TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT is made and entered as of March 24, 1997, between
Sican Corp., a Delaware corporation ("Borrower"), whose address for purposes of
notice hereunder is 0000 Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000 and whose
facsimile number is (000) 000-0000, and Mity-Lite, Inc., a Utah corporation
("Lender"), whose address for purposes of notice hereunder is 0000 Xxxx 000
Xxxxx, Xxxx, Xxxx 00000.
FOR AND IN CONSIDERATION of the promises and mutual covenants herein
contained, Borrower and Lender agree as follows:
1.0 Background. Lender has agreed to make a term loan in the amount of
$1,000,000 to Borrower (the "Term Loan") for use in payment of Borrower's
operating expenses in the ordinary course of Borrower's business. Borrower
and Lender have entered into this Agreement to set forth the terms and
conditions of the Term Loan.
2.0 Definitions. Unless otherwise defined elsewhere in this Agreement,
capitalized terms when used in this Agreement will have the following
meanings:
2.1 "Accounts" will mean any right to payment for goods sold or
leased or for services rendered by Borrower which is not evidenced by
an instrument or chattel paper whether or not it has been earned by
performance.
2.2 "Borrower" will have the meaning assigned to such term in the
introductory paragraph of this Agreement.
2.3 "Business Day" means any day which is neither a Saturday,
Sunday nor a legal holiday on which banks are authorized or required
to be closed in Utah.
2.4 "Chattel Paper" will mean any writing or writings which
evidence both a monetary obligation and a security interest in or a
lease of specific goods in favor of Borrower.
2.5 "Closing Date" will mean March 24, 1997.
2.6 "Collateral" will mean collectively, the Real Property and
the Personal Property.
2.7 "Current Liabilities" will mean all Indebtedness that at any
date at which the amount thereof will be determined should be
classified as current liabilities, but in any event, including (a) all
Indebtedness, whether secured or unsecured, payable on demand or
maturing not more than one year after such date without any option on
the part of the obligor to extend or renew beyond such year, including
periodic or installment payments on any Funded Debt required to be
made within not more than one year after such date, and all
liabilities, contingent or otherwise, for or on account of any Current
Liabilities of any other person, and (b) accruals for federal and
other taxes based on or measured by income, except deferred income
taxes.
2.8 "Default" will mean any breach of any term, covenant or
condition of, or obligation under, this Agreement, or the occurrence
of any of the events described in Section 8.1 of this Agreement which,
but for the giving of notice or the passage of time, or both, would
constitute an Event of Default.
2.9 "Documents" will mean any document of title, including any
xxxx of lading, dock warrant, dock receipt, warehouse receipt or order
for the delivery of goods, and any other document that, in the regular
course of Borrower's business or financing, is treated adequately
evidencing that Borrower is entitled to receive, hold and dispose of
the document and the goods that it covers.
2.10 "Equipment" will mean goods of any nature that are used or
bought for use or consumption primarily in the conduct of Borrower's
business and not held for sale or lease, or goods that are not
included in Inventory.
2.11 "ERISA" will mean the Employment Retirement Income Security
Act of 1974, as amended from time to time, and rules and regulations
promulgated thereunder.
2.12 "Event of Default" will mean any breach of any term,
covenant or condition of, or obligation under, this Agreement, or the
occurrence of any of the events described in Section 8.1 of this
Agreement, and the giving of notice or the passage of any applicable
grace or cure period, or both, as provided in such Section or as
otherwise provided in this Agreement.
2.13 "Financing Statements" will mean any financing statements
filed or recorded by Borrower evidencing Lender's security interest in
the Collateral, together with any continuations and amendments
thereto, in form and substance satisfactory to Lender.
2.14 "Funded Debt" will mean all Indebtedness not included within
the definition of Current Liabilities at the date as of which the
amount thereof is to be determined or that by its terms is payable
more than one year from the date of its creation.
2.15 "GAAP" will mean those principles and practices of the
accounting profession conforming to the standards of the American
Institute of Certified Public Accountants. All accounting terms not
specifically defined herein will be construed in accordance with GAAP.
2.16 "General Intangibles" will mean any personal property owned
by Borrower (including things in action) other than Equipment,
Inventory, Accounts, Chattel Paper, Documents, Instruments and money.
General Intangibles will include Borrower's interest in any
trademarks, trade names, copyrights, patents, patent applications and
other intellectual property rights and licenses and rights in any
thereof.
2.17 "Indebtedness" will mean all obligations, contingent and
otherwise, that in accordance with GAAP consistently applied should be
classified upon Borrower's balance sheet as liabilities, but in any
event including taxes, liabilities in respect of unfunded vested
benefits under any Plan covered by Title IV of ERISA, liabilities
secured by any mortgage, pledge or lien existing on real or personal
property owned or acquired by Borrower, all other Current Liabilities
and Funded Debt and all guaranties, endorsements (other than
endorsements for collection or deposit in the ordinary course of
business or in connection with the sale in the ordinary course of
business of Accounts pursuant to recognized customer credit
arrangements), and other contingent obligations with regard to
Indebtedness of others.
2.18 "Instruments" will mean any negotiable instrument,
certificated security or any other writing that evidences Borrower's
right to the payment of money and is not itself a security agreement
or a lease and is of a type that, in the ordinary course of business,
is transferred by delivery with any necessary endorsement or
assignment.
2.19 "Inventory" will mean all goods now owned or hereafter
acquired by Borrower and held for sale or lease in Borrower's business
or furnished or to be furnished under contracts of service, or raw
materials, work in process or materials used or consumed in Borrower's
business.
2.20 "Lender" will have the meaning assigned to such term in the
introductory paragraph of this Agreement.
2.21 "Loan Documents" will mean this Agreement, the Term Note,
the Security Agreement, the Mortgages, the Financing Statements, and
all other documents, instruments, certificates and affidavits
evidencing, securing or governing the Term Loan.
2.22 "Maturity Date" will mean March 24, 2000.
2.23 "Mortgages" will mean the Mortgage, Security Agreement and
Fixture Filings given by Borrower to Lender dated the Closing Date
encumbering the Real Property as a lien and security interest
secondary only to the Senior Debt to secure the Term Note, in form and
substance satisfactory to Lender.
2.24 "Personal Property" will mean the Accounts, Chattel Paper,
Documents, Equipment, General Intangibles, Instruments and Inventory,
and any products, proceeds, renewals, additions, substitutions or
replacements thereof.
2.25 "Plan" will mean any plan defined in Section 4021(a) of
ERISA in respect of which Borrower is an "employer" or a "substantial
employer" as such terms are defined in Section 3(5) and 40041(a)(2),
respectively, of ERISA.
2.26 "Real Property" will mean that certain real property located
in the State of Arkansas as more particularly described on attached
Exhibit A-1, together with all improvements and fixtures located
thereon, and all rents and leases related thereto, and all tenements,
hereditaments, appurtenances, easements and servitudes associated
therewith.
2.27 "Reportable Event" will mean any of the events set forth in
Section 4043(b) of ERISA.
2.28 "Security Agreement" will mean the Security Agreement
between Borrower and Lender dated the Closing Date pursuant to which
Borrower grants to Lender a priority security interest in the Personal
Property secondary in priority only to the Senior Debt as security for
the Term Note, in form and substance satisfactory to Lender.
2.29 "Senior Debt" will mean the indebtedness of Borrower to
Senior Lender in the original principal amount of $ 6,000,000.00 as
evidenced by the Senior Loan Documents.
2.30 "Senior Lender" will mean LaSalle National Bank, its
successors and assigns, as the owner and holder of the Senior Debt.
2.31 "Senior Loan Documents" will mean the promissory note, the
loan agreement and any security documents given by Borrower in favor
of Senior Lender.
2.32 "State" means each state in which the Collateral is located.
2.33 "Tangible Net Worth" will mean the excess of total assets
over total liabilities, with total assets and total liabilities each
to be determined in accordance with GAAP consistently applied. Without
limiting the generality of the foregoing, the determination of total
assets will exclude (A) all assets that would be classified as
intangibles under GAAP, including, without limitation, goodwill
(whether representing the excess of cost over book value of assets
acquired or otherwise), organizational expenses, trademarks, trade
names, copyrights, patents, patent applications and licenses and
rights in any thereof, (B) additions to net worth arising from
re-evaluation of fixed assets.
2.34 "Term Loan" will have the meaning assigned to such term in
Section 1.0 of this Agreement.
3.0 Purpose, Amount and Terms of Loan. Subject to the terms and
conditions of this Agreement, Lender agrees to make the Term Loan to
Borrower in the principal amount of $1,000,000.00. Borrower intends to use
the proceeds of the Term Loan for payment of Borrower's operating costs and
expenses incurred in the ordinary course of Borrower's business and for
payment, by Lender on behalf of Borrower at Closing to Xaio, Inc. of the
amount of $250,000, and will not use the proceeds of the Term Loan for any
other purpose without Lender's express written consent, which may be
granted or withheld in Lender's sole discretion. The Term Loan and the
obligation of Borrower to repay the same will be evidenced by the Term
Note. Borrower will pay interest accrued on the Term Note quarterly,
commencing on the 1st day of April, 1997, and continuing on the 1st day of
January, April, July and October of each calendar year thereafter. The
entire principal amount of the Term Note, together with accrued and unpaid
interest, will be due and payable in full on the Maturity Date. Interest on
the principal balance of the Term Note will accrue on the basis of a 360
day year, at a rate of 10.00% per annum. Borrower will give Lender a valid
lien and security interest in the Collateral secondary only to the Senior
Debt as security for the payment of the Term Note and Borrower's
performance of its obligations under this Agreement. Proceeds of the Term
Loan will be disbursed on the Closing Date.
4.0 Conditions of Lending. Lender's obligation to lend hereunder is
subject to the following conditions precedent:
4.1 Loan Documents and Supporting Materials. Before Lender will
be obligated to make the Term Loan hereunder, Lender will have
received in form and content satisfactory to counsel for Lender:
(a) Evidence of the due organization, valid legal existence
and good standing of Borrower as a Delaware corporation, and the
current authority of Borrower to transact business in each state
in which the Collateral is located;
(b) A certificate of the resolutions of the Board of
Directors of Borrower authorizing the execution and delivery of
this Agreement, the borrowing hereunder and the execution and
delivery of the Loan Documents;
(c) An extended coverage title insurance policy issued by a
title insurance company reasonably acceptable to Lender insuring
Lender's mortgagee interest in the Real Property subject only to
the Senior Loan Documents and those other matters as may be
expressly approved by Lender;
(d) A current boundary survey of the Real Property prepared
by a surveyor licensed in the State in which the Real Property is
located and reasonably acceptable to Lender, certified to Lender
and to the title insurance company as true and correct and
meeting or exceeding the minimum technical standards for land
surveys as established in the State in which the Real Property is
located;
(e) A current UCC-11 search for the state in which Borrower
maintains its executive offices and principal place of business,
and in each State in which any Collateral is located, evidencing
that no person, other than Senior Lender or Lender, has a
perfected security interest in that portion of the Collateral a
security interest in which may be perfected by filing;
(f) The executed Loan Documents;
(g) Such Financing Statements and other instruments as
Lender deems necessary to perfect Lender's security interest in
the Collateral;
(h) At Lender's option, a legal opinion provided by an
attorney licensed in each State in which any Collateral is
located and in the State of Illinois, retained by Borrower and
acceptable to Lender, addressing such matters as Lender
reasonably may require, including, without limitation, the
following:
(i) the due organization, valid legal existence and
good standing of Borrower as a Delaware corporation, and the
current authority of Borrower to transact business in each
State in which the Collateral is located;
(ii) the due authorization, execution, validity,
binding effect and enforceability of the Loan Documents in
accordance with their terms;
(iii) the Collateral and its use by Borrower comply
with applicable requirements of all governmental authorities
having jurisdiction over the Collateral (the foregoing
opinion may be given to the actual knowledge of opining
counsel and based on a certification of such matters given
by Borrower to opining counsel) ;
(iv) all amounts paid and to be paid by Borrower as
interest under the Loan Documents constitute lawful interest
under the laws of the state the laws of which govern such
Loan Documents; and
(v) the existence of, or the non-existence of, any
requirement for any consent of any governmental authority in
connection with the execution, delivery or performance of
the Loan Documents by Borrower; and
(i) Such other documents as Lender or counsel for
Lender reasonably may request.
4.2 Covenants and Representations. Before Lender will be
obligated to make the Term Loan hereunder: (a) no Default or Event of
Default will exist or be continuing, (b) the representations and
warranties of Borrower as set forth in Section 5.0 below will be true
on and as of the Closing Date, with the same force and effect as if
made on and as of such date; (c) Borrower will be in compliance with
all of the covenants as set forth in Section 6.0 and Section 7.0
below; and (d) all legal matters incident to the transactions hereby
contemplated will be satisfactory to Lender.
5.0 Representations and Warranties of Borrower. Borrower represents
and warrants to Lender that:
5.1 Borrower. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, and Borrower
has the corporate power and authority to own its property and to carry
on its business as now being conducted and is duly qualified to do
business in every jurisdiction where such qualification is necessary.
Borrower has the corporate power to execute and perform this
Agreement, to borrow hereunder, to give Lender a mortgage or security
interest in the Collateral and to execute and deliver the Loan
Documents; to do so will not violate any law, Borrower's articles of
incorporation or bylaws or any other agreement or instrument by which
Borrower or any of its properties is bound or to which Borrower is a
party, including without limitation, the Senior Loan Documents, nor
result in the imposition of any lien upon any of the property or
assets of Borrower other than the lien in favor of Lender or Senior
Lender in the Collateral. The making and performance by Borrower of
this Agreement, the borrowing by Borrower hereunder, the creation of
Lender's security interest in the Collateral and Borrower's execution
and delivery of the Loan Documents have been duly authorized by all
necessary corporate action, and all consents, approvals,
authorizations and other orders of regulatory bodies required to have
been obtained therefor have been obtained.
5.2 Title to Collateral. Borrower has good and marketable title
to the Collateral, free and clear of any liens, charges, encumbrances,
security interests and adverse claims whatsoever except those in favor
of the Senior Lender or the Lender or as described on attached Exhibit
B.
5.3 No Litigation. There is no litigation or proceeding pending,
nor to the knowledge of Borrower, threatened, against Borrower which
would reasonably be expected to have a material adverse effect on
Borrower's business, except as disclosed to Lender in writing prior to
the Closing Date.
5.4 Financial Information. The financial statements and reports
of Borrower as delivered to Lender fairly reflect the financial
condition of Borrower as of the date thereof and for the periods
stated, and no material adverse change in the financial condition, the
business or operations of Borrower has occurred between the date
thereof and the date hereof. All financial statements and reports were
prepared in accordance with GAAP consistently applied.
5.5 No Other Indebtedness. Other than the Senior Indebtedness,
Borrower has no material Indebtedness except that disclosed in the
financial statements and reports referred to in Section 5.4 above as
delivered by Borrower to Lender prior to the Closing Date, other than
material Indebtedness incurred since the date of such financial
statement or report in the ordinary course of business.
5.6 No Guaranties. Borrower has made no investments in, advances
to or guaranties of the Indebtedness of any corporation, individual or
other equity except those disclosed in the financial statements and
reports referred to in Section 5.4 above as delivered by Borrower to
Lender prior to the Closing Date.
5.7 Tax Returns. Borrower has filed all required federal, state
and local tax returns as they have become due and has paid all taxes
due thereunder, except any such taxes which are being contested in
good faith and has provided complete and correct copies of such tax
returns to Lender for the last 3 fiscal years of Borrower.
5.8 Regulation U. Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying "margin
stock" (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no proceeds of the Term
Loan will be used, directly or indirectly, to purchase or carry any
margin stock or to extend credit to others for the purpose of
purchasing or carrying any margin stock.
5.9 ERISA. Borrower is in compliance in all material respects
with all applicable provisions of ERISA, no Reportable Event has
occurred and is continuing with respect to any Plan, and Borrower has
not incurred any liability to the Pension Benefit Guaranty Corporation
under Section 4062 of ERISA.
5.10 Place of Business. Borrower's executive offices and
principal place of business is located at the address of Borrower set
forth in the introductory paragraph of this Agreement (subject to any
change only upon not less than 30 days prior written notice to Lender
of any proposed change).
6.0 Affirmative Covenants of Borrower. Until all of the amounts
owed to Lender by Borrower have been paid in full, Borrower will:
6.1 Financial Statements. Furnish to Lender within 45 days after
each fiscal year-end of Borrower, a copy of the audited financial
statement of Borrower for the fiscal year of Borrower just ended,
prepared and certified by independent certified public accountants
reasonably satisfactory to Lender in accordance with GAAP consistently
applied, and otherwise in a form acceptable to Lender.
6.2 Monthly Interim Financial Statements. Furnish to Lender not
later than 15 days after the end of each calendar month an interim
financial statement of Borrower for the calendar month just ended,
prepared internally and certified as true and correct by the president
of Borrower, and otherwise in a form acceptable to Lender.
6.3 Monthly Accounts Aging Report. Furnish to Lender not later
than 15 days after the end of each calendar month for the calendar
month just ended a report of Accounts aging, showing each Account and
aging of such Account over 30, 60 and 90 day periods.
6.4 Tax Returns. Furnish to Lender not later than 15 days after
filing, all federal, state and local tax returns and filings of
Borrower.
6.5 Other Financial Information. Furnish to Lender such other
financial information as Lender reasonably may request from time to
time in writing, including but not limited to financial information of
affiliates of Borrower.
6.6 ERISA Reports. Furnish to Lender copies of all reports and
notices that Borrower files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the U.S.
Department of Labor, or which Borrower receives from any of the
foregoing, promptly after the filing or receipt thereof.
6.7 Minimum Corporate Net Worth. Maintain at all times a Tangible
Net Worth of not less than $_______________, measured as of Borrower's
fiscal year-end using GAAP consistently applied.
6.8 Debt to Net Worth Ratio. Maintain at all times a ratio of
total Indebtedness of Borrower to Tangible Net Worth of Borrower of
not greater than ____ to 1.0, measured as of Borrower's fiscal
year-end using GAAP consistently applied.
6.9 Compliance with Laws. Comply with all statutes and
governmental rules and regulations, including, without limitation,
ERISA, regulations relating to protection of the environment, and
other regulations relating to the ownership, leasing, sale, use or
operation of the Collateral or the business of Borrower, and pay when
due all taxes, assessments, governmental charges, claims for labor,
supplies, rent and other obligations that, if unpaid, might become a
lien against the Collateral, except liabilities being contested in
good faith and against which, if requested by Lender, Borrower will
set up reasonable reserves satisfactory to Lender.
6.10 Insurance. Procure and maintain the following insurance:
(a) Insurance against all risk of direct physical loss or
damage to the Real Property, the Equipment and the Inventory, in
amounts not less than the full replacement cost thereof, if the
same are actually replaced, or actual cash value (replacement
cost minus depreciation) if the same are not replaced.
(b) General public liability insurance against claims for
bodily injury, death or property damage occurring on, in, or
about the Real Property, or in connection with the manufacture,
sale, distribution or use of Inventory, with combined single
limit coverage of not less than $_________.
(c) Workers' compensation insurance covering all persons
employed in connection with the operations of Borrower, or in
lieu of such workers' compensation insurance, a program of
self-insurance complying with the rules, regulations and
requirements of the appropriate agency of each state in which
Borrower maintains operations.
The foregoing policy or policies of insurance will be written by companies
of recognized financial standing which are rated A-1 or better by Standard
& Poors corporation or A-3 or better by Xxxxx'x Investor Service with asset
size rating of "X" or better by Best's Rating Service. The insurance (i)
will be for a term of not less than 6 months, (ii) will be in amounts
sufficient at all times to satisfy any coinsurance requirements thereof,
and (iii) will (except for the workers' compensation insurance referred to
in subparagraph (c) above) name Borrower as insured, and will recite
Lender's interest as mortgagee in standard non-contributory mortgagee
clauses.
If said insurance or any part thereof expires, is withdrawn, becomes void
by breach of any condition thereof by Borrower, or becomes void or unsafe
by reason of the failure or impairment of the capital of any insurer, or if
for any other reasonable cause said insurance becomes unsatisfactory to
Lender, Borrower will promptly obtain new or additional insurance
satisfactory to Lender. Borrower will provide Lender with a copy of all
such insurance policies.
Each insurance policy referred to above will provide that it may not be
cancelled or modified to change the risk or coverages insured except after
30 days prior notice to Lender. Borrower will promptly pay all premiums for
the insurance required by this Section 6.10, will renew or replace each
policy at least 30 days prior to the expiration of such policy, and will
deliver to Lender such renewal certificate within 10 days following
inception. Borrower will provide Lender with reasonable proof of payment of
such premiums promptly following Borrower's payment of such premiums.
6.11 Corporate Existence; Maintenance of Property. Maintain
Borrower's corporate existence and maintain Borrower's properties,
including all Real Property, in good operating condition, ordinary
wear and tear excepted.
6.12 Maintenance of Corporate Records; Access to Facilities. Keep
books and records reflecting Borrower's financial condition in
accordance with GAAP consistently applied, and permit any person
designated by Lender to visit and inspect Borrower's property, to
examine and photocopy Borrower's corporate and financial books and
records and to discuss Borrower's affairs, finances and accounts with,
and to be advised as to the same by, Borrower's officers, all at such
reasonable times and intervals as Lender may reasonably request.
6.13 Notice of Default. Give to Lender prompt written notice of
the occurrence of any failure of performance or event of default, or
of the occurrence of any event that with due notice or lapse of time
would constitute a failure of performance or an event of default,
under the terms of this Agreement or any other material agreement or
contract to which Borrower is a party or by which Borrower is bound
and of any acceleration of indebtedness caused thereby.
6.14 Notice of Proceedings. Give to Lender prompt written notice
of Borrower's's becoming a party to any litigation or proceeding that
if decided adversely to Borrower would have a material effect on the
financial condition or business of Borrower.
6.15 Documentary Stamp/Intangible Taxes. Pay any documentary,
transfer, mortgage or recording tax assessed or the cost of any stamps
required to be affixed to any documents in connection with the Loan
Documents or the Collateral, by state or federal governments.
6.16 Financing Statements. Execute and deliver to Lender in form
and substance satisfactory to Lender such Financing Statements and
such other instruments as Lender may from time to time consider
reasonably necessary to create, perfect, preserve and maintain in full
force and effect Lender's security interest in the Collateral and to
give public notice thereof; and Lender, at the expense of Borrower,
may cause such statements and assurances to be recorded and
re-recorded, filed and re-filed, at such times and places as may be
required or permitted by law to create, perfect, preserve and maintain
such security interest and public notice thereof.
6.17 Further Assurances. Upon the reasonable request of Lender,
execute, acknowledge and deliver such further instruments and do such
further acts as may be necessary, desirable or proper to carry out
more effectively the purpose of this Agreement and to subject to
Lender's security interest any property intended by the terms hereof
to be covered thereby and any renewals, additions, substitutions,
replacements or betterments thereto.
6.18 Expenses of Collection. Pay or reimburse Lender for all
reasonable attorneys' fees, costs and expenses paid or incurred by
Lender, whether incurred with respect to collection, trial, appeal,
enforcement of any judgement, bankruptcy or insolvency proceedings or
any subsequent proceedings or appeals from any order or judgement
entered therein, or otherwise, in any action, proceeding or dispute of
any kind in which Lender is made a party or appears as party plaintiff
or defendant, affecting the Loan Documents, Borrower or the
Collateral, including but not limited to the foreclosure or other
enforcement of Lender's security interest, any action to protect the
security thereof or any proceeding in probate, reorganization or
bankruptcy; and any such amounts paid or incurred by Lender will be
added to the amounts owed Lender under the Note, will bear interest at
the Default Rate stated in the Note from date of payment and will be
secured by Lender's security interest in the Collateral.
6.19 Place of Business. Maintain its executive offices and
principal place of business at the address of Borrower set forth in
the introductory paragraph of this Agreement, unless Borrower provides
written notice to Lender of a change in Borrower's executive offices
or principal place of business at lease 30 days prior to any proposed
change.
6.20 Environmental Indemnity. Comply, and cause each of its
Subsidiaries to comply, with the requirements of all federal, state
and local environmental and health laws and regulations the
non-compliance with which could materially adversely affect the
operations, condition (financial or otherwise), business, assets or
prospects of the Borrower or such Subsidiary or the ability of the
Borrower or such Subsidiary to perform its obligations under any Loan
Document, (ii) provide to the Lender all documentation in connection
with such compliance that the Lender may reasonably request and (iii)
defend, indemnify and hold harmless, the Lender and its employees,
agents, officers and directors, from and against any claims, demands,
penalties, fines, liabilities, settlements, damages, costs or expenses
(including, without limitation, attorney and consultant fees,
investigation and laboratory fees, court costs and litigation and
expenses) arising out of (A) the presence, disposal, release or
threatened release of any hazardous materials on any property at any
time owned or occupied by the Borrower or any of its Subsidiaries (or
its respective predecessors in interest or title), (B) any personal
injury (including wrongful death) or property.
7.0 Negative Covenants of Borrower. Until all of the Indebtedness
owed to Lender by Borrower under the Term Note has been paid in full,
Borrower will not:
7.1 Limit on Corporate Borrowing. Borrow or permit the borrowing
by Borrower of any Indebtedness, other than the Term Loan and the
Senior Debt, in excess of $__________ (except trade credit) without
the prior written consent of Lender, which consent may be granted or
withheld in Lender's sole and absolute discretion.
7.2 Sale of Assets. Sell, lease, convey, pledge, grant a security
interest in, or otherwise dispose of any of Borrower's's property or
assets, including but not limited to the Collateral, except in the
ordinary course of business, other than to Lender or Senior Lender.
7.3 Dissolution or Liquidation. Suffer or permit Borrower's
dissolution or liquidation, either in whole or in part, or conveyance
of any of its stock, or redeem, purchase, retire or otherwise acquire,
directly or indirectly, any shares of its own stock, or issue any
additional shares of its own stock.
7.4 Merger or Reorganization. Become a party to a merger,
consolidation or other reorganization with any other corporation or
entity (including a de facto merger by which all or substantially all
of the property or assets of another company are acquired).
7.5 Disposition of Accounts. Pledge, discount or sell any of the
Accounts Receivable other than pursuant to the Security Agreement or
under the Senior Loan Documents.
7.6 No Dividends or Distributions. Not disburse funds in the form
of dividends, distributions, excessive rents, excessive (in Lender's
judgement) management fees, excessive (in Lender's judgment) officer's
compensation, or any other non "arms length" expense incurred in the
normal course of business, without the prior written consent of
Lender, which consent may be granted or withheld in Lender's sole and
absolute discretion.
8.0 Default by Borrower and Remedies of Lender.
8.1 Events of Default. Occurrence of any one or more of the
following events will constitute a Default, and if the same is
continuing beyond any applicable grace or cure period provided below
will constitute an Event of Default:
(a) Payment. If Borrower fails to pay any amount due under
the Term Note or any other Loan Document when due.
(b) Covenants. If Borrower fails to perform or observe any
term, covenant or agreement (other than a covenant of payment)
contained in any Loan Document on its part to be performed or
observed, and such failure shall remain uncured for 15 days after
written notice thereof shall have been given by Lender to
Borrower.
(c) Representations and Warranties. If any representation or
warranty made by Borrower (or any of its officers) under or in
connection with any Loan Document shall be or become incorrect or
untrue, or shall prove to have been incorrect or misleading in
any material respect when made.
(d) Default under other Indebtedness. If a material default
occurs under the Senior Loan Documents, or any other
Indebtedness, and is continuing beyond any applicable grace or
cure period.
(e) Involuntary Bankruptcy or Receivership. If an
involuntary case or proceeding under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect shall
be commenced against Borrower, and such case or proceeding shall
not be dismissed in 60 days; or a court shall enter a decree, or
a court or regulatory authority having jurisdiction over Borrower
shall enter an order, appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator, conservator,
supervisor, rehabilitator (or similar official) of Borrower or
for any substantial part of its property, or ordering the
winding-up, supervision or liquidation of its affairs and such
order shall not have been vacated or discharged or stayed or
bonded pending appeal with sixty (60) days after the entry
thereof.
(f) Voluntary Bankruptcy or Receivership. If Borrower shall
commence a voluntary case or proceeding under any applicable
bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an
involuntary case or proceeding under any such law, or shall
consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator,
conservator, supervisor, rehabilitator (or other similar
official) of Borrower or for any substantial part of its
property, or shall make any general assignment for the benefit of
creditors, or shall fail generally to pay its indebtedness
generally as the same becomes due, or shall take any corporate
action in furtherance of any of the foregoing.
(g) Judgments. If any judgments or order for the payment of
money which impairs substantially the ability of Borrower to
perform its obligations under the Loan Documents (exclusive of
amounts covered by insurance) shall be rendered against the
Borrower and such judgment or order shall not have been vacated
or discharged or stayed or bonded pending appeal within sixty
(60) days after the entry thereof.
(h) Transfers or Further Encumbrances. With the exception of
the Senior Lender, if Borrower sells, conveys, transfers,
mortgages, pledges, or grants a security interest in, any of the
Collateral, voluntarily or otherwise (other than in the ordinary
course of Borrower's business), without the prior written consent
of Lender, which consent may be granted or withheld in Lender's
absolute discretion.
(i) Failure of Loan Documents. If any material provision of
the Loan Documents for any reason ceases to be valid and binding
on Borrower, or Borrower shall so state in writing.
(j) Failure of Security. If the Mortgages or the Security
Agreement for any reason ceases to constitute a valid and (with
appropriate filings) perfected mortgage or security interest in
any of the Collateral secondary only to the Senior Debt.
(k) Levy Against Collateral. If the estate or interest of
Borrower in any of the Collateral is levied upon or attached in
any proceeding and such estate or interest is about to be sold or
transferred, or such process is continuing for more than 15 days
after such levy or attachment.
(l) Notices. If Borrower fails to give to Lender any notice
required under this Agreement.
8.2 Remedies. If any Event of Default occurs as provided in
Section 8.1 above, then Lender will, at the option of Lender, have the
right to exercise any or all of the remedies provided for in the Loan
Documents, and such other remedies as may be available to Lender at
law or in equity. The rights of Lender under the Loan Documents will
be separate, distinct, and cumulative of other powers and rights
herein granted and of all other rights which Lender may have in law or
equity, and none of them will be in exclusion of any other. No act of
Lender will be construed as an election to proceed under any
particular provision of this Agreement or the other Loan Documents to
the exclusion of any other provisions, or an election of remedies to
the bar of any other remedy allowed in law or equity. Borrower will
pay the reasonable attorneys' fees and other legal expenses incurred
by Lender in connection with such default or recourse against all
Collateral.
9.0 Indemnification. Borrower hereby releases Lender and agrees to
hold Lender harmless from any and all claims, damages, loss, cost or
expense (including, without limitation, reasonable attorneys' fees and
costs) arising out of or in connection with the Collateral, the Loan
Documents or Borrower's failure to pay or perform its obligations under the
Loan Documents, except for claims arising solely out of Lender's acts or
omissions to act with respect thereto if such acts or omissions are
determined by final judicial or administrative action to constitute gross
negligence or wilful misconduct.
10. Miscellaneous.
10.1 No Waiver; Rights Cumulative. No failure or delay by Lender
to exercise any right, power or privilege hereunder will operate as a
waiver of any such right, power or privilege or preclude any other or
future exercise thereof, and no failure by Lender to insist upon
strict performance by Borrower of any of the terms and provisions of
this Agreement or the other Loan Documents will operate as a waiver of
any of the terms or provisions thereof, and Lender will have the right
thereafter to insist upon strict performance by Borrower of any and
all of them. The rights and remedies herein provided are cumulative
and not exclusive of any other rights or remedies provided by law or
equity.
10.2 Governing Law; Jurisdiction and Venue. The rights and
obligations of Borrower and Lender with respect to this Agreement and
the Term Note shall be governed by, and construed in accordance with,
the laws of the State of Utah, and the rights and obligations of
Borrower and Lender with respect to any other Loan Documents shall be
governed by, and construed in accordance with, the laws of the State
in which the Collateral is located. Any suit, action or proceeding may
be brought against Borrower under the Loan Documents in the courts of
the State in which the Collateral is located or in the courts of the
County of Salt Lake, State of Utah, or the United States District
Court for the Federal District of Utah, as Lender in its sole
discretion may elect, and Borrower hereby accepts the nonexclusive
jurisdiction of those courts for the purpose of any suit, action, or
proceeding. In addition, Borrower hereby irrevocably waives, to the
fullest extent permitted by law, any objection which Borrower may now
or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to the Loan Documents or any
judgment entered by any court in respect of any part thereof, and
hereby further irrevocably waives any claim that any suit, action or
proceeding brought in the jurisdiction selected by Lender has been
brought in an inconvenient forum. Borrower irrevocably agrees that any
pleadings or service of process may be had on Borrower by mailing to
Borrower at the address set forth in the introductory paragraph of
this Agreement by certified or registered mail and such mailing shall
be effective for all purposes, including the establishment of personal
jurisdiction of the court in any such action.
10.3 Amendments, Etc. No amendment, modification, release,
termination or waiver of any provision of this Agreement or the other
Loan Documents shall be effective unless the same shall be in writing
and signed by Lender and Borrower and then such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given.
10.4 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of Borrower and Lender and their
respective successors and assigns, except Borrower shall not have the
right to assign its rights hereunder or any interest herein without
the prior written consent of Lender.
10.5 Severability. Any provision of this Agreement or the other
Loan Documents which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remainder of such provision or the remaining provisions hereof or
thereof or affecting the validity or enforceability of such provision
in any other jurisdiction. This Agreement may be executed in two or
more counterparts, and by the different parties on separate
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument,
and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
10.6 Headings. Section headings used in this Agreement are for
convenience only and shall not affect the construction of this
Agreement.
10.7 Counterparts. This Agreement may be executed in two or more
counterparts, and by the different parties on separate counterparts,
each of which shall be deemed an original, but all such counterparts
shall together constitute one and the same instrument, and it shall
not be necessary in making proof of this Agreement to produce or
account for more than one such counterpart.
10.8 Survival of Representations and Warranties. The warranties,
representations, covenants and agreements set forth in this Agreement
and in the other Loan Documents will survive the making of the Term
Loan and the execution and delivery of the Term Note, and will
continue in full force and effect until all Indebtedness of Borrower
to Lender will have been paid in full.
10.9 No Representations or Warranties by Lender. By accepting or
approving anything required to be observed, performed, fulfilled or
given to Lender pursuant to this Agreement or the other Loan
Documents, including (but not limited to) any officer's certificate,
balance sheet, statement of income, profit and loss or other financial
statement, Lender will not be deemed to have warranted or represented
the sufficiency, legality, effectiveness or legal effect of the same,
or of any term, provision or condition thereof, and such acceptance or
approval thereof will not be or constitute any warranty or
representation with respect to Lender.
10.10 Notices. All notices, demands, requests and other
communications required under this Agreement and the other Loan
Documents will be in writing and will be deemed to have been properly
given (a) when deposited in the United States mail and sent by United
States first class mail, postage prepaid, addressed to the party for
whom it is intended at its address set forth in the introductory
paragraph of this Agreement, or (b) when transmitted by facsimile to
the party for whom it is intended at its facsimile number set forth in
the introductory paragraph of this Agreement. Either party may
designate a change of address by written notice to the other, given at
least 10 days before such change of address is to become effective.
10.11 Usury. Anything in this Agreement or the Loan Documents to
the contrary notwithstanding, if from any circumstances whatever
fulfillment of any provision of any of the foregoing documents or
agreements at the time performance of said provision will be due will
involve transcending the limit of validity prescribed by the
applicable state usury law as preempted and prescribed from time to
time by the laws of the United States of America or any rule or
regulation of any department or agency thereof, then, ipso facto the
obligation to be fulfilled will be reduced to the limit of such
validity so that in no event will exaction be possible under any of
the aforesaid documents or agreements in excess of the limit of such
validity, but such obligations will be fulfilled to the limit of such
validity, and if under any circumstances whatsoever interest in excess
of the limit of such validity will have been paid by Borrower in
connection with the Term Note, such excess will be applied by Lender
to the unpaid principal balance of Term Note, as the case may be, or
refunded to Borrower, the manner of handling such excess to be at
Lender's election, and in case any such excess interest has accrued,
Lender will eliminate such excess interest so that under no
circumstances will interest on the Term Loan exceed the maximum rate
allowed by applicable law as preempted and prescribed from time to
time by the laws of the United States of America or any rule or
regulation of any department or agency thereof.
10.12 Waiver of Jury Trial. AS A MATERIAL INDUCEMENT FOR LENDER
TO MAKE THE TERM LOAN, BORROWER AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER OF THEM MAY HAVE
TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION ARISING OUT OF,
UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS AND THE INDEBTEDNESS OF
BORROWER TO LENDER THEREUNDER, OR WITH RESPECT TO ANY CLAIMS OR
DEFENSES ALLEGED TO ARISE OUT OF THE COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY
PARTY TO THE LOAN DOCUMENTS. THIS PROVISION IS NEGOTIATED BY THE
PARTIES AND IS SUBJECT TO NO EXCEPTIONS.
[Remainder of Page Left Intentionally Blank]
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be executed the day and year first above written.
BORROWER:
SICAN CORP.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Its: President
LENDER:
MITY-LITE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Its: President
[Signature Page to Term Loan Agreement]
Exhibit A-1: Legal Description of Arkansas Real Property
Exhibit A-2: Legal Description of Indiana Real Property
Exhibit B: Schedule of Prior Interests in Collateral
