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Loan Agreement
Date of Agreement: June 25, 2014
Principal Amount: $700,000.00 Account Number: 18-0000315101
Introduction. This Agreement dated and effective as of June 25, 2014,
is entered into between Scientific Industries, Inc. (the "Borrower")
and Bank of America, N.A. (the "Bank"). The Borrower agrees to the
following terms and conditions:
1. LINE OF CREDIT
1.1 Line of Credit Amount.
(a) During the availability period described below, the Bank will
provide a line of credit to the Borrower (the "Line of Credit"). The
amount of the Line of Credit (the "Commitment") is Seven Hundred
Thousand and 00/100 Dollars ($700,000.00).
(b) This is a revolving line of credit. During the availability
period, the Borrower may repay principal amounts and reborrow them.
(c) The Borrower agrees not to permit the principal balance
outstanding to exceed the Commitment. If the Borrower exceeds
this limit, the Borrower will immediately pay the excess to the
Bank upon the Bank's demand.
1.2 Availability Period. The Line of Credit is available between
the date of this Agreement and November 30, 2015, or such earlier date
as the availability may terminate as provided in this Agreement
(the "Expiration Date").
The availability period for this Line of Credit will be considered
renewed if and only if the Bank has sent to the Borrower a written
notice of renewal for the Line of Credit (the "Renewal Notice"). If
this Line of Credit is renewed, it will continue to be subject to all
the terms and conditions set forth in this Agreement except as
modified by the Renewal Notice. If this Line of Credit is renewed,
the term "Expiration Date" shall mean the date set forth in the Renewal
Notice as the Expiration Date, and all outstanding principal plus
all accrued interest shall be paid on the Expiration Date. The
same process for renewal will apply to any subsequent renewal of this
Line of Credit. A renewal fee may be charged at the Bank's option.
The amount of the renewal fee will be specified in the Renewal Notice.
If this Line of Credit is not renewed, the Bank in its sole discretion
may allow the outstanding balance to be repaid in installments over
a term specified by the Bank at the time. The Borrower specifically
understands that the interest rate applicable to the Line of Credit
may be increased upon term-out and that the new interest rate will
apply to the entire outstanding principal balance due hereunder. A
transaction fee may be charged at the Bank's option. If so,
the amount will be specified in the term-out notice.
1.3 Repayment Terms.
(a) The Borrower will pay interest on August 1, 2014, and then
on the same day of each month thereafter until payment in full of
any principal outstanding under this Agreement.
(b) The Borrower will repay in full any principal, interest or other
charges outstanding under this Agreement no later than the
Expiration Date.
1.4 Prepayments. The Borrower may prepay principal in full or in
part at any time without the payment of a prepayment fee or premium.
The prepayment will be applied to the most remote payment of principal
due under this Agreement.
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1.5 Interest Rate.
(a) The interest rate is a rate per year equal to the LIBOR
Daily Floating Rate plus 3 percentage point(s).
(b) The LIBOR Daily Floating Rate is a fluctuating rate of
interest which can change on each banking day. The rate will be
adjusted on each banking day to equal the London Interbank Offered
Rate (or a comparable or successor rate which is approved by the
Bank) for U.S. Dollar deposits for delivery on the date in question
for a one month term beginning on that date. The Bank will use the
London Interbank Offered Rate as published by Bloomberg (or other
commercially available source providing quotations of such rate
as selected by the Bank from time to time) as determined at
approximately 11 :00 a.rn. London time two (2) London Banking Days
prior to the date in question, as adjusted from time to time in
the Bank's sole discretion for reserve requirements, deposit
insurance assessment rates and other regulatory costs. If such
rate is not available at such time for any reason, then the
rate will be determined by such alternate method as reasonably
selected by the Bank. A "London Banking Day" is a day on which
banks in London are open for business and dealing in offshore
dollars.
2. COLLATERAL
2.1 Personal Property. The personal property listed below
now owned or owned in the future by the parties listed below will
secure Borrower's obligations to the Bank under this Agreement.
The collateral is further defined in security agreement(s)
executed by the owners of the collateral. In addition, all
personal property collateral owned by the Borrower securing this
Agreement shall also secure all other present and future
obligations of the Borrower to the Bank and to any affiliate of
the Bank (excluding any consumer credit covered by the federal
Truth in Lending law, unless the Borrower has otherwise agreed
in writing or received written notice thereof). All personal
property collateral securing any other present or future
obligations of the Borrower to the Bank shall also secure this
Agreement.
(a) Equipment and fixtures owned by the Borrower.
(b) Inventory owned by the Borrower.
(c) Receivables owned by the Borrower.
3. LOAN ADMINISTRATION AND FEES
3.1 Fees.
(a) The Borrower will pay to the Bank the fees set forth
on Schedule A.
3.2 Collection of Payments.
(a) Payments will be made by debit to a deposit account, if
direct debit is provided for in this Agreement or is otherwise
authorized by the Borrower. For payments not made by direct
debit, payments will be made by mail to the address shown on the
Borrower's statement, or by such other method as may be permitted
by the Bank.
(b) Each disbursement by the Bank and each payment by the
Borrower will be evidenced by records kept by the Bank which
will, absent manifest error, be conclusively presumed
to be correct and accurate and constitute an account stated
between the Borrower and the Bank.
3.3 Borrower's Instructions.
(a) Subject to the terms, conditions and procedures stated
elsewhere in this Agreement, the Bank may honor instructions
for advances or repayments and any other instructions under
this Agreement given by the Borrower (if an individual), or by
any one of the individuals the Bank reasonably believes is
authorized to sign loan agreements on behalf of the Borrower,
or any other individual(s) designated by any one of such
authorized signers (each an "Authorized Individual"). The
Bank may honor any such instructions made by any one of the
Authorized Individuals, whether such instructions are given
in writing or by telephone, telefax or Internet and intranet
websites designated by the Bank with respect to separate
products or services offered by the Bank.
3.4 Direct Debit.
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(a) The Borrower agrees that on the due date of any amount
due under this Agreement, the Bank will debit the amount due
from deposit account number NY-483043705675 owned by the
Borrower, or such other of the Borrower's accounts with the
Bank as designated in writing by the Borrower (the "Designated
Account"). Should there be insufficient funds in the Designated
Account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by the Borrower.
(b) The Borrower may terminate this direct debit
arrangement at any time by sending written notice to the Bank.
If the Borrower terminates this arrangement, then the principal
amount outstanding under this Agreement will at the option of
the Bank bear interest at a rate per annum which is one (1.0)
percentage point higher than the rate of interest otherwise
provided under this Agreement and the amount of each
payment will be increased accordingly.
3.5 Banking Days. Unless otherwise provided in this
Agreement, a banking day is a day other than a Saturday,
Sunday or other day on which commercial banks are authorized
to close, or are in fact closed, in the state where the
Bank's lending office is located, and, if such day relates
to amounts bearing interest at an offshore rate (if any),
means any such day on which dealings in dollar deposits are
conducted among banks in the offshore dollar interbank market.
All payments and disbursements which would be due or which are
received on a day which is not a banking day will be due
or applied, as applicable, to the credit on the next banking
day.
3.6 Interest Calculation. Except as otherwise stated
in this Agreement, all interest and fees, if any, will be
computed on the basis of a 360-day year and the actual number
of days elapsed. This results in more interest or a higher fee
than if a 365-day year is used. Installments of principal
which are not paid when due under this Agreement shall continue
to bear interest until paid.
3.7 Default Rate. Upon the occurrence of any default
or after maturity or after judgment has been rendered on any
obligation under this Agreement, all amounts outstanding
under this Agreement, including any unpaid interest, fees,
or costs, will at the option of the Bank bear interest at a
rate which is 6.0 percentage point(s) higher than the rate
of interest otherwise provided under this Agreement.
This may result in compounding of interest. This will not
constitute a waiver of any default.
4. CONDITIONS
Before the Bank is required to extend any credit to the Borrower
under this Agreement, it must receive any documents and other
items it may reasonably require, in form and content acceptable
to the Bank, including any items specifically listed below.
4.1 Authorizations. If the Borrower or any guarantor
is anything other than a natural person, evidence that the
execution, delivery and performance by the Borrower and/or
such guarantor of this Agreement and any instrument or
agreement required under this Agreement have been duly
authorized.
4.2 Governing Documents. If required by the Bank,
a copy of the Borrower's organizational documents.
4.3 Security Agreements. Signed original security
agreements covering the personal property collateral which
the Bank requires.
4.4 Perfection and Evidence of Priority. Evidence that
the security interests and liens in favor of the Bank are
valid, enforceable, properly perfected in a manner
acceptable to the Bank and prior to all others' rights and
interests, except those the Bank consents to in writing. All
title documents for motor vehicles which are part of the
collateral must show the Bank's interest.
4.5 Payment of Fees. Payment of all fees, expenses
and other amounts due and owing to the Bank. If any fee is
not paid in cash, the Bank may, in its discretion, treat the
fee as a principal advance under this Agreement or deduct the
fee from the loan proceeds.
4.6 Environmental Information. A completed Bank form
Environmental Questionnaire.
5. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is
repaid in full, the Borrower makes the following representations
and warranties. Each request for an extension of credit
constitutes a renewal of these representations and warranties
as of the date of the request:
5.1 Formation. If the Borrower is anything other than a
natural person, it is duly formed and existing under the laws
of the state or other jurisdiction where organized.
5.2 Authorization. This Agreement, and any instrument
or agreement required under this Agreement, are within the
Borrower's powers, have been duly authorized, and do not conflict
with any of its organizational papers.
5.3 Good Standing. In each state in which the Borrower
does business, it is properly licensed, in good standing,
and, where required, in compliance with fictitious name
statutes.
5.4 Financial Information. All financial and other
information that has been or will be supplied to the Bank is
sufficiently complete to give the Bank accurate knowledge of
the Borrower's (and any guarantor's) financial condition,
including all material contingent liabilities. Since the
date of the most recent financial statement provided to the
Bank, there has been no material adverse change in the business
condition (financial or otherwise), operations, properties or
prospects of the Borrower (or any guarantor). If the Borrower
is comprised of the trustees of a trust, the above
representations shall also pertain to the trustor(s) of
the trust.
5.5 Lawsuits. There is no lawsuit, tax claim or other
dispute pending or threatened against the Borrower which, if
lost, would impair the Borrower's financial condition or ability
to repay the loan, except as have been disclosed in writing to
the Bank.
5.6 Other Obligations. The Borrower is not in default on
any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract,
instrument or obligation, except as have been disclosed in writing
to the Bank.
5.7 Tax Matters. The Borrower has no knowledge of any
pending assessments or adjustments of its income tax for
any year and all taxes due have been paid, except as have been
disclosed in writing to the Bank.
5.8 No Event of Default. There is no event which is, or
with notice or lapse of time or both would be, a default under
this Agreement.
5.9 Collateral. All collateral required in this Agreement
is owned by the granter of the security interest free of any title
defects or any liens or interests of others, except those which
have been approved by the Bank in writing.
5.10 ERISA Plans.
(a) Each Plan (other than a multiemployer plan) is in compliance
in all material respects with ERISA, the Code and other federal or
state law, including all applicable minimum funding standards
and there have been no prohibited transactions with respect to any
Plan (other than a multiemployer plan), which has resulted or could
reasonably be expected to result in a material adverse effect.
(b) With respect to any Plan subject to Title IV of ERISA:
(i) No reportable event has occurred under Section 4043(c) of
ERISA which requires notice.
(ii) No action by the Borrower or any ERISA Affiliate to terminate
or withdraw from any Plan has been taken and no notice of intent to
terminate a Plan has been filed under Section 4041 or 4042 of ERISA.
(c) The following terms have the meanings indicated for
purposes of this Agreement:
(i) "Code" means the Internal Revenue Code of 1986, as amended.
(ii) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(iii) "ERISA Affiliate" means any trade or business (whether
or not incorporated) under common control with the Borrower
within the meaning of Section 414(b) or (c) of the Code.
(iv) "Plan" means a plan within the meaning of Section 3(2)
of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, including any multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA.
6. COVENANTS
The Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full:
6.1 Use of Proceeds. To use the proceeds of the credit only
for business purposes.
6.2 Financial Information. To provide the following
financial information and statements in form and content
acceptable to the Bank, and such additional information as
requested by the Bank from time to time. The Bank reserves
the right, upon written notice to the Borrower, to require
the Borrower to deliver financial information and statements
to the Bank more frequently than otherwise provided below, and
to use such additional information and statements to measure
any applicable financial covenants in this Agreement.
(a) Within 120 days of Borrower's fiscal year end:
(i) The annual financial statements of the Borrower, certified
and dated by an authorized financial officer. These financial
statements must be audited (with an opinion satisfactory to
the Bank) by a Certified Public Accountant acceptable to the
Bank. The statements shall be prepared on a consolidated basis.
(ii) A detailed aging of the Borrower's receivables by invoice
or a summary aging by account debtor, as specified by the Bank.
(b) Within 45 days after the date of filing with the Securities
and Exchange Commission, the semi-annual copies of the Form 10-K
Annual Report, 10-Q Quarterly Report and Form 8-K Current Report
for the Borrower. The statements shall be prepared on a
consolidated basis.
6.3 Out of Debt Period. To reduce the amount of advances
outstanding under this Agreement to not more than No Dollars
($0.00) for a period of at least thirty (30) consecutive
days in each Line-Year. "Line-Year" means the period
between the date of this Agreement and November 30, 2015,
and each subsequent one-year period (if any). For the
purposes of this paragraph, "Advances" includes overdrafts
in the Borrower's accounts.
6.4 Other Debts. Not to have outstanding or incur any
direct or contingent liabilities or lease obligations (other
than those to the Bank or to any affiliate of the Bank), or
become liable for the liabilities of others, without the Bank's
written consent. This does not prohibit:
(a) Acquiring goods, supplies, or merchandise on normal
trade credit.
(b) Liabilities, lines of credit and leases in existence
on the date of this Agreement disclosed in writing to the Bank.
(c) If the Borrower is a natural person, additional debts of
the Borrower as an individual for consumer purposes.
6.5 Other Liens. Not to create, assume, or allow any security
interest or lien (including judicial liens) on property the
Borrower now or later owns, except:
(a) Liens and security interests in favor of the Bank or any
affiliate of the Bank.
(b) Liens outstanding on the date of this Agreement disclosed
in writing to the Bank.
6.6 Maintenance of Assets.
(a) Not to sell, assign, lease, transfer or otherwise dispose
of any part of the Borrower's business or the Borrower's
assets except inventory sold in the ordinary course of the
Borrower's business.
(b) Not to sell, assign, lease, transfer or otherwise dispose
of any assets for less than fair market value, or enter into
any agreement to do so.
(c) Not to enter into any sale and leaseback agreement covering
any of its fixed assets.
(d) To maintain and preserve all rights, privileges, and
franchises the Borrower now has.
(e) To make any repairs, renewals, or replacements to keep
the Borrower's properties in good working condition.
6.7 Loans. Not to make any loans, advances or other extensions
of credit to any individual or entity except for extensions of
credit in the nature of accounts receivable or notes receivable
arising from the sale or lease of goods or services in the
ordinary course of business to non-affiliated entities.
6.8 Change of Management. Not to make any substantial change
in the present executive or management personnel of the Borrower.
6.9 Change of Ownership. If the Borrower is anything other
than a natural person, not to cause, permit, or suffer
any change in capital ownership such that there is a material
change, as determined by the Bank in its sole discretion, in
the direct or indirect capital ownership of the Borrower.
6.10 Additional Negative Covenants. Not to, without the Bank's
written consent:
(a) Enter into any consolidation, merger, or other combination,
or become a partner in a partnership, a member of a
joint venture, or a member of a limited liability company.
(b) Acquire or purchase a business or its assets.
(c) Engage in any business activities substantially different
from the Borrower's present business.
(d) Liquidate or dissolve the Borrower's business.
6.11 Notices to Bank. To promptly notify the Bank in writing of:
(a) Any event of default under this Agreement, or any event
which, with notice or lapse of time or both, would constitute
an event of default.
(b) Any change in the Borrower's name, legal structure,
principal residence, or name on any driver's license or special
identification card issued by any state (for an individual),
state of registration (for a registered entity), place of
business, or chief executive office if the Borrower has more
than one place of business.
6.12 Insurance
(a) General Business Insurance. To maintain insurance
as is usual for the business it is in.
(b) Insurance Covering Collateral. To maintain all risk
property damage insurance policies (including without
limitation windstorm coverage, and hurricane coverage as
applicable) covering the tangible property comprising
the collateral. Each insurance policy must be for the
full replacement cost of the collateral and include a
replacement cost endorsement. The insurance must be issued
by an insurance company acceptable to the Bank and must
include a lender's loss payable endorsement in favor of
the Bank in a form acceptable to the Bank.
(c) Evidence of Insurance. Upon the request of the Bank,
to deliver to the Bank a copy of each insurance policy, or,
if permitted by the Bank, a certificate of insurance listing
all insurance in force.
6.13 Compliance with Laws. To comply with the laws
(including any fictitious or trade name statute), regulations,
and orders of any government body with authority over the
Borrower's business. The Bank shall have no obligation to
make any advance to the Borrower except in compliance with all
applicable laws and regulations and the Borrower shall fully
cooperate with the Bank in complying with all such applicable
laws and regulations.
6.14 Books and Records. To maintain adequate books and
records.
6.15 Audits. To allow the Bank and its agents to inspect
the Borrower's properties and examine, audit, and make copies
of books and records at any reasonable time. If any of the
Borrower's properties, books or records are in the possession
of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform
inspections or audits and to respond to the Bank's requests for
information concerning such properties, books and records.
6.16 Perfection of Liens. To help the Bank perfect and
protect its security interests and liens, and reimburse it for
related costs it incurs to protect its security interests and
liens.
6.17 Cooperation. To take any action reasonably requested
by the Bank to carry out the intent of this Agreement.
6.18 Bank as Principal Depository. To maintain the Bank
or one of its affiliates as its principal depository bank,
including for the maintenance of business, cash management,
operating and administrative deposit accounts.
7. HAZARDOUS SUBSTANCES
7.1 Indemnity Regarding Hazardous Substances. The Borrower
will indemnify and hold harmless the Bank from any loss or
liability the Bank incurs in connection with or as a result
of this Agreement, which directly or indirectly arises
out of the use, generation, manufacture, production, storage,
release, threatened release, discharge, disposal or presence
of a hazardous substance. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's
property or operations or property leased to the Borrower.
The indemnity includes but is not limited to attorneys' fees
(including the reasonable estimate of the allocated cost of
in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys
and assigns.
7.2 Compliance Regarding Hazardous Substances. The Borrower
represents and warrants that the Borrower has complied with
all current and future laws, regulations and ordinances or
other requirements of any governmental authority relating
to or imposing liability or standards of conduct concerning
protection of health or the environment or hazardous
substances.
7.3 Notices Regarding Hazardous Substances. Until full
repayment of the loan, the Borrower will promptly notify
the Bank in writing of any threatened or pending investigation
of the Borrower or its operations by any governmental agency
under any current or future law, regulation or ordinance
pertaining to any hazardous substance.
7.4 Site Visits, Observations and Testing. The Bank and
its agents and representatives will have the right at any
reasonable time, after giving reasonable notice to the Borrower,
to enter and visit any locations where the collateral securing
this Agreement (the "Collateral") is located for the purposes
of observing the Collateral, taking and removing environmental
samples, and conducting tests. The Borrower shall reimburse
the Bank on demand for the costs of any such environmental
investigation and testing. The Bank will make reasonable
efforts during any site visit, observation or testing
conducted pursuant to this paragraph to avoid interfering
with the Borrower's use of the Collateral. The Bank is
under no duty to observe the Collateral or to conduct tests,
and any such acts by the Bank will be solely for the purposes
of protecting the Bank's security and preserving the Bank's
rights under this Agreement. No site visit, observation or
testing or any report or findings made as a result thereof
("Environmental Report") (i) will result in a waiver of any
default of the Borrower; (ii) impose any liability on the
Bank; or (iii) be a representation or warranty of any kind
regarding the Collateral (including its condition or value
or compliance with any laws) or the Environmental Report
(including its accuracy or completeness). In the event the
Bank has a duty or obligation under applicable laws, regulations
or other requirements to disclose an Environmental Report
to the Borrower or any other party, the Borrower authorizes
the Bank to make such a disclosure. The Bank may also
disclose an Environmental Report to any regulatory authority,
and to any other parties as necessary or appropriate
in the Bank's judgment. The Borrower further understands
and agrees that any Environmental Report or other
information regarding a site visit, observation or testing
that is disclosed to the Borrower by the Bank or its agents
and representatives is to be evaluated (including any
reporting or other disclosure obligations of the Borrower)
by the Borrower without advice or assistance from the Bank.
7.5 Definition of Hazardous Substances. "Hazardous
substances" means any substance, material or waste that is
or becomes designated or regulated as "toxic," "hazardous,"
"pollutant," or "contaminant" or a similar designation or
regulation under any current or future federal, state or
local law (whether under common law, statute, regulation or
otherwise) or judicial or administrative interpretation
of such, including without limitation petroleum or
natural gas.
7.6 Continuing Obligation. The Borrower's obligations
to the Bank under this Article, except the obligation to give
notices to the Bank, shall survive termination of this
Agreement and repayment of the Borrower's obligations to
the Bank under this Agreement.
8. DEFAULT AND REMEDIES
Without limiting any of the Bank's rights and remedies in
this Agreement, if any of the following events of default
occurs, the Bank may do one or more of the following without
prior notice: declare the Borrower in default, stop making any
additional credit available to the Borrower, and require the
Borrower to repay its entire debt immediately. If an event
which, with notice or the passage of time, will constitute
an event of default has occurred and is continuing, the Bank
has no obligation to make advances or extend additional
credit under this Agreement. In addition, if any event of
default occurs, the Bank shall have all rights, powers and
remedies available under any instruments and agreements
required by or executed in connection with this Agreement,
as well as all rights and remedies available at law or in
equity. If an event of default occurs under the paragraph
entitled "Bankruptcy/Receivers," below, with respect to
the Borrower, then the entire debt outstanding under this
Agreement will automatically be due immediately.
8.1 Failure to Pay. The Borrower fails to make a
payment under this Agreement when due.
8.2 Covenants. Any default in the performance of or
compliance with any obligation, agreement or other provision
contained in this Agreement (other than those specifically
described as an event of default in this Article).
8.3 Other Bank Agreements. Any default occurs under
any guaranty, subordination agreement, security agreement,
deed of trust, mortgage, or other document required by
or delivered in connection with this Agreement or any such
document is no longer in effect, or any guarantor purports
to revoke or disavow the guaranty; or any representation or
warranty made by any guarantor is false when made or
deemed to be made; or any default occurs under any other
agreement the Borrower (or any Obliger) has with the Bank
or any affiliate of the Bank. For purposes of this Agreement,
"Obliger" shall mean any guarantor, any party pledging
collateral to the Bank, or, if the Borrower is comprised
of the trustees of a trust, any xxxxxxx.
8.4 Cross-default. Any default occurs under any agreement
in connection with any credit the Borrower (or any Obliger)
has obtained from anyone else or which the Borrower (or any
Obliger) or any of the Borrower's related entities or
affiliates has guaranteed.
8.5 False Information. The Borrower or any Obliger has
given the Bank false or misleading information or
representations.
8.6 Bankruptcy/Receivers. The Borrower, any Obliger,
or any general partner of the Borrower or of any Obliger
files a bankruptcy petition, a bankruptcy petition is
filed against any of the foregoing parties and such
petition is not dismissed within a period of forty-five
(45) days after the filing, or the Borrower, any Obliger,
or any general partner of the Borrower or of any Obliger
makes a general assignment for the benefit of creditors;
or a receiver or similar official is appointed for a
substantial portion of Borrower's or any Obliger's
business; or the business is terminated, or such Obliger
is liquidated or dissolved.
8.7 Revocation or Termination. If the Borrower is
comprised of the trustee(s) of a trust, the trust is
revoked or otherwise terminated or all or a substantial
part of the Borrower's assets are distributed or otherwise
disposed of.
8.8 Lien Priority. The Bank fails to have an enforceable
first lien (except for any prior liens to which the Bank has
consented in writing) on or security interest in any
property given as security for this Agreement (or any
guaranty).
8.9 Judgments. Any judgments or arbitration awards
are entered against the Borrower or any Obliger.
8.10 Death. If the Borrower or any Obliger is a natural
person, the Borrower or such Obliger dies or becomes
legally incompetent; if the Borrower or any Obliger is
a trust, a xxxxxxx dies or becomes legally incompetent;
if the Borrower or any Obliger is a partnership,
any general partner dies or becomes legally incompetent.
8.11 Material Adverse Change. A material adverse
change occurs, or is reasonably likely to occur, in
the Borrower's (or any Obliger's) business condition
(financial or otherwise), operations, or properties,
or ability to repay the credit.
8.12 Government Action. Any government authority
takes action that the Bank believes materially adversely
affects the Borrower's or any Obliger's financial
condition or ability to repay.
8.13 ERISA Plans. A reportable event occurs under
Section 4043(c) of ERISA, or any Plan termination (or
commencement of proceedings to terminate a Plan) or
the full or partial withdrawal from a Plan under Section 4041
or 4042 of ERISA occurs; provided such event or events
could reasonably be expected, in the judgment of the Bank,
to have a material adverse effect.
9. ENFORCING THIS AGREEMENT; MISCELLANEOUS
9.1 GAAP. Except as otherwise stated in this Agreement,
all financial information provided to the Bank and all
financial covenants will be made under generally accepted
accounting principles, consistently applied or another basis
acceptable to the Bank.
9.2 Governing Law. Except to the extent that any law of
the United States may apply, this Agreement shall be governed
and interpreted according to the laws of New York (the
"Governing Law State"), without regard to any choice of
law, rules or principles to the contrary. Nothing in this
paragraph shall be construed to limit or otherwise affect any
rights or remedies of the Bank under federal law.
9.3 Venue and Jurisdiction. The Borrower agrees that any
action or suit against the Bank arising out of or relating
to this Agreement shall be filed in federal court or state
court located in the Governing Law State. The Borrower
agrees that the Bank shall not be deemed to have waived its
rights to enforce this section by filing an action or suit
against the Borrower in a venue outside of the Governing
Law State. If the Bank does commence an action or suit
arising out of or relating to this Agreement, the Borrower
agrees that the case may be filed in federal court or state
court in the Governing Law State. The Bank reserves the right
to commence an action or suit in any other jurisdiction
where the Borrower, any Guarantor, or any collateral has
any presence or is located. The Borrower consents to personal
jurisdiction and venue in such forum selected by the Bank and
waives any right to contest jurisdiction and venue and the
convenience of any such forum. The provisions of this
section are material inducements to the Bank's acceptance
of this Agreement.
9.4 Successors and Assigns. This Agreement is binding on
the Borrower's and the Bank's successors and assignees.
The Borrower agrees that it may not assign this Agreement
without the Bank's prior consent.
9.5 Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER DOCUMENT
EXECUTED IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (a) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT
SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (b) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED
TO ENTER INTO THIS AGREEMENT AND THE OTHER DOCUMENTS
CONTEMPLATED HEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION AND (c)
CERTIFIES THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND
VOLUNTARILY MADE.
9.6 Severability; Waivers. If any part of this Agreement
is not enforceable, the rest of the Agreement may be
enforced. The Bank retains all rights, even if it makes
a loan after default. If the Bank waives a default,
it may enforce a later default. Any consent or waiver
under this Agreement must be in writing.
9.7 Expenses.
(a) The Borrower shall pay to the Bank immediately upon
demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees,
expended or incurred by the Bank in connection with (a)
the negotiation and preparation of this Agreement and
any related agreements, the Bank's continued administration
of this Agreement and such related agreements, and the
preparation of any amendments and waivers related to
this Agreement or such related agreements, (b) filing,
recording and searchfees, appraisal fees, field examination
fees, title report fees, and documentation fees with
respect to any collateral and books and records of the
Borrower or any Obligor, (c) the Bank's costs or losses
arising from any changes in law which are allocated
to this Agreement or any credit outstanding under
this Agreement, and (d) costs or expenses required to
be paid by the Borrower or any Obligor that are paid,
incurred or advanced by the Bank.
(b) The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments,
and costs of any kind relating to or arising directly or
indirectly out of (a) this Agreement or any document required
hereunder, (b) any credit extended or committed by the Bank
to the Borrower hereunder, and (c) any litigation or
proceeding related to or arising out of this Agreement,
any such document, or any such credit, including, without
limitation, any act resulting from the Bank complying with
instructions the Bank reasonably believes are made by
any Authorized Individual. This paragraph will survive
this Agreement's termination, and will benefit the Bank and
its officers, employees, and agents.
(c) The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in
connection with (a) the enforcement or preservation of
the Bank's rights and remedies and/or the collection of any
obligations of the Borrower which become due to the Bank
and in connection with any "workout" or restructuring,
and (b) the prosecution or defense of any action in any
way related to this Agreement, the credit provided
hereunder or any related agreements, including without
limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration
proceeding or otherwise, and including any of the foregoing
incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding,
contested matter or motion brought by the Bank or any other
person) relating to the Borrower or any other person
or entity.
9.8 Individual Liability. If the Borrower is a natural
person, the Bank may proceed against the Borrower's business
and non-business property in enforcing this and other
agreements relating to this loan. If the Borrower is a
partnership, the Bank may proceed against the business and
non-business property of each general partner of the Borrower
in enforcing this and other agreements relating to this loan.
9.9 Joint and Several Liability. If two or more Borrowers
sign this Agreement, each Borrower agrees that it is jointly
and severally liable to the Bank for the payment of all
obligations arising under this Agreement, and that such
liability is independent of the obligations of the other
Borrowers.
9.10 Set-Off. Upon and after the occurrence of an event
of default under this Agreement, (a) the Borrower hereby
authorizes the Bank, at any time and from time to time,
without notice, which is hereby expressly waived by the
Borrower, and whether or not the Bank shall have declared
any credit subject hereto to be due and payable in accordance
with the terms hereof, to set off against, and to appropriate
and apply to the payment of, the Borrower's Obligations (whether
matured or unmatured, fixed or contingent, liquidated or
unliquidated), any and all amounts owing by the Bank to the
Borrower (whether payable in U.S. dollars or any other currency,
whether matured or unmatured, and in the case of deposits,
whether general or special (except trust and escrow accounts),
time or demand and however evidenced), and (b) pending any
such action, to the extent necessary, to hold such amounts
as collateral to secure such Obligations and to return as
unpaid for insufficient funds any and all checks and other
items drawn against any deposits so held as the Bank,
in its sole discretion, may elect. The Borrower hereby
grants to the Bank a security interest in all deposits and
accounts maintained with the Bank to secure the payment
of all Obligations of the Borrower to the Bank under this
Agreement and all agreements, instruments and documents
related to this Agreement. "Obligations" means all obligations,
now or hereafter existing, of the Borrower to the Bank under
this Agreement and under any other agreement or instrument
executed in connection with this Agreement.
9.11 One Agreement. This Agreement and any related
security or other agreements required by this Agreement
constitute the entire agreement between Borrower and Bank
with respect to each credit subject hereto and supersede all
prior negotiations, communications, discussions and
correspondence concerning the subject matter hereof.
In the event of any conflict between this Agreement and
any other agreements required by this Agreement, this
Agreement will prevail.
9.12 Notices. Unless otherwise provided in this Agreement
or in another agreement between the Bank and the Borrower,
all notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, or
by overnight courier to the addresses on the signature
page of this Agreement, or to such other addresses as
the Bank and the Borrower may specify from time to time in
writing. Notices and other communications shall be
effective (i) if mailed, upon the earlier of receipt or
five (5) days after deposit in the U.S. mail, first class,
postage prepaid, or (ii) if hand-delivered, by courier or
otherwise (including telegram, lettergram or mailgram),
when delivered.
9.13 Headings. Article and paragraph headings are for
reference only and shall not affect the interpretation or
meaning of any provisions of this Agreement.
9.14 Counterparts. This Agreement may be executed in
any number of counterparts, each of which, when so executed,
shall be deemed to be an original, and all of which when
taken together shall constitute one and the same Agreement.
Delivery of an executed counterpart of this Agreement
(or of any agreement or document required by this Agreement
and any amendment to this Agreement) by telecopy or other
electronic imaging means shall be as effective as delivery
of a manually executed counterpart of this Agreement;
provided, however, that the telecopy or other electronic
image shall be promptly followed by an original if required
by the Bank.
9.15 Borrower Information; Reporting to Credit Bureaus.
The Borrower authorizes the Bank at any time to verify or
check any information given by the Borrower to the Bank,
check the Borrower's credit references, verify employment,
and obtain credit reports. The Borrower agrees that the
Bank shall have the right at all times to disclose and
report to credit reporting agencies and credit rating
agencies such information pertaining to the Borrower
and/or all guarantors as is consistent with the Bank's
policies and practices from time to time in effect
9.16 Customary Advertising Material. The Borrower and
each Obligor consent to the publication by the Bank of
customary advertising material relating to the
transactions contemplated hereby using the name, product
photographs, logo or trademark of the Borrower or such
Obligor. .'
9.17 Amendments. This Agreement may be amended or
modified only in writing signed by each party hereto.
9.18 Limitation of Interest and Other Charges. If,
at any time, the rate of interest, together with all
amounts which constitute interest and which are reserved,
charged or taken by the Bank as compensation for fees,
services or expenses incidental to the making,
negotiating or collection of the loan evidenced hereby,
shall be deemed by any competent court of law, governmental
agency or tribunal to exceed the maximum rate of interest
permitted to be charged by the Bank to the Borrower under
applicable law, then, during such time as such rate of
interest would be deemed excessive, that portion of each
sum paid attributable to that portion of such interest
rate that exceeds the maximum rate of interest so permitted
shall be deemed a voluntary prepayment of principal. As
used herein, the term "applicable law" shall mean the
law in effect as of the date hereof; provided, however,
that in the event there is a change in the law which results
in a higher permissible rate of interest, then this
Agreement shall be governed by such new law as of its
effective date.
The Borrower executed this Agreement as of the date stated
at the top of the first page, intending to create an instrument
executed under seal.
Bank:
Bank of America, N.A.
By: /s/ Xxxxxxx Xxxxxxx, Vice President
________________________________________
Xxxxxxx Xxxxxxx, ViCe8Sident
Borrower:
Scientific Industries, Inc.
By: /s/ Xxxxxx Xxxxxx
_____________________ (Seal)
Xxxxxx Xxxxxx, Chief Executive Officer
Address where notices to Scientific Industries, Inc. are to
be sent:
00 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Address where notices to the Bank are to be sent:
Doc Retention - GCF
CT2-515-BB-03
00 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Federal law requires Bank of America, N.A. (the "Bank") to
provide the following notice. The notice is not part of
the foregoing agreement orinstrument and may not be altered.
Please read the notice carefully.
(1) USA PATRIOT ACT NOTICE
Federal law requires all financial institutions to obtain,
verify and record information that identifies each person
who opens an account or obtains a loan. The Bank will ask
for the Borrower's legal name, address, tax ID number or
social security number and other identifying information.
The Bank may also ask for additional information or
documentation or take other actions reasonably necessary
to verify the identity of the Borrower, guarantors or other
related persons.
SCHEDULE A
FEES
(a) Waiver Fee. If the Bank, at its .discretion,
agrees to waive or amend any terms of this Agreement, the
Borrower will, at the Bank's option, pay the Bank a fee for
each waiver or amendment in an amount advised by the Bank at
the time the Borrower requests the waiver or amendment.
Nothing in this paragraph shall imply that the Bank is
obligated to agree to any waiver or amendment requested
by the Borrower. The Bank may impose additional
requirements as a condition to any waiver or amendment.
(b) Late Fee. To the extent permitted by law, the
Borrower agrees to pay a late fee in an amount not to exceed
four percent (4%) of any payment that is more than fifteen
(15) days late; provided that such late fee shall be reduced
to two percent (2%) of any required principal and interest
payment that is not paid within fifteen (15) days of the
date it is due if the loan is secured by a mortgage on an
owner-occupied residence. The imposition and payment
of a late fee shall not constitute a waiver of the Bank's
rights with respect to the default.
