EXHIBIT 10.12
STAR BANK, N.A.
000 Xxxxxx Xxxxxx
X. X. Xxx 0000
Xxxxxxxxxx, Xxxx 00000-0000
July 1, 1992
Xx. Xxxxxxx X. Xxxxx
President
Dataguard Recovery Services, Inc.
X.X. Xxx 00000
Xxxxxxxxxx, XX 00000-0000
Dear Xx. Xxxxx:
This letter shall set out the terms and conditions under which Star
Bank, N.A. (Hereafter referred to as the "Bank") agrees to
loan Dataguard Recovery Services, Inc. (Hereafter called the "Company")
One Hundred Thousand Dollars ($100,000) under this Revolving Credit
Agreement (the "Agreement"). The purpose of this loan is working
capital.
THE REVOLVING CREDIT
Subject to there being no event of default (or circumstance which
would, with the passage of time become an event of default) the
Bank agrees to make revolving credit loans to the Company (as
described below) from the date of this Agreement through the
earlier of: a) a demand for payment in accordance with the terms of
a revolving promissory note (the "Revolving Note") which will
evidence the Company's obligation, substantially in the form of
Exhibit "A" attached hereto; or b) July 1, 1993 (the "Maturity
Date").
The Revolving Note shall bear interest at 1.0% over the Bank's
prime rate (the "Prime Rate"). The Prime Rate is the rate
announced as such from time to time by the Bank. The Prime Rate is
determined solely by the Bank pursuant to market factors and its
own operating needs, and is not necessarily the Bank's best or most
favorable rate for commercial or other loans. The Prime Rate is
currently 6.5%. The interest rate on the Revolving Note shall be
adjusted on the effective date of any change in the Bank's Prime
Rate. Interest shall accrue in arrears and be payable beginning
October 1, 1992 and quarterly thereafter and on the Maturity Date.
REPRESENTATIONS & WARRANTIES
To induce the Bank to enter into this Agreement and to agree to
make the loans described herein, the Company represents and
warrants that:
(A) Corporate Existence. It is a corporate duly existing under
the laws of the Commonwealth of Kentucky, is qualified to do
business in all states where failure to be so qualified would
have a material adverse effect on the Company, and has all
requisite power and authority to own its property and carry on
its business as now being conducted.
(B) Borrowing Authorization. The execution by the Company and the
delivery and performance of this Agreement, the Note(s), and
other documents connected to the loans described herein have
been authorized by necessary corporate action and will not
violate: 1) any provision of law; 2) the Articles of
Incorporation or By-laws of the Company; or 3) any agreement
binding on the Company.
(C) Financial Statements. Its audited financial statements dated
December 31, 1991 (a copy of which have been previously
furnished to the Bank) have been prepared in conformity with
generally accepted accounting principles consistently applied,
and fairly present the financial condition of the Company and
its operation as of the date of the statements, and since such
date there has been no material adverse change in its
financial condition.
(D) Actions Pending. There is no litigation pending or threatened
against or affecting the Company before any court or agency,
or any contingent liabilities that are not provided for in the
financial statements referred to in subsection (C) Financial
Statements above.
(E) Liens. None of the assets of the Company are subject to any
mortgage, pledge, security interest, line, or other
encumbrance except for those noted in the financial statements
referred to in subsection (C) Financial Statements.
(F) Environmental Matters. All operations and property of the
Company are in full compliance with all federal, state, and
local statutes, rules, and regulations relating to air and
water pollutants and hazardous waste disposal. There is no
judicial or administrative proceeding pending or threatened
against or affecting the Company with respect to such
environmental matters.
(G) Compliance. The Company is in compliance in all material
respects with all statutes, rules, and regulations applicable
to it. No default (or event which with notice or lapse of
time, or both, would constitute a default) exists under any
agreement or instrument for borrowed money to which Company is
a party or pursuant to which any property of Company is
encumbered.
(H) Liabilities. All taxes, assessments, and other liabilities
which are due have been paid in full and in a timely manner,
except for those taxes and assessments which the Company is
contesting in good faith and with respect to which the Company
has taken proper steps to perfect its appeal and which have
not resulted in liens on the company's property which
materially diminishes the value of the property.
COLLATERAL
All obligations of the Company to the Bank under this Agreement and
the Note(s) shall be secured by the following (collectively called
the "Collateral"):
(A) A security interest in the Company's accounts receivable,
inventory, machinery, equipment, furniture, fixtures,
furnishings, and general intangibles, now owned or hereafter
acquired, their proceeds (cash or non-cash) and any insurance
proceeds related thereto, located at either 0000 Xxxxx Xxxx,
Xxxxxxxxxx, XX 00000 or 00000 Xxxx Xxxxxxx Xxxx, Xxxxxxxxxx,
XX 00000, all to be evidenced by the Bank's standard Security
Agreement in the form of Exhibit "B" Attached hereto dated
October 10, 1989 and July 1, 1992.
The Collateral and all documentation with respect thereto shall be
in a form satisfactory to the Bank, and the Company agrees to
execute any an all documents necessary to assure the protection,
perfection, and/or enforcement of the Bank's security interest in
the Collateral.
COVENANTS
In consideration of the Bank's promise to make the loan described
herein, the Company agrees that, from the date of this Agreement
until the Note(s) are paid in full, it shall:
(A) Financial Statement. Furnish the Bank: 1) a copy of the
Company's audited financial statements, prepared in conformity
with generally accepted accounting principles applied on a
basis consistent with the preceding years by independent
certified public accountants acceptable to the Bank within 90
days of the Company's fiscal year end; and 2) a copy of its
unaudited financial statements, similarly prepared, in a form
satisfactory to the Bank within 30 days of the end of each of
its fiscal quarter.
(B) Insurance. Maintain insurance on all real and personal
property with carriers acceptable to the Bank in an amount and
against hazards and liabilities as is common with other
companies in similar situations. The policies shall show the
Bank as "name insured" and "loss payee." The Company shall
provide the Bank with certificates of insurance or other
satisfactory evidence upon request.
(C) Taxes. Pay all taxes, assessments, and other liabilities when
due, except for those which are contested in good faith.
(D) Notice. Give the Bank prompt notice of any: (i) default of
this or any other Agreement or contract under which the
Company is liable; (ii) environmental or labor dispute; (iii)
lawsuit filed naming the Company as a defendant; (iv)
reportable event under ERISA; or (v) material change in the
Company's business prospects or financial condition.
(E) Corporate Existence and Status. Maintain its corporate
existence and remain in good standing under the laws of each
jurisdiction where the Company is duly qualified to conduct
its business.
(F) Bank as Primary Depository. Maintain all corporate accounts,
including all time and demand deposit accounts, certificate of
deposit accounts, and safekeeping accounts, at the Bank.
(G) Maintenance of Property. Maintain Company property in good
condition and repair, and not commit or permit any action that
may impair the value of the property or the Bank's Collateral.
(H) Tangible Capital Base. Not permit its tangible capital base
to be less than $675,000 beginning with the fiscal year ending
December 31, 1992 and for each fiscal year thereafter.
"Tangible Capital Base" shall mean, as of any date, the sum of
the Company's total equity plus debts subordinated to the Bank
minus any intangible assets. All financial terms in this
Agreement shall have the meanings given them under generally
accepted accounting principles.
(I) Indebtedness. Not incur or permit to exist any indebtedness,
except: (i) the borrowings evidenced by this Agreement; (ii)
favorable short-term unsecured trade credit granted in the
ordinary course of business.
(J) Liens. Not create or permit to exist any mortgage, pledge,
security interest, or other encumbrance with respect to any
assets now owned or hereafter acquired, except for (i) liens
created in favor of the Bank hereunder; or (ii) purchase money
interests created in connection with the acquisition of
property acquired after the date of this Agreement which
attaches specifically to the property acquired.
(K) Guaranties. Not guaranty any obligation or indemnify any
other person or enterprise except for the personal liability
from the Company's own officers', directors', or employees'
own actions on behalf of the Company.
(L) Merger and Sale of Assets. Not to be a party to any merger,
consolidation, or reorganization (including the purchase of
all or substantially all of the equity or assets of any other
enterprise). Not, except in the ordinary course of its
business, sell, transfer, or lease any part of its property in
excess of $50,000 in any one-year period.
(M) Waiver. Any variance from these covenants shall be permitted
only with the prior written consent and/or waiver of the bank.
Any such waiver shall not preclude the exercise of any power
or right under this Agreement by the Bank.
CLOSING CONDITIONS
The obligation of the Bank to make the loans described by this
Agreement is subject to the satisfaction of each of the following
conditions:
(A) Resolutions. The Company shall have delivered to the Bank a
copy of the resolutions of the Company's Board of Directors
authorizing the loans described herein and the execution and
delivery of this Agreement, the Note(s), and other documents
the Bank deems necessary for these loans, certified by an
appropriate officer of the company.
(B) Other Documents; Inspection. The Company shall have delivered
to the Bank such other documents as the Bank may request prior
to the date of the initial loan. The Bank or its designated
representative shall have the continuing right to inspect and
review all the Company's records, documents, and assets,
whether or not directly related to the Company's obligations
hereunder.
(C) Default. Before and after giving effect to the loan(s)
described herein, no event of default (as defined below) or
event which would with the passage of time mature into an
event of default shall have occurred and/or be continuing.
(D) Warranties. Before and after giving effect to the loan(s)
described herein, the representations and warranties noted
above shall be true and correct on the date of this Agreement.
(E) Fees and Expenses. The Company agrees to pay the Bank a one-time
fee of ($500.00) plus any out-of-pocket expenses incurred
by the Bank (including reasonable attorneys' fees, legal
expenses, filing fees, etc.) in entering into and closing this
Agreement.
EVENTS OF DEFAULT
Upon the occurrence of any of the following events, the Bank may
declare the Note(s) due and immediately payable, without further
notice or demand and the Bank shall have all rights to realize on
the collateral. To the extent the maximum Amount Available is not
being utilized by the Company, the Bank may upon such declaration
of default terminate any unused balance:
(A) Non-payment of principal or interest prescribed herein when
due or when notice of such non-payment is sent to the Company
by the Bank, or any default, demand, or acceleration under any
Note or related instrument concerning the Collateral; or
(B) Non-payment of principal or interest on any other borrowed
money obligation when due or the holder of such obligation
declares the obligation due prior to its stated maturity
unless the obligation is disputed in good faith; or
(C) Any representation or warranty of the Company in this or any
other loan document is false; or
(D) The Company violates any covenant or condition of this or any
other loan documentation; or
(E) The Company is unable to pay its business debts as they become
due or the Company's consolidated financial statement
indicates an insolvency or deficit net worth; or
(F) The Company applies for the appointment of a trustee or
receiver of any part of the assets of the Company or commences
and proceedings relating to Borrower under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt,
dissolution, or other liquidation law of any jurisdiction; or
(G) Any such application, if filed, or any such proceedings are
commenced against the Company, and the Company indicates its
approval, consent, or acquiescence; or an order is entered
appointing such trustee or receiver, or adjudicating the
Company bankrupt or insolvent, or approving the petition in
any such proceedings, and such order remains in effect for
thirty (30) days; or
(H) A material part of the Company's operations shall cease for a
period of thirty (30) days, other than temporary or seasonal
cessations which are simultaneously experienced by other
companies in the Company's line of business (which, if
continued, would not have a material adverse effect on the
Company's operations or financial conditions); or,
(I) If, in the reasonable opinion of the Bank, there has been a
material adverse change in the financial affairs or operating
condition of the Company or in the value of the Collateral
which, in the reasonable judgment of Bank, materially imperils
the Company's ability to repay or secure its obligations to
the Bank under this Agreement.
LAW/JURISDICTION
This Agreement, the loans, and the Note(s) shall be deemed made in
Ohio, and all the rights and obligations of the parties hereunder
shall in all respects be governed by and construed in accordance
with the laws of the State of Ohio, including all matters of
construction, validity, and performance. Without limitation on the
ability of the Bank to exercise all its rights as to the Collateral
security for any loan or note, or to initiate and prosecute actions
for repayment in any applicable jurisdiction, Bank and Company
agree that any action or proceeding commenced by or on behalf of
the parties relating to this Agreement, the loans, or the Note(s)
shall be commenced and maintained exclusively in courts of
applicable jurisdiction located in Xxxxxxxx County, Ohio.
STAR BANK, N.A.
/s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Assistant Vice President
Accepted this 1st day of July, 1992
Dataguard Recovery Services, Inc.
By /s/Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
President
