LOAN PARTICIPATION CERTIFICATE AND AGREEMENT
THIS PARTICIPATION AGREEMENT is entered into as of this 1st day of
May, 1997 (the "Agreement") by and between BANDO ▇▇▇▇▇▇▇▇▇▇ SMALL BUSINESS
LENDING CORPORATION (the "Company") and SECURITY BANK, SSB (the "Bank").
R E C I T A L S:
WHEREAS, the Company has entered into Commitment and Loan Agreements
(each a "Loan Agreement" and collectively the "Loan Agreements") with
those persons listed on Exhibit A (each a "Borrower" and collectively the
"Borrowers"), pursuant to which, among other things, the Company made
loans to Borrowers evidenced by each Borrower's Note in the principal
amount, at the interest rate, dated and maturing on the date all as listed
on Exhibit A (each a "Note" and collectively the "Notes"); and
WHEREAS, the Bank desires to purchase from the Company, and the
Company desires to sell, a participation in the Loan Agreements, the Notes
and all other legal documents and instruments creating or evidencing the
Company's loan (each a "Loan" and collectively the "Loans") to the
Borrower and all other legal documents and instruments securing or
guarantying the same (collectively, the "Loan Documents"), subject to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the above premises and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
(a) "Participant" means the Company and the Bank.
(b) "Participation" of a Participant means the undivided
interest of such Participant in the Note and Loan.
2. Sale, etc. The Company hereby sells, transfers and assigns and
the Bank hereby agrees to purchase from the Company, an undivided
Participation in the Notes and Loan Documents (in the amounts which are
listed on Exhibit A) for the aggregate amount of $21,811,236.88, the
receipt of which is hereby acknowledged by the Company. The Company
retains a Participation in the Note and Loan, which is and shall remain
subordinate to the Bank's rights and interest in the Loan and Loan
Documents and to Bank's full recovery of its participation, including any
interest or other amounts due in connection therewith. The Company will
deliver to Firstar Trust company, Milwaukee, Wisconsin ("Document
Custodian") the original Loan Documents, as agent for the Participants,
subject to the rights and duties herein described retained by the Company.
The Bank shall be entitled to interest on the aggregate amount of its
Participation at the rate of 7.90% per annum, payable in arrears on the
10th day of each calendar month commencing on the 10th day of the first
calendar month following the date hereof and continuing on the 10th day of
each calendar month until June 30, 1997. Subsequent to an event of
default in the payment of any funds due on any Note, the Bank shall be
entitled to interest on the aggregate amount of its Participation at the
rate of 2.0% above the rate otherwise in effect for the period that the
default is left uncured. Interest shall be determined on a daily basis
using the exact amount invested or remaining invested in the
Participation, including amounts due to be paid the Bank under Section 3
hereof, but not yet received by the Bank. All computation of interest
shall be made on the basis of a year of 360 days, composed of 12 months of
30 days in each month, using the actual number of days occurring for any
partial month for which such interest is payable. For the month beginning
July 1, 1997 and for each successive month thereafter, the interest rate
shall be equal to the one month London Interbank Offered Rate plus 1.5%.
The one month London Interbank Offered Rate means the rate published in
The Wall Street Journal on the first business day of each month.
The Company shall furnish the Bank a written computation of interest
with each payment of interest, provided, however, that the Bank shall make
the final determination of interest, which determination shall be
conclusive and binding, absent manifest error.
The Company shall pay a late payment fee equal to 5% of the amount of
any payment of interest, principal or other amounts due the Bank that is
not paid when due on any such late payments accepted by the Bank.
In the event that (i) the Company offers to repurchase, and the Bank
agrees to resell, any Note or Notes to the Company for the full amount of
the Bank's Participation, (ii) there is a payment in full prior to
maturity of any Note, or (iii) there is a payment in full of any Note upon
its stated maturity which occurs on or before July 1, 2000, then the Bank
agrees that, subject to the Bank's approval of the Loan, it will purchase
and the Company agrees that it will sell, an additional Note or Notes for
an amount not to exceed in the aggregate the amount of the Bank's
Participation that is repurchased by the Company or that has been repaid
by the Borrower to the Company.
In the event that there is a payment in full of any Note at or prior
to its stated maturity as provided in the preceding paragraph, the Bank
agrees that, subject to the Bank's approval of the Loan, it will purchase
and the Company agrees that it will sell an eightyfive percent (85%)
undivided Participation in an additional Note or Notes for an amount not
to exceed in the aggregate the amount of the Bank's Participation that is
paid at maturity within five (5) years from the date hereof or is prepaid
by the Borrower to the Company, provided that:
The Company shall provide to the Bank not less than five (5)
Business Days prior to the Company's receipt of the prepayment from
the Borrower:
a) an Officer's Certificate setting forth the original
principal amount of the Note being paid or prepaid, the stated
maturity of the Note being prepaid, the amount being paid, and
the interest rate for said Note as of the date of payment; and
b) an Officer's Certificate setting forth the original
principal balance of the Note (or Notes) to be purchased by the
Bank, the stated maturity of the Note (or Notes) to be purchased
by the Bank, the then-current principal balance of the Note (or
Notes) to be purchased by the Bank, and the then-current
interest rate for said Note (or Notes).
The Company may, at any time, repurchase any Note or Notes for the
full amount of the Bank's Participation in such Note or Notes, together
with any interest accrued thereon pursuant to Section 2 hereof. In the
event that the Company exercises its option to repurchase any Note or
Notes pursuant to this agreement, then: a) the Company shall pay to the
Bank on the date of the repurchase, a repurchase premium equal to 1.5% of
the Bank's Participation in such Note or Notes; and (ii) the Bank shall be
under no obligation to purchase an additional Note or Notes in
substitution therefor.
3. Collection and Allocation of Payments.
(a) All payments on account of principal, together with any
release fees, condemnation awards, renewal or extension fees, insurance
proceeds, payments received from guarantors or sureties, proceeds of
setoff and all proceeds of collection or from the sale or liquidation of
collateral for any Note (together, "Collections") and all payments of
interest received by the Company shall be allocated to, and paid by the
Company to the Bank as hereinafter set forth. On the tenth (10th) day of
each month, the Company agrees to remit to the Bank:
(i) Interest in the amount determined under Section 2 hereof for
the preceding month just ended, including interest on any amount of
interest not paid when due;
(ii) Eightyfive percent (85%) of any prepayment penalties or
fees on the Notes;
(iii) Eightyfive percent (85%) of Collections prior to maturity
of the Notes received during the preceding month just ended; and
(iv) One hundred percent (100%) of Collections after maturity of
the Notes (whether by acceleration or otherwise) received during the
preceding month just ended, up to a maximum of the Bank's
Participation therein.
In the event that all payments of principal received by the Company on any
Note, including all Collections, are not sufficient to repay the balance
of the Bank's Participation in any such Note, the Company agrees to
repurchase the unpaid principal balance of the Bank's Participation, plus
interest and other fees or charges due the Bank thereon, upon demand by
the Bank.
(b) All payments of principal and interest due under this
Agreement shall be made by wire transfer of immediately available funds by
the Company to the Bank no later than 12 p.m. on the dates when due. No
later than the preceding Business Day, the Company shall notify the Bank
of the anticipated amount or each remittance, together with sufficient
text to identify the Loan Participation Certificate and Agreement to which
such remittance relates, and the amount being remitted as interest, fees
or principal, as the case may be.
4. Loan Servicing. Until such time as the Bank has fully recovered
the amount invested in this Participation plus interest on the amount of
this Participation, the Company shall service and manage the Notes and
Loan Documents in accordance with its usual practices with respect to
loans of that type and shall exercise the same degree of care and shall
adhere to the same standards of conduct as would be the case if there were
no participation in such Loan, without cost or charge to the Bank. The
Company shall provide to the Bank a copy of all paid real estate tax bills
and all certificates of fire and hazard insurance provided by the
Borrowers to the Company. The Company shall pay all expenses incurred in
performance by the Company of its servicing obligations hereunder,
including expenses incurred in administering, collecting, enforcing or
protecting the Notes and Loan Documents. The Company shall not be liable
to the Bank for any action of, or failure to act or mistake on the part of
any of the Company's agents, officers, employees or attorneys with respect
to any transaction relating to the Loan, provided the Company has acted in
good faith and has not been guilty of any willful misconduct.
5. Covenants. Except as provided in Section 9 hereof, neither the
Company not the Bank shall, without the prior written consent of the other
Participant:
(a) Amend the Note or any of the Loan Documents if the effect of
any such amendment is to extend the term of any Note, change the
amount, frequency or time for any payment due under the Note or
change the interest rate or other fees or charges due or payable
under the Note or any of the Loan Documents;
(b) Consent to any waiver of default or forbearance in
connection with any Note or Loan document; and
(c) Release or waive any security or any claim against the
Borrower or any guarantor or surety of the Borrower's obligations
under the Note and the Loan Documents.
6. Financial Information. The Company shall furnish to the Document
Custodian copies of all annual financial statements of each Borrower. The
Company will furnish to the Bank, upon request, copies of interim
financial statements of any Borrower, appraisals, title reports,
environmental reports or any other information relating to a Borrower and
a Borrower's Loan. The Company shall not be responsible for the accuracy
of any information given to the Company by the Borrowers. The Company
shall promptly notify the Bank of any material inaccuracy or omission in
information of which the Company has knowledge, provided, however, that
the Company has no duty to investigate the accuracy of the information.
7. Indemnification. The Company agrees to indemnify and hold the
Bank harmless from any and all claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments and any other costs
that the Bank may sustain as a result of the Company's obligations under
the Note and other Loan Documents, or this Agreement.
8. Borrower Default and Remedies. Upon a default in the payment of
any funds due on any Note, or in the performance of any term in any of the
Loan Documents, the Company shall promptly notify the Bank of the default.
In the event any default as described above is left uncured for a period
of ninety (90) days, the Company shall accelerate the maturity of the
entire indebtedness of such Note and commence foreclosure or other
appropriate proceedings to collect the Note and to enforce its rights
against any collateral securing the Note.
9. Lender Default and Remedies. In the event that Company shall
become the subject of liquidation, reorganization, receivership or similar
proceedings or a Default occurs, the Bank will have the right to
administer and service, or to collect and enforce, as the case may be, the
Note and the Loan Documents in its own name and for its own account and in
so doing, may, without limitation, notice or consent (notice and consent
being hereby waived by the Company) (a) amend the Note or any of the Loan
Documents; (b) change the nature or time of payment of the obligations
referred to therein; (c) consent to any waiver, modification, forbearance
or revision of the Note or any of the Loan Documents; and (d) release or
waive any security or any claim against the Borrower or any guarantor or
surety of the Borrower's obligations under the Note and the Loan
Documents.
10. General.
(a) This Agreement may only be changed, waived, discharged or
terminated by written agreement signed by the Company and the Bank.
The Company may not repurchase the unpaid principal balance of the
Bank's Participation without the Bank's consent.
(b) Neither the execution of this Agreement nor the purchase of
the Participation by the Bank is intended to be, nor shall it be,
construed to be, the formation of a partnership or joint venture
between the Company and the Bank.
(c) The delivery of the Note and the Loan Documents to the
Document Custodian shall constitute a sale and assignment of a
Participation in the Note and the Loan Documents to the extent of the
amounts stated herein. No payment by the Bank to the Company on
account of any such Participation shall evidence a loan by the Bank
to the Company.
(d) The Agreement embodies the entire agreement and
understanding between the Company and the Bank and supersedes all
prior agreements and understandings between the Company and the Bank
relating to the subject matter thereof.
(e) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.
(f) All of the terms, covenants and conditions herein contained
inure to the benefit of and are binding upon the Participants, their
successors and assigns.
(g) This Agreement is governed by the laws of the State of
Wisconsin.
(h) The Company acknowledges that it is acting as and will
fulfill its duties and obligations hereunder as a fiduciary to the
Bank.
(i) None of the terms, covenants, conditions, agreements or
provisions contained in this Agreement confer any rights upon, or are
enforceable by the Borrower, or its successors, legal representatives
or assigns.
Dated as of the date first above written.
BANDO ▇▇▇▇▇▇▇▇▇▇ SMALL BUSINESS
LENDING CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman of the Board and
Chief Executive Officer
SECURITY BANK SSB
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President
BMSBLC/SECURITY PARTICIPATION Original Current Participation BMSBLC
Date of Loan Balance Loan Balance Loan Balance
Small Business Concern Note Balance 05/01/97 05/01/97 05/01/97
Acme ▇▇▇▇▇▇▇ 12/20/95 862,786 827,233.26 703,148.27 124,084.99
Carriage House of Brookfield (▇▇▇▇▇▇▇) 04/30/93 800,000 756,457.09 642,988.53 113,468.56
Columbia Grinding, Inc./▇▇▇▇▇▇▇ 01/23/95 675,000 629,894.35 535,410.20 94,484.15
Dash Medical (Market Investment) 09/23/91 560,000 400,829.24 340,704.85 60,124.39
▇▇▇▇▇ Transport (JD Invest) 03/31/92 858,000 629,450.90 535,033.27 94,417.64
Flexcraft, Inc. 11/17/88 1,230,000 800,021.61 680,018.37 120,003.24
Getzen Company 04/15/97 278,000 257,361.88 218,757.60 38,604.28
Ghidorzi/ C A Company 02/15/94 1,773,000 1,256,318.11 1,067,870.39 188,447.72
Hydro Thermal/▇▇▇▇▇▇ 03/23/90 800,000 635,793.59 540,424.55 95,369.04
▇▇▇▇▇▇ Group Co Inc 07/01/96 640,000 630,442.53 535,876.15 94,566.38
Lakeland Supply (▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇) 04/13/94 432,500 402,766.01 342,351.11 60,414.90
Lang Companies 9012/00004 06/23/94 1,760,000 1,602,972.22 1,160,632.67 442,339.55
Lang Companies - BMREIC 606 Genese 04/28/94 180,000 176,241.43 149,805.22 26,436.21
Lang Companies - BMREIC 711 ▇▇▇▇▇ 03/07/94 409,000 396,822.72 337,299.31 59,523.41
Lang Companies - BMREIC 803 Genesee 04/12/94 800,000 764,993.53 650,244.50 114,749.03
LA-Z Boy /F AND E, Inc. (▇▇▇▇▇▇▇, ▇▇▇▇▇) 03/03/93 1,350,000 1,112,114.73 945,297.52 166,817.21
Mainline Industrial Distr. Inc. 09/09/88 900,000 403,790.57 343,221.98 60,568.59
Manutronics, Inc. (▇▇▇▇▇ ▇▇▇▇▇) 07/09/93 1,538,000 1,457,222.53 1,238,639.15 218,583.38
Manutronics, Inc. (▇▇▇▇▇ ▇▇▇▇▇) 06/27/94 675,000 621,217.79 528,035.12 93,182.67
MEE Enterprises, Inc. 06/30/92 742,500 226,884.09 192,851.48 34,032.61
▇▇▇▇▇ Retaining Ring Co., Inc. 01/12/96 488,000 483,019.17 410,566.29 72,452.88
National Technologies, Inc. 08/03/95 1,770,000 1,703,992.99 1,400,000.00 303,992.99
Oconomowoc Mfg Company 03/19/92 454,400 38,052.55 32,344.67 5,707.88
Ortho-Kinetics, Inc. 03/30/95 1,319,143 1,263,101.59 1,073,636.35 189,465.24
Professional Systems (Pearson) 12/07/93 400,000 233,830.59 198,756.00 35,074.59
Python Products - BMREIC 01/19/94 457,000 344,883.41 293,150.90 51,732.51
Quality Stamping & Tube 02/16/96 1,351,000 1,299,941.68 1,104,950.43 194,991.25
▇▇▇▇▇ Tool & Design Inc. 05/13/96 425,000 420,633.95 357,538.86 63,095.09
Rock Transfer & Storage, Inc. 03/31/92 1,300,000 557,810.43 474,138.87 83,671.56
Sharp Packaging (Hawk III) 10/29/93 1,260,000 858,103.18 729,387.70 128,715.48
Sports Specialists/▇▇▇▇▇▇▇ 01/13/94 450,000 378,515.42 321,738.11 56,777.31
Supa Machine (▇▇▇▇▇▇▇▇) 10/30/92 935,000 722,893.57 614,459.53 108,434.04
Valvax Corp. (TDJ Assoc) 08/08/91 267,000 172,826.42 146,902.46 25,923.96
Visual Impressions (V Productions) 05/29/96 1,084,000 832,001.50 640,000.00 192,001.50
▇▇▇▇▇▇▇▇ Steel (WSS Acquisition) 03/05/96 1,350,000 1,295,907.12 1,101,521.05 194,386.07
▇▇▇▇▇▇▇ Tool & Engineering, Inc. 06/26/92 1,900,000 1,439,453.44 1,223,535.42 215,918.02
------------- ------------- ------------
26,033,795.19 21,811,236.88 4,222,558.31
============= ============= ============
BMSBLC/SECURITY PARTICIPATION EXHIBIT A
Market BMSBLC SECURITY Maturity Date PRIME+
Small Business Concern Value LTV LTV Mo Day YR Rate
Acme ▇▇▇▇▇▇▇ $1,459,000 56.7% 48.2% 1 1 6 Fixed 8.2% -1/1/1
Carriage House of Brookfield (▇▇▇▇▇▇▇) $1,100,000 68.8% 58.5% 5 31 0 1.25%
Columbia Grinding, Inc./▇▇▇▇▇▇▇ $810,000 77.8% 66.1% 12 1 1 0.25%
Dash Medical (Market Investment) $765,000 52.4% 44.5% 11 1 98 1.00%
▇▇▇▇▇ Transport (JD Invest) $1,000,000 62.9% 53.5% 2 1 0 1.00%
Flexcraft, Inc. $1,431,000 55.9% 47.5% 7 1 98 1.50%
Getzen Company $1,000,000 25.7% 21.9% 7 1 0 0.25%
Ghidorzi/ C A Company $3,127,400 40.2% 34.1% 4 1 1 Fixed 8.25% (04/01)
Hydro Thermal/▇▇▇▇▇▇ $875,000 72.7% 61.8% 4 1 0 0.00%
▇▇▇▇▇▇ Group Co Inc $800,000 78.8% 67.0% 8 1 6 0.00%
Lakeland Supply (▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇) $1,060,000 38.0% 32.3% 5 1 4 1.00%
Lang Companies 9012/00004 $1,800,000 89.1% 64.5% 7 1 0 1.00%
Lang Companies - BMREIC 606 Genese $225,000 78.3% 66.6% 6 1 99 1.00%
Lang Companies - BMREIC 711 ▇▇▇▇▇ $509,000 78.0% 66.3% 4 1 99 1.00%
Lang Companies - BMREIC 803 Genesee $900,000 85.0% 72.2% 5 1 99 1.00%
LA-Z Boy /F AND E, Inc. (▇▇▇▇▇▇▇, ▇▇▇▇▇ $2,050,000 54.2% 46.1% 4 1 98 1.00%
Mainline Industrial Distr. Inc. $1,050,000 38.5% 32.7% 5 1 99 Fixed 8%(5/99)
Manutronics, Inc. (▇▇▇▇▇ ▇▇▇▇▇) $2,725,000 53.5% 45.5% 8 1 98 0.00%
Manutronics, Inc. (▇▇▇▇▇ ▇▇▇▇▇) $2,725,000 22.8% 19.4% 8 1 99 0.00%
MEE Enterprises, Inc. $1,500,000 15.1% 12.9% 7 1 97 1.00%
▇▇▇▇▇ Retaining Ring Co., Inc. $675,000 71.6% 60.8% 1 1 1 Fixed 8.20%
National Technologies, Inc. $2,350,000 72.5% 59.6% 1 1 1 1.00%
Oconomowoc Mfg Company $655,000 5.8% 4.9% 4 1 99 1.50%
Ortho-Kinetics, Inc. $2,800,000 45.1% 38.3% 3 1 0 0.25%
Professional Systems (Pearson) $800,000 29.2% 24.8% 1 1 4 0.00%
Python Products - BMREIC $515,000 67.0% 56.9% 7 1 99 1.00%
Quality Stamping & Tube $2,100,000 61.9% 52.6% 3 1 1 Fixed 8.25 (3/1)
▇▇▇▇▇ Tool & Design Inc. $600,000 70.1% 59.6% 6 1 6 Fixed 8.25%(-05/99)
Rock Transfer & Storage, Inc. $1,825,000 30.6% 26.0% 5 1 99 1.00%
Sharp Packaging (Hawk III) $1,350,000 63.6% 54.0% 12 1 0 Fixed 8.5%(12/01/97)
Sports Specialists/▇▇▇▇▇▇▇ $485,000 78.0% 66.3% 2 1 4 Fixed 7.9%(- 2/99)
Supa Machine (▇▇▇▇▇▇▇▇) $1,150,000 62.9% 53.4% 6 1 98 1.00%
Valvax Corp. (TDJ Assoc) $325,000 53.2% 45.2% 2 1 99 1.25%
Visual Impressions (V Productions) $1,200,000 69.3% 53.3% 1 1 7 0.25%
▇▇▇▇▇▇▇▇ Steel (WSS Acquisition) $1,675,000 77.4% 65.8% 4 1 3 Fixed 8.00%(04/1/99)
▇▇▇▇▇▇▇ Tool & Engineering, Inc. $2,400,000 60.0% 51.0% 8 1 97 Fixed 8.5%(8/97)
---------- ---- ----
$47,816,400 54.4% 45.6%
========== ==== ====