EXHIBIT 10.5
TERM LOAN SUPPLEMENT
(REAL ESTATE)
TO
CREDIT AGREEMENT
This Agreement is made this 31st day of August, 2005, by Resistance
Technology, Inc., a Minnesota corporation ("Resistance"), and RTI Electronics,
Inc., a Delaware corporation (herein together with Resistance individually
called "Borrower" and and collectively, the "Borrowers"), for the benefit of
Diversified Business Credit, Inc., a Minnesota corporation (herein referred to
as the "Lender").
RECITALS
Borrowers have executed and delivered to Lender a credit and security
agreement dated August 31, 2005 (herein, as amended from time to time, called
the "Credit Agreement") pursuant to which Lender has made or may make certain
loans to the Borrowers. These loans and all other debts, liabilities and
obligations of Borrowers to Lender are secured pursuant to the Credit Agreement
and other security documents (all herein called the "Security Documents")
referred to in the Credit Agreement.
Borrowers have requested that Lender make one or more loans (herein
collectively called the "Real Estate Term Loan") under the Credit Agreement,
repayable in installments. This Agreement supplements the Credit Agreement to
set forth the terms on which any such Real Estate Term Loan shall be advanced
and repaid. Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in the Credit Agreement.
ACCORDINGLY, to induce Lender to make one or more advances on the Real
Estate Term Loan under this Supplement, and in consideration of the mutual
agreements herein contained, each Borrower and Lender hereby agree that:
1. THE REAL ESTATE TERM LOAN. Subject to the terms and conditions set
forth in the Credit Agreement and in this Supplement, the Lender shall make Term
Advances to Resistance from time to time from the date all of the conditions set
forth in Section 12(a) and (c) of Credit Agreement and Section 4 of this
Supplement are satisfied to September 30, 2005, up to an aggregate amount equal
to $1,481,000, in reliance upon the appraised fair market value of the real
property of Resistance located at 0000 XxXxxxxx Xxxxxx, Xxxxxxx Xxxxxxx, XX (the
"Property"), with the amount of such commitment reduced by the aggregate amount
of principal payments made pursuant to Sections 2 and 3 hereof. Without notice
or demand, if the sum of the outstanding principal balance of the Real Estate
Term Loan shall at any time exceed such limitation, the Borrowers shall
immediately prepay the Real Estate Term Loan to the extent necessary to
eliminate such excess.
If Resistance desires to borrow under this Supplement, it shall submit borrowing
requests in the manner set forth in the Credit Agreement and this Supplement and
will notify Lender that the advance is requested on the Real Estate Term Loan
under this Supplement. The Real Estate Term Loan shall bear interest at the rate
specified in the Credit Agreement, shall be secured by the Credit Agreement,
Security
Documents and all other collateral security (without apportionment,
exclusion or segregation) as provided in the Credit Agreement.
2. REPAYMENTOF THE REAL ESTATE TERM LOAN. Interest and principal on the
Real Estate Term Loan shall be repaid as follows:
- Each month commencing October 1, 2005, Borrowers shall pay all
interest accrued on the Real Estate Term Loan in the preceding month.
- Each month commencing October 1, 2005, Borrowers shall pay $10,284.72
on account of the Real Estate Term Loan.
- On August 31, 2008, the entire unpaid principal balance of the Real
Estate Term Loan, and all unpaid interest accrued thereon, shall in any
event be due and payable in full.
3. PREPAYMENT OF THE REAL ESTATE TERM LOAN. Borrowers shall prepay the
Real Estate Term Loan (a) as and when required by the Credit Agreement, and (b)
whenever required to assure that the maximum amount of the Real Estate Term Loan
does not exceed the limitations prescribed in Section 1 of this Supplement. In
the event either Borrower shall sell, collect insurance proceeds on, or
otherwise dispose of or realize on any collateral security, other than inventory
and trade accounts receivable, granted to Lender, Borrowers shall immediately
prepay the Obligations, in such order as the Lender shall determine in its sole
discretion, by the full amount of the proceeds so realized (it being understood
and agreed that no such collateral security may be sold or otherwise disposed of
or realized on except with the written consent of Lender and that each Borrower
shall pay over and account for all proceeds of inventory and trade accounts
receivable as provided in the Credit Agreement). No prepayment under this
Section 3 shall reduce any monthly installment due on the Real Estate Term Loan
pursuant to Section 2 above.
4. ADDITIONAL REAL ESTATE TERM LOAN ADVANCE CONDITIONS. The Lender's
obligation to make any Term Advance hereunder shall be subject to the additional
condition precedent that the Lender shall have received all of the following,
each in form and substance satisfactory to the Lender:
i. A fully paid ALTA mortgagee's title insurance policy
issued by a title insurance company acceptable to the Lender, in form
and substance satisfactory to the Lender, naming the Lender as the
insured and insuring the Lender's mortgage to be a valid first lien on
a good and marketable fee simple title to the Property, in an amount
not less than $2,000,000, subject only to such liens and encumbrances
and such exceptions as are approved in writing by the Lender, and,
without limiting the generality of the foregoing, specifically insuring
against mechanics' liens, matters which would be disclosed by a
comprehensive survey, and the rights of parties in possession, and
containing judgment, tax lien, assessment and bankruptcy searches, a
zoning endorsement and such other endorsements as shall be requested by
the Lender.
ii. Flood Insurance, if any of the Property is located in
a "flood plain"as defined by the Federal Insurance Administration, in
the maximum obtainable amount up to the amount of the Real Estate Term
Loan, naming the Lender as loss payee (unless an appropriate official
of the city in which the Real Property is located states in writing
that all of the Property is not located in a "flood plain" as defined
by the Federal Insurance Administration).
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iii. The Lender shall have received and approved an
appraisal prepared by an MAI designated appraiser acceptable to the
Lender setting forth the estimated fair market value of the Property,
together with such documentation as may be necessary to permit the
Lender to rely thereon.
iv. The Lender shall have received and approved an
ALTA/ACSM land survey of the Property, in form and substance
satisfactory to the Lender, prepared at the Borrowers' expense,
currently certified to the Lender by a licensed, registered surveyor
acceptable to the Lender and (a) incorporating the legal description of
the Property; (b) showing the location of all points and lines referred
to in the legal description; (c) showing the location of the
improvemnets as being within the exterior boundaries of the Property
and in compliance with all setback requirements of the political
subdivision in which the Property is located; (d) showing the location
of all easements and encroachments onto or from the Property that are
visible on the Property, known to the surveyor preparing the survey or
of record; (e) identifying easements of record by recording data; (f)
showing the location of all utilities serving the Property (and tie-in
points with respect thereto); (g) showing any flood hazard areas; (h)
showing all service roads, highways and parking areas on or serving the
Property; (i) showing the proposed location of all skyways attached to
or otherwise benefiting the Property; and (j) showing any other matters
of record, visible upon inspection of the Property or otherwise known
to the surveyor which affect the title to or use of the Property.
v. The Lender shall have received evidence (including,
without limitation, a hazardous waste assessment or report) acceptable
to it in its sole discretion that no hazardous waste or substances are
contained on, under or in the Property, together with such
documentation as may be necessary to permit the Lender to rely thereon.
The Lender shall also have received a Certificate of No Hazardous Waste
duly executed and delivered to the Lender by the Borrowers and the
Guarantor, the form and substance of which shall be acceptable to the
Lender.
vi. The Borrowers shall have executed and/or delivered,
or caused to be executed and/or delivered, to the Lender and any other
appropriate party such other documents, instruments and agreements as
the Lender may reasonably request.
5. MISCELLANEOUS PROVISIONS. This Supplement is part of the Credit
Agreement and is subject and entitled to all of the rights, terms and provisions
set forth therein and, as supplemented and modified hereby, the Credit Agreement
remains in full force and effect. No waiver or modifications of any of the
provisions hereof shall be binding on Lender unless agreed to in a writing
signed by Lender.
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This Term Loan Supplement has been duly executed and delivered as of the date
hereof.
BORROWERS: Resistance Technology, Inc.
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RTI Electronics, Inc.
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LENDER: Diversified Business Credit, Inc.
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Vice President
