October 8, 1997
Refrigeration Technology Inc.
Attn: Xx. Xxxx Xxxxxx, Chairman and CEO
301 Xxxxxx, P.O. Box 3048
Sunland Park, New Mexico 88063
Re: $600,000 loan between Norwest Bank El Paso, N.A., a national banking
association ("Lender" or "Bank") and Refrigeration Technology Inc., a Delaware
corporation (the "Borrower")
Gentlemen:
This will evidence Lender's agreement to make Borrower that certain
loan (the "Loan") in an amount not to exceed SIX HUNDRED THOUSAND AND NO/00
DOLLARS ($600,000), said Loan to be secured in part by the foregoing
(collectively, the "Collateral"): (i) a security interest in and to the
furniture, fixtures and equipment now owned or hereafter acquired by Borrower
and described on Exhibit "A" attached hereto and made a part hereof (the
"Equipment") and all proceeds derived therefrom, as evidenced by a Security
Agreement of even date herewith, (ii) by the assignment by RTI INC., a New York
corporation ("RTI" or "Guarantor") of l00' of the issued and outstanding shares
of all classes of stock of Borrower, as evidenced by a Pledge and Security
Agreement of even date herewith, and (iii) by a first lien Deed of Trust,
Security Agreement and Financing Statement ("Deed of Trust") and Assignment of
Rents and Leases and Security Agreement ("Assignment"), both of even date
herewith, covering the following described real property together with all
permanent improvements thereon or to be constructed thereon, to wit:
Lots 3 through 20 and 41 through 58, Block 15, WESTWAY UNIT II, an
addition to El Paso County, Texas, according to the plat thereof on
file in Volume 17, Page 35, Real Property Records, El Paso County,
Texas (the "Property")
The Loan shall be additionally secured by the absolute and
unconditional guaranty agreement of RTI.
The Loan shall be evidenced by a Promissory Note in substantially the
form attached hereto as Exhibit "B" in the amount of $600,000.00 (the "Note"),
representing funds to be advanced to reimburse Borrower for acquisition costs
associated with the Property, the costs incurred by Borrower in the renovation
of the Property and the expenses associated with the purchase and installation
of the Equipment.
1. Closing Documents. At the time of closing of the Loan, Borrower and
Guarantor shall furnish the following (collectively, the "Closing Documents") in
form satisfactory to Lender:
(a) This Loan Agreement;
(b) The Note executed by Xxxxxxxx;
___________________, 1997
Page 2
(c) The Deed of Trust covering the Property, executed by Xxxxxxxx;
(d) The Assignment covering the Property, executed by Xxxxxxxx and Xxxxxx;
(e) The Security Agreement covering the Personal Property, executed by Xxxxxxxx
and Xxxxxx;
(f) The Pledge and Security Agreement covering the stock of
Borrower, executed by Xxxxxxxxx and Xxxxxx;
(g) UCC-1 Financing Statement(s) for recording in the
County Clerk's office of El Paso County, Texas, Secretary of State's
offices in Austin, Texas and Secretary of State's Office of Santa Fe,
New Mexico;
(h) Guaranty Agreement executed by Guarantor;
(i) Statutory Notice of No Oral Agreements;
(j) Acknowledgment of Non-Representation by Xxxxxx's Counsel;
(k) A Mortgagee's Policy issued by Lawyers Title of El
Paso, Inc. (the "Title Company"), in the amount of $450,000.00,
containing only such exceptions as may be approved in writing by
Xxxxxx, insuring the liens of Lender as first and prior liens with
respect to the Property;
(1) A Plat based on a survey by a licensed engineer or
surveyor satisfactory to Lender, showing the boundaries of the
Property, locations of all improvements and all easements, containing
only those exceptions approved in writing by Xxxxxx;
(in) Unanimous Consent of the Board of Directors and
Shareholders of Borrower evidencing the authorization of Borrower to
obtain the Loan from Lender and to execute the documents contemplated
herein to be signed between Xxxxxxxx and Lender with respect to the
Loan and the transactions contemplated hereby;
(n) Evidence of the approval by the Small Business
Administration ("SBA") and the Upper Rio Grande Development Company
("CDC") of the terms of this Loan, the loan documents to be executed
in connection herewith, and the proposed permanent financing in an
amount not to exceed $350,000.00 to be provided by the Bank to
Borrower (the "Bank Permanent Loan"), which Bank Permanent Loan is to
be funded in conjunction with that certain loan to be provided to the
Borrower (the "SBA Loan") under the terms of the SEA Loan
Authorization and Guaranty Agreement (as hereinafter defined);
(o) Unless waived in writing by Bank at the time of
Closing, an executed SBA Loan Authorization and Guaranty Agreement
for the United States Small Business Administration Upper Rio Grande
Development Company, Loan Program 504 of the Small Business
Investment Act of 1958, signed on behalf of the SEA (the "Loan
Authorization and Guaranty Agreement"), pertaining to a permanent,
partial takeout commitment with respect to the Loan in an amount not
less than $250,000.00;
___________________, 1997
Page 3
(p) An appraisal of the Property prepared by an MAI
certified appraiser licensed to do business in the State of Texas,
approved by Xxxxxx, opining that the Property has a fair market value
of at least $775,000.00;
(q) An executed Environmental Indemnity Agreement in the
form attached hereto as Exhibit "C" dated concurrently with this
Agreement, duly executed by the Borrower in favor of Bank, whereby
such parties agree to indemnify and hold harmless Bank from the
consequences of any Hazardous Materials (as defined in the
Environmental Indemnity Agreement), in, on, under or about the
Property;
(r) Such evidence as Bank may require to confirm receipt by
Borrower of a satisfactory efficiency and safety rating from
Electronics Testing Lab and the American Refrigeration Institute;
(s) All documentation that may be reasonably requested by
Bank with respect to the ongoing environmental proceedings relating to
the property owned by Guarantor in Rockaway, New Jersey (the "New
Jersey Property") and with respect to the environmental condition of
the Property;
(t) Such UCC lien searches with respect to Borrower and Guarantor as Lender may
reasonably require;
(u) Unanimous Consent of the Board of Directors of Guarantor
evidencing the approval of the guaranty and pledge of stock by the
Guarantor of the Loan and that the execution and delivery of such
Guaranty Agreement and Pledge and Security Agreement will benefit
Guarantor, either directly or indirectly;
(v) Evidence satisfactory to Bank of the corporate existence
and current corporate good standing of Borrower and Guarantor in the
States of Delaware and New York, respectively, and the qualification
and good standing of Borrower to transact business in the State of
Texas;
(w) Evidence satisfactory to Bank of the injection of
capital by the Borrower into the Property in an amount greater than or
equal to $108,785.00;
(x) Evidence satisfactory to Bank that any remodeling of any
improvements on the Property or any additional improvements
constructed thereon conform with the National Earthquake Hazards
Reduction Program; and
(y) Such other information and/or documents as Lender may reasonably require.
2. Covenants. Re~Representations and Warranties. As an inducement to Lender to
make the Loan herein contemplated, Xxxxxxxx and Guarantor make the following
representations, warranties and covenants:
(a) Other than the existence of that certain Utility and
Drainage Easement recorded in Book 17, Page 35, Real Property Records
of El Paso, County, Texas (the "utility easement") which in part is
located underneath the building and other improvements situated on the
Property, there is no significant material fact or
Page 4
condition relating to the financial condition of Borrower, Guarantor
or to the Collateral which has not been disclosed in writing to
Lender.
(b) No Deed of Trust, Security Agreement or other security
instrument covering the Property has been executed, no Financing
Statement filed, and no lien, security interest, mechanic's lien or
materialmen's lien, has attached to or been perfected against the
Collateral.
(c) Borrower represents and warrants that Borrower is a
Delaware corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware and is duly
qualified and in good standing under the laws of the State of Texas.
Guarantor represents and warrants that Guarantor is a New
York corporation duly organized, validly existing and in good standing
under the laws of the State of New York.
(d) During the term of the Loan, Borrower, at its sole cost
and expense, will maintain or cause to be maintained policies of
insurance, each with a standard mortgagee's clause, with loss payable
to the Lender, providing that no cancellation, reduction in amount or
material change in coverage shall be effective until at least ten (10)
days after receipt by Lender and Borrower of written notice thereof,
issued by such insurers with such types of coverage (including
worker's compensation, flood insurance, casualty/hazard insurance and
public liability insurance) and in such amounts as shall be
satisfactory to Lender. Borrower covenants and agrees to deliver to
Xxxxxx the original of any and all policies or renewal policies
required hereunder, bearing the notations evidencing the payment of
premiums.
(e) During the term of the Loan, Borrower will pay before
the same become delinquent all taxes, assessments and special
assessments (including paving) of every kind that may be assessed or
levied against the Property or any part thereof. Upon request,
Borrower will provide to Lender evidence of such payment which shall
be either (i) photo copy (front and back) of the canceled check or
(ii) a duplicate tax receipt showing that payment has been made.
(f) Borrower shall pay all costs and expenses incurred in
connection with the transaction herein contemplated, including,
without limitation, the fees of attorneys for Lender for their
services in connection with the preparation of this Agreement and
related loan documents and in connection with the closing of the Loan
as well as all title insurance and other insurance premiums.
(g) Borrower will not permit any of the Property to become
subject to any liens or encumbrances other than those herein
referenced, including specifically the SEA Loan.
(h) Borrower and Guarantor will promptly notify Lender of
any material adverse changes in the facts or circumstances represented
or warranted by Borrower or Guarantor in this Agreement or in any of
the Closing Documents or other documents or certificates or reports
furnished to Lender in connection with this Agreement.
Page 5
(i) The transaction contemplated hereby and the execution
and delivery of the loan documents contemplated herein, have been
duly authorized by all requisite corporate action required on behalf
of Borrower and Guarantor, and such loan documents constitute the
legal, binding and enforceable obligations of the such parties
thereto in accordance with their terms.
(j) Borrower and Guarantor shall each furnish to Bank (i)
within forty-five (45) days after the end of each fiscal quarter,
beginning with the quarter ending September 30, 1997, internally
prepared financial statements for the preceding quarter, consisting
of at least a balance sheet, income statement and profit and loss
statement and a statement of compliance with each of the financial
covenants and ratios set forth in Section 2 (1), together with such
supporting information with regards thereto as Bank may require and
(ii) by April 30 each year during the term of the Loan, or within 30
days from the date of filing thereof, copies of the respective
federal income tax returns with all schedules appended thereto for
each of Borrower and Guarantor.
All of the financial statements to be provided hereunder
shall be prepared in accordance with generally accepted accounting
principles, consistently applied, and shall be certified as true and
correct by the President or chief financial officer of each of
Borrower and Guarantor. Each of Borrower and Guarantor shall furnish
to Bank such additional financial information as Bank may from time to
time request.
(k) Guarantor shall provide to Bank copies of each of its
quarterly l0-Q reports and annual 10-K reports within thirty (30) days
of the date of filing thereof with the Securities and Exchange
Commission;
(1) During the term of this Loan, Guarantor and Borrower
shall maintain, on a consolidated basis, the following financial
covenants and ratios, to wit:
(i) A ratio of current assets to current
liabilities (the "Minimum Current Ratio") of at least 1.6 to
1, at all times.
(ii) A maximum total liabilities to total net worth ratio of 1.5 to 1, at all
times.
(iii) Commencing as of December 31, 1998 and
continuing thereafter during the term of the Loan, an
aggregate minimum cash flow to prior years current maturities
of long term debt ratio of one hundred and twenty-five
percent (l25%), calculated as a fraction, the numerator of
which shall be the sum of (x) the aggregate net income plus
depreciation less (y) distributions and dividends to
partners, managers and members, and shareholders of Borrower
and Guarantor, and the denominator of which shall be the sum
of current maturities of long term debt for the year just
ending. This ratio shall be tested on an annual basis using
the consolidated fiscal year end audited financial
statements.
Page 6
For the purpose of determining compliance with each of the
financial covenants set forth in this Agreement, all covenants shall
be defined and determined in accordance with GAAP, based upon the
consolidated financial statements of Guarantor.
At the time Guarantor and Borrower provide to Bank the
quarterly financial statements described in Section 2(j) above,
Borrower and Guarantor shall provide evidence of the compliance with
the financial ratios and covenants set forth above, or if not in
compliance the amount of variation therefrom, and in connection
therewith provide all supporting information, reports and financial
data (both present and historical) as Bank may require.
(in) Neither Borrower nor Guarantor shall pay any dividends
until the remediation proceedings relating to the New Jersey Property
have been completed and a no further action letter has been issued by
the State of New Jersey and any other governmental, administrative or
regulatory agency having jurisdiction with respect thereto and
evidence satisfactory in all respect to Bank has been provided to
Bank.
(n) During the term of the Loan, each of Borrower and
Guarantor will comply with all covenants, conditions and restrictions
set forth in the Loan Authorization and Guaranty Agreement.
(o) During the term of the Loan, each of Borrower and
Guarantor will do all things necessary to preserve and maintain their
respective corporate existences in good standing and duly qualified to
conduct its businesses in the States of New York and Delaware,
respectively, and with respect to Borrower, the State of Texas; will
not enter into any corporate mergers, reorganizations, restructures or
liquidations without the prior written consent of Bank; not make any
amendments to its articles of incorporation or bylaws without the
prior written consent of Bank, which consent shall not be unreasonably
withheld or delayed; and except for issuance of authorized shares of
stock to shareholders other than RTI which does not result in a change
of more than 20~ of the ownership of Borrower, not allow or consent to
a transfer of any of its shares of stock without the prior written
consent of Bank. Borrower covenants to give thirty (30) days prior
written notice of any change in stock ownership allowed under this
Section 2 (a). As of the date hereof, the shareholders, officers and
directors of Borrower and Guarantor are as set forth in Exhibit D
attached hereto and made a part hereof.
(p) As of the date hereof, the Articles of Incorporation of
Borrower allow for the issuance of three THOUSAND (3,000) shares of
stock and one hundred (100) shares are issued and outstanding. During
the term of the Loan, no additional shares of stock will be authorized
or issued.
(s) During the term of this Loan, Borrower and Guarantor
will insure that Borrower maintains a satisfactory efficiency and
safety rating from Electronics Testing lab and an American
Refrigeration Institute listing, and contemporaneously with providing
the quarterly financial statements to Bank as required hereunder will
provide such evidence thereof as Bank may require.
Page 7
3. Loan Funding. The proceeds of the Loan shall be funded as follows,
to wit:
(a) Interim Loan. At the time of closing of the Loan and
subject to the satisfaction of each of the terms and conditions
hereof and the delivery of each of the Closing Documents and the
other items described in Section 1 hereof required to be delivered by
Borrower and Guarantors, Bank will advance to Borrower the principal
amount of Three Hundred Fifty THOUSAND and No/100 Dollars
($350,000.00) under the Note. The principal balance of the funds
available for advance under the Note in the amount of Two Hundred
Fifty THOUSAND and No/100 Dollars ($250,000.00) shall not be
disbursed and Bank shall have no obligation to disburse the same
unless within one hundred twenty (120) days from the date of closing
Borrower has (i) secured all required municipal, regulatory,
governmental and third party approvals necessary to vacate those
portions of the utility easement which are situated underneath the
building and other improvements on the Property and otherwise located
on the Property in such a manner as may create an impediment to the
use and operation of the Property, (ii) caused such utility easement
to be vacated of record in the County Clerk's Records of El Paso
County, Texas, and (iii) to the extent required by applicable law,
ordinance or regulation, has filed an amended plat of the Westway
Unit II subdivision to reflect the vacation thereof. Once Borrower
has satisfied the foregoing requirements with respect to the utility
easement and provided such evidence with regards thereto as may be
required by Bank, and provided that at such time no Event of Default
has occurred hereunder and no condition exists which with the giving
of notice, lapse of time, or both or otherwise would constitute such
an Event of Default, the balance of the principal available for
advance under the Note will be disbursed to Borrower. Failure of
Borrower to satisfy the foregoing requirements with respect to
vacation of the utility easement shall constitute and Event of
Default under the terms of this Loan Agreement and the terms of the
Loan.
(b) Minipermanent Loan. One hundred and twenty (120) days
from the date hereof (the "Conversion Date"), provided Xxxxxxxx has
complied with all of the terms and conditions set forth herein, and
provided further that no Event of Default then exists and no condition
then exists which with the giving of notice, lapse of time or both or
otherwise would constitute such an Event of Default, Bank agrees to
convert the interim loan to a mini-permanent loan. Following the
Conversion Date, the Loan shall continue to be secured by the Loan
Documents and such other security documents as Bank may require, and
shall be renewed, extended and modified in accordance with either
subparagraph (i) or (ii) below.
(i) With SBA. Having obtained the approval of the
SEA and CDC and received the executed Loan Authorization and Guaranty
Agreement, and having received from the SEA a payment of $250,000 in
reduction of the principal amount of the Loan, the Bank shall convert
the Loan to a $350,000 mini-permanent loan, which $350,000
mini-permanent loan will bear interest from the Conversion Date,
prior to default or maturity at the rate or rates set forth below.
Commencing as of the Conversion Date and continuing through and
including ten (10) years from the date thereof, the Loan shall bear
interest on the principal balance from time to time remaining unpaid
under the Loan, prior to default or maturity, at the Prime Rate (as
hereinafter defined), plus one and three quarters percent (l.75'~)
per annum (the "Applicable Rate provided, however, that
Page 8
if at any time the rate of interest which the Loan would otherwise
bear exceeds the highest interest rate permitted by applicable law
(the "Maximum Rate"), the rate of interest which the Loan bears shall
be limited to the Maximum Rate. Interest shall be computed on a 360
day year basis, as if each year consisted of twelve (12) months of
thirty (30) days each, but to the extent such computation of interest
might cause the rate of interest to exceed the Maximum Rate, such
interest shall be computed on the basis of a 365 day or 366 day year,
as the case may be.
All past due principal or interest of the Loan (compounded
monthly) shall bear interest from default or maturity thereof until
paid at the Maximum Rate, or in the absence of a Maximum Rate, at the
rate of l8% per annum.
The Prime Rate shall be the rate of interest per annum
quoted on a daily basis in The Wall Street Journal (Southwest Edition)
as the base rate on corporate loans at large U.S. money center
commercial banks (or as "Prime Rate" may be similarly therein
defined). In the event more than one rate is quoted, or if a range or
"spread" of rates is quoted, then, in such case, the highest rate
quoted shall be the "Prime Rate" for the purposes hereof. Such Prime
Rate is currently quoted under the "Money Rates" column for the prior
business day; provided, however, for the purpose of the Loan, the
quoted Prime Rate shall be effective as of and for the date of
publication of the issue of The Wall Street Journal in which the Prime
Rate is quoted, and not such prior business day, and shall remain in
effect until the Prime Rate is reset in accordance with the foregoing.
In the event that The Wall Street Journal should cease quoting such
Prime Rate, then Lender may refer to another similar source that
identifies the prime rate.
THE PRIME RATE IS USED AS A DEVICE TO SET THE RATE OF
INTEREST ONLY; IN NO EVENT IS IT TO BE CONSTRUED AS A WARRANTY OR
REPRESENTATION OF FAVORABILITY OF RATE OR A REPRESENTATION THAT LOANS
WILL NOT BE MADE AT LOWER RATES.
Principal and interest shall be payable in monthly
installments (determined as hereinafter provided), with the first
installment of principal and interest to be due and payable one (1)
month from the Conversion Date and subsequent installments of
principal and interest being due and payable on the same day of each
successive month thereafter until ten (10) years from the Conversion
Date, when the entire balance of principal and accrued and unpaid
interest shall be due and payable.
The initial monthly installment (the "Initial Monthly
Installment") payable hereunder shall be determined on the Conversion
Date and shall equal the monthly payment required to repay the unpaid
principal amount of the Note on the basis of a ten (10) year
amortization schedule (with year one (1) of the amortization schedule
beginning on the Conversion Date) at an interest rate equal to the
Applicable Rate on the Conversion Date. The Initial Monthly
Installment shall be payable for twelve (12) consecutive months,
commencing one (1) month from the Conversion Date. Thereafter, on each
anniversary of the Conversion Date (each a "Change Date"), Bank shall
redetermine the Applicable Rate as provided above and recalculate the
amount of the monthly principal and interest installments based upon
the then unpaid principal
Page 9
balance hereof, at the Applicable Rate per annum on such Change Date,
with the monthly payments then being calculated based on a ten (10)
year amortization, less the number of years lapsed from the
Conversion Date to such Change Date. The adjusted monthly
installments as determined on each Change Date shall be payable for
the next twelve (12) months, commencing one (1) month from the date
of each Change Date.
(ii) Without SEA. In the event that the approval of
the SEA and CDC is not received and the SBA loan contemplated by the
Loan and Authorization Agreement does not close and result in a
principal reduction of the Loan in the amount of $250,000, the Bank
will convert the interim construction loan to a mini-permanent loan
in the maximum amount of $350,000 (the "Maximum Bank Mini-Perm
Amount") upon receipt, within fifteen (15) days following the
Conversion Date, of a principal reduction on the Loan in the amount
of $250,000.00, plus accrued interest thereon; it being understood
and agreed that the difference as of the Conversion Date between the
principal amount outstanding under the Loan and the Maximum Bank
Mini-Perm Amount (should this option (ii) be exercised) shall be paid
in cash by Borrower as provided herein as a condition precedent to
Bank's obligations herein.
Thereafter, the remaining unpaid principal balance of the
Loan (which in no event shall exceed the Maximum Bank Mini-Perm
Amount) shall bear interest as provided in subparagraph (i) above and
shall be payable in consecutive principal and interest installments as
determined in subparagraph (i) above.
In connection with the conversion of the Loan to a
mini-permanent loan, whether in accordance with the provisions of
subparagraph (i) or subparagraph (ii) above, Borrower and Guarantor
hereby covenant and agree to execute any and all renewal, extension
and modification agreements, guaranty agreements, affidavits, deeds of
trust, assignments, security agreements and other collateral documents
to further secure the Loan as Bank may require.
In the event that neither the SEA approval and principal reduction nor the
principal reduction and interest repayment as described in Section 3(b) (i) or
(ii) herein are received within fifteen (15) days of the Conversion Date, the
Bank's commitment with regards to the mini-permanent loan shall be deemed
terminated and of no force and effect and the Note shall be deemed to have
matured as of the Conversion Date.
4. Default. The term "default" as used herein shall mean the occurrence of any
one or more of the following events:
(a) Failure to pay any installment of principal or interest within ten (10) days
when due under the Note;
(b) Breach of any of the covenants (other than the covenant
to pay the Loan, the financial covenants or the covenant to vacate the
utility easement), agreements or obligations contained herein or in
any instrument or document mentioned herein other than the obligation
to repay the Loan in accordance with its terms, and the continuance of
such breach for a period of fifteen (15) days after written notice
from Lender to Borrower specifying such breach;
Page 10
(c) Breach of any one of the financial covenants contained
herein or failure to vacate the utility easement within one hundred
twenty (120) days from the date of closing of the Loan;
(d) Finding by Lender that any statement, representation or
warranty in this Agreement or in any certificate or document herein
mentioned is untrue or incorrect in any material respect and the
failure and refusal of Borrower or Guarantor to render the same
immaterial or remedy it within fifteen (15) days after written notice
from Lender to Borrower specifying such breach;
(e) Any assignment for the benefit of creditors by the Borrower or the
Guarantor, or any one of them, or the adjudication of any one of the Borrower or
the Guarantor as an involuntary bankrupt;
(f) A material adverse change in the financial condition or the operation of
Borrower or Guarantor;
(g) Any event which results in acceleration of the SEA Loan;
(h) Filing by Borrower or Guarantor of a voluntary petition in bankruptcy;
(i) Breach of any of the covenants, agreements or obligations contained in the
Loan Authorization and Guaranty Agreement; or
(j) The dissolution or other business failure of Borrower or Guarantor. Any sums
expended by Xxxxxx pursuant to the exercise of any remedy provided in this
Paragraph 4 shall be part of the indebtedness owing by Borrower to Lender.
Should a default occur and be continuing, Lender may, at its election,
do any one or more of the following:
(a) Without notice or grace (except as expressly provided
for above), notice of intent to accelerate, notice of acceleration,
demand, notice of intent to demand, notice of demand or presentment,
which are all hereby expressly waived, declare the unpaid principal
balance and accrued interest of the indebtedness immediately due and
payable.
(b) So far as Borrower and Guarantor are concerned, and
without notice to Borrower or Guarantors, which is hereby expressly
waived, take possession of the Property, and at Xxxxxx's option, in
the name and on behalf of Borrower and Guarantor, do any one or more
of the following: (i) assume the rights, powers and duties of Borrower
and Guarantor under any contract entered into by them and (ii) pay all
bills of, and settle or compromise any claims against Xxxxxxxx and
Guarantor.
(c) Pursue any remedy available to Lender at law or in
equity, including without limitation foreclosure of the Vendor's and
Deed of Trust liens against the Property, institute collection of the
Loan against Guarantor or exercise any and all other rights and
remedies afforded Lender under the terms of the collateral documents
executed in connection with the Loan.
Inc.
Page 11
5. Miscellaneous.
(a) Any notice required or permitted hereunder shall be in
writing, addressed to the party to be notified at the address stated
below (or at such other address as may have been designated by
written notice), properly stamped, and deposited in the United States
mail, as certified mail, return receipt requested. The address of
each party for the purpose of this section is as follows:
Borrower: Refrigeration Technology, Inc. Attn: Xx. Xxxxx Xxxxxx, Controller 301
Xxxxxx, P.O. Box 3048 Sunland Park, New Mexico 88063
Lender: Norwest Bank El Paso, N.A. Attn: Mr. Xxx Xxxxxx Vice President 000 Xxxxx
Xxxxxx Xx Xxxx, Xxxxx 00000
Guarantor: RTI, Inc. Attn: Xx. Xxxx Xxxxxx, President 00 Xxxxx Xxxx Xxxx Xxxxxx,
Xxxxxxxxxxx 00000
Any notice given in accordance with this Paragraph 5(a)
shall be deemed received upon delivery if by hand delivery or two (2)
days after deposit in the U.S. Mail, certified mail;- return receipt
requested.
(b) This Agreement has been made, and the Note and all other
security documents shall be made and executed in El Paso, Texas; and
all advances in respect of the Loan, and all payments thereon, shall
be made in Texas. This Agreement, the Note and all other security
documents shall be governed by the laws of the State of Texas in all
respects, including matters of construction, validity and performance.
(c) This Agreement shall not be assignable by operation of
law or otherwise without written consent of Lender.
(d) This Agreement shall be binding upon, and shall inure to
the benefit of Xxxxxx, its successors and assigns and shall be binding
upon Borrower and Guarantor and their respective heirs,
representatives, successors and assigns.
(e) Time is of the essence with respect to performance of this Agreement.
(f) Should Borrower fail to perform any covenant, duty or
agreement in accordance with the terms hereunder, Xxxxxx may, at its
election, perform or attempt to perform such covenant, duty or
agreement on behalf of Borrower. Borrower shall, at the request of
Xxxxxx, promptly pay any amount expended by Xxxxxx in such performance
or attempted performance to Xxxxxx, together with interest thereon at
the rate of eighteen percent (18%) per annum from the date of such
expenditure by Xxxxxx until paid, provided, however, that Xxxxxx does
not assume and shall never have, except
Page 12
by written agreement of Xxxxxx, any liability for the performance of
any duties of Borrower under or in connection with all or any part of
the Property described above.
(g) Failure by Lender to exercise any right or power
accruing hereunder shall not impair such right or power or be
construed to be a waiver of any other breach or any other covenant,
condition or agreement herein contained.
(h) Anything herein contained to the contrary, Borrower does
not agree and shall not be obligated to pay any amount which would
render this obligation usurious. It is the intention of Lender to
conform strictly to applicable usury laws now in force and any
agreement for interest shall be held to be subject to the reduction
to the amount allowed under such usury laws so that if from any
circumstances any interest is in excess of the maximum permitted by
law such excess shall be canceled automatically and if thereto fore
paid shall be refunded or credited on the principal amount
outstanding. The Loan has been made on the assumption that all
scheduled payments will be made when due, and in the event of
prepayment and/or accelerated maturity from any cause, any interest
paid on account of the Loan in excess of the Maximum Rate shall be
considered for all purposes as payment on principal. All sums paid or
agreed to be paid for the use, forbearance, or detention of the
indebtedness evidenced by the Loan shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread
throughout the full term of the Loan until payment in full.
(i) It is understood and agreed that all approvals given by
Xxxxxx to any instruments or documents and all inspections made by
Lender shall be given and made solely to protect Xxxxxx's collateral.
IN NO EVENT SHOULD BORROWER RELY ON XXXXXX'S APPROVALS OR INSPECTIONS
FOR PROTECTION OF BORROWER, OR THE PROPERTY.
(j) This Loan Agreement and all documents to be executed in
connection herewith are to be governed by and construed in accordance
with the laws of the State of Texas and the United States of America.
The jurisdiction and venue of all litigation, bankruptcy actions and
other legal proceeding involving the Property or any of the Loan
Documents shall be in El Paso County, Texas.
(k) Except for "Core Proceedings" as such term is defined
under the United States Bankruptcy Code, Lender and Borrower agree to
submit to binding arbitration all claims, disputes and controversies
between or among them, whether in tort, contract or otherwise (and
their respective employees, officers, directors, attorneys, and other
agents) arising out of or relating to in any way (i) the Loan, this
Loan Agreement and the related loan and security documents which are
the subject of the Note and its negotiation, execution,
collateralization, administration, repayment, modification, extension,
substitution, formation, inducement, enforcement, default or
termination; or (ii) requests for additional credit. Any arbitration
proceeding will (i) proceed in El Paso, Texas; (ii) be governed by the
Federal Arbitration Act (Title 9 of the United States Code); and (iii)
be conducted in accordance with the Commercial Arbitration rules of
the American Arbitration Association ("AAA")
Page 13
The arbitration requirement does not limit the right of
either party to Ci) foreclose against real or personal property
collateral; (ii) exercise self-help remedies relating to collateral
or proceeds of collateral such as setoff or repossession; or (iii)
obtain provisional ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or
after the pendency or any arbitration proceeding. This exclusion does
not constitute a waiver of the right or obligation of either party to
submit any dispute to arbitration, including those arising from the
exercise of the actions detailed in section Ci), (ii) and (iii) of
this paragraph.
Any arbitration proceeding will be before a single arbitrator
selected according to the Commercial Arbitration Rules of the AAA. The
arbitrator will determine whether or not an issue is arbitratable and
will give effect to the statutes of limitation in determining any
claim. Judgment upon the award rendered by the arbitrator may be
entered in any court having jurisdiction.
In any arbitration proceeding the arbitrator will decide (by
documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for
failure to state a claim or motions for summary adjudication.
In any arbitration proceeding discovery will be permitted
and will be governed by the Texas Rules of Civil Procedure. All
discovery must be completed no later than 20 days before the hearing
date and within 180 days of the commencement of arbitration
proceedings. Any requests for an extension of the discovery periods,
or any discovery disputes, will be subject to final determination by
the arbitrator.
If the foregoing terms are acceptable to Borrower and Guarantor,
please indicate your acceptance below by your signature.
Yours very truly,
NORWEST BANK EL PASO, N.A.
By: Xxx Xxxxxx, Vice President
Accepted this 8th day of October, 1997.
REFRIGERATION TECHNOLOGY INC., a Delaware corporation
By: Xxxx Xxxxxxx, President
RTI Inc., a New York corporation
by: Xxxx Xxxxxxx, President, Guarantor
