LOAN AGREEMENT
between
ZIONS FIRST NATIONAL BANK
Lender
and
MITY ENTERPRISES, INC.
AND ITS DOMESTIC SUBSIDIARIES
Borrower
Effective Date: August 21, 2006
LOAN AGREEMENT
Table of Contents
1. Definitions
1.1 Definitions
2. Loan Description
2.1 Commitment
2.2 Borrowing Procedures
2.3 Conditions to Each Loan
2.4 Fees
2.5 Capital Adequacy
2.6 Note
2.7 Due Date Extension
2.8 Reduction or Termination of the Commitment
2.9 Prepayments
2.10 Automatic Debit of Borrower's Account
2.11 Interest
3. Security for Obligations
4. Effectiveness; Conditions to Loan Disbursements
4.1 Initial Loan
4.2 All Loans
5. Representations and Warranties
5.1 Organization and Qualification
5.2 Authorization
5.3 No Governmental Approval Necessary
5.4 Accuracy of Financial Statements
5.5 No Pending or Threatened Litigation
5.6 Full and Accurate Disclosure
5.7 Compliance with ERISA
5.8 Compliance with All Other Applicable Law
5.9 Operation of Business
5.10 Payment of Taxes
5.11 Subsidiaries
5.12 Investment Company Act
5.13 Public Utility Holding Company Act
5.14 Regulation U
5.15 Inactive Subsidiaries
6. Borrower's Covenants
6.1 Use of Proceeds
6.2 Continued Compliance with ERISA
6.3 Continued Compliance with Applicable Law
6.4 Change of Name
6.5 Payment of Taxes and Obligations
6.6 Financial Statements and Reports
6.7 Financial Covenants
6.8 Mergers, Consolidations, Sales
6.9 Insurance
6.10 Inspection and Appraisal
6.11 Operation of Business
6.12 Maintenance of Records and Properties
6.13 Notice of Default, Litigation
6.14 Maintenance of Existence, etc.
6.15 Additional Borrowers
7. Default
7.1 Events of Default
7.2 No Waiver of Event of Default
8. Remedies
8.1 Remedies upon Event of Default
8.2 Rights and Remedies Cumulative
8.3 No Waiver of Rights
8.4 Offset
9. General Provisions
9.1 Governing Agreement
9.2 Borrower's Obligations Cumulative
9.4 Payment of Expenses and Attorney's Fees
9.5 Right to Perform for Borrower
9.6 Assignability
9.7 Third Party Beneficiaries
9.8 Governing Law
9.9 Severability
9.10 Interpretation of Loan Agreement
9.11 Survival and Binding Effect of Representations, Warranties,
and Covenants
9.12 Indemnification
9.13 Interest on Expenses and Indemnification, Order of
Application
9.14 Limitation of Consequential Damages
9.15 Waiver and Release of Claims
9.16 Revival Clause
9.17 Arbitration
9.18 Consent to Utah Jurisdiction and Exclusive Jurisdiction of
Utah Courts
9.19 Notices
9.20 Counterparts
9.21 Disclosure of Financial and Other Information
9.22 Integrated Agreement and Subsequent Amendment
9.23 Representations and Warranties.
9.24 Waiver and Release.
EXHIBITS
Exhibit "A" - Promissory Note
Exhibit "B" - Pending or Threatened Litigation
Exhibit "C" - Subsidiaries of Borrower
Exhibit "D" - Form of Assumption Agreement
LOAN AGREEMENT
This Loan Agreement is made and entered into by and between Zions First
National Bank ("Lender") and MITY Enterprises, Inc, and its Domestic
Subsidiaries ("Borrower").
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Definitions
1.1 Definitions
Terms defined in the singular shall have the same meaning when used in
the plural and vice versa. As used herein, the term:
"Loan Agreement" means this agreement, together with any exhibits,
amendments, addendums, and modifications.
Applicable Letter of Credit Fee Percentage, Applicable LIBOR Margin
Percentage, Applicable Non-use Fee Percentage, and Applicable Prime Margin
Percentage shall mean the percentages corresponding to the Debt Ratio level
for the most recent Fiscal Quarter as set forth below:
Debt Ratio Non-use Letter of Prime LIBOR
Fee Credit Fee Margin Margin
------------- --------- ------------ ---------- ---------
Greater
than 1.50 0.40% 2.25% -0.50% 2.25%
Greater than
0.75 and less
than or equal
to 1.50 0.35% 2.00% -0.75% 2.00%
Less than or
equal to 0.75 0.30% 1.50% -1.25% 1.50%
"Banking Business Day" means any day not a Saturday, Sunday, legal
holiday in the State of Utah, or day on which national banks in the State of
Utah are authorized to close.
"Borrower" means MITY Enterprises, Inc., a Utah corporation, and its
Domestic Subsidiaries, now existing or hereafter created or acquired,
including Xxxxx Enterprises USA, Inc., a Utah corporation, and Mity-Lite,
Inc., a Utah corporation, and their successors, and, if permitted, assigns.
"A Borrower" or "any Borrower" means any of the foregoing, individually.
"Capital Expenditures" means amounts paid by Borrower in connection with
the purchase of plant, machinery or equipment (including vehicles) or other
similar expenditures (including capital leases of any of the foregoing) which,
in accordance with GAAP, would be required to be capitalized and shown on the
balance sheet of Borrower, but excluding expenditures made in connection with
the replacement, substitution or restoration of assets to the extent financed
(i) from insurance proceeds (or other similar recoveries) paid on account of
the loss of or damage to the assets being replaced or restored or (ii) with
awards of compensation arising from the taking by eminent domain or
condemnation of the assets being replaced.
"Change of Control" means (a) the acquisition by any Person or group of
Persons (within the meaning of Section 13 or 14 of the Securities Exchange Act
of 1934, as amended) other than existing shareholders, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under such Act) of 50% or more
of the outstanding shares of common stock of any Borrower; or (b) during any
24-month period, individuals who at the beginning of such period constituted
any Borrower's Board of Directors (together with any new directors whose
election by such Borrower's Board of Directors or whose nomination for
election by such Borrower's shareholders was approved by a vote of a majority
of the directors who either were directors at beginning of such period or
whose election or nomination was previously so approved) ceasing for any
reason to constitute a majority of the Board of Directors of such Borrower.
Notwithstanding the foregoing, an initial public offering of stock and the
sale of stock pursuant thereto shall not be deemed a Change of Control.
"Compliance Certificate" means a compliance certificate in a form
acceptable to Lender certifying Borrower's status regarding Borrower's
compliance with all terms and conditions of this Loan Agreement, including
compliance with the financial covenants provided in the Section entitled
Financial Covenants. The compliance certificate shall include the data and
calculations supporting all financial covenants, whether in compliance or not,
and shall be signed by the chief executive officer or chief financial officer
of Borrower.
"Commitment" means the commitment of Lender hereunder to make Loans to
Borrower. The initial amount of the Commitment is Five Million Dollars
($5,000,000.00).
"Debt" of any Person means, without duplication, (a) all indebtedness of
such Person for borrowed money; (b) all obligations issued, undertaken or
assumed by such Person as the deferred purchase price of property or services
(other than trade payables and current operating liabilities not for borrowed
money, entered into in the ordinary course of business on ordinary terms that
are not more than ninety (90) days past due, unless contested in good faith
and by appropriate proceedings); (c) all obligations of such Person evidenced
by notes, bonds, debentures or similar instruments; (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to
repossession or sale of such property); (e) all obligations of such Person
with respect to capital leases; (f) all guaranties of such Person of any Debt
of another Person; (g) all obligations of such Person with respect to letters
of credit; and (h) all indebtedness of such Person referred to in clauses (a)
through (g) above secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Lien upon or in
property (including accounts and contracts rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt (it being understood that if such Person has not assumed or otherwise
become personally liable for any such Debt, the amount of the Debt of such
Person in connection therewith shall be limited to the lesser of the face
amount of such Debt or the fair market value of all property of such Person
securing such Debt).
"Debt Ratio" means the ratio of Borrower's total Debt to Borrower's
EBITDA.
"Domestic Subsidiary" means a Subsidiary of any Borrower that is
organized under the laws of any state or territory of the United States.
"EBIT" means net income (excluding extraordinary gains and losses) plus
(without duplication and to the extent deducted in determining net income) the
sum of interest expense and income tax expense, determined in accordance with
GAAP, plus other non-cash gains and expenses as determined by Lender in its
sole discretion.
"EBIT to Interest Expense Ratio" mean the ratio of Borrower's EBIT to
Borrower's interest expense.
"EBITDA" means net income (excluding extraordinary gains and losses) plus
(without duplication and to the extent deducted in determining net income) the
sum of interest expense, income tax expense, depreciation, and amortization,
determined in accordance with GAAP, plus other non-cash gains and expenses as
determined by Lender in its sole discretion.
"Effective Date" shall mean August 21, 2006.
"Event of Default" shall have the meaning set forth in Section 7.1 Events
of Default.
"Fiscal Year" means the fiscal year of Borrower which period shall be the
12-month period ending on March 31 of each year. References to a Fiscal Year
with a number corresponding to any calendar year (e.g., "Fiscal Year 2006")
refer to the Fiscal Year ending on March 31 of such calendar year.
"Fiscal Quarter" means a fiscal quarter of a Fiscal Year.
"Foreign Subsidiary" means a Subsidiary of any Borrower that is organized
under the laws of any jurisdiction other than a state or territory of the
United States.
"GAAP" means generally accepted accounting principles and practices as in
effect in the United States from time to time, consistently applied.
"Insolvency Proceeding" means, with respect to any Person, (a) any case,
action or proceeding with respect to such Person before any court or other
governmental authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of debtors
(including any proceeding under the United States Bankruptcy Code) or (b) any
general assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of such
Person's creditors generally or any substantial portion of such creditors.
"Investment" means any beneficial ownership (including stock, partnership
interest or other securities) of any Person, or any capital contribution to
any Person.
"Lender" means Zions First National Bank, its successors, and assigns.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention agreement,
the interest of a lessor under a capital lease, or any financing lease having
substantially the same economic effect as any of the foregoing, but not
including the interest of a lessor under an operating lease).
"Loan" or "Loans" has the meaning set forth in Section 2.1.
"Loan Agreement" means this Loan Agreement, together with any exhibits,
amendments, addendums, and modifications.
"Loan Documents" means the Loan Agreement, Note, all other agreements and
documents contemplated by any of the aforesaid documents, and all amendments,
modifications, addendums, and replacements, whether presently existing or
created in the future.
"Margin Stock" means "margin stock" as such term is defined in Regulation
G, T, U and X of the Board of Governors of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or
financial condition of Borrower; or (b) a material adverse effect upon the
legality, validity, binding effect or enforceability against Borrower of any
Loan Document.
"Note" means the promissory note in the form of Exhibit A hereto, which
is incorporated herein by reference, to be executed by Borrower pursuant to
Section 2.6, and any and all renewals, extensions, modifications (including,
but not limited to, increases in the amount of such promissory note), and
replacements thereof.
"Obligations" means the Loans, the Note, and all obligations of Borrower
under the Loan Documents.
"Organizational Documents" means articles of incorporation, by-laws,
articles of organization, operating agreements, partnership agreements, and
other formation documents, as applicable, and all amendments, modifications,
and changes to any of the foregoing.
"Person" means any natural person, corporation, partnership, limited
liability company, trust, association, governmental authority or unit, or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Subsidiary" of a Person means any corporation, association, partnership,
limited liability company, joint venture or other business entity of which
more than 50% of the voting stock, membership interests or other equity
interests is owned or controlled directly or indirectly by such Person, or by
one or more of the Subsidiaries of such Person, or by a combination thereof.
Unless the context otherwise clearly requires, references herein to a
"Subsidiary" refer to a Subsidiary of Borrower.
"Termination Date" has the meaning set forth in Section 2.1.
"Unmatured Event of Default" means any event which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
2. Loan Description
2.1 Commitment
Subject to the terms and conditions of this Loan Agreement, Lender agrees
to make loans on a revolving basis and issue such letters of credit for the
benefit of Borrower as Borrower may from time to time request (collectively
the "Loans" and individually each a "Loan") before September 1, 2008 (the
"Termination Date"), in such amounts as Borrower may request, and the
aggregate outstanding principal amount of all Loans, including standby letters
of credit, shall not at any one time exceed Five Million Dollars
($5,000,000.00) (the "Commitment"), as reduced from time to time pursuant to
Section 2.8. Borrower may borrow, repay and reborrow Loans from time to time
before the Termination Date in accordance with the provisions of this Loan
Agreement.
2.2 Borrowing Procedures
Borrower shall have access to the Commitment (less the aggregate
outstanding principal amount of all Loans and outstanding standby letters of
credit issued pursuant to this Loan Agreement) in the following ways:
a. Borrower shall have such access on any Banking Business Day
pursuant to an oral, written or electronic request from Borrower's Chief
Executive Officer or Chief Financial Officer received by a representative of
Lender, who shall be designated by Lender from time to time, before 2:00 P.M.
on such Banking Business Day.
b. If Borrower elects to enter into a Sweep Account Agreement
with Lender (the "Sweep Account Agreement"), the Note shall be linked to
Borrower's sweep account # 024755738 with Lender (the "Sweep Account"), and
Borrower shall have access pursuant to such Sweep Account Agreement.
If such election is made, (i) Lender is authorized and directed to
disburse Loan proceeds for deposit into the Sweep Account on each Banking
Business Day as needed to cover all checks and other charges against the Sweep
Account; (ii) disbursements shall be made up to the maximum available advance
Commitment; (iii) upon occurrence and continuance of an Event of Default or
Unmatured Event of Default, Lender may, in its sole discretion, cease all
disbursements under the Note into the Sweep Account; and (iv) Lender is
authorized and directed to disburse all collected funds in the Sweep Account
on each Banking Business Day to Lender to be applied on the Note.
It is acknowledged that posting of credits and debits to and from the
Sweep Account are made one Banking Business Day after the transactions occur
and backdated to the prior Banking Business Day.
Borrower may unilaterally terminate the Sweep Account at any time.
Except as expressly modified hereby, the terms and conditions of the Sweep
Account Agreement shall remain in full force and effect. All references in
the Sweep Account Agreement to the "Commercial Loan Line with Zions Bank" are
amended to refer to this Loan Agreement.
c. Borrower shall have such access pursuant to such other
procedures as shall be agreed upon by Borrower and Lender from time to time.
2.3 Conditions to Each Loan
Notwithstanding any other provision of this Loan Agreement, no Loan shall
be required to be made hereunder if the applicable conditions precedent to the
making of such Loan specified in Section 4 have not been satisfied.
2.4 Fees
a. Upon execution and delivery of this Loan Agreement, Borrower
shall pay Lender a commitment fee of Twelve Thousand Five Hundred Dollars
($12,500.00) for the Commitment. No portion of such fee shall be refunded in
the event of early termination of this Loan Agreement or any termination or
reduction of the right of Borrower to request Loans under this Loan Agreement.
Lender is authorized, upon execution of this Loan Agreement and fulfillment of
all conditions precedent hereunder, to disburse a sufficient amount of the
Loan proceeds to pay the commitment fee in full.
b. Borrower shall pay a quarterly non-use fee while the
Commitment is in effect based on the unused portion of the Commitment. The
non-use fee shall be paid, in arrears, on the tenth day of the month following
each Fiscal Quarter. The fee shall be in an amount equal to the Applicable
Non-use Fee Percentage, per annum, of the average unused portion of the
Commitment for the preceding Fiscal Quarter (calculated on the basis of a
360-day year and actual days elapsed). For purposes of this calculation,
standby letters of credit issued pursuant to this Loan Agreement shall be
considered usage.
c. Borrower shall pay letter of credit fees according to the
terms set forth in this paragraph.
(i) The following fees shall apply to both standby letters
of credit and commercial letters of credit, as applicable: $30.00 for set-up;
$20.00 for courier service; $35.00 for amendment; and $50.00 for renewal.
(ii) The following additional fees shall apply to standby
letters of credit. For any standby letter of credit issued for the benefit of
Borrower, Borrower shall pay to Lender an issuance fee in an amount equal to
the greater of $300.00 or the Applicable Letter of Credit Fee Percentage, per
annum, of the amount of such letter of credit for the period it is to be
outstanding, paid quarterly in arrears. In the event of an extension or
renewal of a standby letter of credit, Borrower shall pay a fee in the amount
of the Applicable Letter of Credit Fee Percentage, per annum, of the amount of
such letter of credit for the period it is to be extended or renewed, paid
quarterly in arrears. In the event a standby letter of credit is drawn upon,
Borrower shall pay a fee in the amount of $35.00.
(iii) The following additional fees shall apply to
commercial letters of credit. For any commercial letter of credit issued for
the benefit of Borrower, Borrower shall pay to Lender an issuance fee in an
amount equal to the greater of $50.00 or 0.125% of the amount of such letter
of credit for each quarter, or fraction thereof, it is to be outstanding, paid
quarterly in advance. In the event a commercial letter of credit is drawn
upon, Borrower shall pay a negotiation fee in the amount of the greater of
$35.00 or 0.125% of the amount drawn.
2.5 Capital Adequacy
If Lender shall reasonably determine that the application or adoption of
any law, rule, regulation, directive, interpretation, treaty or guideline
occurring after the date hereof regarding capital adequacy, or any change
therein or in the interpretation or administration thereof, whether or not
having the force of law, increases the amount of capital required or expected
to be maintained by Lender or any Person controlling Lender, and such increase
is based upon the existence of Lender's obligations hereunder and other
commitments of this type, then from time to time, within ten days after demand
from Lender, Borrower shall pay to Lender such amount or amounts as will
compensate Lender or such controlling Person, as the case may be, for such
increased capital requirement. The determination of any amount to be paid by
Borrower under this Section 2.5, 2.10,2.11 shall take into consideration the
policies of Lender or any Person controlling Lender with respect to capital
adequacy and shall be based upon any reasonable averaging, attribution and
allocation methods. A certificate of Lender setting forth in reasonable
detail the amount or amounts as shall be necessary to compensate Lender as
specified in this Section 2.5, 2.10, 2.11 shall be delivered to Borrower and
shall be conclusive in the absence of manifest error. Borrower shall have no
liability for amounts related to periods more than 180 days prior to the date
of the certificate.
2.6 Note
The Loans shall be evidenced by the Note, which is substantially in the
form of Exhibit "A" attached hereto, with appropriate insertions, dated on or
about the date hereof, payable to the order of Lender on the Termination Date
in the principal amount of the original Commitment of Lender or, if less, the
aggregate unpaid principal amount of all Loans. The date and amount of each
Loan made by Lender and of each repayment of principal thereon received by
Lender shall be recorded by Lender in its records. The aggregate unpaid
principal amount so recorded shall be rebuttable presumptive evidence of the
principal amount owing and unpaid on the Note. The failure so to record any
such amount or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of Borrower hereunder or under the
Note to repay the actual outstanding principal amount of the Loans together
with all interest accruing thereon.
2.7 Due Date Extension
Unless otherwise provided in the Note, if any payment of principal or
interest under the Note (or of any other amount payable hereunder) falls due
on a day which is not a Banking Business Day, then such due date shall be
extended to the next following Banking Business Day and additional interest
shall accrue and be payable for the period of such extension.
2.8 Reduction or Termination of the Commitment
Borrower may from time to time, on at least three Banking Business
Days' prior written notice received by Lender, permanently reduce the amount
of the Commitment to an amount not less than the aggregate unpaid principal
amount of the Loans. Any such reduction shall be in an amount not less than
$1,000,000.00. Borrower may at any time on like notice terminate the
Commitment upon payment in full of all Loans and all other obligations of
Borrower hereunder.
2.9 Prepayments
a. Mandatory Prepayment. Borrower agrees that if at any time
the aggregate outstanding principal amount of all Loans shall exceed the
amount of the Commitment, Borrower shall make a prepayment of the Loans in an
amount equal to such excess.
b. Optional Prepayments. Borrower may from time to time, on at
least one Banking Business Day's prior written or telephonic notice received
by Lender, prepay the Note in whole or in part, without premium or penalty,
except that during the times the interest on the Note is based on LIBOR, a
prepayment fee shall apply as set forth in the Note.
2.10 Automatic Debit of Borrower's Account. Lender is authorized and
directed to establish automatic debits to Borrower's Account No. 071029904
with Lender for payment of interest on the Note and for payment of non-use
fees and letter of credit fees.
2.11 Interest. Interest on the Loans shall be payable on the terms
set forth in the Note.
3. Security for Obligations
The Obligations shall be unsecured. Sections 6.7(e) restricts Borrower's
rights to grant security interests in Borrower's assets, and Section and
6.7(f) prohibits Borrower from entering into agreements placing similar
restrictions on Borrower.
4. Effectiveness; Conditions to Loan Disbursements
The obligation of Lender to make the Loans is subject to the following
conditions precedent:
4.1 Initial Loan
The obligation of Lender to make the initial Loan was subject to (i) the
conditions specified in this Section 4 having been satisfied; (ii) Borrower
having delivered to Lender the commitment fee described in Section 2.4; and
(iii) Lender having received all of the following, in form and substance
reasonably satisfactory to Lender.
a. The Note.
b. A certified copy of an authorizing resolution of the Board of
Directors for Borrower.
c. Certified copies of the Organizational Documents of Borrower.
d. Financial statements for Borrower as of June 30, 2006 in a
form satisfactory to Lender.
e. Such other documents as Lender may have reasonably requested.
All conditions precedent set forth in this Loan Agreement and any of the
Loan Documents are for the sole benefit of Lender and may be waived
unilaterally by Lender.
4.2 All Loans
The obligation of Lender to make each Loan is subject to the following
further conditions precedent that (a) no Event of Default or Unmatured Event
of Default has occurred and is continuing or will result from the making of
such Loan, and (b) the warranties of Borrower contained in the Loan Documents
are true and correct as of the date of such requested Loan, with the same
effect as though made on the date of such Loan (unless relating solely to an
earlier date). Each request by Borrower for a Loan shall be deemed to be a
certification by Borrower to Lender that the conditions precedent set forth in
clauses (a) and (b) of this Section 4.2 have been satisfied.
5. Representations and Warranties
5.1 Organization and Qualification
Borrower represents and warrants that it is a corporation duly organized
and existing in good standing under the laws of the jurisdiction indicated in
the definition of "Borrower" above, and that each Borrower is qualified to do
business and is in good standing in the State of Utah., except where a failure
to maintain such qualification or good standing would not reasonably be
expected ro result in a Material Adverse Effect.
Borrower represents and warrants that it is duly qualified to do business
in each jurisdiction where the conduct of its business requires qualification
except where a failure to be so qualified would not reasonably be expected to
have a Material Adverse Effect.
Borrower represents and warrants that it has the full power and authority
to own its property and to conduct the business in which it engages and to
enter into and perform its obligations under the Loan Documents.
Borrower represents and warrants that it has delivered to Lender or
Lender's counsel accurate and complete copies of Borrower's Organizational
Documents which are operative and in effect as of the Effective Date.
5.2 Authorization
Borrower represents and warrants that the execution, delivery, and
performance by Borrower of the Loan Documents has been duly authorized by all
necessary action on the part of Borrower and are not inconsistent with
Borrower's Organizational Documents or any resolution of the Board of
Directors of Borrower, do not and will not contravene any material provision
of, or constitute a default under, any material indenture, mortgage, contract,
or other instrument to which Borrower is a party or by which it is bound, and
that upon execution and delivery thereof, the Loan Documents will constitute
legal, valid, and binding agreements and obligations of Borrower, enforceable
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws
relating to the enforcement of creditors' rights.
5.3 No Governmental Approval Necessary
Borrower represents and warrants that no consent by, approval of, giving
of notice to, registration with, or taking of any other action with respect to
or by any federal, state, or local governmental authority or organization is
required for Borrower's execution, delivery, or performance of the Loan
Documents.
5.4 Accuracy of Financial Statements
Borrower represents and warrants that all of its audited and unaudited
financial statements heretofore delivered to Lender have been prepared in
accordance with GAAP and fairly present in all material respects Borrower's
financial condition as of the date thereof and the results of Borrower's
operations for the period or periods covered thereby.
Borrower represents and warrants that since the date of the last audited
financial statements of Borrower delivered to Lender, no event or events have
occurred which, individually or in the aggregate, have had or are reasonably
likely to have a Material Adverse Effect.
5.5 No Pending or Threatened Litigation
Borrower represents and warrants that except as set forth on Exhibit B
hereto, there are no actions, suits, or proceedings pending or, to Borrower's
knowledge, threatened against or affecting Borrower in any court or before any
governmental commission, board, or authority which could reasonably be
expected to have a Material Adverse Effect.
5.6 Full and Accurate Disclosure
Borrower represents and warrants that this Loan Agreement, the financial
statements referred to herein, any loan application submitted to Lender, and
all other statements furnished by Borrower to Lender in connection herewith
contain no untrue statement of a material fact and omit no material fact
necessary to make the statements contained therein or herein not misleading
(it being recognized by Lender that the projections and forecasts provided by
Borrower in good faith and based upon reasonable assumptions are not to be
viewed as fact and that actual results during the period or periods covered by
any such projections and forecasts may differ from the projected or forecasted
results.) Borrower represents and warrants that it has not failed to disclose
in writing to Lender any fact that would, or could reasonably be expected to
have, a Material Adverse Effect.
5.7 Compliance with ERISA
Borrower represents and warrants that Borrower is in compliance in all
material respects with all applicable provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended, and the regulations and
published interpretations thereunder. Neither a Reportable Event as set forth
in Section 4043 of ERISA or the regulations thereunder ("Reportable Event")
nor a prohibited transaction as set forth in Section 406 of ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended, (which is not yet
exempted under ERISA Section 408 or the regulatory guidance issued thereunder)
has occurred and is continuing with respect to any employee benefit plan
established, maintained, or to which contributions have been made by Borrower
or any trade or business (whether or not incorporated) which together with
Borrower would be treated as a single employer under Section 4001 of ERISA
("ERISA Affiliate") for its employees which is covered by Title I or Title IV
of ERISA ("Plan"); no notice of intent to terminate a Plan has been filed nor
has any Plan been terminated which is subject to Title IV of ERISA; no
circumstances exist that constitute grounds under Section 4042 of ERISA
entitling the Pension Benefit Guaranty Corporation ("PBGC") to institute
proceedings to terminate, or appoint a trustee to administer a Plan, nor has
the PBGC instituted any such proceedings; neither Borrower nor any ERISA
Affiliate has completely or partially withdrawn under Section 4201 or 4204 of
ERISA from any Plan described in Section 4001(a)(3) of ERISA which covers
employees of Borrower or any ERISA Affiliate ("Multiemployer Plan"); Borrower
and each ERISA Affiliate has met its minimum funding requirements under ERISA
with respect to all of its Plans and the present fair market value of all Plan
assets equals or exceeds the present value of all vested benefits under each
Plan, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA and the regulations thereunder and the
applicable statements of the Financial Accounting Standards Board ("FASB") for
calculating the potential liability of Borrower or any ERISA Affiliate under
any Plan; neither Borrower nor any ERISA Affiliate has incurred any liability
to the PBGC (except payment of premiums, which is current) under ERISA.
Borrower, each ERISA Affiliate and each group health plan (as defined in
ERISA Section 733) sponsored by Borrower and each ERISA Affiliate, or in which
Borrower or any ERISA Affiliate is a participating employer, are in material
compliance with, have satisfied and continue to satisfy (to the extent
applicable) all material requirements for continuation of group health
coverage under Section 4980B of the Internal Revenue Code and Sections 601 et
seq. of ERISA, and are in material compliance with, have satisfied and
continue to satisfy Part 7 (Sections 701 et seq., Sections 711, 712 and 731 et
seq.) of ERISA and all corresponding and similar state laws relating to
portability, access and renewability of group health benefits and other
requirements included in Part 7.
5.8 Compliance with All Other Applicable Law
Borrower represents and warrants that it has complied with all applicable
statutes, rules, regulations, orders, and restrictions of any domestic or
foreign government, or any instrumentality or agency thereof having
jurisdiction over the conduct of Borrower's business or the ownership of its
properties, which could reasonably be expected to have a material impact or
effect upon the conduct of Borrower's business or the ownership of its
properties.
5.9 Operation of Business
Except to the extent the failure to possess the same or the violation
could not reasonably be expected to have a Material Adverse Effect, Borrower
represents and warrants that Borrower possesses all licenses (or could
promptly obtain such licenses on commercially reasonable terms) permits,
franchises, patents, copyrights, trademarks, and trade names, or rights
thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted, and Borrower is not, to its knowledge, in
violation of any material valid rights of others with respect to any of the
foregoing.
5.10 Payment of Taxes
Borrower represents and warrants that Borrower has filed all tax returns
(federal, state, and local) required to be filed and has paid all taxes,
assessments, and governmental charges and levies, including interest and
penalties, on Borrower's assets, business and income, except such as are being
contested in good faith by proper proceedings and as to which adequate
reserves are maintained, unless the failure to file or make payment would not
reasonably be expected to result in a Material Adverse Effect.
5.11 Subsidiaries
As of the date of this Agreement, Borrower has no Subsidiaries except
those listed in Exhibit "C" attached hereto.
5.12 Investment Company Act
Neither Borrower nor any Subsidiary is an "investment company" or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
5.13 Public Utility Holding Company Act
Neither Borrower nor any Subsidiary is a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
5.14 Regulation U
Borrower is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing
or carrying Margin Stock.
5.15 Inactive Subsidiaries
BOCCC, Inc., a Utah corporation, and DO Group Holding, Inc., a Utah
corporation, are inactive Subsidiaries of MITY Enterprises, Inc. that have no
assets.
6. Borrower's Covenants
Borrower makes the following agreements and covenants, which shall
continue so long as the Commitment remains in effect and so long as Borrower
is indebted to Lender for the Obligations (other than inchoate indemnity
obligations), unless the Lender agrees otherwise in writing.
6.1 Use of Proceeds
Borrower shall use the proceeds of the Loans solely for business
purposes.
Borrower shall not, directly or indirectly, use any of the proceeds of
the Loans for the purpose of purchasing or carrying any Margin Stock, or to
extend credit to any person or entity for the purpose of purchasing or
carrying any such margin stock or for any purpose which violates, or is
inconsistent with, Regulation X of said Board of Governors, or for any other
purpose not permitted by Section 7 of the Securities Exchange Act of 1934, as
amended, or by any of the rules and regulations respecting the extension of
credit promulgated thereunder.
6.2 Continued Compliance with ERISA
With respect to all Plans (as defined in Section 5.7 Compliance With
ERISA) which Borrower or any ERISA Affiliate currently maintains or to which
Borrower or any ERISA Affiliate is a sponsoring or participating employer,
fiduciary, party in interest or disqualified person or which Borrower or any
ERISA Affiliate may hereafter adopt, Borrower shall continue to comply in all
material respects and shall require each ERISA Affiliate to continue to comply
in all material respects with all applicable provisions of the Internal
Revenue Code and ERISA and with all representations made in Section 5.7
Compliance With ERISA, including, without limitation, conformance with all
notice and reporting requirements, funding standards, prohibited transaction
rules, multiemployer plan rules, necessary reserve requirements, and health
care continuation, coverage and portability requirements.
6.3 Continued Compliance with Applicable Law
Borrower shall conduct its business in a lawful manner and in material
compliance with all applicable federal, state, and local laws, ordinances,
rules, regulations, and orders; shall maintain in good standing all licenses
and organizational or other qualifications reasonably necessary to its
business and existence; and shall not engage in any business not authorized by
and not in accordance with its Organizational Documents and other governing
documents, except, in each case, where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
6.4 Change of Name
Borrower shall not change its name without giving Lender thirty (30) days
prior notice.
6.5 Payment of Taxes and Obligations
Borrower shall pay when due all material taxes, assessments, and
governmental charges and levies on Borrower's assets, business, and income,
and all material obligations of Borrower of whatever nature, except such as
are being contested in good faith by proper proceedings and as to which
adequate reserves are maintained, and except where the failure to do so would
not reasonably be expected to result in a Material Adverse Effect..
6.6 Financial Statements and Reports
Borrower shall provide Lender with such financial statements and reports
as Lender may reasonably request. Audited financial statements and reports
shall be prepared in accordance with GAAP and shall fairly present in all
material respects Borrower's financial condition as of the date thereof and
the results of Borrower's operations for the period or periods covered
thereby. Unaudited financial statements and reports shall fairly present in
all material respects Borrower's financial condition as of the date thereof
and the results of Borrower's operations for the period or periods covered
thereby.
Until requested otherwise by Lender, Borrower shall provide the following
financial statements and reports to Lender:
a. Annual audited consolidated financial statements with an
unqualified opinion for each Fiscal Year of Borrower from an independent
accounting firm and in a form acceptable to Lender, to be delivered to Lender
within one hundred twenty (120) days of the end of the Fiscal Year. Borrower
shall also submit to Lender copies of any management letters or other reports
submitted to Borrower by independent certified public accountants in
connection with examination of the financial statements of Borrower made by
such accountants.
b. Quarterly consolidated financial statements for each fiscal
quarter of Borrower in a form acceptable to Lender, to be delivered to Lender
within sixty (60) days of the end of the Fiscal Quarter. The quarterly
financial statements shall include a certification by the chief financial
officer or chief executive officer of Borrower that the quarterly financial
statements fairly present in all material respects Borrower's financial
condition as of the date thereof and the results of operations for the period
covered thereby.
c. A Compliance Certificate with the delivery of each set of
quarterly and annual financial statements and at any other time upon Lender's
request.
6.7 Financial Covenants
All financial covenants set forth herein shall be based on the
consolidated financial statements of Borrower and its Subsidiaries.
a. Debt to EBITDA Ratio. Borrower shall not permit its Debt
Ratio, as of the end of any calendar month for the trailing twelve-month
period, to be greater than 2.50.
b. EBIT to Interest Expense Ratio. Borrower shall not permit
its EBIT to Interest Expense Ratio, as of the end of any calendar month for
the trailing twelve-month period, to be less than 5.00.
c. Capital Expenditures. Borrower shall not make any Capital
Expenditure in any Fiscal Year unless, after giving effect to all such
expenditures, the aggregate amount of all such expenditures made by Borrower
and its Subsidiaries during such Fiscal Year does not exceed $8,000,000.00.
d. Liens. Borrower shall not create or permit to exist any Lien
on any of its real or personal properties, assets or rights of whatsoever
nature (whether now owned or hereafter acquired), except (a) Liens created in
favor of Lender; (b) Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and, in each case, for which it
maintains adequate reserves; (c) Liens arising in the ordinary course of
business (such as Liens of carriers, warehousemen, mechanics and materialmen
and other similar Liens imposed by law for sums not overdue or being contested
in good faith by appropriate proceedings and not involving any deposits or
advances for borrowed money or the deferred purchase price of property or
services, and, in each case, for which it maintains adequate reserves; (d)
easements, rights of way, restrictions, minor defects or irregularities in
title and other similar Liens not interfering in any material respect with the
ordinary conduct of the business of Borrower; (e) Liens incurred or deposits
made in the ordinary course of business in connection with (i) workers'
compensation, (ii) unemployment insurance and other types of social security,
(iii) statutory obligations, and (iv) operating leases; (f) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payments
of customs duties in connection with the importation of goods; (g) Liens which
constitute rights of setoff of a customary nature or banker's liens, whether
arising by law or by contract; (h) leases or subleases and licenses or
sublicenses granted in the ordinary course of Borrower's business; and (i)
other Liens, in addition to Liens permitted by clauses (a) through (h),
securing aggregate Debt not exceeding $500,000 at any time outstanding. Each
of the encumbrances described in clauses (a) through (i), shall be referred to
as a "Permitted Lien."
e. Exclusive Negative Pledge. Borrower shall not enter
into or allow to exist any agreement with any other party that in any way
limits Borrower's ability to grant or allow to exist security interests or
liens in or on any of Borrower's assets.
f. Limitations on Loans. Borrower shall not make or allow
to exist any loans or advances, of any nature whatsoever, to any Person, or
guaranty or allow to exist any guaranty of the indebtedness of any Person,
except (i) advances in the ordinary course of business to vendors, suppliers,
and contractors; (ii) loans and advances to employees aggregating not in
excess of $100,000 at any time; (iii) loans to wholly owned Domestic
Subsidiaries; and (iv ) loans and guarantees to Foreign Subsidiaries in
amounts not to exceed $5,000,000.
g. Investments. Borrower shall not make or allow to exist any
Investments without Lenders' prior written consent, except (i) short term
obligations of, or fully guaranteed by, the United States of America, (ii)
commercial paper rated A-2 or better by Standard Poor's Rating Services or P-2
or better by Xxxxx'x Investor Services, (iii) demand deposit accounts
maintained in the ordinary course of business, (iv) certificates of deposit
issued by and time deposits with domestic commercial banks having capital and
surplus in excess of $100,000,000.00, (v) Investments permitted under a
written investment policy of Borrower approved by its Board of Directors and
by Lender in writing, (vi) Investments pursuant to or arising under currency
agreements or interest rate hedging agreements entered into in the ordinary
course of business for non-speculative purposes, (vii) Investments by Borrower
in any wholly-owned Subsidiary in an amount not to exceed Two Million Dollars
($2,000,000) in any fiscal year, (viii) Investments permitted under Section
6.8 hereof, and (ix) other Investments aggregating not in excess of ten
percent (10%) of Borrower's shareholder's equity for the 12 month period
ending on the last day of the most recently ended fiscal quarter at any time.
6.8 Mergers, Consolidations, Sales
Borrower shall not be a party to any merger or consolidation, or purchase
or otherwise acquire all or substantially all of the assets or any stock of
any class of, or any partnership or joint venture interest in, any other
Person, or, except in the ordinary course of its business, sell, transfer,
convey or lease all or any substantial part of its assets, or sell or assign
with or without recourse any receivables, except as follows: (i) Borrower may
merge or consolidate with, acquire stock of, or acquire a substantial part of
the assets of an entity or entities engaged in business of a type in which
Borrower is currently engaged if the amount paid by Borrower does not exceed
$2,000,000 in any single transaction (except that, with the prior written
consent of Lender, the amount paid by Borrower in such a transaction may
exceed $2,000,000) , and (ii) any wholly-owned Subsidiary may merge into
Borrower.
6.9 Insurance
Borrower shall maintain insurance with financially sound and reputable
insurance companies or associations reasonably satisfactory to Lender in such
amounts and covering such risks as are usually carried by companies engaged in
the same or a similar business and similarly situated, which insurance may
provide for reasonable deductibility from coverage thereof, shall name Lender
as a loss payee (in the case of casualty insurance), shall name Lender as an
additional insured (in the case of liability insurance), shall provide for a
minimum ten days written cancellation notice to Lender, and shall include
insurance on the Borrower's equipment and the inventory against loss, damage,
theft, and such other risks as Lender may reasonably request. In addition to
providing Lender with certificates of insurance as a condition to the initial
Loan hereunder, Borrower shall provide Lender with certificates of insurance
upon all amendments to and renewals of any such insurance within thirty (30)
days of the issuance thereof. During the existence of an Event of Default,
insurance proceeds may be applied by Lender toward payment of any of the
Obligations in such order of application as Lender may elect.
6.10 Inspection and Appraisal
Borrower shall, at least one time per year (and at any reasonable time if
an Event of Default has occurred and is continuing) permit Lender or any
representative of Lender to examine and make copies of and abstracts from the
records and books of account of, and visit and inspect the properties and
assets of, Borrower, and to discuss the affairs, finances, and accounts of
Borrower with any of Borrower's executive officers and with Borrower's
independent accountants. At any time, if an Event of Default has occurred and
is continuing, Lender may have an appraisal of all assets of Borrower done at
Borrower's expense.
6.11 Operation of Business
Borrower shall maintain all licenses, permits, franchises, patents,
copyrights, trademarks, and trade names, or rights thereto, necessary (or, in
Borrower's reasonable judgment, advisable) to conduct its business and
Borrower shall not knowingly violate any valid rights of others with respect
to any of the foregoing, except where the failure to do so could not
reasonably be expected to result in a Material Adverse Effect. Borrower shall
continue to engage in a business of the same general type as now conducted and
businesses reasonably related thereto.
6.12 Maintenance of Records and Properties
Borrower shall keep adequate records and books of accounts in which
entries will be made in a manner sufficient to prepare financial statements in
accordance with GAAP consistently applied, reflecting all financial
transactions of Borrower. Borrower shall maintain, keep and preserve all of
its properties (tangible and intangible) necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, except where the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
6.13 Notice of Default, Litigation
Borrower shall promptly notify Lender in writing of all actions, suits or
proceedings filed or threatened in writing against or affecting Borrower in
any court or before any governmental commission, board, or authority (or any
material adverse development which occurs in any such action, suit or
proceeding) which could reasonably be expected to have a Material Adverse
Effect. Borrower shall promptly notify Lender in writing of the occurrence of
an Event of Default or an Unmatured Event of Default.
6.14 Maintenance of Existence, etc.
Borrower shall maintain and preserve (a) its existence and good standing
in the jurisdiction of its organization, and (b) its qualification and good
standing in each jurisdiction where the nature of its business makes such
qualification necessary except, in each case, where the failure to do so would
not reasonably be expected to result in a Material Adverse Effect.
6.15 Additional Borrowers
Upon the creation or acquisition of any Domestic Subsidiary, or upon
BOCCC, Inc. or DO Group Holding, Inc. (which are existing Domestic
Subsidiaries) acquiring assets, Borrower shall:
a. Require such Domestic Subsidiary to execute an Assumption
Agreement in the form of Exhibit "D."
b. Require such Domestic Subsidiary to take all other steps and
provide any other documents reasonably requested by Lender, including, but not
limited to, Organizational Documents, certificates of insurance, financial
statements and corporate resolutions.
7. Default
7.1 Events of Default
Time is of the essence of this Loan Agreement. The occurrence of any of
the following events shall constitute a default under this Loan Agreement and
under the Loan Documents and shall be termed an "Event of Default":
a. Default in the payment of the principal of or interest on any
Loan or any other amount payable by Borrower hereunder or under the Loan
Documents continuing five (5) days after the date due.
b. Any representation, warranty, or financial statement made by
or on behalf of Borrower in any of the Loan Documents, or any document
contemplated by the Loan Documents, shall have been materially false or
materially misleading when made.
c. Failure by Borrower to comply with or to perform any
provision of this Loan Agreement or any of the Loan Documents that is not
specifically listed herein as an Event of Default, with such failure
continuing unremedied or a period of thirty (30) days after notice of such
failure is given to Borrower by Lender.
d. Any default shall occur under the terms applicable to any
Debt of Borrower in excess of $1,000,000 and such default shall (a) consist
of the failure to pay such Debt when due (subject to any applicable grace
period), whether by acceleration or otherwise, or (b) accelerate the maturity
of such Debt or permit the holder or holders thereof, or any trustee or agent
for such holder or holders, to cause such Debt to become due and payable prior
to its expressed maturity.
e. Borrower (i) ceases or fails to be solvent, or generally
fails to pay, or admits in writing its inability to pay, its debts as they
become due; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing.
f. (i) Any involuntary Insolvency Proceeding is commenced or
filed against Borrower, or any writ, judgment, warrant of attachment, warrant
of execution or similar process is issued or levied against a substantial part
of Borrower's properties, and such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, warrant of execution
or similar process shall not be released, vacated, or fully bonded within
thirty (30) days after commencement, filing or levy; (ii) Borrower admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) Borrower acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor) or other similar Person for itself or a substantial
portion of its property or business.
g. One or more non-interlocutory judgments, non-interlocutory
orders, decrees or arbitration awards is entered against Borrower involving in
the aggregate a liability in excess of $1,000,000 (to the extent not covered
by independent third-party insurance as to which the insurer does not dispute
coverage), as to any single or related series of transactions, incidents or
conditions, and the same shall remain unvacated and unstayed pending appeal
for a period of thirty (30) days after the entry thereof.
h. Any non-monetary judgment, order or decree is entered against
Borrower which has or could reasonably be expected to have a Material Adverse
Effect, and there shall be any period of thirty (30) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
i. The Loan Documents shall cease to be in full force and
effect; or Borrower or any Person by, through or on behalf of Borrower, shall
contest the validity or enforceability of any Loan Document.
j. A Change of Control occurs.
7.2 No Waiver of Event of Default
No course of dealing or delay or failure to assert any Event of Default
or Unmatured Event of Default shall constitute a waiver of that Event of
Default or of any prior or subsequent Event of Default or Unmatured Event of
Default.
8. Remedies
8.1 Remedies upon Event of Default
If any Event of Default occurs and is continuing, Lender may do any or
all of the following:
a. declare the Commitment of Lender to make Loans to be
terminated, whereupon such Commitment shall be terminated;
b. declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by Borrower; and
c. exercise all rights and remedies available to it under the
Loan Documents or applicable law; provided, however, that upon the occurrence
and during the continuance of any Event of Default specified in subsection 7.1
(f) or (g), the obligation of Lender to make Loans shall automatically
terminate and the unpaid principal amount of all outstanding Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of Lender.
8.2 Rights and Remedies Cumulative
The rights and remedies herein conferred are cumulative and not exclusive
of any other rights or remedies and shall be in addition to every other right,
power, and remedy that Lender may have, whether specifically granted herein or
hereafter existing at law, in equity, or by statute. Any and all such rights
and remedies may be exercised from time to time and as often and in such order
as Lender may deem expedient.
8.3 No Waiver of Rights
No delay or omission in the exercise or pursuance by Lender of any right,
power, or remedy shall impair any such right, power, or remedy or shall be
construed to be a waiver thereof.
8.4 Offset
In addition to and not in limitation of all other rights and remedies
(including other rights of offset) that Lender may have under applicable law,
Lender shall, upon the occurrence and continuance of any Event of Default,
have the right to appropriate and apply to the payment of the Note and all
other liabilities of Borrower under the Loan Documents (whether or not then
due), in such order of application as Lender may elect, any and all balances,
credits, deposits, accounts or monies of Borrower then or thereafter with
Lender. To secure the payment of the Obligations, Borrower hereby grants to
Lender a continuing lien on and security interest in such balances, credits,
deposits, accounts and monies.
9. General Provisions
9.1 Governing Agreement
In the event of conflict or inconsistency between this Loan Agreement and
the other Loan Documents, the terms, provisions and intent of this Loan
Agreement shall govern.
9.2 Borrower's Obligations Cumulative
Every obligation, covenant, condition, provision, warranty, agreement,
liability, and undertaking of Borrower contained in the Loan Documents shall
be deemed cumulative and not in derogation or substitution of any of the other
obligations, covenants, conditions, provisions, warranties, agreements,
liabilities, or undertakings of Borrower contained herein or therein.
9.3 Joint and Several Liability
The entities included in the definition of "Borrower" shall each be
jointly and severally liable for all obligations and liabilities arising under
the Loan Documents.
9.4 Payment of Expenses and Attorney's Fees
Borrower shall pay all reasonable expenses of Lender relating to the
negotiation, drafting of documents, documentation of the Loan, and
administration and supervision of the Loan, including, without limitation,
title insurance, recording fees, filing fees, and reasonable attorneys fees
and legal expenses, whether incurred in making the Loan, in future amendments
or modifications to or restatements of the Loan Documents, or in ongoing
administration and supervision of the Loan.
Upon occurrence and during the continuance of an Event of Default,
Borrower agrees to pay all costs, and expenses, including reasonable attorney
fees and legal expenses, incurred by Lender in enforcing, or exercising any
remedies under, the Loan Documents, and any other rights and remedies.
Borrower agrees to pay all expenses, including reasonable attorney fees
and legal expenses, incurred by Lender in any Insolvency Proceeding of any
type involving Borrower or the Loan Documents, including, without limitation,
expenses incurred in modifying or lifting the automatic stay, determining
adequate protection, use of cash collateral or relating to any plan of
reorganization.
9.5 Right to Perform for Borrower
During the existence of an Event of Default Lender may, in its sole
discretion and without any duty to do so, perform any other obligation of
Borrower under this Loan Agreement.
9.6 Assignability
Borrower may not assign or transfer any of the Loan Documents without
Lender's prior written consent and any such purported assignment or transfer
is void.
Lender may assign or transfer any of the Loan Documents with (thirty) 30
days' prior written notice to Borrower. Funding of this Loan may be provided
by an affiliate of Lender.
9.7 Third Party Beneficiaries
The Loan Documents are made for the sole and exclusive benefit of
Borrower and Lender and are not intended to benefit any other third party. No
third party may claim any right or benefit or seek to enforce any term or
provision of the Loan Documents.
9.8 Governing Law
The Loan Documents shall be governed by and construed in accordance with
the internal laws of the State of Utah, except to the extent that any such
document expressly provides otherwise.
9.9 Severability
The illegality or unenforceability of any provision of this Loan
Agreement or any instrument or agreement required hereunder shall not in any
way affect or impair the legality or enforceability of the remaining
provisions of this Loan Agreement or such instrument or agreement.
9.10 Interpretation of Loan Agreement
The article and section headings in this Loan Agreement are inserted for
convenience only and shall not be considered part of the Loan Agreement nor be
used in its interpretation.
All references in this Loan Agreement to the singular shall be deemed to
include the plural when the context so requires, and vice versa. References
in the collective or conjunctive shall also include the disjunctive unless the
context otherwise clearly requires a different interpretation.
9.11 Survival and Binding Effect of Representations, Warranties, and
Covenants
All agreements, representations, warranties, and covenants made herein by
Borrower shall survive the execution and delivery of this Loan Agreement and
shall continue in effect so long as any obligation (other than inchoate
indemnity obligations) to Lender contemplated by this Loan Agreement is
outstanding and unpaid, notwithstanding any termination of this Loan
Agreement. All agreements, representations, warranties, and covenants made
herein by Borrower in this Loan Agreement shall survive any Insolvency
Proceeding involving Borrower. All agreements, representations, warranties,
and covenants in this Loan Agreement shall bind the party making the same, its
successors and, in Lender's case, assigns, and all rights and remedies in this
Loan Agreement shall inure to the benefit of and be enforceable by each party
for whom made, their respective successors and, in Lender's case, assigns.
9.12 Indemnification
Borrower shall indemnify Lender for any and all claims and liabilities,
and for damages which may be awarded or incurred by Lender, and for all
reasonable attorney fees, legal expenses, and other out-of-pocket expenses
incurred in defending such claims, arising from or related in any manner to
the negotiation, execution, or performance by Lender of any of the Loan
Documents, but excluding any such claims based upon breach or default by
Lender or gross negligence or willful misconduct of Lender.
Lender shall have the sole and complete control of the defense of any
such claims. Lender is hereby authorized to settle or otherwise compromise
any such claims as Lender in good faith determines shall be in its best
interests.
9.13 Interest on Expenses and Indemnification, Order of Application
All expenses, out-of-pocket costs, attorneys fees and legal expenses,
amounts advanced in performance of obligations of Borrower, and
indemnification amounts owing by Borrower to Lender under or pursuant to this
Loan Agreement or the Note shall be due and payable upon demand. If not paid
within (ten) 10 days of demand, all such obligations shall bear interest at
the default rate provided in the Note from the date of disbursement until paid
to Lender, both before and after judgment. Lender is authorized to disburse
funds under the Note for payment of all such obligations.
All payments and recoveries shall be applied to payment of the foregoing
obligations, the Note, and all other amounts owing to Lender by Borrower in
such order and priority as determined by Lender. Unless provided otherwise in
the Note, payments on the Note shall be applied first to accrued interest and
the remainder, if any, to principal.
9.14 Limitation of Consequential Damages
Lender and its officers, directors, employees, representatives, agents,
and attorneys, shall not be liable to Borrower for consequential damages
arising from or relating to any breach of contract, tort, or other wrong in
connection with the negotiation, documentation, administration or collection
of the Loans.
9.15 Waiver and Release of Claims
Borrower (i) represents that it has no defenses to or setoffs against any
indebtedness or other obligations owing to Lender or its affiliates (the
"Liabilities"), nor claims against Lender or its affiliates for any matter
whatsoever, related or unrelated to the Liabilities, and (ii) releases Lender
and its affiliates from all claims, causes of action, and costs, in law or
equity, existing as of the date of this Loan Agreement, which Borrower has or
may have by reason of any matter of any conceivable kind or character
whatsoever, related or unrelated to the Liabilities, including the subject
matter of this Loan Agreement. This provision shall not apply to claims for
performance of express contractual obligations owing to Borrower by Lender or
its affiliates.
9.16 Revival Clause
If the incurring of any debt by Borrower or the payment of any money or
transfer of property to Lender by or on behalf of Borrower should for any
reason subsequently be determined to be "voidable" or "avoidable" in whole or
in part within the meaning of any state or federal law (collectively "voidable
transfers"), including, without limitation, fraudulent conveyances or
preferential transfers under the United States Bankruptcy Code or any other
federal or state law, and Lender is required to repay or restore any voidable
transfers or the amount or any portion thereof, or upon the advice of Lender's
counsel is advised to do so, then, as to any such amount or property repaid or
restored, including all reasonable costs, expenses, and attorneys fees of
Lender related thereto, the liability of Borrower shall automatically be
revived, reinstated and restored and shall exist as though the voidable
transfers had never been made.
9.17 Arbitration
ARBITRATION DISCLOSURES:
1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO
ONLY VERY LIMITED REVIEW BY A COURT.
2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.
4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR TO SEEK MODIFICATION OF
ARBITRATORS' RULINGS IS VERY LIMITED.
5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
6. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR
THE AMERICAN ARBITRATION ASSOCIATION.
a. Any claim or controversy ("Dispute") between or among the
parties and their employees, agents, affiliates, and assigns, including, but
not limited to, Disputes arising out of or relating to the Loan, the Loan
Documents, this Section 9.17 Arbitration, this arbitration provision
("arbitration clause"), or any related agreements or instruments relating
hereto or delivered in connection herewith ("Related Agreements"), and
including, but not limited to, a Dispute based on or arising from an alleged
tort, shall at the request of any party be resolved by binding arbitration in
accordance with the applicable arbitration rules of the American Arbitration
Association (the "Administrator"). The provisions of this arbitration clause
shall survive any termination, amendment, or expiration of this Loan Agreement
or Related Agreements. The provisions of this arbitration clause shall
supersede any prior arbitration agreement between or among the parties.
b. The arbitration proceedings shall be conducted in a city
mutually agreed by the parties. Absent such an agreement, arbitration will be
conducted in Salt Lake City, Utah or such other place as may be determined by
the Administrator. The Administrator and the arbitrator(s) shall have the
authority to the extent practicable to take any action to require the
arbitration proceeding to be completed and the arbitrator(s)' award issued
within one-hundred-fifty (150) days of the filing of the Dispute with the
Administrator. The arbitrator(s) shall have the authority to impose sanctions
on any party that fails to comply with time periods imposed by the
Administrator or the arbitrator(s), including the sanction of summarily
dismissing any Dispute or defense with prejudice. The arbitrator(s) shall
have the authority to resolve any Dispute regarding the terms of this Loan
Agreement, this arbitration clause, or Related Agreements, including any claim
or controversy regarding the arbitrability of any Dispute. All limitations
periods applicable to any Dispute or defense, whether by statute or agreement,
shall apply to any arbitration proceeding hereunder and the arbitrator(s)
shall have the authority to decide whether any Dispute or defense is barred by
a limitations period and, if so, to summarily enter an award dismissing any
Dispute or defense on that basis. The doctrines of compulsory counterclaim,
res judicata, and collateral estoppel shall apply to any arbitration
proceeding hereunder so that a party must state as a counterclaim in the
arbitration proceeding any claim or controversy which arises out of the
transaction or occurrence that is the subject matter of the Dispute. The
arbitrator(s) may in the arbitrator(s)' discretion and at the request of any
party: (i) consolidate in a single arbitration proceeding any other claim
arising out of the same transaction involving another party that is
substantially related to the Dispute where that other party to that
transaction that is bound by an arbitration clause with Lender, such as
borrowers, guarantors, sureties, and owners of collateral and (ii) consolidate
or administer multiple arbitration claims or controversies as a class action
in accordance with the provisions of Rule 23 of the Federal Rules of Civil
Procedure.
c. The arbitrator(s) shall be selected in accordance with the
rules of the Administrator from panels maintained by the Administrator. A
single arbitrator shall have expertise in the subject matter of the Dispute.
Where three arbitrators conduct an arbitration proceeding, the Dispute shall
be decided by a majority vote of the three arbitrators, at least one of whom
must have expertise in the subject matter of the Dispute and at least one of
whom must be a practicing attorney. The arbitrator(s) shall award to the
prevailing party recovery of all costs and fees (including attorneys' fees and
costs, arbitration administration fees and costs, and arbitrator(s)' fees).
The arbitrator(s), either during the pendency of the arbitration proceeding or
as part of the arbitration award, also may grant provisional or ancillary
remedies including but not limited to an award of injunctive relief,
foreclosure, sequestration, attachment, replevin, garnishment, or the
appointment of a receiver.
d. Judgment upon an arbitration award may be entered in any
court having jurisdiction, subject to the following limitation: the
arbitration award is binding upon the parties only if the amount does not
exceed four million dollars ($4,000,000.00); if the award exceeds that limit,
any party may demand the right to a court trial. Such a demand must be filed
with the Administrator within thirty (30) days following the date of the
arbitration award; if such a demand is not made within that time period, the
amount of the arbitration award shall be binding. The computation of the
total amount of an arbitration award shall include amounts awarded for
attorneys' fees and costs, arbitration administration fees and costs, and
arbitrator(s)' fees.
e. No provision of this arbitration clause, nor the exercise of
any rights hereunder, shall limit the right of any party to: (i) judicially or
non-judicially foreclose against any real or personal property collateral or
other security; (ii) exercise self-help remedies, including but not limited to
repossession and setoff rights; or (iii) obtain from a court having
jurisdiction thereover any provisional or ancillary remedies including but not
limited to injunctive relief, foreclosure, sequestration, attachment,
replevin, garnishment, or the appointment of a receiver. Such rights can be
exercised at any time, before or after initiation of an arbitration
proceeding, except to the extent such action is contrary to the arbitration
award. The exercise of such rights shall not constitute a waiver of the right
to submit any Dispute to arbitration, and any claim or controversy related to
the exercise of such rights shall be a Dispute to be resolved under the
provisions of this arbitration clause. Any party may initiate arbitration
with the Administrator. If any party desires to arbitrate a Dispute asserted
against such party in a complaint, counterclaim, cross-claim, or third-party
complaint thereto, or in an answer or other reply to any such pleading, such
party must make an appropriate motion to the trial court seeking to compel
arbitration, which motion must be filed with the court within forty-five days
(45) days of service of the pleading, or amendment thereto, setting forth such
Dispute. If arbitration is compelled after commencement of litigation of a
Dispute, the party obtaining an order compelling arbitration shall commence
arbitration and pay the Administrator's filing fees and costs within
forty-five (45) days of entry of such order.
f. Notwithstanding the applicability of any other law to this
Loan Agreement, the arbitration clause, or Related Agreements between or among
the parties, the Federal Arbitration Act, 9 U.S.C. Section 1 et. seq., shall
apply to the construction and interpretation of this arbitration clause. If any
provision of this arbitration clause should be determined to be unenforceable,
all other provisions of this arbitration clause shall remain in full force and
effect.
9.18 Consent to Utah Jurisdiction and Exclusive Jurisdiction of Utah
Courts
Borrower acknowledges that by execution and delivery of the Loan
Documents Borrower has transacted business in the State of Utah and Borrower
voluntarily submits to, consents to, and waives any defense to the
jurisdiction of courts located in the State of Utah as to all matters relating
to or arising from the Loan Documents and/or the transactions contemplated
thereby. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT AS
PROVIDED IN THE ARBITRATION PROVISIONS ABOVE, THE STATE AND FEDERAL COURTS
LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE JURISDICTION OF ANY
AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER OR RELATING TO THE
LOAN DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY. NO LAWSUIT,
PROCEEDING, OR ANY OTHER ACTION RELATING TO OR ARISING UNDER THE LOAN
DOCUMENTS AND/OR THE TRANSACTIONS CONTEMPLATED THEREBY MAY BE COMMENCED OR
PROSECUTED IN ANY OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.
9.19 Notices
All notices or demands by any party to this Loan Agreement shall, except
as otherwise provided herein, be in writing and shall be deemed to have been
sufficiently given when personally delivered, deposited in the United States
mail, by registered or certified mail, or deposited with a reputable overnight
mail carrier which provides delivery of such mail to be traced, addressed as
follows:
Mailing addresses:
Lender:
Zions First National Bank
Commercial Banking Division
Mail Code UTKC150321
00 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxx Xxxxxxxxxxx
With a copy to:
Xxxxxxxxx Xxxxxxx & XxXxxxxxxx
Gateway Tower East Suite 900
00 Xxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Borrower:
MITY Enterprises, Inc.
0000 Xxxx 000 Xxxxx
Xxxx, XX 00000
Attention: Xxxx Xxxxxxxx, CFO
9.20 Counterparts
This Loan Agreement may be executed in any number of separate
counterparts, each of which, when so executed, shall be deemed an original,
and all of which taken together shall constitute but one and the same
instrument.
9.21 Disclosure of Financial and Other Information
Borrower hereby consents to Lender disclosing to any other lender who may
participate in the Loan any and all information, knowledge, reports, and
records, including, without limitation, financial statements, relating in any
manner whatsoever to the Loan and Borrower.
9.22 Integrated Agreement and Subsequent Amendment
The Loan Documents constitute the entire agreement between Lender and
Borrower, and may not be altered or amended except by written agreement signed
by Lender and Borrower. PURSUANT TO UTAH CODE SECTION 25-5-4, BORROWER IS
NOTIFIED THAT THESE AGREEMENTS ARE A FINAL EXPRESSION OF THE AGREEMENT BETWEEN
LENDER AND BORROWER AND THESE AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE
OF ANY ALLEGED ORAL AGREEMENT.
All prior and contemporaneous agreements, arrangements and
understandings between the parties hereto as to the subject matter hereof are,
except as otherwise expressly provided herein, rescinded.
9.23 Representations and Warranties.
As of the date of this Loan Agreement, Borrower affirms and again makes
the representations and warranties set forth in Section 5 Representations and
Warranties of this Loan Agreement (except to the extent such representations
and warranties are made as of a specific date).
Borrower represents and warrants that the execution, delivery, and
performance by Borrower of this Loan Agreement, and all agreements, documents,
obligations, and transactions herein contemplated, have been duly authorized
by all necessary corporate action on the part of Borrower and are not
inconsistent with Borrower's Articles of Incorporation, By-Laws, or any
resolution of the Board of Directors of Borrower, do not and will not
contravene any provision of, or constitute a default under, any indenture,
mortgage, contract, or other instrument to which Borrower is a party or by
which Borrower is bound, and that upon execution and delivery hereof, this
Loan Agreement will constitute a legal, valid, and binding agreement and
obligation of Borrower, enforceable in accordance with its terms.
9.24 Waiver and Release.
As an express condition of and part of the consideration for this Loan
Agreement, Borrower waives, releases and discharges Lender and all of its
affiliated entities, as well as their respective, directors, officers, agents,
employees and attorneys, from any and all claims, demands, damages, losses,
liabilities, causes of action, costs, expenses and attorney fees, of whatever
kind or nature, related, directly or indirectly, or wholly unrelated to the
Loans, whether known or unknown, whether suspected or unsuspected, and which
they, or any of them, now own or hold, or have owned or held at any time prior
to the execution of this Loan Agreement, except for claims based solely on the
express, written, contractual obligations of Lender. Borrower acknowledges
that Lender has relied on this release as a condition to entering into this
Loan Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of August 21, 2006.
Lender:
ZIONS FIRST NATIONAL BANK
By: /s/ Xxx Xxxxxxxxxxx
----------------------------------
Name: Xxx Xxxxxxxxxxx
Title: Vice President
Borrower:
MITY ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
Xxxxx Enterprises USA, Inc.
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
Title: Secretary
Mity-Lite, Inc.
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
EXHIBIT "A"
Promissory Note
(Revolving Line of Credit)
August 21, 2006
Borrower: MITY Enterprises, Inc. and its Domestic Subsidiaries
Lender: Zions First National Bank
Amount: $5,000,000.00
Maturity: September 1, 2008 (the "Maturity Date")
For value received, Borrower promises to pay to the order of Lender at
Salt Lake City, Utah, the sum of five million dollars ($5,000,000.00) or such
other principal balance as may be outstanding hereunder in lawful money of the
United States with interest thereon calculated and payable as provided herein.
Definitions
Terms used in the singular shall have the same meaning when used in the
plural and vice versa. As used in this Promissory Note, the term:
"Banking Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in the State of Utah are authorized or
required to close and, when used in reference to an Interest Period, a day on
which dealings in dollar deposits are also carried on in the London Interbank
market and banks are open for business in London.
"Debt Ratio" shall have the meaning set forth in the Loan Agreement.
"Dollars" and the sign "$" mean lawful money of the United States.
"Event of Default" shall have the meaning set forth in the Loan Agreement
"Interest Period" means, with respect to any advance or balance for which
interest is based on the LIBOR Rate, the period commencing on the date such
advance is made or, as to an existing balance, the date selected by Borrower
and ending, as Borrower may select, on the numerically corresponding day in
the first, second, third or sixth calendar month, or on the annual anniversary
date for the number of years selected by Borrower, not to exceed two (2) years
thereafter, except that each such Interest Period that commences on the last
Banking Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Banking Business Day of the appropriate subsequent
calendar month; provided that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(i) No Interest Period may extend beyond the termination of the Loan
Agreement;
(ii) No Interest Period may extend beyond the aforesaid Maturity Date
or such later date to which it is extended; and
(iii) If an Interest Period would end on a day that is not a Banking
Business Day, such Interest Period shall be extended to the next Banking
Business Day unless such Banking Business Day would fall in the next calendar
month, in which event such Interest Period shall end on the immediately
preceding Banking Business Day.
"LIBOR Rate" applicable to any Interest Period means the rates per annum
quoted by Lender as Lender's LIBOR rate based upon quotes from the London
Interbank Offered Rate or Eurodollar rate, as applicable, from the British
Bankers Associates Interest Settlement Rates, as quoted for U.S. Dollars by
Bloomberg or other comparable pricing services selected by Lender. This
definition of Lender's LIBOR rate is to be strictly interpreted and is not
intended to serve any purpose other than providing an index to determine the
interest rate used in this Promissory Note. Lender's LIBOR rate may not
necessarily be the same as the quoted offer side in the Eurodollar time
deposit market by any particular institution or service applicable to any
interest period. It is not the lowest rate at which Lender may make loans to
any of its customers, either now or in the future.
"Loan Agreement" means this Loan Agreement, together with any exhibits,
amendments, addenda, and modifications.
"Prime Rate" means an index which is determined daily by the published
commercial loan variable rate index announced by any two of the following
banks: X. X. Xxxxxx Xxxxx & Co., Xxxxx Fargo Bank N. A., and Bank of America,
N.A. In the event no two of the above banks have the same published rate, the
bank having the median rate will establish the Prime Rate. If, for any reason
beyond the control of Lender, any of the aforementioned banks becomes
unacceptable as a reference for the purpose of determining the Prime Rate used
herein, Lender may, five days after posting notice in Lender's bank offices,
substitute another comparable bank for the one determined unacceptable. As
used in this paragraph, "comparable bank" shall mean one of the ten largest
commercial banks headquartered in the United States of America. This
definition of Prime Rate is to be strictly interpreted and is not intended to
serve any purpose other than providing an index to determine the variable
interest rate used herein. It is not the lowest rate at which Lender may make
loans to any of its customers, either now or in the future.
Revolving Line of Credit
This Note shall be a revolving line of credit under which Borrower may
repeatedly draw and repay funds, so long as no Event of Default has occurred
and is continuing.
Principal and interest shall be payable as follows. Accrued interest
based on the Prime Rate shall be paid on the first day of the month following
the date hereof, and on the same day of each month thereafter through the
Maturity Date. As to amounts for which Borrower has selected the LIBOR Rate,
for Interest Periods of two months or less, accrued interest shall be paid at
maturity, and for Interest Periods greater than two months, accrued interest
shall be paid quarterly on the same day of month that the applicable Interest
Period begins. All principal and unpaid interest shall be paid in full on the
Maturity Date. Unless Lender specifies otherwise, all principal and interest
payments shall be made by automatic debit to Borrower's account, as set forth
in the Loan Agreement.
Interest shall accrue from the date of disbursement of the principal
amount or portion thereof until paid, both before and after judgment, in
accordance with the terms set forth herein.
Prime Rate or LIBOR Rate Election
Borrower shall specify whether interest will be based on the Prime Rate
or the LIBOR Rate and, if the LIBOR Rate is selected, the applicable Interest
Period. LIBOR Rate may only be selected for a minimum amount of
$1,000,000.00, and may not be selected so long as an Event of Default has
occurred and is continuing. If no specification is made by Borrower, interest
will be based on the Prime Rate. If Borrower has selected Prime Rate, it may
switch to the LIBOR Rate at any time. If Borrower has selected the LIBOR
Rate, it may switch to Prime Rate only on the maturity of the applicable
Interest Period.
Interest Based on Prime Rate
Interest based on the Prime Rate shall be at a variable rate, shall be
adjusted as of the date of any change in the Prime Rate, and shall be computed
on the basis of an actual three hundred sixty (360) day year. Interest based
on the Prime Rate shall accrue at rates equal to the Prime Rate plus the
Applicable Prime Margin Percentage. Such margins shall be adjusted the first
day of the month following the later of when quarterly financial statements
are due or are actually received by Lender.
Interest Based on LIBOR Rate
Interest based on the LIBOR Rate shall be calculated as follows:
1. Interest shall be computed on the basis of a three hundred sixty
(360) day year. The interest rate shall be equal to the LIBOR Rate as of the
first day of the applicable Interest Period plus the Applicable LIBOR Margin
Percentage. Such margins shall be adjusted the first day of the month
following the later of when quarterly financial statements are due or are
actually received by Lender.
2. Notwithstanding any other provision in this Promissory Note, if
the adoption of any applicable law, rule, or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank, or comparable agency, shall make it unlawful or
impossible for Lender to maintain balances based on the LIBOR Rate, then upon
notice to Borrower by Lender the outstanding principal amount of the balances
based on the LIBOR Rate, together with interest accrued thereon, shall be
repaid immediately upon demand of Lender if such change or compliance with
such request, in the judgment of Lender, requires immediate repayment or, if
such repayment is not required, at the election of Borrower shall be converted
to a balance based on Prime Rate or repaid at the expiration of the last
Interest Period to expire before the effective date of any such change or
request.
3. Notwithstanding anything to the contrary herein, if Lender
determines (which determination shall be conclusive) that (a) quotations of
interest rates are not being provided for purposes of determining the LIBOR
Rate, or (b) the LIBOR Rate does not accurately cover the cost to Lender of
making or maintaining advances based on the LIBOR Rate, then Lender may give
notice thereof to Borrower, whereupon until Lender notifies Borrower that the
circumstances giving rise to such suspension no longer exist, then (1) the
right of Borrower to request interest pricing based on the LIBOR Rate shall be
suspended; and (2) Borrower shall repay in full the then outstanding principal
amount based on LIBOR Rate together with accrued interest thereon, on the last
day of the then current Interest Period applicable to such balance, or, at
Borrower' option, convert the outstanding principal balances based on LIBOR
Rate to balances based on Prime Rate on the last day of the then current
Interest Period applicable to such balances.
General
Borrower may prepay all or any portion of all Prime Rate based balances
at any time without penalty. For outstanding balances based on the LIBOR
Rate, any prepayment shall be subject to a prepayment fee if the Original
LIBOR Rate is greater than the Current LIBOR Rate on the prepayment date. The
prepayment fee shall be an amount equal to the total of (i) the remaining
interest payments that would have been payable to Lender if such balance had
not been prepaid, each discounted to present value at the Current Rate, less
(ii) the remaining interest payments that would have been payable to Lender if
such balance had not been prepaid and had been made at the Current Rate, each
discounted to present value at the Current Rate. Current Rate means the LIBOR
Rate in effect on the date the prepayment is made for the Interest Period from
that prepayment date to the date of maturity of the applicable Interest
Period, plus the applicable margin. Any prepayment received by Lender after
2:00 p.m. mountain standard or daylight time (whichever is in effect on the
date the prepayment is received) shall be deemed received on the following
Banking Business Day.
Upon default in payment of any principal or interest when due, whether
due at stated maturity, by acceleration, or otherwise, all outstanding
principal shall bear interest at a default rate from the date when due until
paid, both before and after judgment, which default rate shall be three
percent (3%) per annum above the otherwise applicable rates and upon maturity
of the applicable Interest Periods all balances bearing interest based on the
LIBOR Rate shall be converted to balances bearing interest based on the Prime
Rate.
If, at any time prior to the maturity of this Note, this Note shall have
a zero balance owing, this Note shall not be deemed satisfied or terminated
but shall remain in full force and effect for future draws unless terminated
upon other grounds.
This Note is made in accordance with the Loan Agreement. All
disbursements under this Note shall be made in accordance with the Loan
Agreement.
If any Event of Default occurs and is continuing, time being of the
essence hereof, then the entire unpaid balance, with interest as aforesaid,
shall, at the election of the holder hereof and without notice of such
election, become immediately due and payable in full.
If this Note becomes in default or payment is accelerated, Borrower
agrees to pay to the holder hereof all collection costs, including reasonable
attorney fees and legal expenses, in addition to all other sums due hereunder.
This Note shall be governed by and construed in accordance with the laws
of the State of Utah.
Borrower acknowledges that by execution and delivery of this Note
Borrower has transacted business in the State of Utah and Borrower voluntarily
submits to, consents to, and waives any defense to the jurisdiction of courts
located in the State of Utah as to all matters relating to or arising from
this Note. EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER AND EXCEPT AS
PROVIDED IN THE ARBITRATION PROVISIONS IN THE LOAN AGREEMENT, THE STATE AND
FEDERAL COURTS LOCATED IN THE STATE OF UTAH SHALL HAVE SOLE AND EXCLUSIVE
JURISDICTION OF ANY AND ALL CLAIMS, DISPUTES, AND CONTROVERSIES, ARISING UNDER
OR RELATING TO THIS NOTE. NO LAWSUIT, PROCEEDING, OR ANY OTHER ACTION
RELATING TO OR ARISING UNDER THIS NOTE MAY BE COMMENCED OR PROSECUTED IN ANY
OTHER FORUM EXCEPT AS EXPRESSLY AGREED IN WRITING BY LENDER.
Borrower and all endorsers hereof hereby jointly and severally waive
presentment for payment, demand, protest, notice of protest, notice of protest
and of non-payment and of dishonor, and consent to extensions of time and
waivers without notice and consent to the release of any collateral or any
part thereof with or without substitution.
Borrower:
MITY Enterprises, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
Xxxxx Enterprises USA, Inc..
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxx
Title: Secretary
Mity-Lite, Inc.
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxx
Title: Chief Financial Officer
EXHIBIT "B"
PENDING OR THREATENED LITIGATION
None
EXHIBIT "C"
SUBSIDIARIES OF BORROWER
DOMESTIC SUBSIDIARIES
BOCCC, Inc., a Utah corporation (Not included in Borrower)
Xxxxx Enterprises USA, Inc., a Utah corporation
DO Group Holding, Inc., a Utah corporation (Not included in Borrower)
Mity-Lite, Inc.
FOREIGN SUBSIDIARIES
Xxxxx Enterprises, Inc., a Canadian corporation
EXHIBIT "D"
ASSUMPTION AGREEMENT
This Assumption Agreement (the "Agreement") is entered into by and
between Zions First National Bank ("Lender") and ("New
Borrower"). This Agreement is executed pursuant to an Loan Agreement between
Lender and MITY Enterprises, Inc. and its Domestic Subsidiaries ("Borrower")
dated as of August 21, 2006 (the "Loan Agreement").
For good and valuable consideration, receipt of which is hereby
acknowledged, Lender and New Borrower agree as follows:
1. Definitions. Except as otherwise provided herein, terms defined
in the Loan Agreement shall have the same meanings when used herein.
2. Loan Documents. The terms of the Loan Documents are incorporated
herein. New Borrower assumes all obligations under the Loan Documents, and is
hereby added as a party thereto as part of Borrower for all purposes. New
Borrower makes all representations and warranties made by Borrower under the
Loan Documents unless otherwise specified herein.
3. Loan Agreement. The terms of the Loan Agreement are incorporated
herein. New Borrower assumes all Obligations under the Loan Agreement and the
Note, and is hereby added as a Borrower for all purposes under Loan Agreement
and the Note. New Borrower makes all representations and warranties made by
Borrower under the Loan Agreement unless otherwise specified herein.
4. Representations and Warranties. New Borrower represents and
warrants that New Borrower is a organized under the laws of
and that New Borrower is qualified and in good standing as a
foreign corporation in the State of Utah.
5. Effective Date. The Effective Date, with respect to New Borrower,
means the date of this Agreement.
Dated as of .
Lender:
Zions First National Bank
By:
Name: Xxx Xxxxxxxxxxx
Title: Vice President
New Borrower:
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By:
Name:
Title:
