TERM LOAN AGREEMENT
NBD Bank, N.A, a national banking association (the "Bank"), whose address
is Xxx Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, XX 00000, agrees to extend the term
loan(s) described below (whether one or more, the "Loans") to TEKSYN, Inc.
(the "Borrower"), whose address is 0000 Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxxxxx,
XX 00000 under the terms and conditions set forth in this agreement.
1. TERM LOANS. The Bank agrees to extend the following Loans to the
Borrower:
A. A loan in the amount of $112,500.00 maturing April 1, 1998 the
proceeds of which will be used for the following purpose: Purchase
Equipment.
Each loan shall be evidenced by an Installment Business Loan Note or a Term
Note executed concurrently with this agreement (referred to in this agreement
both singularly and together with any other promissory notes referenced in
this Section l, and all extensions, renewals and amendments to these notes,
as the "Notes").
2. Fees and Expenses
2.1 FEES. Upon execution of this agreement the Borrower shall pay the Bank
the following fees, all of which the Borrower acknowledges have been
earned by the Bank: Documentation Fee of $1,125.00
2.2 OUT-OF-POCKET EXPENSES. In addition to any fee set forth in
Section 2.1 above, the Borrower shall reimburse the Bank for its
out-of-pocket expenses, including reasonable attorney fees allocated
to the Loans.
3. Security
3.1 Payment of the borrowings under the Loans shall be secured by a first
security interest and/or real estate mortgage, as the case may be, of
first priority, or other priority to which the Bank consents in
writing, covering the following property and all its additions,
substitutions, increments, proceeds and products, whether now owned or
later acquired (the "Collateral"):
A. ACCOUNTS RECEIVABLE. All of the Borrower's accounts, chattel
paper, general intangibles, instruments, and documents (as those
terms are defined in the Indiana Uniform Commercial Code), rights
to refunds of taxes paid at any time to any governmental entity,
and any letters of credit and drafts under them given in support
of the foregoing, wherever located. The Borrower shall deliver to
the Bank executed security agreements and financing statements in
form and substance satisfactory to the Bank.
B. INVENTORY. All of the Borrower's inventory, wherever located.
The Borrower
shall deliver to the Bank executed security agreements and
financing statements in form and substance satisfactory to
the Bank.
C. EQUIPMENT. All of the Borrower's equipment, wherever located.
The Borrower shall deliver to the Bank executed security
agreements and financing statements in form and substance
satisfactory to the Bank.
D. CERTIFICATE OF DEPOSIT. NBD Certificate of Deposit in the
amount of $56,250.00.
3.2 No forbearance nor extension of time granted any subsequent owner of
the Collateral shall release the Borrower from liability.
3.3 ADDITIONAL COLLATERAL/SETOFF. To further secure payment of the
borrowings under the Loans and all of the Borrower's other liabilities
to the Bank, the Borrower grants to the Bank a continuing security
interest in: (i) all securities and other property of the Borrower in
the custody, possession or control of the Bank (other than property
held by the Bank solely in a fiduciary capacity) and (ii) all balances
of deposit accounts of the Borrower with the Bank. The Bank shall have
the right at any time to apply its own debt or liability to the
Borrower, or to any other party liable for payment of the Loans, in
whole or partial payment of such loans or other present or future
liabilities, without any requirement of mutual maturity.
3.4 CROSS-LIEN. Any of the Borrower's other property in which the Bank has
a security interest to secure payment of any other debt, whether
absolute, contingent, direct or indirect, including the Borrower's
guaranties of the debts of others, shall also secure payment of and be
part of the Collateral for the Loans.
4. AFFIRMATIVE COVENANTS. So long as any Loan remains outstanding, the
Borrower, and each of its subsidiaries, will:
4.1 INSURANCE. Maintain insurance with financially sound and reputable
insurers covering its properties and business against those casualties
and contingencies and in the types and amounts as shall be in
accordance with sound business and industry practices.
4.2 EXISTENCE. Maintain its existence and business operations as presently
in effect in accordance with all applicable laws and regulations, pay
its debts and obligations when due under normal terms, and pay on or
before their due date all taxes, assessments, fees and other
governmental monetary obligations, except as they may be contested in
good faith if they have been properly reflected on its books and, at
the Bank's request, adequate funds or security has been pledged to
insure payment.
4.3 FINANCIAL RECORDS. Maintain proper books and records of account, in
accordance with generally accepted accounting principles where
applicable, and consistent with financial statements previously
submitted to the Bank.
4.4 COLLATERAL AUDITS. Permit the Bank or its agents to perform annual
audits of the Collateral. The Borrower shall compensate the Bank for
such audits in accordance with the Bank's schedule of fees as may be
amended from time to time. The Bank shall retain the right to inspect
the Collateral and business records related to it at such times and at
such intervals as the Bank may reasonably require.
4.5 MANAGEMENT. Maintain current management specifically Xxxx Xxxxxxx.
a. FINANCIAL REPORTS. Furnish to the Bank whatever information, books,
and records the Bank may reasonably request, including at a minimum:
If the Borrower has, subsidiaries, all financial statements required
will be provided on a consolidated and on a separate basis.
A. Within 30 days after each quarterly period, a balance sheet as of
the end of that period and a statement of profit, loss and
surplus, from the beginning of that fiscal year to the end of that
period, certified as correct, subject to year-end adjustments, by
one of its authorized agents.
B. Within 120 days after, and as of the end of, each of its fiscal
years, a detailed audit statement including a balance sheet and
statement of profit, loss and surplus, certified by an independent
certified public accountant of recognized standing.
5. DEPOSITS. Maintain its corporate primary demand deposit relationship
with the Bank.
6. NEGATIVE COVENANTS.
6.1 DEFINITIONS. As used in this agreement, the following terms shall have
the following respective meanings:
A. "Subordinated Debt" shall mean debt subordinated to the Bank in
manner and by agreement satisfactory to the Bank.
B. "Tangible Net Worth" shall mean total assets less the sum of
intangible assets, due from Affiliates, and total liabilities.
Intangible assets include goodwill, patents, copyrights, mailing
lists, catalogs, trademarks, bond discount and underwriting
expenses, organization expenses, and all other intangibles.
C. "Working Capital" shall mean current assets less the sum of
(i) current liabilities and (ii) amounts due from Affiliates.
D. "Affiliate" shall mean shareholders, partners, owners, and
subsidiaries, and entities owned or controlled by such parties.
E. "Cash Flow Coverage" shall mean (net income after taxes plus
interest
expense, depreciation & amortization expense minus unfunded
capital expenditures and dividends) divided by total debt service.
6.2 Unless otherwise noted, the financial requirements set forth in this
Section 6 shall be computed in accordance with generally accepted
accounting principles applied on a basis consistent with financial
statements previously submitted by the Borrower to the Bank.
6.3 Without the written consent of the Bank, so long as any debt remains
outstanding under the Credit Facilities, the Borrower will not: (where
appropriate, covenants shall apply on a consolidated basis)
A. TANGIBLE NET WORTH. Permit its Tangible Net Worth to be negative,
tested quarterly.
B. DEBT. Incur, or permit to remain outstanding, BANK debt for
borrowed money, capital leases obligations, installment
obligations from any financial institution other than Bank, other
than (i) debt reflected in the latest financial statement of the
Borrower furnished to the, Bank prior to execution of this
agreement (ii) debt for any purpose not to exceed $30,000.00 in
the aggregate in any fiscal year. For purposes of this covenant,
non-capitalized leases and the sale of any accounts receivable
shall be deemed the incurring of debt for borrowed money.
C. GUARANTIES. Guarantee or otherwise become or remain secondarily
liable on the undertaking of another, except for endorsement of
drafts for deposit and collection in the ordinary course of
business.
D. LIENS. Create or permit to exist any lien on any of its property,
real or personal, except: existing liens known to the Bank; liens
to the Bank; liens incurred in the ordinary course of business
securing current nondelinquent liabilities for taxes, worker's
compensation, unemployment insurance, social security and pension
liabilities; and liens for taxes being contested in good faith.
E. ADVANCES AND INVESTMENTS. Purchase or acquire any securities of,
or make any loans or advances to, or investments in, any person,
firm or corporation, except obligations of the United States
Government, open market commercial paper rated one of the top two
ratings by a rating agency of recognized standing, or certificates
of deposit in insured financial institutions.
F. CASH FLOW COVERAGE RATIO. Permit the ratio of its cash flow
coverage to be less than 1.50 to 1.00.
7. REPRESENTATIONS BY BORROWER. Each Borrower represents: (a) that the
execution and delivery
of this agreement and the Notes and the performance of the obligations they
impose do not violate any law, conflict with any agreement by which it is
bound, or require the consent or approval of any governmental authority or
other third party; (b) that this agreement and the Notes are valid and
binding agreements, enforceable according to their terms; and (c) that all
balance sheets, profit and loss statements, and other financial statements
furnished to the Bank are accurate and fairly reflect the financial condition
of the organizations and persons to which they apply on their effective
dates, including contingent liabilities of every type, which financial
condition has not changed materially and adversely since those dates. Each
Borrower, other than a natural person, further represents: (a) that it is
duly organized, existing and in good standing pursuant to the laws under
which it is organized; and (b) the execution and delivery of this agreement
and the Notes and the performance of the obligations they impose (i) are
within its powers and have been duly authorized by all necessary action of
its governing body, and (ii) do not contravene the terms of its articles of
incorporation or organization, its by-laws, or any partnership, operating or
other agreement governing its affairs.
8. ACCELERATION.
8.1 EVENTS OF DEFAULT/ACCELERATION. If any of the following events occurs:
A. The Borrower or any guarantor of any of the Loans ("Guarantor")
fails to pay when due any amount payable under the Loans or under
any agreement or instrument evidencing debt to any creditor;
B. The Borrower or any Guarantor (a) fails to observe or perform any
other term of this agreement or the Notes; (b) makes any
materially incorrect or misleading representation, warranty, or
certificate to the Bank; (c) makes any materially incorrect or
misleading representation in any financial statement or other
information delivered to the Bank; or (d) defaults under the terms
of any agreement or instrument relating to any debt for borrowed
money (other than the Loans) such that the creditor declares the
debt due before its maturity;
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document executed in
connection with the Loans, or any guaranty of the Loans becomes
unenforceable in whole or in part, or any Guarantor fails to
promptly perform under such a guaranty;
D. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974 as amended) occurs that would permit the
Pension Benefit Guaranty Corporation to terminate any employee
benefit plan of the Borrower or any affiliate of the Borrower;
E. The Borrower or any Guarantor becomes insolvent or unable to pay
its debts as they become due;
F. The Borrower or any Guarantor (a) makes an assignment for the
benefit of creditors; (b) consents to the appointment of a
custodian, receiver or trustee
for it or a substantial part of its assets; or (c) commences any
proceeding under any bankruptcy, reorganization, liquidation or
similar laws of any jurisdiction;
G. A custodian, receiver or trustee is appointed for the Borrower or
any Guarantor or for a substantial part of its assets without its
consent and is not removed within 60 days after such appointment;
H. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar laws
of any jurisdiction, and such proceedings remain undismissed for
60 days after commencement; or the Borrower or Guarantor consents
to the commencement of such proceedings;
I. Any judgment is entered against the Borrower or any Guarantor, or
any attachment, levy or garnishment is issued against any property
of the Borrower or any Guarantor;
J. The Borrower or any Guarantor dies;
K. The Borrower or any Guarantor, without the Bank's written consent,
(a) is dissolved, (b) merges or consolidates with any third party,
(c) leases, sells or otherwise conveys a material part of its
assets or business outside the ordinary course of business,
(d) leases, purchases, or otherwise acquires a material part of
the assets of any other corporation or business entity, except in
the ordinary course of business, (e) engages in any share exchange
to the same effect, or (f) agrees to do any of the foregoing,
(notwithstanding the foregoing, any subsidiary may merge or
consolidate with any other subsidiary, or with the Borrower, so
long as the Borrower is the survivor);
L. There is a substantial change in the management or ownership, or
the existing or prospective financial condition, of the Borrower
or any Guarantor which the Bank in good faith determines to be
materially adverse; or
M. The Bank in good faith shall deem itself insecure;
then, whether or not the Bank has made demand, the Loans shall become due
immediately, without notice, at the Bank's option.
8.2 REMEDIES. If the Loans are not paid at maturity, whether by
acceleration or otherwise, the Bank shall have all of the rights and
remedies provided by any law or agreement. Any requirement of
reasonable notice shall be met if the Bank sends the notice to the
Borrower at least seven (7) days prior to the date of sale,
disposition or other event giving rise to the required notice. The
Bank is authorized to cause all or any part of the Collateral to be
transferred to or registered in its name or in the name
of any other person, firm or corporation, with or without designation
of the capacity of such nominee. The Borrower shall be liable for any
deficiency remaining after disposition of any Collateral, and waives
all valuation and appraisement laws. The Borrower is liable to the
Bank for all reasonable costs and expenses of every kind incurred in
the making or collection of the Loans, including, without limitation,
reasonable attorneys' fees and court costs. These costs and expenses
shall include, without limitation, any costs or expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other similar
proceeding.
9. Miscellaneous
9.1 Notice from one party to another relating to this agreement shall be
deemed effective if made in writing (including telecommunications) and
delivered to the recipient's address, telex number or facsimile number
set forth under its name below by any of the following means: (a) hand
delivery, (b) registered or certified mail, postage prepaid, with
return receipt requested, (c) first class or express mail, postage
prepaid, (d) Federal Express, Purolator Courier or like overnight
courier service or (e) facsimile, telex or other wire transmission with
request for assurance of receipt in a manner typical with respect to
communication of that type. Notice made in accordance with this
section shall be deemed delivered upon receipt if delivered by hand or
wire transmission, 3 business days after mailing if mailed by first
class, registered or certified mail, or one business day after mailing
or deposit with an overnight courier service if delivered by express
mail or overnight courier.
9.2 No delay on the part of the Bank in the exercise of any right or
remedy shall operate as a waiver. No single or partial exercise by the
Bank of any right or remedy shall preclude any other future exercise of
it or the exercise of any other right or remedy. No waiver or
indulgence by the Bank of any default shall be effective unless in
writing and signed by the Bank, nor shall a waiver on one occasion be
construed as a bar to or waiver of that right on any future occasion.
9.3 This agreement, the Notes, and any related loan documents embody the
entire agreement and understanding between the Borrower and the Bank
and supersede all prior agreements and understandings relating to their
subject matter. If any one or more of the obligations of the Borrower
under this agreement or the Notes shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining obligations of the Borrower shall not
in any way be affected or impaired, and such validity, illegality or
unenforceability in one jurisdiction shall not affect the validity,
legality or enforceability of the obligations of the Borrower under
this agreement or the Notes in any other jurisdiction.
a. The Borrower, if more than one, shall be jointly and severally liable.
b. This agreement is delivered in the State of Indiana and governed by
Indiana law. This agreement is binding on the Borrower and its
successors, and shall inure to the benefit
of the Bank, its successors and assigns.
c. Section headings are for convenience of reference only and shall not
affect the interpretation of this agreement.
10. WAIVER OF JURY TRIAL BY BANK AND BORROWER. The Bank and the Borrower,
after consulting or having had the opportunity to consult with counsel,
knowingly, voluntarily and intentionally waive any right either of them may
have to a trial by jury in any litigation based upon or arising out of this
agreement or any related instrument or agreement or any of the transactions
contemplated by this agreement or any course of conduct, dealing, statements
(whether oral or written), or actions of either of them. Neither the Bank
nor the Borrower shall seek to consolidate, by counterclaim or otherwise, any
action in which a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived. These provisions shall not be
deemed to have been modified in any respect or relinquished by either the
Bank or the Borrower except by a written instrument executed by both of them.
Executed by the parties as of: March 20, 1995.
"BANK" "BORROWER":
NBD Bank, N.A. TEKSYN, INC.
By: /s/ Xxx Xxxxx, AVP By: /s/ Xxxxx X. Xxxxxxx
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Xxx X. Xxxxx, Assistant
Vice President Xxxxx X. Xxxxxxx President
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Printed Name Title
ADDRESS FOR NOTICES: ADDRESS FOR NOTICES:
NBD Bank, N.A. TEKSYN, INC.
One Indiana Square 0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Facsimile/Telex No Facsimile/Telex No
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