:
(a) the terms "hereby", "hereof", "herein", "hereunder" and
any similar words refer to this Loan Agreement;
(b) words in the masculine gender mean and include
correlative words of the feminine and neuter genders and words
importing the singular numbered meaning include the plural number or a
collective reference, and vice versa;
(c) words importing persons include firms, companies,
associations, general partnerships, limited partnerships, limited
liability partnerships, limited liability limited partnerships,
limited liability companies, trusts, business trusts, corporations and
other Organizations, including public and quasi-public bodies, as well
as individuals;
(d) the use of the terms "including" or "included in", or
the use of examples generally, are not intended to be limiting, but
shall mean, without limitation, the examples provided and others that
are not listed, whether similar or dissimilar;
(e) as the context requires, the word "and" may have a joint
meaning or a several meaning and the word "or" may have an inclusive
meaning or an exclusive meaning;
(f) the words "attorney" and "counsel" are interchangeable
in this Loan Agreement;
(g) the phrase "costs and expenses", or variations thereof,
shall include, without limitation, reasonable attorneys' fees and fees
of legal assistants, and reasonable fees of accountants, engineers,
surveyors, appraisers and other professionals or experts - and all
references to attorneys' fees or fees of legal assistants, or to fees
of accountants, engineers, surveyors, appraisers or other
professionals or experts shall mean reasonable fees;
(h) the phrase "highest contract rate of interest under the
Note" shall refer to the highest rate at which interest accrues under
the Note, including any Default Rate, or if there is more than one
Note, the highest rate under all of the Notes, and when used in this
Loan Agreement it means that interest on an amount owing to Bank shall
accrue at such rate to the same extent and in the same manner as it
would if the amount owing to Bank was included in the principal
evidenced by the Note bearing the highest contract rate of interest;
(i) this Agreement shall not be applied, interpreted and
construed more strictly against a person because that person or that
person's attorney drafted this Agreement; and
(j) if any party hereto is an Organization, when any action
is required or permitted to be taken, it is intended that the same
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will be undertaken through duly authorized employees or
representatives of such party, or a partner, member, manager,
executive, officer or director, and any action taken by any of the
foregoing persons shall be presumed authorized absent a clear and
convincing showing that the person relying on such action knew or
should have known that the person acting was exceeding his authority.
Article II. Loan.
Section 2.1. LOAN. Subject to the terms and conditions of this Loan Agreement
and as stated on the INFORMATION SCHEDULE relative to the type of loan or loans
to be made pursuant to this Loan Agreement, Bank will lend and Borrower will
borrow up to the respective Loan Amount for each of the Term Loan, Non-Revolving
Line of Credit and Revolving Line of Credit and the borrowing shall be evidenced
by a Note for each of the Term Loan, Non-Revolving Line of Credit and Revolving
Line of Credit. The purpose of the Loan is described on the INFORMATION
SCHEDULE. Loan proceeds may not be used for any other purpose without the prior
written consent of Bank, which may be granted in Bank's sole and absolute
discretion.
Section 2.2. INTEREST RATE/REPAYMENT. The outstanding principal balance of each
Loan which is subject to this Loan Agreement shall bear interest, and principal
and interest shall be repayable in accordance with the terms of the Note for
each, together with the fees, premiums, charges and cost and expenses provided
for in each Note. Unless otherwise provided in this Loan Agreement or the other
Loan Documents, the monetary obligations Borrower now owes and the monetary
obligations that arise in the future and are owing by Borrower to Bank under
this Loan Agreement and the other Loan Documents (exclusive of the Note) shall
be payable by Borrower upon demand of Bank, with interest thereon at the highest
contract rate of interest under the Note; and, like the amounts due and owing
under the Note, the same shall be secured by the Collateral. Notwithstanding
this Section 2.2, the Note is not a demand promissory note.
Section 2.3. DISBURSEMENTS. If the Loan includes a Term Loan, upon satisfaction
of the Conditions to Closing as provided in ARTICLE V, Bank shall advance to
Borrower the Loan Amount for the Term Loan. If the Loan includes a Non-Revolving
Line of Credit or a Revolving Line of Credit, Bank agrees that it will, from
time to time, so long as there shall exist no Default Condition or Event of
Default, make disbursements to Borrower up to but not in excess of the Loan
Amount for the Non-Revolving Line of Credit or the Revolving Line of Credit, as
applicable, in accordance with the terms and provisions set forth in ARTICLE V,
ARTICLE VI and elsewhere in this Loan Agreement. Loan disbursements may be made
by depositing same in Borrower's operating account with Bank or at such other
place requested by Borrower and agreed to by Bank.
Section 2.4. ADVANCES DO NOT CONSTITUTE A WAIVER. If Loan includes a
Non-Revolving Line of Credit or a Revolving Line of Credit, no advance of Loan
proceeds shall constitute a waiver of any of the conditions of Bank's
obligations to make further advances nor, in the event Borrower is unable to
satisfy any such condition, shall any such advance have the effect of precluding
Bank from thereafter declaring such inability to be an Event of Default
hereunder.
Article III. Collateral.
As security for the payment of the Loan and the other obligations evidenced by
and arising under any one or more of this Loan Agreement and the other Loan
Documents, Bank is and shall be granted a lien and security interest in the
property and property rights ("Collateral") described on ATTACHMENT 1, less any
Collateral released by Bank subsequent to the date hereof, together with the
proceeds, products, accessions, additions, replacements and substitutions
thereto and thereof. Bank's lien and security interest in the Collateral is and
shall be a perfected first priority lien and security interest, subject only to
the Permitted Encumbrances. Borrower, and all other persons who may own and all
persons who may have an ownership interest in any of the Collateral, shall
execute and deliver to Bank and shall cause all persons who may be in control of
or possession of any of the Collateral to execute and deliver to Bank, all deeds
to secure debts, mortgages, deeds of trust, security deeds, assignments,
security agreements, pledge agreements, control agreements, financing statements
and other documents, statements and agreements as Bank and its counsel deem
necessary or desirable to create and perfect the liens and security interests of
Bank in and to the Collateral - and, in connection with the creation and
perfection of the liens and security interests as aforesaid, each and all of the
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foregoing persons record or file, and cause to be recorded or filed any and all
of the foregoing documents, statements and agreements as and when directed by
Bank and its counsel.
Article IV. Representations and Warranties.
In order to induce the Bank to enter into this Loan Agreement and to make the
Loan, Borrower hereby makes the following representations and warranties,
effective as of Closing, which representations and warranties shall survive the
execution and delivery of this Loan Agreement and any other Loan Documents, any
inspections and examinations at any time made by Bank and made on behalf of Bank
and, if the Loan includes a Non-Revolving Line of Credit or a Revolving Line of
Credit, the same shall be deemed renewed and effective as of any advances made
by Bank hereunder or under the Loan Documents.
Section 4.1. FINANCIAL POSITION OF BORROWER. The financial statements delivered
by Borrower to Bank in connection with Borrower's application for the Loan have
been prepared from the books and records of Borrower and present fairly the
financial condition of Borrower at such date. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved.
Borrower has no material contingent obligation, liability for taxes, long term
lease and unusual forward or long-term commitment which in accordance with GAAP
is required to be reflected in such statements or in the notes thereto and is
not so reflected.
Section 4.2. NO CHANGE. Since the date of the financial statements delivered by
Borrower to Bank in connection with Borrower's application for the Loan, (1)
there have been no material adverse changes in any one or more of the business,
operations, assets and financial condition of Borrower and (2) if Borrower is an
Organization, no dividends and no other distributions have been declared or paid
to the owners of an equity or profit interest in Borrower, nor have any such
interests in Borrower been redeemed, retired, purchased or otherwise acquired
for value, nor have any of Borrower's assets been disposed of or distributed by
Borrower, other than in the ordinary course of business.
Section 4.3. ORGANIZATIONAL EXISTENCE; COMPLIANCE WITH LAW. If Borrower is an
Organization, Borrower (1) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (2) has the
power, authority and the legal right to own and operate its property, to lease
the property it operates and to conduct the business as presently conducted and
as proposed to be conducted, as represented to Bank, (3) is duly qualified as a
foreign Organization and in good standing under the laws of each jurisdiction
where its ownership, lease, and operation of property and the conduct of its
business requires such qualification, and (4) is in compliance with all
Requirements of Law, except in those instances where the failure to comply
therewith does not and will not, in the aggregate, have a material adverse
impact on any one or more of the business, operations, property and financial
condition of Borrower and does not and will not materially adversely affect the
ability of Borrower to perform its obligations under the Loan Documents.
Section 4.4. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. If
Borrower is an Organization, Borrower has the power, authority and the legal
right (1) to make, deliver and perform under the Loan Documents, (2) to borrow
hereunder and has taken all action to authorize the borrowings on the terms and
conditions of the Loan Documents, including the Note, (3) to authorize the
execution, delivery and performance of the Loan Documents to which it is a party
and (4) to pledge and mortgage its property as contemplated by the Loan
Documents. No consent or authorization of, filing with, and other act by or in
respect of any Governmental Authority or any other person is required in
connection with the borrowings hereunder and in connection with the execution,
delivery, performance, validity and enforceability of the Loan Documents, except
for approvals of the owners of equity or profit interests in Borrower and their
designated managing boards or members (which approvals to the extent required
have been obtained). The Loan Documents, including the Note, have or will be
duly executed and delivered on or at Closing. The Loan Documents when executed
and delivered will constitute legal, valid and binding obligations of Borrower,
enforceable in accordance with their terms and not subject to rescission,
invalidation, nullification and other avoidance.
Section 4.5. NO VIOLATION. The execution, delivery and performance of this Loan
Agreement and other Loan Documents, and the borrowings hereunder and thereunder
and the use of the proceeds thereof, and the consummation of the transactions
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contemplated herein and therein, will not (1) violate any Requirement of Law,
(2) constitute an event of default under any material Contractual Obligation of
Borrower and (3) result in, or require the creation or imposition of any lien on
any of its properties (including any of its revenues) and on any of its equity
interests pursuant to any Requirement of Law or material Contractual Obligation,
except such liens as are created in favor of the Bank as a result of the Loan
Documents.
Section 4.6. NO LITIGATION. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending and to the best of
its knowledge, after due and diligent inquiry, threatened by or against Borrower
and any of its properties (including its revenues) (1) with respect to the Loan
Documents and any of the transactions contemplated thereby or (2) which could
have a material adverse effect on any one or more of the business, operations,
property and financial condition of Borrower. Borrower is not in default with
respect to any material order, any decree and any judgment of any court,
arbitrator or governmental body, and no event exists, and no event will exist at
Closing which with the giving of notice or the lapse of time, or both, would
give rise to such a default.
Section 4.7. NO DEFAULT - CONTRACTUAL OBLIGATIONS. Borrower is not in default
under or with respect to any Contractual Obligation (including any Indebtedness)
where such default and the consequences thereof could be materially adverse to
any one or more of its business, operations, properties and financial condition,
or where such default and the consequences thereof could materially adversely
effect its ability to perform its obligations under the Loan Documents; and no
event exists, or will exist at Closing which, with the giving of notice or the
lapse of time, or both, would give rise to such a default. To the best of its
knowledge, all of the material Contractual Obligations of Borrower are valid,
binding and enforceable obligations of all of the parties thereto, in accordance
with their respective terms; to the best of its knowledge, there are no material
disputes between Borrower and the other parties to such material Contractual
Obligations with respect to such Contractual Obligations; and Borrower, after
taking the Loan into account, will be able to continue performing its
obligations under such Contractual Obligations.
Section 4.8. NO DEFAULT - LOAN DOCUMENTS. No Default Condition or Event of
Default shall exist at Closing and, to the best of its knowledge, after due and
diligent inquiry, no event exists and no event will exist at Closing which with
the giving of notice or the lapse of time, or both, would give rise to a Default
Condition.
Section 4.9. OWNERSHIP OF PROPERTY; LIENS; ETC. Borrower, and each of the other
owners of the Collateral and each of the other owners of interests therein, if
any, have good and marketable title in fee simple in and to the Collateral owned
by each, free and clear of any and all liens, security interests, claims,
demands, off-sets, contingencies and other outstanding interests, both legal and
equitable, except for the Permitted Encumbrances.
Section 4.10. TAXES. Borrower (1) has filed or caused to be filed all tax
returns, reports, estimates and declarations which are required to be filed, (2)
has paid all taxes shown to be due and payable on said returns (3) has paid all
assessments made against it and any of its property and (4) has paid all other
taxes, fees and other charges imposed on Borrower and its property by any
Governmental Authority (other than of the foregoing the amount or validity of
which is currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been established by
Borrower); and no liens have been filed and no claims are being asserted with
respect to any such taxes, fees and other charges, and no event exists, and no
event will exist at Closing which with the giving of notice or the lapse of
time, or both, would give rise to a lien.
Section 4.11. SUBSIDIARIES. Borrower has no Subsidiaries and will have no
Subsidiaries as of Closing, except as listed on the INFORMATION SCHEDULE.
Section 4.12. DISCLOSURE. Neither this Loan Agreement, the other Loan Documents,
nor any representation, certificate, statement and other document furnished to
Bank prior to or contemporaneous with the execution and delivery of this Loan
Agreement by Borrower contain any untrue statement of any material fact or omits
disclosure of any material fact necessary to make the statements contained
herein and therein not misleading. There is no material fact known to Borrower
which has not been disclosed to Bank in writing which affects in a materially
adverse manner either or both (1) the property, business, prospects, profits and
other conditions (financial or otherwise) of Borrower, or (2) the ability of
Borrower to fully perform this Loan Agreement, the Note, the other Loan
Documents and any and all other transactions contemplated herein. After giving
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effect to the Loan and the transactions herein contemplated, Borrower will have
assets having a fair market value in excess of the amount required to timely pay
its probable liabilities on its existing debts as they become due in the
ordinary course of business, and has, and will have, access to adequate capital
for the conduct of its business and the timely payment of its debts from time to
time incurred in connection therewith as such debts mature.
Section 4.13. COLLATERAL IN COMPLIANCE. All of the Collateral and all other
property of Borrower that is necessary for the full use and enjoyment of the
Collateral is in material compliance with all Requirements of Law, including
zoning, subdivision and environmental rules and regulations, and will be
operated in such manner to remain in material compliance with such laws until
the Loan is paid and satisfied in full.
Section 4.14. NO MATERIALLY ADVERSE CONTRACTS, ETC. Borrower is not subject to
any one or more charter restrictions, corporate laws or other similar legal
restrictions and restraints, judgments, decrees, orders, rules, regulations and
other Requirements of Law which has or is expected in the future to have a
material adverse effect on any one or more of the business, assets, financial
condition and prospects of Borrower. Borrower is not a party to any contract or
agreement which has or is expected to have in the future any material adverse
effect on the business, assets, financial condition and prospects of Borrower.
Section 4.15. NAME. Borrower operates its business and owns its assets only
under the name of Borrower.
Section 4.16. ENVIRONMENTAL COMPLIANCE. With respect to any real property owned
by Borrower, any real property leased by Borrower and any real property
otherwise in Borrower's possession or control (including all improvements
located on any of the foregoing real property): (1) as of the date hereof, (i)
there are no hazardous materials, substances, wastes or other environmentally
regulated, controlled or sensitive materials or substances, including, without
limitation, any oil, gas or other petroleum related products, any lead based
paints, any materials containing asbestos or any biological, chemical or nuclear
contaminated materials or substances, located on, in or under any of such
property, and (ii) there are no harmful or hazardous levels or concentrations of
mold, spores or other fungi on, in or under such property and there are no
harmful or hazardous levels or concentrations of radon or other similar gases
on, in or under such property (collectively (i) and (ii), "hazardous
substances"); or (2) Borrower has fully disclosed to Bank, in writing, the
existence, extent and nature of any such hazardous substances, and (i) Borrower
is legally authorized and empowered to maintain such hazardous substances on, in
or under such property or use them in connection with such property, (ii) such
hazardous substances are being used, maintained and controlled in substantially
full compliance with all Requirements of Law and (iii) Borrower has obtained and
will constantly maintain all licenses, permits and approvals required with
respect thereto, and is and will remain in substantially full compliance with
all of the terms, conditions and requirements of such licenses, permits and
approvals. The records of Borrower do not now, nor to the best knowledge of
Borrower have they ever revealed any discharge, spill or disposal of any
hazardous substances at, on and under any of the aforementioned property.
Borrower has not received any notice of a violation or an alleged violation, a
claim or an alleged claim, a civil action or a threatened civil action, a
criminal action or a threatened criminal action, an administrative action or a
threatened administrative action, an administrative penalty, a fine or a lien
from any person whatsoever (including any Governmental Authority) against
Borrower and any of the aforementioned property relating to any hazardous
substances or any other environmental matter. To the best knowledge of Borrower,
the soil, surface water and groundwater on, under and about said real property
are free from hazardous substances.
Article V. Conditions to Closing.
All of the conditions set forth in this ARTICLE V must be satisfied and
completed, or the satisfaction and completion thereof waived by Bank, prior to
any disbursement of proceeds by Bank under the Loan, whether the Loan includes a
Term Loan, Non-Revolving Line of Credit or Revolving Line of Credit. If all of
the conditions are not met to Bank's satisfaction, or the completion thereof
waived by Bank, Bank may, at its option, (1) withhold disbursement until the
same are met, (2) disburse and require that any unsatisfied terms and conditions
be satisfied as a condition subsequent to Closing within such period of time as
may be designated by the Bank or (3) terminate its obligation to fund the Loan
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and recover from Borrower all costs and expenses incurred by Bank in connection
with its preparations for making the Loan to Borrower, together with the fees
and other costs and expenses required to be paid by Borrower under the
Commitment. A waiver by Bank of a condition must be in writing to be effective
and a waiver as to one or more conditions shall not constitute a waiver as to
other conditions and shall not establish a "course of dealing or practice" that
would require a waiver of the same or a similar condition at some later time.
Section 5.1. LOAN DOCUMENTS. Bank shall have received fully executed and, if
necessary, recorded or filed, originals of the Loan Documents required by the
Commitment, this Loan Agreement and as may be otherwise required by Bank and its
counsel to evidence the Loan and create and perfect the first priority liens and
security interests in the Collateral, subject only to the Permitted
Encumbrances.
Section 5.2. SUPPORTING DOCUMENTATION. The Bank shall have received the
supporting documentation and items listed on ATTACHMENT 2, and all of the other
terms and conditions listed on ATTACHMENT 2, in the Commitment and elsewhere in
this Loan Agreement shall have been satisfied, including, without limitation,
perfection in favor of Bank of a first priority lien and security interest in
all of the Collateral, subject only to the Permitted Encumbrances.
Section 5.3. REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by Borrower which are contained herein and those which are contained in any
certificate, document, financial statement and other statement furnished at any
time under and in connection herewith, shall be correct on and as of Closing, as
if made on and as of such date, and on and as of the date of each subsequent
disbursement of Loan proceeds.
Section 5.4. NO DEFAULT OR EVENT OF DEFAULT. No Default Condition or Event of
Default shall have occurred and be continuing as of Closing, or after giving
effect to the Loan to be made at Closing, nor shall a Default Condition or event
of Default exist as of the date of subsequent disbursement of Loan proceeds.
Section 5.5. COMMITMENT FEE. Borrower shall have paid to Bank the Commitment Fee
as set forth in the Commitment and all other fees and costs and expenses to be
paid by Borrower at or before Closing, as provided in the Commitment.
Section 5.6. ADDITIONAL MATTERS. All other documents and legal matters in
connection with the transactions contemplated by this Loan Agreement shall be
received by the Bank in form and substance satisfactory to the Bank and its
counsel and such counsel shall have received all information and such
counterpart originals, or certified or other such copies of such documents, as
such counsel may reasonably request.
Section 5.7. GENERAL. Without imposing any obligation or undertaking on Bank and
its counsel and without acknowledging compliance with the representations and
warranties or waiving strict compliance by Borrower with all of the terms and
conditions of this Loan Agreement and the materiality of all of the
representations and warranties of Borrower, Bank and Bank's counsel shall retain
the right to be satisfied that all matters required to be performed in
connection with this transaction have been performed in such a manner that the
Loan proceeds can be advanced, the lien and security position of Bank perfected
in the Collateral and that no event exists which will jeopardize the Loan and
the prospect of payment of the Loan.
Article VI. Non-Revolving and Revolving Line of Credit -
Conditions Precedent to Disbursements Following the First Disbursement.
If the Loan includes either a Non-Revolving Line of Credit or a Revolving Line
of Credit, all of the conditions set forth in this ARTICLE VI must be satisfied
before Bank is obligated to make any disbursements and each of the conditions
must be and remain satisfied at the time of each disbursement subsequent to the
first disbursement. As in ARTICLE V, all of the conditions in this ARTICLE VI
must be met to Bank's satisfaction. If the Loan includes a Non-Revolving Line of
Credit, once disbursements are repaid, the amount repaid may not be reborrowed
and the maximum principal amount that may be borrowed under the Note for the
Non-Revolving Line of Credit and pursuant to this Loan Agreement is the Loan
Amount for the Non-Revolving Line of Credit. If the Loan includes a Revolving
Line of Credit, Loan proceeds may be borrowed, repaid, reborrowed and repaid
under the Note for the Revolving Line of Credit and pursuant to this Loan
Agreement, but at no time shall the amount of principal outstanding exceed the
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Loan Amount for the Revolving Line of Credit. If the Loan includes a
Non-Revolving Line of Credit or a Revolving Line of Credit, ATTACHMENT 2A
contains additional terms and provisions relating to such Loans.
Section 6.1. EXISTING CONDITIONS. All of the conditions stated in ARTICLE V must
have been satisfied to Bank's satisfaction and they each must remain satisfied
at the time of the disbursement, or the completion thereof waived by Bank.
Section 6.2. ADDITIONAL CONDITIONS. All of the conditions stated in ATTACHMENT
2A must have been satisfied to Bank's satisfaction and they each must remain
satisfied at the time of each disbursement, or the completion thereof waived by
Bank.
Section 6.3. DRAW REQUEST. Borrower shall have delivered to Bank a Draw Request
for each disbursement, and under the terms of this Loan Agreement, including
those set forth in ATTACHMENT 2A, Bank must be obligated to make the
disbursement being requested in the Draw Request.
Section 6.4. NO DEFAULT OR EVENT OF DEFAULT. No Default Condition or Event of
Default shall have occurred and be continuing as of the date of any disbursement
of Loan proceeds.
Article VII. Affirmative Covenants.
Borrower covenants and agrees with Bank that until the later of (1) payment in
full of the Loan and all other amounts owing to Bank under the Loan Documents or
(2) termination of Bank's obligation to make disbursements under the Loan,
Borrower will fully and promptly do and perform each and every one of the
matters set forth in this ARTICLE VII; and Borrower acknowledges to Bank that
the breach or default by Borrower of any of said covenants and agreements is and
the same shall be material.
Section 7.1. BANKING RELATIONSHIP. If required by the Commitment, Borrower shall
maintain its primary banking relationship with Bank, including, without
limitation, its deposit accounts with Bank; or, if Borrower elects to maintain
its accounts with another financial institution, at Bank's request made at
anytime during the term of the Loan, Borrower shall cause such other financial
institution to execute and deliver to Bank such control agreements and blocked
account agreements relative to Borrower's accounts as Bank deems necessary or
appropriate.
Section 7.2. USE OF LOAN FUNDS. Borrower shall use all Loan proceeds disbursed
to Borrower only for the purposes stated in this Loan Agreement.
Section 7.3. PAYMENT/PERFORMANCE. Borrower shall pay when due all amounts now
owing to Bank under the Note, this Loan Agreement and the other Loan Documents
and Borrower shall pay when due all amounts which may in the future become owing
to Bank under the Note, this Loan Agreement and the other Loan Documents.
Borrower also shall promptly perform all other obligations of Borrower hereunder
and under the Note and the other Loan Documents - both present obligations and
obligations which may arise in the future.
Section 7.4. OTHER INDEBTEDNESS. Borrower shall make full and timely payment of
the principal and interest on all Indebtedness on which Borrower is now
obligated and on all which it may in the future come to be obligated on to
persons other than Bank, and duly and faithfully comply with all the terms and
conditions to which Borrower is obligated thereunder, the breach of which could
materially adversely affect Borrower (inclusive of its business and its
property).
Section 7.5. FINANCIAL STATEMENTS. Borrower shall furnish to the Bank and
Borrower shall cause others to furnish to Bank, at the sole expense of Borrower,
such information respecting the business, assets, operations and financial
condition of Borrower as the Bank may from time to time request, including,
without limitation, the information indicated on ATTACHMENT 3, at the times
stated therein.
Section 7.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. Borrower
shall maintain proper books and records in which full, true, accurate and
correct entries, in conformity with GAAP and all Requirements of Law, shall be
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made of all material dealings and transactions in relation to Borrower's
business and activities. Borrower shall permit Bank, and Borrower shall permit
representatives of Bank, to visit and inspect any of the Collateral and any of
the other property owned or used by Borrower in its business and shall permit
Bank, and shall permit representatives of Bank, to examine and make abstracts
from any of Borrower's books and records at reasonable intervals and at
reasonable time, on reasonable advance notice. Borrower shall permit Bank, and
Borrower shall permit representatives of Bank, to discuss the business,
operations, properties, financial condition and prospects of Borrower with its
officers, board members, executives, managers, members, partners, employees,
agents, independent certified public accountants and others, as applicable, and
shareholders on reasonable advance notice; and, Borrower shall promptly furnish
to Bank such reports relating to the business, operations, prospects and
financial condition of Borrower as Bank may request from time to time.
Section 7.7. INSURANCE. Borrower shall maintain insurance as required herein and
in the other Loan Documents, including the insurance coverages set forth on
ATTACHMENT 4. All insurance carriers shall have a Best's Key Rating of at least
"A" and shall have a Best's Key Rating Class of at least "IX" and Bank shall be
shown as an "additional insured" in all liability policies and a "mortgagee-loss
payee" in all casualty insurance policies. Borrower shall deliver to Bank, and
Borrower shall cause others to deliver to Bank, annually (and at such other
times as Bank may request) a statement regarding Borrower's insurance coverages,
such statement to contain as much detail as Bank may request; and Borrower also
shall deliver to Bank, and Borrower shall cause others to deliver to Bank,
certificates of such insurance or the policies of insurance as may be requested
by Bank. If Borrower shall at any time or times hereafter fail to obtain and
maintain the insurance coverages on the terms set forth herein and in the other
Loan Documents, Bank may, but shall not be obligated to, obtain and cause to be
maintained insurance coverage with respect to the property affected, including,
at Bank's option, the coverages provided by any and all of the policies of
Borrower, and pay any part of and all of the premiums therefor, without waiving
any default by Borrower.
Section 7.8. PAYMENT OF TAXES AND ASSESSMENTS. Borrower shall duly pay and
discharge (1) all taxes (including federal and state withholding and other
employee related taxes), assessments and governmental charges upon and against
either or both Borrower and any of the Collateral prior to the date on which
penalties attach thereto, unless and to the extent that such matters are being
diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established in accordance with GAAP, and
(2) all lawful claims, including claims related to tort damages, labor,
materials, supplies, services, repairs and wages, which might or could, if
unpaid, become a lien or charge upon the Collateral, unless and to the extent
only that the same are being diligently contested in good faith and by
appropriate proceedings and appropriate reserves therefor have been established
in accordance with GAAP.
Section 7.9. CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE. Borrower shall
continue to engage in business of the same general type as now conducted and
notify the Bank of any significant change in management. If Borrower is an
Organization, Borrower shall preserve, renew and keep in full force and effect
its organizational existence. Borrower shall take all reasonable action to
maintain all rights, privileges, franchises, patents, copyrights, trademarks and
tradenames necessary or desirable in the normal conduct of its business and all
licenses and permits necessary to continue to operate its business as it is
currently being operated. Except in those limited instances where the failure to
comply could not have a material adverse effect on one or more of the business,
operations, property and financial condition of Borrower, and otherwise could
not substantially impair the Collateral and the Bank's position with respect to
the Collateral, Borrower shall comply with all Contractual Obligations and
Requirements of Law and Borrower shall maintain capital sufficient to carry on
its business and transactions and, at any time, all businesses and transactions
in which it then proposes to engage.
Section 7.10. MAINTENANCE OF PROPERTY. Borrower shall keep and maintain the
Collateral consisting of real property and tangible personal property in good
working order and condition and make all needful and proper repairs,
replacements, additions and improvements thereto as are necessary.
Section 7.11. MAINTAIN SECURITY INTEREST. Borrower shall maintain, protect and
preserve the security interest of Bank in the Collateral and the lien position
of Bank in the Collateral, including, without limitation, the filing of "claims"
under insurance policies within the time periods required under such policies
and the filing of appropriate notices, claims and pleadings in any condemnation
actions.
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Section 7.12. NOTICES. Borrower shall promptly give notice to Bank of (1) the
occurrence of any Default Condition or Event of Default, (2) any governmental
investigation, any litigation, any arbitration and any other proceeding
affecting Borrower in which the amount involved is or could have a material
adverse effect on one or more of the business, operations, properties, financial
condition and prospects of Borrower, (3) any event affecting Borrower and any
change in the financial condition of Borrower occurring since the date of the
last financial statements delivered to Bank, which individually or cumulatively
when viewed in light of prior financial statements, may result in a material
adverse change in the financial condition of Borrower and (4) any change in the
location or address of the principal office and place of business of Borrower.
Each notice pursuant to this subsection shall be accompanied by a statement
setting forth details of the occurrence referred to therein and stating what
action is proposed to be taken with respect thereto.
Section 7.13. FURTHER ASSURANCES. On demand of Bank, Borrower shall do any act
and execute and deliver any additional documents consistent with the Commitment
and the Loan Documents reasonably required by Bank to secure the Loan, confirm
and perfect the lien and security interest of Bank in the Collateral and to
comply with the Commitment and the Loan Documents, including, but not limited
to, any items listed on ATTACHMENT 5, additional Financing Statements, new and
replacement notes, security documents and agreements supplementing, extending
and otherwise modifying the Note, this Loan Agreement and any of the other Loan
Documents, and certificates as to the amount of the Indebtedness evidenced by
the Note from time to time.
Article VIII. Negative Covenants.
Borrower covenants and agrees with Bank that until the later of (1) payment in
full of the Loan and all other amounts owing to Bank under the Loan Documents or
(2) termination of Bank's obligation to make disbursements under the Loan,
Borrower shall not do and Borrower shall not permit others to do, either
directly or indirectly, without the prior written consent of Bank unless such
consent is not necessary because of exceptions set forth on ATTACHMENT 5, any of
the matters listed in this ARTICLE VIII; and Borrower acknowledges to Bank that
the breach or default by Borrower of any of said covenants and agreements is and
the same shall be material.
Section 8.1. INDEBTEDNESS. Except Indebtedness in respect of the Note and other
Indebtedness with Bank, Borrower shall not do any one or more or the following:
create any Indebtedness; incur or otherwise become obligated on any
Indebtedness; assume any Indebtedness; refinance any Indebtedness; suffer to
exist any Indebtedness against it; and draw upon any Indebtedness. For the
purposes of this section only, Indebtedness does not include short-term
unsecured trade credit incurred in the ordinary course of business to maintain
or acquire (1) normal levels of inventory and supplies, and (2) maintenance and
service contracts for services necessary or appropriate to Borrower.
Section 8.2. LIENS AND SECURITY INTERESTS. Except for (1) liens for taxes not
yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained in
accordance with GAAP and (2) liens and security interests in favor of Bank,
Borrower shall not and Borrower shall not permit others to encumber the
Collateral, and any part thereof and interest therein, with any one or more of
the following: a lien (inclusive of real property, personal property and mixed
real and personal property liens), a security interest, a governmental
assessment, a charge, a levy, an attachment, an order of seizure and any other
similar or dissimilar claim.
Section 8.3. JUDGMENTS. Borrower shall not permit a judgment for the payment of
money to be entered against it which judgment Borrower permits to remain
unsatisfied or unstayed for a period the shorter of thirty (30) days after the
same is entered against Borrower or the date on which an execution is issued on
such judgment;
Section 8.4. GUARANTY. Borrower shall not directly agree to and Borrower shall
not indirectly agree to, and Borrower shall not directly or indirectly assume,
guarantee, endorse and otherwise in any way be responsible or liable for or
become responsible or liable for the Indebtedness and other obligations of any
person (all such transactions being herein called "guarantees"), except
guarantees by endorsement of instruments for deposit or collection in the
ordinary course of business.
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Section 8.5. LOAN. Except as provided in SECTION 8.7 below, Borrower shall not
make and Borrower shall not commit to make any one or more of the following with
respect to any person, whether done directly by Borrower or indirectly through
someone else: an advance, a loan, an extension of credit, a deferral of payment
on goods sold or to be sold, a deferral of payment on goods leased or to be
leased, a deferral of payment on services rendered or to be rendered, a capital
contribution, a purchase of bonds, a purchase of notes, a purchase of
debentures, and a purchase of warrants, stock, securities and any other
investment.
Section 8.6. LEASES AND CAPITAL EXPENDITURES. Borrower shall not become liable
directly and Borrower shall not become liable indirectly, in the capacity of a
lessee or tenant, and Borrower shall not become liable as aforesaid in the
capacity of a guarantor or other surety, with respect to any lease of real,
personal or mixed real and personal property; and Borrower shall not directly
and Borrower shall not indirectly enter into any transaction on account of the
purchase or other acquisition of capital assets.
Section 8.7. LOANS TO OFFICERS. Except for employee relocation loans, employee
bridge loans and other incidental loans to employees, all in the ordinary course
of Borrower's business, Borrower shall not directly make any loan or other
extension of credit and Borrower shall not indirectly make any loan or other
extension of credit to any of the following persons and Borrower shall not do
any of the foregoing for the benefit of any of the following persons:
shareholders, directors, officers, executives, managers, members, partners and
employees of Borrower, and members of the immediate family of any of the
foregoing who are individuals and not Organizations ("Related Persons"). The
prohibitions in this Section relating to loans and other extensions of credit to
Related Persons apply to past Related Persons, present Related Persons and to
future Related Persons.
Section 8.8. COMPENSATION. Borrower shall not pay any compensation to any
Related Person, whether through salary, bonus or otherwise, in excess of the
lower of industry standards and norms or the compensation levels set forth on
ATTACHMENT 5, if any. The prohibitions in this Section relating to compensation
to Related Persons apply to past Related Persons, present Related Persons and to
future Related Persons.
Section 8.9. REORGANIZATION. Borrower shall not change its name and Borrower
shall not operate under a name other than its current name. If Borrower is an
Organization: (1) Borrower shall not offer to, and Borrower shall not sell,
transfer, issue, convey, dispose of and distribute any equity interests in
Borrower, debt instruments of Borrower and combinations of equity and debt in
Borrower; (2) Borrower shall not offer to, and Borrower shall not sell,
transfer, issue, convey, dispose of and distribute any option, warrant and other
similar or dissimilar right to acquire an equity interest in Borrower, a debt
instrument of Borrower and combinations of equity and debt in Borrower; (3)
Borrower shall not permit and Borrower shall not recognize any transfer,
conveyance, alienation and other disposition of any interest and right in
Borrower by any equity holder or other person, including, without limitation,
any transfer of any stock and other securities in Borrower, any transfer of any
equity interest in Borrower, any transfer of a debt interest in Borrower and any
transfer of some other position in Borrower; (4) Borrower shall not enter into
any one or more of the following - merger, consolidation, asset acquisition,
stock acquisition, syndication, liquidation of assets, reorganization or
recapitalization, and reclassification of capital stock or other equity
interests; (5) Borrower shall not change, modify, amend and otherwise
reconstitute its organizational structure, its properties and its businesses;
and (6) Borrower shall not form, create and otherwise cause to be formed or
created any Subsidiaries.
Section 8.10. SALES. Except as otherwise permitted in this Loan Agreement or in
any of the other Loan Documents, Borrower shall not voluntarily and Borrower
shall not involuntarily through its direct actions or inactions, or indirectly
through the actions or inactions of others, do any one or more of the following:
sell, transfer, lease, liquidate, franchise, license, dispose of and part with
possession or control of all or any part of or interest in (whether legal or
equitable) any of the Collateral or all of the Collateral. The prohibitions in
this Section do not extend to or include (1) the sale of inventory in the
ordinary course of business and (2) the sale of equipment in the ordinary and
normal replacement program for equipment under which Bank's first priority lien
and security interest continues in the replacement equipment.
13
Section 8.11. ACQUISITIONS. Borrower shall not acquire any stock or other equity
in any other person; Borrower shall not acquire any debt or other similar
interest in any other person; and Borrower shall not acquire a material part of
the assets of any other person.
Section 8.12. DIVIDENDS AND DISTRIBUTIONS. Borrower shall not declare any
dividends on, and Borrower shall not make any payment or other distribution on
account of, and Borrower shall not set apart assets for a sinking or other
analogous fund for the purchase, redemption, retirement and other similar or
dissimilar acquisition of, any stock or other equity interest in Borrower; and
Borrower shall not do any of the foregoing with respect to a debt or similar
interest in Borrower other than debts owed to Bank and trade debt incurred in
the normal and ordinary course of Borrower's business.
Section 8.13. SPECULATE. Borrower shall not directly and Borrower shall not
indirectly purchase or otherwise acquire, and Borrower shall not directly and
Borrower shall not through another person carry or otherwise hold any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System and any interpretations or rulings thereunder; and
Borrower shall not "speculate" in or "hedge" in any stock, futures, commodity,
index and other similar markets, or undertake any other activity that is not in
the ordinary course of business of Borrower as that business has been disclosed
to Bank in connection with the making of the Loan.
Section 8.14. CHARTER, ETC. If Borrower is an Organization, Borrower shall not
allow and Borrower shall not cause the organizational documents of Borrower to
be amended in any manner that would have a materially adverse impact on
Borrower, nor shall Borrower make or permit any significant change in accounting
treatment and reporting practices except as permitted or required by GAAP, nor
change its fiscal year.
Section 8.15. THIRD PARTY AGREEMENTS. Borrower shall not enter into any
agreement containing any provision that would be violated or breached by the
performance of the obligations of Borrower under this Loan Agreement, the Note
and any other Loan Document to be delivered hereunder or in connection herewith.
Section 8.16. ADDITIONAL CONTRACTS. Borrower shall not enter into any contract
and incur any Contractual Obligation to any Affiliate or other related person,
other than at arms length and in a manner and on terms in the best interest of
Borrower, and immediately upon the execution of any such contract, a copy
thereof will be provided to Bank.
Article IX. Financial Maintenance Covenants.
Commencing with the Closing Date and continuing until the later of (1) payment
in full of the Loan and all other amounts owing to Bank under the Loan Documents
or (2) termination of Bank's obligation to make disbursements under the Loan,
Borrower shall fully and timely comply with each and every one of the financial
maintenance covenants set forth on ATTACHMENT 5; and Borrower acknowledges to
Bank that the breach or default by Borrower of any of said financial maintenance
covenants is and the same shall be material.
Article X. Events of Default; Remedies.
Section 10.1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an "Event of Default" hereunder:
(a) the occurrence of any event of default or default
condition under the Note or any of the Notes if more than one,
including, without limitation, Borrower's failure to pay when due the
principal of or interest on the Note or any of the Notes if more than
one, or any other sums due thereunder, whether fees, charges, premiums
or costs and expenses, where such failure to pay shall not be cured
within three (3) days after Bank has given Borrower written notice
thereof;
(b) other than a default covered under Section 10.1(a)
above, Borrower's breach of or default under any of the terms,
conditions or covenants contained in this Loan Agreement, where such
breach or default shall not be cured within ten (10) days after Bank
has given Borrower written notice thereof;
14
(c) the actual or threatened demolition, injury or waste to
the Collateral, or any material part thereof, which, in the sole
opinion of Bank, may impair its value, or the actual or threatened
decline in value of the Collateral or any material part thereof;
(d) Borrower's assets, or any material part or portion
thereof, are attached, seized, subjected to a writ or distress
warrant, or are levied upon, or come into the possession of any
trustee, receiver or person acting in a similar capacity and such
attachment, seizure, writ or distress warrant or levy has not been
removed, discharged or rescinded within sixty (60) days, or if
Borrower is enjoined, restrained or in any way prevented by court
order from continuing to conduct all or any material part of its
business affairs, or if a judgment or other claim becomes a lien or
encumbrance upon any material portion of Borrower's assets, or if a
notice of lien, levy or assessment is filed of record with respect to
any of Borrower's assets by any Governmental Authority, and the same
is not paid within thirty (30) days after Borrower receives notice
thereof, provided that none of the foregoing shall constitute an Event
of Default where such action or event is stayed or an adequate bond
has been posted pending a good faith contest by Borrower;
(e) the insolvency of Borrower or any person obligated for
payment of the Loan or any parts or portions thereof, or the
appointment of a receiver for, or the filing of a petition of
bankruptcy by or against Borrower, provided, that if any such
appointment or filing shall be made, instituted or caused by any
person or entity other than Borrower, such appointment or filing shall
not be discharged within 60 days thereafter;
(f) the insolvency of any guarantor of the Loan or any parts
or portions thereof, or the appointment of a receiver for, or the
filing of a petition of bankruptcy by or against such guarantor,
provided, that if any such appointment or filing shall be made,
instituted or caused by any person or entity other than such
guarantor, such appointment or filing shall not be discharged within
60 days thereafter;
(g) Borrower's default under the terms of any instrument or
other agreement to which this Loan Agreement or any of the other Loan
Documents is subordinate or which is subordinate to this Loan
Agreement or any of the other Loan Documents;
(h) the occurrence of any event of default or default
condition under any other Loan Document, including, without
limitation, any deeds of trust, mortgages, security deeds, deeds to
secure debts, assignments, security agreements, pledge agreements,
guaranty agreements, indemnification agreements, control agreements or
blocked account agreements;
(i) any false statement, misrepresentation or withholding of
facts by Borrower or any other person in any loan application or other
document provided by Borrower or any other person to Bank or its
agents, including any misrepresentation made in this Loan Agreement,
or in any presentation made by Borrower or any other person to Bank or
its agents, as to any matter relied upon by Bank in evaluating whether
to extend financing to Borrower; or
(j) default by Borrower under any other Indebtedness or
other obligation now owing or which hereafter arises and is owing to
Bank, or default by any of Borrower's Affiliates or Subsidiaries under
any Indebtedness or other obligation now owing or which hereafter
arises and is owing to Bank.
Section 10.2. RIGHTS AND REMEDIES. If an Event of Default shall occur under this
Loan Agreement, in addition to any other right and remedy which may be available
to Bank and without limiting any other right and remedy granted to Bank in the
Loan Documents, which rights and remedies are fully exercisable by Bank as and
when provided in such other Loan Documents, Bank shall have the rights and
remedies set forth below in this SECTION 10.2., any and all of which it may
exercise at its election, without notice of its election and without demand -
subject, however, to applicable notice or grace periods, if any.
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10.2.1. ACCELERATION OF MATURITY. Bank may, at its option, accelerate and
declare immediately due and payable the Note, as well as any of and all of the
other Indebtedness and obligations owing under this Loan Agreement and the other
Loan Documents that are not already due hereunder and that are not already due
thereunder. If there is more than one Note, Bank may accelerate and declare
immediately due and payable all of the Notes, or Bank may from time to time and
at any number of times after the occurrence of an Event of Default, accelerate
and declare immediately due and payable any one or more of the Notes as Bank in
its discretion elects to accelerate. In addition to the foregoing, Bank may from
time to time and at any time proceed to protect and enforce its rights and
remedies under the Loan Documents (including its absolute and unconditional
right to recover full payment of any and all of the obligations owing by
Borrower, as well as those owing by other persons to Bank) by any one or more of
the following: judicial and non-judicial foreclosure proceedings as against all
and any part of the Collateral, without regard to the situs of such Collateral;
suits in equity; actions at law; and other appropriate legal, equitable and
administrative proceedings to enforce full payment.
10.2.2. BANK'S POWER OF ENFORCEMENT. Bank may by appropriate actions and
proceedings seek to do and have done any and all of the following: (1) to
enforce through actions at law and proceedings in equity, or both, payment of
all and any part or parts of the obligations owing by Borrower to Bank under the
Loan Documents, the performance of any of the terms in any of the Loan
Documents, and any other rights and remedies available to Bank; (2) to foreclose
and to authorize the foreclosure of all and any part or parts of the Collateral,
or interests therein, and to sell and have sold, as an entirety or in separate
lots or parcels, at one or more sales, the Collateral, or parts thereof or
interests therein, under the power of sale granted in the Loan Documents (to the
extent permitted by law) or the judgment or decree of a court or courts of
competent jurisdiction; and (3) to pursue any other right and remedy available
to it under the Loan Documents, at law and in equity. Bank may proceed either by
such actions and proceedings or by the exercise of its powers with respect to
entry and taking possession, or both, as Bank may determine in its discretion;
and the same may be taken without regard to whether the Note (or any and all of
the Notes if more than one) or any and all of the obligations owing to Bank
under this Loan Agreement and the other Loan Documents shall be due and payable
and without prejudice to the right of Bank thereafter to bring actions and
proceedings for any default existing at the time any earlier action or
proceeding was commenced. The taking of any action does not preclude Bank from
taking subsequent action and Bank may continue taking subsequent actions at such
time or times as it elects until the Loan and all other amounts owing to Bank
under the Loan Documents are paid in full.
10.2.3. BANK'S RIGHTS TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY
INCOME.
10.2.3.1. [INTENTIONALLY OMITTED]
10.2.3.2. ACTION FOR POSSESSION. If Borrower should fail for any
reason to surrender possession or if Borrower should fail for any reason to
deliver possession of the Collateral, or any part or parts thereof or interests
therein, to Bank after the earlier of Bank's demand therefor or Bank's attempt
to gain possession without prior demand, Bank may obtain a judgment or decree
conferring on Bank and Bank's agents the right to immediate possession of all of
the Collateral, or such part or parts thereof or interests therein, as Bank may
elect, and a judgment or decree requiring Borrower to surrender and deliver
immediate possession of all of the Collateral to Bank, or such part or parts
thereof or interests therein, as Bank may elect. Borrower shall pay to Bank,
upon demand, all costs and expenses of obtaining such judgment or decree,
including reasonable compensation to Bank, its attorneys and agents; and all
such costs and expenses shall, until paid, be secured by the lien and security
interest of Bank in the Collateral, and shall be payable on demand with interest
from date of demand at the highest contract rate payable under the Note.
10.2.3.3. MANAGEMENT OF COLLATERAL. Upon each and every entering into
and taking of possession of the Collateral, or part or parts thereof or
interests therein, by the Bank through its own actions and by the Bank through
those of its agents and other persons, Bank may directly and through its agents
and other persons, hold, store, use, operate, repair, restore, preserve,
protect, manage and control all and any part or parts of, and interests in the
Collateral, and conduct the business related thereto; and, without limiting the
foregoing, from time to time and at any time, the Bank may do and the Bank may
have done or direct the doing of any one or more of the following through
itself, its agents and such other persons as Bank deems appropriate under the
circumstances:
16
(a) make all necessary and proper maintenance, repairs,
renewals, replacements, additions, betterments and improvements to the
Collateral and parts thereof, and in connection therewith, purchase
and otherwise acquire fixtures, personal property and other types of
property;
(b) insure and keep the Collateral and parts thereof
insured;
(c) manage and operate the Collateral and parts thereof, and
exercise all the rights and powers of Borrower in its name and
otherwise with respect to the same;
(d) enter into agreements with others to exercise the powers
herein granted Bank, all as Bank from time to time may determine; and
(e) collect and receive all the rents, income, proceeds and
other benefits from, related to and arising out of the Collateral and
each and all parts thereof and interests therein, including those past
due, those currently due and those thereafter becoming due;
In connection with its management of the Collateral as aforesaid, Bank shall
apply any monies received by Bank in such priority as Bank may determine, or
such priority as may be required under any Requirement of Law, to: (1) payment
of any and all of the obligations owing to Bank under the Loan Documents,
including the Loan; (2) payment of any deposits for taxes, assessments and
insurance premiums; (3) payment of the cost of insurance, taxes, assessments and
other expenses and charges upon the Collateral or any parts thereof or interest
therein, (4) payment of any amounts due and payable on any other Indebtedness of
Borrower, whether prior or subsequent to the liens and security interest of
Bank, (5) payment of the compensation, disbursements and costs and expenses of
the agents, attorneys and other representatives of Bank, (6) payment of any
amounts deemed necessary by Bank to otherwise protect and preserve the
Collateral and the lien and security interest of Bank and (7) payment of such
other amounts as Bank deems necessary to assure to Bank the repayment of the
Loan and all other obligations owing to Bank under the Loan Documents.
10.2.3.4. PAYMENTS TO PRESERVE COLLATERAL. Bank, at its election, and
without notice to Borrower, may, to protect and preserve its interest in the
Collateral, and to assure repayment of the Loan and all other obligations owing
under the Loan Documents, make any payments which Borrower has failed to make
and any sum so paid shall be deemed an obligation secured by Bank's security
interest and be immediately due and payable from Borrower upon demand with
interest thereon at the highest contract rate applicable under the Note, but
such payment by Bank shall not release Borrower from its obligations or
constitute a waiver of a default hereunder.
10.2.4. RECEIVER. Bank, to the extent permitted by law and without regard
to the value, adequacy and occupancy of all or any part of the Collateral, or
any interests therein, shall be entitled as a matter of right, if it so elects,
to the appointment of a receiver or other similar official to: (1) enter upon
and take possession of any and all of the Collateral and any interests therein,
(2) preserve, protect, manage and control the Collateral or those parts or
interests over which it takes possession; and (3) collect all rents, income,
proceeds and other benefits thereof and apply the same as Bank directs, or if so
required, as the court which appointed such receiver or other similar official
may direct. The costs and expenses, including receiver's fees, attorneys' fees
and agent's compensation, incurred pursuant to the powers herein contained shall
be deemed an obligation of Borrower owing to Bank under this Loan Agreement and
the same shall be secured by Bank's lien and security interest in the Collateral
and shall be payable upon demand with interest from the date of demand at the
highest contract rate under the Note. Bank and any receiver or similar official
appointed as provided herein shall be liable to account only for such rents,
income, proceeds and other benefits actually received by Bank or such other
person, whether received pursuant to this Section or under other provisions of
this Loan Agreement. Notwithstanding the appointment of any receiver or other
similar official, Bank shall be entitled as pledgee to the possession and
control of any money, deposits, accounts, account receivables, documents,
chattel paper, documents of title, instruments, payment intangibles and other
general intangibles and other property and property rights and interests at the
present and any future time held by, or payable or deliverable under the terms
of the Loan Documents to Bank.
17
10.2.5. SET-OFF AND RECOUPMENT. Bank may, at its option and at any time or
times without prior notice to Borrower, set-off and apply toward payment of the
Loan
and other amounts now owing and amounts which may become owing by Borrower under
the Loan Documents, and otherwise exercise its rights of recoupment, as to any
and all (1) balances and deposits of Borrower held by Bank, (2) Indebtedness and
other obligations at any time owing to or for the credit and account of Borrower
by Bank and (3) Indebtedness and other obligations at any time owing to or for
the credit and account of Borrower by any of Bank's Affiliates.
Section 10.3. SUITS TO PROTECT THE COLLATERAL. If an Event of Default shall
occur and be continuing beyond any applicable cure period, Bank shall have the
power and authority, to institute and maintain any suits and proceedings as Bank
may deem advisable in its judgment (1) to prevent the impairment or threatened
impairment of the Collateral, or any part or parts thereof or interests therein,
by any acts and inactions which may be unlawful or which may be in breach of
this Loan Agreement and any of the other Loan Documents, (2) to preserve and
protect its interest in the Collateral and each and all parts thereof and
interests therein, including its liens and security interests therein, and (3)
to restrain the enforcement of or compliance with any legislation and any other
governmental enactment, rule and order that may be unconstitutional or otherwise
invalid, if the enforcement of or compliance with such enactment, rule and order
might impair Bank's lien and security interest in the Collateral, or be
prejudicial to Bank's interest in any other manner.
Section 10.4. PROOFS OF CLAIM. In the case of any receivership, insolvency,
bankruptcy, reorganization, arrangement, adjustment, composition and other
judicial proceedings affecting Borrower, any person obligated on any of
Borrower's obligations, any of Borrower's creditors and any of Borrower's
property, Bank, to the extent permitted by law and at any time or times, shall
be entitled to file such proofs of claim and other documents as may be necessary
or advisable in order to have its claims allowed in such proceedings for the
entire amount due and payable by Borrower under the Loan Documents, at the date
of the institution of such proceedings, and for any additional amounts which may
become due and payable by Borrower after such date.
Section 10.5. DISCONTINUANCE OF PROCEEDINGS; POSITION OF PARTIES RESTORED. If
Bank shall have proceeded to enforce any right and remedy under the Loan
Documents by foreclosure, entry or otherwise and such proceedings shall have
been discontinued or abandoned for any reason, or such proceedings shall have
resulted in a final determination adverse to Bank, then and in every such case
Borrower and Bank shall be restored to their former positions and rights
hereunder, and all rights, powers and remedies of Bank shall continue as if no
such proceedings had occurred or had been taken.
Section 10.6. [INTENTIONALLY OMITTED]
Article XI. Miscellaneous.
Section 11.1. INCORPORATION OF EXHIBITS AND RECITALS; CUSTOMER AND LOAN NUMBERS.
All exhibits, supplements, schedules, addenda and other attachments to this Loan
Agreement are by this reference incorporated herein and made a part hereof as if
fully set forth in the body of this Loan Agreement; provided, however, the
failure to correctly complete any exhibit, supplement, schedule, addenda or
attachment hereto shall not affect Borrower's duties and Bank's rights hereunder
if such corrected information can be obtained from the Commitment or any of the
other Loan Documents. The recitals set forth in this Loan Agreement are also a
part of this Loan Agreement. The Customer and Loan Numbers, if any, stated in
this Loan Agreement are for Bank's internal business use and reference only and
do not and shall not limit the scope and extent of Bank's security interest or
the Indebtedness and other obligations evidenced hereby, referenced herein and
secured hereby. The captions herein are inserted only as a matter of convenience
and for reference and in no way define, limit or describe the scope of this Loan
Agreement nor the intent of any provision hereof.
Section 11.2. AMENDMENTS. Subject to the exercise by Bank of its rights and
remedies as set forth in this Loan Agreement and without limiting any of such
rights and remedies, this Loan Agreement may not be modified, amended, waived,
extended, changed, discharged and terminated orally or by any act or failure to
act on the part of Borrower or Bank, but only by an agreement in writing signed
by the party against whom enforcement of any modification, amendment, waiver,
extension, change, discharge and termination is sought.
18
Section 11.3. ASSIGNMENT. The terms, provisions and conditions in this Loan
Agreement shall be binding upon and inure to the benefit of the heirs,
successors, assigns and personal representatives of the parties hereto;
provided, however, Borrower shall not assign this Loan Agreement and any of its
rights, interests, duties and obligations hereunder (inclusive of the proceeds
of the Loan and other moneys to be advanced under or on account of this Loan
Agreement) in whole or in part without the prior written consent of Bank, and
any such assignment (whether voluntary or by operation of law) without said
consent shall be void. It is expressly recognized and agreed that Bank may
assign or transfer this Loan Agreement, the Note or any of the Notes if more
than one, and any other Loan Documents, in whole or in part, to any person and,
in the event of such assignment, Bank shall thereafter be relieved of all
liability hereunder to the extent of the assignment or transfer. Borrower waives
and will not assert against any transferee or assignee of Bank any claims,
defenses, set-offs and rights of recoupment which Borrower could assert against
Bank, except defenses which Borrower cannot waive.
Section 11.4. CONFLICT. It is the intention of the parties that this Loan
Agreement and the other Loan Documents be interpreted in a consistent manner;
provided, however, in the event of any irreconcilable conflict in the provisions
of this Loan Agreement and the provisions of any of the other Loan Documents,
the provisions of this Loan Agreement shall control.
Section 11.5. NO PARTNERSHIP, JOINT VENTURE OR AGENCY. This Loan Agreement and
the other Loan Documents shall not in any respect be interpreted, deemed or
construed as making Bank a partner or joint venturer with Borrower, nor shall
they or any of them be interpreted, deemed or construed as making Bank the agent
or representative of Borrower. The relationship of Bank to Borrower is that of a
creditor to an obligor or debtor; and in furtherance thereof and in explanation
thereof, Bank has no fiduciary, trust, guardian, representative, partnership,
joint venturer and other similar relationship to or with Borrower and no such
relationship shall be drawn and implied from any of the Loan Documents or any of
Bank's actions and inactions hereunder or with respect hereto - and, Bank has no
obligation to Borrower and any other person relative to administration of the
Loan and administration of the Collateral, or any part or parts thereof or
interests therein. In no event shall Bank be liable for debts and claims
accruing or arising against Borrower.
Section 11.6. POWER OF ATTORNEY. So long as an Event of Default shall occur and
be continuing beyond any applicable cure period, Borrower constitutes and
appoints Bank its true and lawful attorney with full power of substitution, for
it and in its name, place and stead, to execute, deliver and file such
agreements, documents, notices, statements and records, to include, without
limitation, Financing Statements, and to do and undertake such other acts as
Bank, in its sole discretion, deems necessary or advisable to effect the terms
and conditions of this Loan Agreement and to otherwise protect and preserve the
security of the lien and security interests in the Collateral, and Bank's
interests therein. The foregoing appointment is and the same shall be coupled
with an interest in favor of Bank.
Section 11.7. INDEMNITY. Borrower hereby agrees to defend, protect, indemnify
and hold harmless Bank and each and all of Bank's shareholders, directors,
officers, employees, attorneys, agents and Affiliates (individually and
collectively, "Indemnified Parties"), from and against any and all claims,
actions, liabilities, damages, costs and expenses (including, without
limitation, all costs and expenses incurred in the investigation and defense of
any matter) ("Indemnified Liabilities") asserted against, imposed upon and
incurred by the Indemnified Parties, both direct and indirect and regardless of
the basis of the Indemnified Liabilities (i.e., whether based on federal, state
or local laws, rules, regulations and ordinances, common law, an equitable
cause, contract, tort or otherwise), as a result of or arising from or relating
to any one or more of (1) this Loan Agreement, (2) the other Loan Documents, (3)
the transactions contemplated by this Loan Agreement, (4) any credit extended or
used hereunder, (5) any act done or omitted by any person, or any event
occurring in connection therewith, and (6) the exercise of any rights and
remedies under this Loan Agreement and the exercise of any rights and remedies
under any of the other Loan Documents, including, without limitation, the
acquisition of the Collateral by Bank by way of foreclosure of the lien and
security interests thereon, deed in lieu of such foreclosure or otherwise,
except in all of the instances enumerated in (1) through (6) whereby the
Indemnified Liabilities result from the gross negligence or willful misconduct
of the person otherwise to be indemnified hereunder. In the event this indemnity
is unenforceable as a matter of law as to a particular matter or consequence
referred to herein, it shall be enforceable to the full extent permitted by law.
The obligations of Borrower under this Section are independent of all other
rights and obligations set forth herein and shall survive the payment of the
Loan and the termination of this Loan Agreement.
19
Section 11.8. PAYMENT OF EXPENSES. Without limiting any other provision of this
Loan Agreement relating to Borrower's payment of costs and expenses incurred by
Bank and those incurred by others on behalf of Bank, but in addition thereto,
whether or not the Loan is made and all of the Loan proceeds disbursed, Borrower
shall pay to Bank, on demand, each and all of any costs and expenses reasonably
incurred by Bank, incurred by others on behalf of Bank and incurred by Bank for
Borrower: (1) in order to meet Bank's requirements in connection with the Loan,
(2) in connection with the making of the Loan and (3) in connection with the
enforcement of Bank's rights and remedies under the Loan Documents, including,
payments to third persons of amounts Borrower is required to pay to such third
persons under and pursuant to the terms of any of the Loan Documents, protecting
Bank's interest in the Collateral, collecting any amount owing by Borrower and
owing by other persons under the Loan Documents and in enforcing its rights
under any of the Loan Documents with respect to the Collateral. All of the
foregoing costs and expenses shall be paid with interest thereon at the highest
contract rate prescribed in the Note from the date paid or incurred by or on
behalf of Bank until such costs and expenses are paid by Borrower. All sums so
paid and expended by Bank, and the interest thereon, shall be added to and be
secured by Bank's lien and security interests in the Collateral.
Section 11.9. DOCUMENTARY AND INTANGIBLE TAXES; ADDITIONAL COSTS. To the extent
not prohibited by law and notwithstanding who is liable for payment of the taxes
or fees, Borrower shall pay, on Bank's demand, (1) all intangible personal
property taxes, documentary stamp taxes, excise taxes and other similar taxes
assessed, charged and required to be paid in connection with the Loan and any
extension, renewal and modification thereof, and (2) all intangible personal
property taxes, documentary stamp taxes, excise taxes and other similar taxes
assessed, charged and required to be paid in connection with this Loan Agreement
and any of the other Loan Documents, and any extension, renewal and modification
of any of the foregoing. If, with respect to this Loan Agreement and the
transactions hereunder, any Requirement of Law (x) subjects Bank to any tax
(except federal, state and local income taxes on the overall net income of
Bank), (y) imposes, modifies or deems applicable any deposit insurance, reserve,
special deposit and other similar requirement against assets held by, deposits
in, and loans by Bank, or (z) imposes upon Bank any other condition, and the
result of any of the foregoing is to increase the cost to Bank, reduce the
income receivable by Bank or impose any expense upon Bank with respect to the
Loan, Borrower agrees to pay to Bank the amount of such increase in cost,
reduction in income or additional expense within thirty (30) days following
presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.
Section 11.10. MARSHALLING OF ASSETS. Borrower hereby waives, to the extent
permitted by law, the benefit of all appraisal, homestead, valuation, stay,
extension, reinstatement and redemption laws now in force and any which may in
the future come to be in force and all rights of marshalling in the event of any
sale under the Loan Documents of the Collateral, or any part or parts thereof or
any interests therein. Further, Borrower hereby expressly waives on behalf of
Borrower, and on behalf of each and every person acquiring any interest in or
title to the Collateral or any part thereof subsequent to the date of this Loan
Agreement and on behalf of all other persons to the extent permitted by law, any
or all rights of redemption from sale under any order or decree of foreclosure
of this Loan Agreement.
Section 11.11. WAIVER OF STATUTORY RIGHTS. Borrower waives any right to require
Bank to bring any action against any other person and to require that resort be
had to any security and to any balances of any deposit or other accounts on the
books of Bank in favor of any other person; and, without limiting the foregoing,
but in furtherance thereof, Borrower waives any rights Borrower otherwise might
have or may have in the future under the statutory provisions identified in the
INFORMATION SCHEDULE (by referencing this Section), and any other laws that
require or may require Bank to recover against some other person, or to realize
upon any security which Bank holds for the Loan. Until the Indebtedness to Bank
is paid in full, Borrower also waives any and all right of subrogation,
contribution, reimbursement and indemnity whatsoever and any right of recourse
to and with respect to the assets and property of any person that is or may be
security for the Loan.
Section 11.12. JURY, VENUE, JURISDICTION. This Loan Agreement shall be deemed to
have been executed and delivered in the jurisdiction listed on the INFORMATION
SCHEDULE as the jurisdiction whose laws govern this Loan Agreement, regardless
of where the signatories may be located at the time of execution. This Loan
Agreement and the other Loan Documents shall be governed by and construed in
accordance with the substantive laws of the aforesaid jurisdiction, excluding,
however, the conflict of law and choice of law provisions thereof.
Notwithstanding the foregoing, to the extent any of the Collateral is located in
another jurisdiction or other jurisdictions, the laws of the jurisdictions in
20
which the Collateral is located shall govern with respect to Bank's and
Borrower's rights in and to Collateral located in such other jurisdictions and
Bank's remedies relative thereto. Borrower: (1) TO THE EXTENT PERMITTED BY LAW,
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION ARISING FROM OR RELATED TO
THIS LOAN AGREEMENT AND ANY OF THE OTHER LOAN DOCUMENTS; (2) irrevocably submits
to the jurisdiction of either (i) the state courts of the jurisdiction whose
laws govern this Loan Agreement as identified on the INFORMATION SCHEDULE or
(ii) a United States District Court for any federal district in such
jurisdiction over any action or proceeding arising from or related to this Loan
Agreement and any of the other Loan Documents - subject to the exception
regarding location of the Collateral as provided hereinabove; and (3)
irrevocably waives, to the fullest extent Borrower may effectively do so, the
defense of improper venue or an inconvenient forum to the maintenance of any
such action or proceeding. Nothing in this Section shall affect or impair Bank's
right to serve legal process in any manner permitted by law or Bank's right to
bring any action or proceeding against Borrower or Borrower's property in the
courts of any other jurisdiction.
Section 11.13. CUMULATIVE RIGHTS, ETC. The rights, powers and remedies of Bank
under this Loan Agreement shall be in addition to all rights, powers and
remedies given to Bank by virtue of any applicable laws and regulations, those
given in equity, those given to Bank under the other Loan Documents and those
given under any other agreement, all of which rights, powers and remedies shall
be cumulative and may be exercised by Bank from time to time and at any number
of times successively, concurrently and alternatively without impairing Bank's
rights under this Loan Agreement and under any of the other Loan Documents.
Section 11.14. NO WAIVER; NO COURSE OF DEALING; NO INVALIDITY. No delay or
forbearance by Bank in exercising any and all of its rights and remedies under
this Loan Agreement and those under any of the other Loan Documents, and no
delay or forbearance of Bank in exercising any and all rights and remedies
otherwise afforded by law and in equity, shall operate as a waiver thereof or
preclude the exercise thereof during the continuance of any Default Condition or
Event of Default as set forth herein or in the event of any subsequent Default
Condition or Event of Default hereunder. If Bank is requested to waive a Default
Condition or an Event of Default or forbear taking action relative thereto, Bank
may condition any waiver or forbearance it elects to grant Borrower on payment
by Borrower of such fees to Bank as Bank deems appropriate under the
circumstances and may condition any such waiver or forbearance on Borrower
reimbursing Bank for all costs and expenses Bank incurs in connection with such
waiver or forbearance. Also, no act or inaction of Bank under this Loan
Agreement and under any of the other Loan Documents shall be deemed to
constitute or establish a "course of performance or dealing" that would require
Bank to so act or refrain from acting in any particular manner at a later time
under similar or dissimilar circumstances. Wherever possible each provision of
this Loan Agreement and the other Loan Documents shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Loan Agreement and if any provision of any of the other Loan Documents
shall be prohibited or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating
the remainder of such provision or the remaining provisions of this Loan
Agreement and those of the other Loan Documents, or the application thereof
shall be in a manner and to an extent permissible under applicable law.
Section 11.15. MAINTENANCE OF BANK'S RECORDS. Borrower acknowledges and agrees
that Bank is authorized to maintain, store and otherwise retain the Loan
Documents in their original, inscribed tangible form or a record thereof in an
electronic medium or other non-tangible medium which permits such record to be
retrieved in a perceivable form; that a record of any of the Loan Documents in a
non-tangible medium which is retrievable in a perceivable form shall be the
agreement of Borrower to the same extent as if such Loan Document was in its
original, inscribed tangible medium and such a record shall be binding on and
enforceable against Borrower notwithstanding the same is in a non-tangible form
and notwithstanding the signatures of the signatories hereof or thereof are
electronic, typed, printed, computer generated, facsimiles or other
reproductions, representations and forms; and that Bank's certification that a
non-tangible record of any of the Loan Documents is an accurate and complete
copy or reproduction of the original, inscribed tangible form shall be
conclusive, absent clear and convincing evidence of the incorrectness of said
certification, and such non-tangible record or a reproduction thereof shall be
deemed an original and have the same force and effect as the original, inscribed
tangible form.
Section 11.16. CREDIT INVESTIGATIONS; SHARING OF INFORMATION; CONTROL
AGREEMENTS. Bank is irrevocably authorized by Borrower to make and have made
such credit investigations as it deems appropriate to evaluate Borrower's credit
and financial standing, and Borrower authorizes Bank to share with consumer
21
reporting agencies and creditors its experiences with Borrower and other
information in Bank's possession relative to Borrower. Bank shall not have any
obligation and responsibility to (1) provide information to any third persons
relative to Bank's security interest in the Collateral, this Loan Agreement and
otherwise with respect to Borrower, (2) subordinate its liens and security
interests in the Collateral to the interests of any person, and (3) enter into
control agreements relative to the Collateral.
Section 11.17. BANK'S LIABILITY FOR COLLATERAL. Notwithstanding anything in this
Loan Agreement and any of the other Loan Documents to the contrary, Bank may at
any time or times during the term of this Loan Agreement make such payments and
do or cause to be done such acts as Bank considers necessary or advisable to
protect the Collateral and to preserve, protect and perfect or continue the
perfection of its security interest in the Collateral. So long as Bank complies
with reasonable banking practices, Bank shall not be liable and responsible for
the Collateral, or any part thereof or interest therein, and without limiting
the foregoing, Bank shall not have any responsibility for any one or more of the
following: (1) the safekeeping of the Collateral, (2) any loss and damage
occurring to the Collateral, regardless of the cause for such loss and damage,
(3) any diminution in the value of the Collateral, and (4) any act or default of
any carrier, warehouseman, bailee, forwarding agency and other person
whomsoever. All risk of loss, damage and destruction of the Collateral shall be
borne by Borrower.
Section 11.18. EXECUTION IN COUNTERPARTS. This Loan Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement, and in making proof of
this Loan Agreement, it shall not be necessary to produce or account for more
than one such counterpart (subject always to the provisions of SECTION 11.15
relating to maintenance of records).
Section 11.19. NOTICES. All notices, certificates and other communications
hereunder shall be deemed given when mailed by registered or certified mail,
postage prepaid, return receipt requested, addressed to the addresses set forth
above. Borrower and the Bank may, by written notice given hereunder, designate a
different address where communications should be sent and Bank may require that
all communications sent to it be sent electronically or in some other
non-tangible medium.
Section 11.20. TIME OF ESSENCE. Time is of the essence for the performance of
all of Borrower's covenants and agreements set forth in this Loan Agreement and
in each of the other Loan Documents.
Section 11.21. TERM OF LOAN AGREEMENT. This Loan Agreement shall become
effective on the Closing Date and shall continue in full force and effect until
the last to occur of (1) payment in full of the Loan and all other amounts now
owing and which may in the future be owing to Bank under the Loan Documents, or
(2) termination of Bank's obligation to make disbursements of Loan proceeds
under this Loan Agreement or the Note. Notwithstanding the foregoing, Bank shall
have the right to limit, declare a moratorium on and terminate its obligation to
make disbursement of Loan proceeds immediately and without notice upon the
occurrence and during the continuance of a Default Condition or an Event of
Default and such action by Bank shall not constitute a termination of this Loan
Agreement and Borrower's obligations under this Loan Agreement and the other
Loan Documents; and shall not adversely affect or impair Bank's lien or security
interests in the Collateral.
Section 11.22. INTENTIONALLY OMITTED.
Section 11.23. AML REPRESENTATIONS, WARRANTIES AND COVENANTS. Borrower
represents and warrants to Bank as follows, and acknowledge that the following
representations and warranties shall be continuing representations and
warranties from Borrower to Bank:
(a) Borrower is and shall remain in compliance with the Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
and any other enabling legislation, regulations or executive orders relating
thereto, and the Uniting and Strengthening America By Providing Appropriate
Tools Required To Intercept and Obstruct Terrorism Act (USA Patriot Act of
2001), as amended, and any other enabling legislation, regulations or executive
orders relating thereto;
22
(b) Borrower is and shall remain in compliance with 31 U.S.C., Section 5313, as
amended, 31 C.F.R. Section 103.22, as amended, and any similar laws or
regulations involving currency transaction reports or disclosures relating to
transactions in currency of more than $10,000.00, or of more than any other
minimum amount specified by any laws or regulations; and
(c) Borrower (i) is not a person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order 13224 of
September 23, 2001 Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) does not engage in any dealings or transactions prohibited by
Section 2 of such executive order, or are otherwise associated with any such
person in any manner violative of Section 2, or (iii) is not a person on the
list of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury's Office
of Foreign Assets Control regulation or executive order.
Borrower covenant and agree with Bank that no part of any loan proceeds or
advances, and no part of any other amounts or sums derived from any property
which secures repayment of such loan proceeds or advances, including, without
limitation, any accounts, payment intangibles, money, rents, issues or profits,
will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
(SIGNATURES BEGIN ON NEXT PAGE, FOLLOWED BY INFORMATION SCHEDULE AND ATTACHMENTS)
23
The undersigned have executed this Loan Agreement as of the effective date set
forth on the INFORMATION SCHEDULE.
BANK:
RBC CENTURA BANK
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title Vice President - Commercial Markets
BORROWER:
M-TRON INDUSTRIES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
PIEZO TECHNOLOGY, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
24
LOAN AGREEMENT SUPPLEMENT
AND
INFORMATION SCHEDULE
Subject Information
--------------------------------------------------------------------------------
Customer Number:
--------------------------------------------------------------------------------
Loan Number:
--------------------------------------------------------------------------------
Effective Date of Loan Agreement September 30, 2005
--------------------------------------------------------------------------------
Borrower: Full Legal Name: M-TRON INDUSTRIES, INC.
--------------- ------------------------------------
Street Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
P.O. Box:
------------------------------------
City: Yankton
------------------------------------
State: South Dakota
------------------------------------
Zip Code: 57078
-----------------------------------------------------------------
State of Organization: Delaware
------------------------------------
Tax Identification No.: ▇▇-▇▇▇▇▇▇▇
------------------------------------
Social Security No.:
-----------------------------------------------------------------
Contact Person: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Telephone Number:
------------------------------------
Facsimile Number:
------------------------------------
Email Address:
--------------------------------------------------------------------------------
Borrower: Full Legal Name: PIEZO TECHNOLOGY, INC.
--------------- ------------------------------------
Street Address: ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
P.O. Box:
------------------------------------
City: Yankton
------------------------------------
State: South Dakota
------------------------------------
Zip Code: 57078
-----------------------------------------------------------------
State of Organization: Florida
------------------------------------
Tax Identification No.: ▇▇-▇▇▇▇▇▇▇
------------------------------------
Social Security No.:
-----------------------------------------------------------------
Contact Person: ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Telephone Number:
------------------------------------
Facsimile Number:
------------------------------------
Email Address:
--------------------------------------------------------------------------------
Guarantor: Full Legal Name: ▇▇▇▇▇ CORPORATION
--------------- ------------------------------------
Street Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
------------------------------------
P.O. Box:
------------------------------------
City: Greenwich
------------------------------------
State: Connecticut
------------------------------------
Zip Code: 06830
-----------------------------------------------------------------
State of Organization: Indiana
------------------------------------
Tax Identification No.:
------------------------------------
Social Security No.:
-----------------------------------------------------------------
Contact Person: ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Telephone Number:
------------------------------------
Facsimile Number:
------------------------------------
Email Address:
--------------------------------------------------------------------------------
25
------------------------------------------------------ -------------------------
Bank: Full Name: RBC Centura Bank
--------------- ------------------------------------
Street Address: ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
P.O. Box: 1220
------------------------------------
City: Rocky Mount
------------------------------------
State: North Carolina
------------------------------------
Zip Code: 27802-1220
-----------------------------------------------------------------
Contact Person: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Telephone Number: 407/428-3026
------------------------------------
Facsimile Number: 407/428-3025
------------------------------------
Email Address: ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇.▇▇▇
--------------------------------------------------------------------------------
Type of Loan: X Term Loan
------
Non-Revolving Line of Credit
------
Revolving Line of Credit
------
-----------------------------------------------------------------------------------------------------------
Purpose of Loan X Term Loan Describe: Refinance 74,299 square foot
office/manufacturing facility located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇ and for payment of closing costs
of such refinance
------ ------------------------------------------
Non-Revolving Line of Credit Describe:
------ ------------------------------------------
Revolving Line of Credit Describe:
-----------------------------------------------------------------------------------------------------------
Loan Amount: X Term Loan $3,040,000.00, as evidenced by a promissory note
dated of even date herewith.
------
Non-Revolving Line of Credit $ , as evidenced by a promissory note dated:
------
Revolving Line of Credit $ , as evidenced by a promissory note dated:
-----------------------------------------------------------------------------------------------------------
Commitment Letter: Date:
-----------------------------------------------------------------------------------------------------------
26
-------------------------------------------------------------------------------------------------------------
Security The security 1. Amended and Restated Mortgage, Assignment of Rents and
Documents documents which Security Agreement dated of even date herewith made by
secure the Loan Borrower in favor of Bank, as modified by that certain Notice
include, without of Future Advance and Modification of Loan Documents,
limitation, those dated of even date herewith and executed by Borrower.
listed in this part.
-------------------------------------------------------------------------------------------------------------
Appraised Value X Term Loan $3,800,000.00
of Collateral
(insert minimum --------------------------------------------------
value): ---------
Non-Revolving Line of Credit $
---------
Revolving Line of Credit $
--------- --------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Subsidiaries: Full Legal Name:
-----------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
P.O. Box:
-----------------------------------------------------------------
City:
-----------------------------------------------------------------
State:
-----------------------------------------------------------------
Zip Code:
--------------------------------------------------------------------------------------------
Full Legal Name:
-----------------------------------------------------------------
Street Address:
-----------------------------------------------------------------
P.O. Box:
-----------------------------------------------------------------
City:
-----------------------------------------------------------------
State:
-----------------------------------------------------------------
Zip Code:
--------------------------------------------------------------------------------------------
Jurisdiction whose Laws Govern Loan Agreement State: Florida
-------------------------------------------------------------------------------------------------------------
Jurisdiction Specific Provisions 1. NONE
-------------------------------------------------------------------------------------------------------------
Additional Information: NONE
-------------------------------------------------------------------------------------------------------------
Additional Changes: Sections 7.4 and 10.6 are hereby deleted.
The following clause shall be deleted from Section 10.1(c):
"or the actual or threatened decline in value of the Collateral
or any material part thereof"
-------------------------------------------------------------------------------------------------------------
BORROWER'S ACKNOWLEDGMENT: ________________________________________________
-------------------------------------------------------------------------------------------------------------
BORROWER'S ACKNOWLEDGMENT: ________________________________________________
-------------------------------------------------------------------------------------------------------------
BANK'S ACKNOWLEDGMENT: ________________________________________________
-------------------------------------------------------------------------------------------------------------
27
ATTACHMENT 1
TO
LOAN AGREEMENT
(DESCRIPTION OF COLLATERAL)
All of the following real property and improvements and fixtures attached
thereto:
PARCEL 1:
BEGIN 1129.86 FEET EAST AND 30 FEET NORTH OF THE SOUTHWEST CORNER OF THE
NORTHWEST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 9, TOWNSHIP 22 SOUTH, RANGE 29
EAST, THENCE RUN NORTH 00 DEGREES 13 MINUTES 00 SECONDS EAST, 458.53 FEET;
THENCE SOUTH 89 DEGREES 47 MINUTES 53 SECONDS EAST, 445 FEET; THENCE SOUTH 00
DEGREES 13 MINUTES 00 SECONDS WEST, 458.53 FEET; THENCE NORTH 89 DEGREES 47
MINUTES 53 SECONDS WEST, 445 FEET TO THE POINT OF BEGINNING, LYING AND BEING IN
ORANGE COUNTY, FLORIDA.
PARCEL 3:
BEGIN 1574.86 FEET EAST AND 30 FEET NORTH OF THE SOUTHWEST CORNER OF THE
NORTHWEST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 9, TOWNSHIP 22 SOUTH, RANGE 29
EAST, THENCE RUN SOUTH 89 DEGREES 47 MINUTES 53 SECONDS EAST, 153.78 FEET;
THENCE NORTH 24 DEGREES 15 MINUTES 33 SECONDS WEST, 374.35 FEET; THENCE SOUTH 00
DEGREES 13 MINUTES 00 SECONDS WEST, 340.68 FEET TO THE POINT OF BEGINNING, LYING
AND BEING IN ORANGE COUNTY, FLORIDA.
PARCEL 5:
BEGINNING 1129.86 FEET EAST AND 488.53 FEET NORTH OF THE SOUTHWEST CORNER OF THE
NORTHWEST 1/4 OF THE SOUTHEAST 1/4 OF SECTION 9, TOWNSHIP 22 SOUTH, RANGE 29
EAST, THENCE CONTINUE NORTH 00 DEGREES 00 MINUTES 00 SECONDS EAST, 73.27 FEET;
SOUTH 89 DEGREES 47 MINUTES 53 SECONDS EAST, 378.16 FEET TO THE POINT OF
CURVATURE OF A CURVE CONCAVE SOUTHWESTERLY HAVING A RADIUS OF 52.00 FEET; THENCE
SOUTHEASTERLY ALONG THE ARC OF SAID CURVE THROUGH A CENTRAL ANGLE OF 65 DEGREES
32 MINUTES 20 SECONDS, A DISTANCE OF 59.48 FEET TO THE POINT OF TANGENCY OF SAID
CURVE; THENCE SOUTH 24 DEGREES 15 MINUTES, 33 SECONDS EAST, 47.02 FEET; THENCE
NORTH 89 DEGREES 47 MINUTES 53 SECONDS WEST, 445 FEET TO THE POINT OF BEGINNING,
LYING AND BEING IN ORANGE COUNTY, FLORIDA.
28
ATTACHMENT 2
TO
LOAN AGREEMENT
(CONDITIONS TO CLOSING)
UCC-11 SEARCH RESULTS. Bank shall have received current UCC-11 search results
from such local and state filing offices as Bank may request, each showing no
liens or encumbrances against any of the Collateral.
TITLE INSURANCE. Bank shall have received a title insurance policy, or a title
insurance commitment, with respect to any real property that is a part of the
assets owned by Borrower, issued by a title insurance company acceptable to Bank
("Title Company"). The title insurance policy, or the title insurance
commitment, (1) shall have deleted, or shall have been marked to delete, all
exceptions other than those acceptable to Bank, (2) shall meet or have satisfied
all requirements requested by Bank and (3) shall contain such endorsements as
Bank deems appropriate (E.G., zoning, access, comprehensive).
SURVEY. Borrower shall have delivered to Bank four copies of a recent (dated not
more than 90 days prior to the Closing Date) survey of any real property that is
a part of the Collateral, by a registered land surveyor, together with a
surveyor's certificate with respect to such survey. The survey and surveyor's
certification shall meet in all respects Bank's survey requirements, which at a
minimum shall entitle Bank's title insurance to be issued without exception as
to matters of survey.
ENVIRONMENTAL QUESTIONNAIRE/ENVIRONMENTAL ASSESSMENT. Borrower shall have
completed and delivered to Bank an environmental questionnaire on a form
supplied by Bank, such completed questionnaire containing answers to the
questions therein that are satisfactory in all respects to Bank and Bank shall
have received a current (dated not more than 90 days prior to the Closing Date)
Phase I environmental assessment with respect to any real property that is a
part of the Collateral, the results and conclusions of which are in all respects
satisfactory to Bank, in its sole discretion.
APPRAISAL. Bank shall have received a MAI appraisal of such of the Collateral as
Bank designates in writing to Borrower, performed in accordance with all
applicable governmental regulations by an independent appraiser selected by Bank
and commissioned by and addressed to Bank, which reflects that the appraised
fair market value of the Collateral exceeds the amount stated on the INFORMATION
SCHEDULE.
TAXES. Borrower shall have delivered to Bank evidence that the AD VALOREM taxes
on any real property that is a part of the Collateral have been paid through the
most recent calendar year and information as to tax parcel identification
numbers, tax rates, estimated tax values and the identities of the taxing
authorities.
UTILITIES. Borrower shall have delivered to Bank evidence satisfactory to Bank
of the suitability and availability, at normal and customary rates, of water,
sanitary sewer and storm water sewer, electric, gas, telephone, cable, internet
connectivity and other utilities needed to properly service any real property
that is a part of the Collateral in its intended use, together with evidence
satisfactory to Bank that all easements needed for the construction, maintenance
and use of such utilities are available.
LICENSES AND PERMITS. Bank shall have received copies of all material licenses
and permits respecting Borrower's business that are necessary for the conduct
thereof.
FLOOD HAZARDS. Bank shall have received evidence that any real property that is
a part of the Collateral is not located within an area identified as having
"special flood hazards" as such term is used in the federal Flood Disaster
Protection Act of 1973.
INSURANCE. Borrower shall have delivered to Bank evidence that Borrower has
obtained each of the insurance policies required under ARTICLE VII, together
with satisfactory evidence of premium payments.
29
CURRENT FINANCIAL STATEMENTS. Borrower and any other person obligated for
payment of the Loan or Borrower's performance shall have delivered to Bank
complete and current financial statements, all in a form satisfactory to Bank.
TAXPAYER IDENTIFICATION NUMBER. Borrower and any other person obligated for
payment of the Loan or Borrower's performance shall have supplied to Bank their
respective federal taxpayer identification numbers or social security numbers,
as applicable.
AUTHORITY DOCUMENTS. Bank shall have received from Borrower and from such other
persons as Bank may request, documents evidencing Borrower's and such other
persons' respective authority to enter into this Loan, together with
certificates of authority or good standing and borrowing certifications as Bank
and its counsel deem appropriate.
ATTORNEY'S OPINION. Borrower's counsel shall have delivered to Bank its written
opinion regarding the organization and operation of Borrower, the enforceability
of the Loan Documents and such other matters as Bank may reasonably request,
such opinion to be in form and substance satisfactory to Bank.
CONSENT TO ASSIGNMENTS. Borrower shall have delivered to Bank consents to
collateral assignments from such persons as Bank may require, such consents
authorizing Borrower's assignments to Bank of Borrower's interests in the
contract with each of them.
CONSENTS AND APPROVALS. Bank shall have received true and exact copies of any
other consents and approvals of all persons required in order for Borrower to
comply with all of the terms of the Loan Documents.
COMPLIANCE WITH LAWS. Bank shall have received evidence that Borrower's
business, property and operations are in compliance with all Requirements of
Law.
30
ATTACHMENT 2A
TO
LOAN AGREEMENT
(ADDITIONAL TERMS AND CONDITIONS)
A. ADDITIONAL CONDITIONS. THE FOLLOWING ADDITIONAL CONDITIONS MUST BE
SATISFIED BEFORE BANK IS OBLIGATED TO MAKE ANY DISBURSEMENTS AND EACH OF
THE CONDITIONS MUST BE AND REMAIN SATISFIED AT THE TIME OF EACH
DISBURSEMENT SUBSEQUENT TO THE FIRST DISBURSEMENT:
1. None
2. None
B. TERMS AND PROVISIONS REGARDING DISBURSEMENTS. BANK'S OBLIGATION TO MAKE
DISBURSEMENTS AND BORROWER'S RIGHT TO RECEIVE DISBURSEMENTS SHALL BE
SUBJECT TO THE FOLLOWING TERMS AND PROVISIONS:
None
31
ATTACHMENT 3
TO
LOAN AGREEMENT
(FINANCIAL REPORTS)
Each Borrower shall submit the following financial reports to Bank at the times
indicated below:
ANNUAL AND QUARTERLY REPORTS. Furnish to Bank with reasonable promptness such
information respecting the business, operations and financial condition of the
Borrower as Bank may from time to time request, including, without limitation:
(i) audited, annual financial statements of Borrower within 120 days of the
close of Borrower's fiscal year, with no limitations of scope and prepared by an
independent certified public accountant acceptable to Bank; and (ii) quarterly
financial statements, certified by an officer of Borrower to be true, correct
and stated on a basis consistent with the annual statements required to be
supplied by Borrower to Bank.
32
ATTACHMENT 4
TO
LOAN AGREEMENT
(INSURANCE REQUIREMENTS)
INSURANCE COVENANTS
BUSINESS INTERRUPTION. For the term of the Loan.
HAZARD INSURANCE. All risk replacement cost insurance with agreed amount
endorsement and such other hazard insurance as Bank may require with standard
noncontributing mortgagee clauses and standard waiver of subrogation clauses,
such insurance to be in such amounts and form and by such companies as shall be
approved by Bank, the originals of which policies (together with appropriate
endorsements thereto, evidence of payment of premiums thereon and written
agreement by the insurer or insurers therein to give Bank thirty (30) days'
prior written notice of intention to cancel) shall be promptly delivered to
Bank, with such insurance to be kept in full force and effect at all times until
the payment in full of the Loan;
PUBLIC LIABILITY INSURANCE. Public liability insurance in an amount standard for
the industry or business in which Borrower operates and otherwise satisfactory
to Bank, such insurance to be in the form and covering risks customarily carried
in similar properties issued by a company acceptable to Bank and covering Bank
as an additional insured.
WORKMEN'S COMPENSATION. ▇▇▇▇▇▇▇'▇ compensation in amount standard for the
industry that meets all requirements of law and is otherwise satisfactory to
Bank.
FLOOD INSURANCE. If required by Bank, a flood insurance policy in the amount of
the Loan containing a standard mortgagee clause naming Bank as loss-payee.
33
ATTACHMENT 5
TO
LOAN AGREEMENT
(ADDITIONAL AFFIRMATIVE, NEGATIVE AND FINANCIAL COVENANTS)
A. Additional Affirmative Covenants (Article VII).
1. None.
2. None.
B. Additional Negative Covenants (Article VIII).
1. Borrower shall not pay annual management fees to Guarantor in excess of the
lower of (a) $250,000.00 or (b) 50% of the sum of net income plus
management fees previously expensed during the reported fiscal year period.
2. None.
C. Exceptions to Negative Covenants (Article VIII - Reference Specific Section
to which Exception Applies).
1. Section 7.1 - Borrower shall not be required to maintain its primary
banking relationship with Bank, but shall maintain such depository and loan
relationship with Bank as is established as of the date of this Loan Agreement.
2. 8.3 shall only apply to judgments in excess of $100,000.00.
3. Sections 8.1, 8.4, 8.6, 8.13 and 8.16 are hereby deleted in their entirety.
4. Sections 8.5 and 8.7 shall be applicable to Borrower only to the extent
that any such acts prohibited in Sections 8.5 and 8.7 would mean a violation the
Financial Maintenance Covenants set forth in paragraph D of this Attachment.
5. Sections 8.9, 8.10 and 8.11 are applicable to Borrower only to require that
Borrower deliver written notice to Bank prior to taking any act set forth in
such Sections 8.9, 8.10 and 8.11, which provisions shall have no force or
effect.
6. With respect to Sections 8.8 and 8.12, Borrower shall be entitled to (i)
make such interest payments as allowed under paragraph 3 of the Subordination
Agreement, dated of even date herewith, by and between Borrower and Bank and pay
annual management fees as set forth in this Attachment 5, item B(1) immediately
above.
D. Financial Maintenance Covenants (Article IX).
TOTAL LIABILITIES/TANGIBLE NET WORTH. A ratio of (i) Total Liabilities to
(ii) Tangible Net Worth of at least 4.00 to 1.00.
TANGIBLE NET WORTH. Tangible Net Worth of at least $4,200,000.00.
FIXED CHARGE COVERAGE RATIO: A Ratio of not less than 1.20 to 1.00.
E. ADDITIONAL DEFINITIONS
34
"CAPITAL EXPENDITURES" means any amounts accrued or paid in respect of any
purchase or other acquisition for value of capital assets and, for greater
certainty, excludes amounts expended in respect of the normal repair and
maintenance of capital assets utilized in the ordinary course of business.
"CAPITALIZED LEASES" means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.
"CONTINGENT OBLIGATION" OR "CONTINGENT LIABILITIES" means, as applied to any
person, any direct or indirect liability, contingent or otherwise, of that
person with respect to (i) any account, instrument, chattel paper, document,
general intangible, indebtedness, lease, dividend, letter of credit, letter of
credit right or other obligation of another person, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed,
co-made or discounted or sold with recourse by that person, or in respect of
which that person is otherwise directly or indirectly liable; (ii) any
obligations with respect to undrawn letters of credit issued for the account of
that person; and (iii) all obligations arising under any interest rate, currency
or commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other agreement or arrangement designated to protect a person
against fluctuation in interest rates, currency exchange rates or commodity
prices; provided, however, that the term "Contingent Obligation" shall not
include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement.
"EBITDA" means the total of (i) net income from continuing operations
(excluding extraordinary gains or losses), and to the extent deducted in
determining net income, (ii) Interest Expense, (iii) income taxes, (iv)
depreciation, depletion and amortization expenses.
"FIXED CHARGE COVERAGE RATIO" means as of any day the ratio derived when
comparing EBITDA, less Unfunded Capital Expenditures, dividends and taxes to
Borrower's payments on the principal and interest on Borrower's Indebtedness to
Bank and Subordinated Debt, made during the applicable reporting period.
"FUNDED DEBT" means, at any time, all obligations for borrowed money which bear
interest or to which interest is imputed plus, without duplication, all
obligations for the deferred payment of the purchase of property, all
Capitalized Lease obligations and all indebtedness secured by purchase money
security interests, plus the amount of any Contingent Liabilities.
"INTEREST EXPENSE" means the total of the costs of advances outstanding under
all indebtedness including (i) interest charges, (ii) capitalized interest,
(iii) the interest component of Capitalized Leases, (iv) fees payable in respect
of letters of credit and letters of guarantee, and (v) discounts incurred and
fees payable in respect of bankers' acceptances.
"SUBORDINATED DEBT" means any debt incurred by Borrower that is subordinated to
the Indebtedness owing by Borrower to Bank on terms reasonably acceptable to
Bank (and identified as being such by Borrower and Bank).
"TANGIBLE NET WORTH" means total assets less Total Liabilities and less the
following types of assets: (a) receivables and other investments in or amounts
due from any shareholder, employee, or other person or entity related to or
affiliated with the Borrower, except the $500,000.00 short-term note receivable
from Guarantor as long as Borrower receives timely quarterly payments of no less
than $125,000.00, starting September 30, 2005, and (b) goodwill, patents,
copyrights, mailing lists, trade names, trademarks, servicing rights,
organizational and franchise costs, bond underwriting costs and other like
assets properly classified as intangible; and treasury stock. Tangible Net Worth
shall not include any debt due to Borrower not acceptable to Bank in the
exercise of its reasonable discretion including the $917,000.00 long term note
receivable due from Guarantor.
35
"TOTAL LIABILITIES" OR "TOTAL DEBT" means all liabilities including Contingent
Liabilities, exclusive of deferred tax liabilities, less Subordinated Debt not
to exceeding $2,500,000.00.
"UNFUNDED CAPITAL EXPENDITURES" means those Capital Expenditures which are not
financed by Funded Debt.