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LOAN AGREEMENT
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This LOAN AGREEMENT (this "AGREEMENT" or the "LOAN AGREEMENT") dated as
of --- DAY OF DECEMBER, 1996, is made and entered into by and among
D & K WHOLESALE DRUG, INC., a Delaware corporation ("D & K"), and KRELITZ
INDUSTRIES, INC., a Minnesota corporation ("KRELITZ") (said D & K and Krelitz
being sometimes hereinafter referred to collectively as the "BORROWER"); and
MAGNA BANK, N.A., a national banking association ("BANK").
The following recitals form the basis of this Agreement:
A. Borrower has applied to Bank for a loan (the "LOAN") under the
Missouri First Link Program described below in the principal sum of
$1,495,000.00 to finance the Borrower's purchase and installation of certain
leasehold improvements for the distribution and warehouse facility leased by
Borrower located at 0000 XXXX XXXXXX, XXXX XXXXXXXXX, XXXXXXXX 00000 (the
"MISSOURI FACILITY"), and to finance the Borrower's purchase of furniture,
fixtures and equipment for use in connection with the Borrower's operation of
the Missouri Facility.
B. The Loan will be evidenced by a PROMISSORY NOTE (the "NOTE"),
dated as of the date hereof, made by Borrower in the original principal amount
of $1,495,000.00. This Agreement, together with the Note, together with the
"SECURITY DOCUMENTS" (as defined below) which secure the Note and secure this
Agreement, and together with all other documents and agreements evidencing,
securing or guaranteeing repayment of the Loan, are collectively referred to
herein as the "LOAN DOCUMENTS."
C. As a condition to closing the Loan, and to further evidence
Borrower's obligation to repay the Loan, Bank has required Borrower to agree
to repay the Loan on the following terms and conditions, and to make the
certifications, representations, warranties and covenants herein.
NOW, THEREFORE, in consideration of the above recitals and the making of
the Loan, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Bank hereby agree
as follows:
ARTICLE I - LOAN TERMS AND CONDITIONS
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1.1 LOAN TERMS AND CONDITIONS. The terms and conditions of the
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$1,495,000.00 LOAN (including the term, interest rate and provisions for
repayment of the principal amount thereof) are as set forth in the Promissory
Note annexed hereto as EXHIBIT A, and as set forth in this Loan Agreement.
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With respect to the Loan and Note, Bank agrees that Bank shall issue to
Borrower a monthly computer generated invoice of the amount of interest and
principal due and payable for the applicable month for the Loan and Note,
which invoice shall be mailed to Borrower's address for notices set forth in
Section 4.3 hereof, on or about the first (1st) of each month during the
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term of the Loan.
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The Loan shall be closed ("CLOSING" or "CLOSING DATE") in accordance
with the terms, conditions and requirements of this Agreement on the full
execution of this Agreement by Bank and Borrower, at the offices of the Bank.
The Loan shall be funded in accordance with Sections 1.3 through 1.5 hereof.
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1.2 SECURITY FOR LOAN; COLLATERAL. Pursuant to the Security Documents
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described in Section 4.1 hereof, the Loan will be secured by: (A) a first
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lien perfected security interest in the personal property, furniture, fixtures
and equipment (the "MISSOURI FFE") owned by Borrower and located at or affixed
or attached to the Missouri Facility; (B) a first lien perfected security
interest in the personal property, furniture, fixtures and equipment (the
"KENTUCKY FFE") owned by Borrower and located at or affixed or attached to the
distribution and warehouse facility owned by Borrower located at 000 XXXX
XXXXXX XXXXXX, XXXXXXXXX, XXXXXXXX 00000 (the "KENTUCKY FACILITY"); and (C) a
first deed of trust lien in the real estate and improvements (distribution and
warehouse facility) owned by Krelitz located at 000 XXXXX XXXXX XXXXXX,
XXXXXXXXXXX, XXXXXXXXX 00000 (the "MINNESOTA FACILITY"), and a first lien
perfected security interest in the personal property, furniture, fixtures and
equipment (the "MINNESOTA FFE") owned by Borrower and/or Krelitz and located
at or affixed or attached to the Minnesota Facility. The Missouri Facility
and the Missouri FFE, the Kentucky Facility and the Kentucky FFE, and the
Minnesota Facility and the Minnesota FFE, are sometimes hereinafter referred
to collectively as the "COLLATERAL".
Notwithstanding anything to the contrary contained herein, the
Collateral expressly excludes all of, and expressly does not include any of,
the "FLEET COLLATERAL" described in INTERCREDITOR AGREEMENT dated December --,
1996, by and between Magna Bank, N.A., and Fleet Capital Corporation.
1.3 FUNDING OF LOAN.
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(a) MISSOURI FIRST LINK PROGRAM. The Borrower has been approved for
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participation in, and the Loan from the Bank to the Borrower for the first
(1st) year of the Loan has ben extended by Bank to Borrower pursuant to, the
MISSOURI FIRST LINKED DEPOSIT JOB CREATION LOAN PROGRAM (the "MISSOURI FIRST
LINK PROGRAM"). The State of Missouri has agreed to deposit with Bank the sum
of $1,495,000.00 (the "STATE DEPOSIT") for the first (1st) year of the Loan,
pursuant to the Missouri First Link Program.
For the purposes hereof, the annual rate of interest on the State
Deposit charged to the Bank by the State of Missouri is the "STATE DEPOSIT
RATE". The State Deposit Rate determined on and as of the "FUNDING DATE" (as
defined in Section 1.3(c) below) is the "INITIAL STATE DEPOSIT RATE". Bank
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and Borrower agree that the interest rate for the Loan under this Loan
Agreement pursuant to Paragraph C(1) of the Note shall be that fixed annual
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rate of interest which is THREE PERCENT (3%) over and in addition to the
Initial State Deposit Rate determined on and as of the Funding Date. If the
Initial State Deposit Rate, as determined on the Funding Date, is other than
2.95%, then the Bank and the Borrower shall enter into, execute and deliver to
each other an amendment
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to the Note, changing the interest rate stated under Paragraph C(1) of the Note
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to that fixed annual rate of interest which is 3% over and in addition to the
Initial State Deposit Rate, as determined on the Funding Date.
The State of Missouri has the right to increase the State Deposit Rate
charged to Bank on the State Deposit, in accordance with the applicable regula-
tions and guidelines under the Missouri First Link Program, by reason of the
failure of the Borrower to create and retain the requisite minimum number of
jobs in the State of Missouri and by reason of other defaults by Borrower
under the Missouri First Link Program. If, after the Funding Date, the State
of Missouri increases the State Deposit Rate charged to Bank on the State
Deposit (any such increased State Deposit Rate is an "ADJUSTED STATE DEPOSIT
RATE"), then, in such event, for all periods during which the Adjusted State
Deposit Rate exceeds the Initial State Deposit Rate, the Borrower shall pay to
Bank, as additional interest under the Loan, that amount which is equal to
interest on the outstanding principal amount of the Loan at a rate of interest
equal to that amount which is: (1) the Adjusted State Deposit Rate, minus
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(2) the Initial State Deposit Rate.
(b) RECEIPT OF STATE DEPOSIT; COMPLIANCE WITH REQUIREMENTS OF MISSOURI
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FIRST LINK PROGRAM. The Bank will advise the State of Missouri of the Closing
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of the Loan. Thereafter, upon the Bank's receipt of the State Deposit, the
Bank shall proceed to fund and advance loan proceeds of the Loan in accordance
with this Section 1.3 and Section 1.4. The Bank and the Borrower agree
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that the Bank shall have no obligation to fund and advance loan proceeds of
the Loan or any portion thereof, unless and until receipt by the Bank of the
State Deposit. Bank agrees to fully comply with all the requirements, terms
and conditions of Sec.Sec.30.750 to 30.767 X.X.Xx., regarding the Missouri
First Link Program, as the same may be amended from time-to-time, and to
timely and promptly provide the State Treasurer with all required
certifications and such other documents as may be required by the State
Treasurer in connection therewith in the form and manner prescribed by the
State Treasurer.
In accordance with the requirements of Section 30.760.1 X.X.Xx.,
Borrower agrees that Borrower shall use the loan proceeds of the Loan as
required by Sections 30.750 to 30.765 X.X.Xx., and that in the event Borrower
does not use the loan proceeds in the manner prescribed by said Sections, then
the remaining loan proceeds (not then used by the Borrower) shall be
immediately returned to Bank and any loan proceeds used by the Borrower (in
violation of the requirements of said Sections) shall be repaid to the Bank as
soon as practicable.
(c) INITIAL FUNDING OF LOAN. The date of the Bank's receipt of the
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State Deposit is the "FUNDING DATE" of the Loan. On the Funding Date, Bank
agrees to and shall fund and advance to Borrower loan proceeds of the Loan in
an amount equal to the sum of: (1) $1,000,000.00, which loan proceeds are
funded and advanced based on the value of the Collateral in place as of the
Closing Date at the Kentucky Facility and the Minnesota Facility; plus (2)
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that amount which is equal to FIFTY-SIX PERCENT (56%) of the actual cost of
any leasehold improvements to the Missouri Facility ("MISSOURI LEASEHOLD
IMPROVEMENTS") actually completed as of the Clos-
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ing Date, and of any Missouri FFE (furniture, equipment, machinery, appliances,
fixtures and other items of personal property) purchased by Borrower and
actually delivered to, or in place, or installed at the Missouri Facility as of
the Closing Date. At Loan Closing, Borrower shall provide to Bank the evidence
required under Section 1.5 (b) hereof with respect to the amount to be funded
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under the preceding Item 2 of this Section 1.3(b).
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On the Funding Date, the balance, if any, of the Loan not funded and
advanced by Bank to Borrower pursuant to this Section 1.3, shall be funded,
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advanced and deposited by Bank into a money market interest bearing "ESCROW
ACCOUNT" at Bank for the benefit of the Borrower. All interest earned on the
Escrow Account shall be reported under Borrower's FEIN and paid to Borrower.
After the Funding Date, the loan proceeds on deposit in the Escrow Account
shall be funded and advanced by Bank to Borrower pursuant to Section 1.4
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hereof. The deposit of monies by Bank into the Escrow Account shall be deemed
to be a funding and advance of loan proceeds for the benefit of the Borrower;
and interest on the full amount of the Loan (including the amount deposited
into the Escrow Account) shall commence to accrue on the Funding Date.
1.4 FUTURE FUNDING OF LOAN. The remaining balance of the Loan
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on deposit in the Escrow Account may be drawn by Borrower after the Funding
Date and prior to the maturity of the Loan, in accordance with and upon
satisfaction of the "FUNDING CONDITIONS" set forth in Section 1.5 hereof,
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for the payment of, or reimbursement to Borrower for its payment of,
installation and construction of Missouri Leasehold Improvements and purchase
by Borrower of Missouri FFE. The balance of the Loan may be drawn in one or
more installments, to a maximum $1,495,000.00 aggregate amount funded to
Borrower under Section 1.3 hereof and drawn and funded to Borrower under
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this Section 1.4. The Loan is not a revolving line of credit. Amounts
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borrowed under the Loan may not be reborrowed after any such amounts are
repaid.
1.5 FUNDING CONDITIONS. Borrower may draw the balance of the Loan,
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only upon and after satisfaction by Borrower of the following conditions (the
"FUNDING CONDITIONS"), to-wit:
(a) Borrower may draw loan proceeds for the payment of, or
reimbursement to Borrower for its payment of, FIFTY-SIX PERCENT (56%) of the
actual cost of installation and construction of Missouri Leasehold
Improvements actually completed. Borrower may draw loan proceeds for the
payment of, or reimbursement to Borrower for its payment of, FIFTY-SIX PERCENT
(56%) of the actual cost of the purchase by Borrower of Missouri FFE actually
delivered to, or in place, or installed at the Missouri Facility.
(b) Borrower must submit and present to Bank: (1) Copies of invoices
for items to be paid and/or reimbursed by the draw on the Loan; and (2)
Borrower's duly executed written draw request for loan proceeds (in the form
annexed hereto as Exhibit B). The Borrower's draw request shall contain a
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detailed listing and/or description of all applicable Missouri Leasehold
Improvements which are the subject of the draw, and/or of all applicable
Missouri FFE which is the subject of the draw; all of which Missouri Leasehold
Improvements and Missouri FFE which are the subject of said draws must be
substantially in accordance with the "BUDGET" annexed hereto as Exhibit C.
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The Borrower's draw request shall certify to the Bank that: all applicable
Missouri Leasehold Im-
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provements which are the subject of the draw are substantially in accordance
with the Exhibit C Budget and have been completed; all applicable Missouri FFE
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which is the subject of the draw is substantially in accordance with the
Exhibit C Budget and has been delivered to, or is in place, or has been
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installed at the Missouri Facility; and the proceeds of the draw shall be used
by the Borrower for the payment and/or reimbursement of the corresponding
invoices provided by Borrower to Bank per the preceding Item (1) of this
Section 1.5(b).
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(c) Borrower is not, as of the date of the requested draw, then in
default (after the expiration of any applicable grace, notice and cure
periods) under this Loan Agreement or under the terms of any of the other Loan
Documents.
(d) Provided that Borrower is not then in default (after the
expiration of any applicable grace, notice and cure periods) under this Loan
Agreement or under the terms of any of the other Loan Documents; then the Bank
agrees to and shall fund to Borrower draws on the Loan within five (5)
business days after Borrower's written draw request submitted to Bank in
satisfaction of, compliance with and conformity with all of the terms, condi-
tions, requirements and provisions of this Section 1.5. Borrower's
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submission of its draw request to Bank for a draw under the Loan shall
constitute Borrower's certification, warranty and representation to Bank that,
to the best of its knowledge after due inquiry, as of the date of the draw
request: (1) the Borrower is not then in default under any material term,
condition, provision or requirement of this Loan Agreement or of any of the
other Loan Documents; (2) all of Borrower's warranties and representations
contained in this Loan Agreement and in all of the other Loan Documents are
then true and correct in all material respects; and (3) Borrower is then in
compliance with all of the Borrower's agreements, obligations and covenants
contained in this Loan Agreement and in all of the other Loan Documents.
ARTICLE II - BORROWER COVENANTS
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2.1 RESERVED.
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2.2 CLOSING COSTS. Borrower shall pay, without limitation, all
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reasonable costs and expenses incurred by Bank in connection with the Loan,
including but not limited to reasonable appraisal fees, environmental audit
fees, legal expenses, title insurance premiums, survey charges, and recording
and filing fees.
2.3 LITIGATION. If any proceedings are filed or are legitimately
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threatened to be filed seeking to: (a) enjoin or otherwise prevent or declare
invalid or unlawful the Borrower's use or occupancy of the Missouri Facility,
the Kentucky Facility or the Minnesota Facility; (b) adversely affect the
validity or priority of the liens and security interests granted Bank under
the Loan Documents; or (c) materially adversely affect the financial condition
of Borrower, then Borrower will notify Bank of such proceedings and, within
five (5) calendar days following Borrower's receipt of notice of such
proceedings, or at least five (5) calendar days prior to the expiration of the
time period allowed under applicable law to file an answer, Borrower will
cause such proceedings to be vigorously contested in good faith, and in the
event of an adverse ruling or decision, prosecute all allowable
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appeals therefrom. Borrower will, without limiting the generality of the
foregoing, resist the entry or seek the stay of any temporary or permanent
injunction that may be entered, and use its best efforts to bring about a
favorable and speedy disposition of all such proceedings. Borrower agrees to
reimburse Bank for all of Bank's reasonable expenses incurred in connection with
any such proceedings, including, without limitation, Bank's reasonable
attorneys' fees and expenses, regardless of whether Bank is named in any such
proceeding.
2.4 Financial Statements. Borrower agrees to promptly supply
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Bank with such information concerning the Collateral, and the Borrower's
assets, liabilities and affairs as Bank may reasonably request from time to
time; provided that Borrower shall, without necessity of any request by Bank,
provide to Bank: (a) Within forty-five (45) days after the close of each
calendar quarter, company prepared quarterly financial statements, certified
to be true and correct by an officer of the Borrower; and (b) as soon as
available and in no event later than ninety (90) days after the close of each
calendar year (or Borrower's fiscal year, if different), audited financial
statements, prepared by a certified public accountant, showing the results of
its operations, and containing a balance sheet and statement of income
prepared in accordance with generally accepted accounting principles consis-
tently applied. Borrower agrees to: (c) maintain its books and records in
accordance with generally accepted accounting principles consistently applied;
(d) permit Bank or any of its agents or representatives to have access to and
to examine all books and records regarding the Collateral, at any time or
times hereafter during business hours; (e) permit Bank to copy and make
abstracts from any and all of said books and records; and (f) to provide Bank
with such other current financial information regarding such property and the
Borrower on an interim basis as determined necessary by Bank in its reasonable
judgment.
Subject to the proviso hereinafter set forth, Bank agrees to treat
all books and records, and all other financial information, and all other
information regarding Borrower's business, supplied or provided by Borrower to
Bank, as confidential information; and subject to the proviso hereinafter set
forth, and except in response to a valid court order, Bank shall not divulge
any of said books, records or information to any third-parties without the
prior written consent of Borrower. PROVIDED, HOWEVER, that Bank may divulge
such books, records and other information where required by applicable banking
law and regulations, and/or to Bank's loan committee(s), employees, officers,
directors, attorneys and accountants, and/or to bank examiners, and/or to any
party with or to whom Bank is negotiating or investigating a sale, merger or
consolidation of or with Bank (and to such party's loan committee(s),
employees, officers, directors, attorneys and accountants).
2.5 NOTICE OF DEFAULT. Borrower agrees to promptly notify Bank:
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(a) of any condition or event which to its knowledge constitutes (or which to
its knowledge, with the giving of notice or lapse of time, or both, would
constitute) an Event of Default hereunder; (b) of any condition or event which
to its knowledge constitutes (or to its knowledge, with the giving of notice
or lapse of time, or both, would constitute) a default or event of default
under or within the meaning of any present or future
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material agreement or obligation of Borrower to any third party, including
(without limitation) the loan obligations of Borrower to FLEET CAPITAL
CORPORATION ("FLEET") under the THIRD AMENDED AND RESTATED LOAN AGREEMENT dated
March 3, 1995 (as now and hereafter amended and restated, the "FLEET LOAN
AGREEMENT") by and between Borrower, as borrower, and Fleet, as Lender, and any
other material loan, line of credit, revolving credit, guaranty or letter of
credit reimbursement obligations of Borrower to any third parties; and (c) and
of any material adverse change in the financial condition of Borrower. Borrower
also agrees to cooperate with Bank in arranging for inspections by
representatives of the Bank of the Collateral, from time to time. Borrower
shall perform all of its obligations under the Note, the Security Documents and
the other Loan Documents and shall cause all of the representations and
warranties in this Agreement to be true and correct at all times until the Loan
is repaid in full. Borrower shall immediately notify Bank if any representation
or warranty made herein to its knowledge ceases to be true and correct in all
material respects.
2.6 NEGATIVE COVENANTS. Until the Loan is repaid in full,
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Borrower agrees, without the prior consent of Bank (which consent shall not be
unreasonably withheld, conditioned or delayed), as follows:
(a) Borrower shall not merge into or consolidate with or into
any corporation, partnership, limited liability company or other legal
entity, nor shall any of the foregoing partnerships dissolve, liquidate or
otherwise be terminated, except as expressly permitted in Section 4.4
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hereof.
(b) Borrower shall not mortgage, encumber or suffer any lien on
the Collateral, or any part thereof, except as may be expressly permitted
in the Loan Documents.
(C) Borrower shall not sell, lease or otherwise transfer all or
any portion of the Collateral, other than to allow for the substitution
and/or replacement of the same with reasonably equivalent Collateral, as
may be reasonable and appropriate in the normal course of Borrower's
business, and except as expressly permitted in Section 4.4 hereof.
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(d) The articles of incorporation and corporate by-laws of the
Borrower shall not be amended, modified or terminated, except as expressly
permitted in Section 4.4 hereof.
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2.7 FINANCIAL COVENANTS. Until the Loan is repaid in full,
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Borrower agrees and covenants, as follows:
(a) MAINTENANCE OF CAPITAL BASE. Borrower shall maintain at all
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times during the periods specified below a Capital Base in an amount not less
than the amount shown below for the period corresponding thereto:
Period Amount
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09/30/96 through 12/30/96 $1,800,000
12/31/96 through 03/30/97 $1,400,000
As of 03/31/97 $1,976,000
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The Capital Base for all periods after 3/31/97 through the maturity date
of the Note, shall be established on or before 3/31/97 in the same amounts
established by Borrower and Fleet as the Capital Base requirement for such
periods under the Fleet Loan Agreement. If Borrower and Fleet are unable to
reach agreement on the amounts of the Capital Base requirement for such
periods on or before such date, then, notwithstanding anything contained
herein or elsewhere to the contrary, such failure to so agree shall constitute
an Event of Default hereunder by Borrower.
(b) CURRENT RATIO. Borrower shall maintain at all times a ratio
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of Consolidated Current Assets to Consolidated Current Liabilities of not less
than 1.5 to 1.0. For purposes of computing the ratio contemplated herein, the
amount of Borrower's Inventory comprising Consolidated Current Assets shall be
computed on a first in, first out basis in accordance with GAAP.
(c) DEBT SERVICE COVERAGE RATIO. Borrower shall maintain for
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each fiscal year of Borrower a ratio of Net Cash Flow minus Capital
Expenditures not financed by Permitted Purchase Money Indebtedness to Debt
Service of not less than 1.0 to 1.0.
Any capitalized terms used in the foregoing Section 2.7 (a), (b) & (c)
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not otherwise defined in this Loan Agreement shall have the meanings ascribed
to such terms in the "ADDITIONAL DEFINITIONS" annexed hereto as EXHIBIT D
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and incorporated herein by this reference.
2.8 FURTHER ASSURANCES. Borrower will, on request of Bank, from time
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to time, execute and deliver such documents as may be necessary to perfect and
maintain perfected as valid liens and security interests, upon the Collateral,
the liens and security interests granted to Bank pursuant to the Loan
Documents, and to fully consummate the transactions contemplated thereby.
ARTICLE III - BORROWER'S REPRESENTATIONS AND WARRANTIES
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Borrower represents and warrants as follows:
3.1 EXISTENCE AND OWNERSHIP. D & K is corporation duly organized and
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validly existing under the laws of the State of Delaware, and qualified to do
business in the State of Missouri and the State of Kentucky, and all other
States in which D & K does business. Krelitz is corporation duly organized
and validly existing under the laws of the State of Minnesota, and qualified
to do business in the State of Minnesota, and all other States in which
Krelitz does business. Krelitz is a wholly-owned subsidiary of D & K.
D & K has full power and authority to conduct its business as presently
conducted, to lease the Missouri Facility, to own the Kentucky Facility, to
own the Missouri FFE, the Kentucky FFE and the Minnesota FFE (if any), and to
own its other properties, and to perform all of its duties and obligations
under the Loan Documents; and such execution and performance have been duly
authorized by all corporate action. Krelitz has full power and authority to
conduct its business as presently conducted, to own the Minnesota Facility, to
own the Minnesota FFE, and to own its other properties, and to perform all of
its duties and obligations under
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the Loan Documents; and such execution and performance have been duly authorized
by all corporate action.
3.2 NO VIOLATIONS. Neither the execution, delivery, nor performance
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of the Loan Documents will violate or conflict with any law, rule, regulation,
order, judgment, organizational document, indenture, instrument, or agreement
by which Borrower is bound.
3.3 COMPLIANCE WITH LAWS. To the best of its knowledge after due and
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diligent inquiry and investigation, the Collateral is in compliance with all
applicable laws, ordinances, regulations, and other requirements of
governmental authorities and any restrictive covenants applicable to such
property (including, without limitation, land use, development, zoning and
environmental laws, regulations and restrictions, and the requirements of the
Federal Fair Housing Act and the Americans with Disabilities Act).
3.4 ENVIRONMENTAL. To the best of Borrower's knowledge and belief,
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after due and diligent inquiry, the Missouri Facility, the Kentucky Facility
and the Minnesota Facility are each now in full compliance with all applicable
Local, State and Federal Environmental Laws, Ordinances, Regulations and
Requirements.
3.5 LITIGATION. Except as disclosed on EXHIBIT E annexed hereto,
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there is no material adverse litigation or other civil or criminal proceeding
pending nor, to the best of its knowledged threatened, against or affecting
Borrower, or the Collateral, or any circumstance existing which would in any
manner materially adversely affect the Collateral, the priority or enforce-
ability of the Loan Documents or the ability of Borrower to perform its
obligations under the Loan Documents. If civil litigation is hereafter
commenced or threatened against Borrower, or the Collateral, and if the claims
and causes of action which are the subject of such litigation are fully
insured and/or covered by insurance policies which are then in full force and
effect (collectively, "INSURED CLAIMS"), then the Borrower's warranty and
representation under this Section shall be deemed to be true and correct
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notwithstanding the pendency or threat of such civil litigation. All
litigation disclosed on EXHIBIT E are Insured Claims.
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3.6 NO MISSTATEMENTS. To the best of Borrower's knowledge and belief,
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no information, certification or report submitted to Bank by Borrower pursuant
to this Agreement contains any material misstatement of fact or omits to state
a material fact or any fact necessary to make the information not misleading.
For the purposes of this Loan Agreement, the phrase "Borrower's knowledge and
belief" (or similar) refers to the actual knowledge of Xxxxxx X. Xxxxxx and
Xxxxx Xxxxxxx (being the employees of the Borrower actually involved in the
transactions contemplated hereby), and such other information which said
individuals would know or should know upon such investigation as is
appropriate under the circumstances. For the purposes of this Loan Agreement,
the phrase "Due and Diligent Inquiry and Investigation" (or similar) means
such inquiry of the Borrower's records, officers, directors and employees, and
such investigation of public records, and such other investigations and
studies, as is reasonably appropriate under the circumstances in order for
Borrower to make that applicable statement or give the applicable warranty or
representation.
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3.7 NO DEFAULTS. To the best of Borrower's knowledge and belief, (A)
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Borrower is not in default under its lease (the "MISSOURI LEASE") of the
Missouri facility; and (B) no event has occurred or condition exists which,
with the giving of notice, the lapse of time, or both, would constitute a
default under any of the Loan Documents, the Missouri Lease, or any other
material agreement or instrument to which Borrower is a party or an obligor.
3.8 FINANCIAL STATEMENTS. To the best of Borrower's knowledge and
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belief, all financial statements of Borrower delivered to Bank have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the financial condition of Borrower.
To the best of Borrower's knowledge and belief, no material adverse change has
occurred in the financial condition of Borrower since the respective dates
thereof.
3.9 TAX RETURNS. Borrower has filed all required federal, state and
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local tax and informational returns and paid all taxes due pursuant to said
returns or any assessments against Borrower or the Collateral.
3.10 CONSENT OF FLEET. Fleet has consented in writing to Borrower
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procuring and obtaining the Loan hereunder. At or prior to Closing, Borrower
shall deliver to Bank a true and correct copy of such written consent by
Fleet.
ARTICLE IV - MISCELLANEOUS
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4.1 NOTE AND SECURITY. The Loan shall be evidenced by the Note
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executed by the Borrower, as maker, and delivered to the Bank, at the Closing
of the Loan. The Loan, and all of the agreements, obligations, covenants,
representations and warranties of Borrower contained in this Loan Agreement,
are secured by the following "SECURITY DOCUMENTS" executed and delivered by
the Borrower to the Bank at the Closing of the Loan, to-wit:
(a) Deed of Trust executed by Krelitz, as grantor, to and in favor of
Bank, granting a first lien on the Minnesota Facility;
(b) Security Agreement executed by Borrower, as debtor, to and in
favor of Bank, as secured party, granting a first lien security interest the
Missouri FFE, the Kentucky FFE and the Minnesota FFE;
(c) UCC Financing Statements executed by Borrower, as debtor, to and
in favor of Bank, as secured party, with respect to the Missouri FFE, the
Kentucky FFE and the Minnesota FFE; and
(d) Landlord's Agreement executed by the Landlord of the Missouri
Facility.
4.1A DEED OF TRUST -- SURVEY EXCEPTION. Borrower agrees, provides and
---------------------------------
covenants that (at Borrower's sole cost and expense), at Borrower's option,
either:
------
(a) AT LOAN CLOSING, Borrower shall cause FIRST AMERICAN TITLE
---------------
INSURANCE COMPANY (or such other title insurance company reasonable acceptable
to Bank) (the "TITLE COMPANY") to delete the survey exception from Bank's loan
policy of title insurance insuring the first mortgage lien of the Deed of
Trust encumbering the
11
Minnesota Facility (the "LOAN POLICY"); and in connection therewith, at
Borrower's option, either Borrower shall provide the Title Company with a survey
of the Minnesota Facility which is sufficient to cause the Title Company to
delete the survey exception from the Loan Policy, or Borrower shall provide the
Title Company with such affidavits, and indemnity and other agreements, as are
sufficient to cause the Title Company to delete the survey exception from the
Loan Policy; or.
--
(b) WITHIN SIXTY (60) DAYS AFTER LOAN CLOSING, Borrower shall
-----------------------------------------
cause the Title Company to issue an "ENDORSEMENT" to Bank's Loan Policy
insuring the first mortgage lien of the Deed of Trust encumbering the
Minnesota Facility, by which Endorsement the Title Company deletes the survey
exception from Bank's Loan Policy; and in connection therewith, at Borrower's
option, either Borrower shall provide the Title Company with a survey of the
Minnesota Facility which is sufficient to cause the Title Company to issue
such Endorsement to the Loan Policy deleting the survey exception from the
Loan Policy, or Borrower shall provide the Title Company with such affidavits,
and indemnity and other agreements, as are sufficient to cause the Title
Company to issue such Endorsement to the Loan Policy deleting the survey
exception from the Loan Policy.
In the event that for any reason whatsoever Borrower fails or is unable
to satisfy the requirements of the foregoing Section 4.1A(a) at Loan
---------------
Closing, and thereafter for any reason whatsoever Borrower fails or is unable
to satisfy the requirements of the foregoing Section 4.1A(b) within SIXTY
---------------
(60) DAYS after Loan Closing, then such failure or inability by Borrower shall
constitute the "SURVEY DEFAULT" hereunder.
If Borrower obtains a survey of the Minnesota Facility, such survey
shall be certified to Bank and Borrower shall deliver two (2) prints thereof
to Bank.
4.2 EVENTS OF DEFAULT. The Borrower agrees that the occurrence and
-----------------
continuation beyond any applicable grace, notice or cure period specifically
allowed for under this Loan Agreement or any of the other Loan Documents or
otherwise approved by Bank in writing, of any one or more of the followings
events shall constitute an "EVENT OF DEFAULT" by Borrower under this Loan
Agreement and under the Loan Documents, to-wit:
(a) PAYMENT DEFAULT. In the event that Borrower fails to make any
---------------
regularly scheduled payment due under the Note within TWENTY (20) DAYS after
the due date thereof, or in the event that Borrower fails to make any other
payment required under the Security Documents, this Loan Agreement or any of
the other Loan Documents within TWENTY (20) DAYS after the Bank's written
invoice or other demand for payment.
(b) SURVEY DEFAULT. In the event of the occurrence of the Survey
--------------
Default under Section 4.1A hereof, and for any reason whatsoever Borrower
------------
fails or is unable to cure such Survey Default within TEN (10) DAYS after
written notice of such Survey Default from Bank to Borrower.
(c) NON-MONETARY DEFAULT. In the event that Borrower defaults on or
--------------------
breaches or fails to perform with respect to any agreement, obligation and
covenant under the Note, this Loan
12
Agreement, the Security Documents or any of the other Loan Documents not
involving the payment of money (a "NON-MONETARY DEFAULT"), and such Non-Monetary
Default shall not be cured within THIRTY (30) DAYS after written notice of such
Non-Monetary Default from Bank to Borrower.
(d) DEFAULTS UNDER OBLIGATIONS TO THIRD-PARTIES. A default
-------------------------------------------
or event of default (after the expiration of any applicable notice and cure
period, if any) shall occur under or within the meaning of any present or
future material agreement or obligation of Borrower to any third party,
including (without limitation): (1) D & K's obligations under AMENDED AND
RESTATED LEASE AGREEMENT dated as of January 19, 1996 (as amended, the
"MISSOURI LEASE") by and between D & K, as tenant, and Morhaert Development,
L.L.C., as landlord (the "MISSOURI LANDLORD"), covering the Missouri Facility;
(2) the loan obligations of Borrower to Fleet; and (3) any other material
loan, line of credit, revolving credit, guaranty or letter of credit xxxx-
bursement obligations of Borrower to any third parties.
(e) RENT DEFAULT UNDER MISSOURI LEASE. If the Missouri
---------------------------------
Landlord gives Bank written notice of a rent payment default under the
Missouri Lease ("RENT DEFAULT NOTICE"), the failure of D & K to pay the rent
due under the Missouri Lease within ten (10) days after Bank gives Borrower
written notice of such Rent Default Notice; or if the Missouri Landlord gives
Bank a Rent Default Notice, and Bank thereupon pays to the Missouri Landlord
rent due under the Missouri Lease, the failure of D & K to reimburse to Bank
the rent paid by Bank under the Missouri Lease to the Missouri Landlord within
ten (10) days after Bank gives Borrower written notice of such Bank payment of
rent.
(f) MISREPRESENTATION. Any warranty or representation made by
-----------------
Borrower hereunder shall be untrue or misleading or inaccurate in any material
respect when made; or with respect to warranties and representations of
Borrower hereunder which are required to be true and correct at all times, any
such warranty or representation made by Borrower hereunder shall be untrue or
misleading or inaccurate in any material respect at any time, and Borrower
fails to cure or correct such untrue or misleading or inaccurate warranty or
representation within THIRTY (30) DAYS after written notice thereof from Bank
to Borrower.
Upon the occurrence and during the continuation of any such Event of
Default, the Bank shall have the right and option, and shall be entitled, to
exercise any and all rights and remedies available to Bank under the Note, the
Security Documents and the other Loan Documents, and under applicable law.
4.3 NOTICES. Any notices required or permitted to be given hereunder
-------
shall be given either hand-delivered or by United States Certified Mail,
Return Receipt Requested, and addressed to the parties hereto at the addresses
set forth below, or at such other addresses as the parties may themselves
designate in writing (by notice given hereunder) for the purpose of receiving
notices hereunder. Such notices shall be deemed effective on delivery if
hand-delivered or on the second business day after being deposited in the
mails with postage prepaid if mailed.
13
Bank:
----
Magna Bank, N.A.
One Magna Place
0000 Xxxxx Xxxxxxxxx Xxxx.
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxx X. Xxxxxxxxx
with a copy to [Attorney]:
-------------------------
Xxxxx Xxxxxx, Esq.
Rosenblum, Goldenhersh,
Xxxxxxxxxxx & Zafft, P.C.
0000 Xxxxxxx Xxxx. - 0xx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Borrower:
--------
c/o D & K Wholesale Drug, Inc.
Attn: Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx - Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
with a copy to [Attorney]:
-------------------------
Xxxxxx Xxxxxx, Esq.
Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
4.4 CERTAIN PERMITTED BORROWER TRANSACTIONS. Notwithstanding anything
---------------------------------------
to the contrary contained in this Loan Agreement, or contained in any of the
Security Documents, or contained in any of the other Loan Documents, Bank
agrees, as follows:
(a) With prior written notice to Bank, Krelitz may merge and be merged
into D & K, with D & K being the surviving entity, without Bank's consent,
provided that D & K assumes in writing and/or ratifies all of Krelitz's
obligations under this Loan Agreement, the Security Documents and the other
Loan Documents, upon terms and conditions reasonably satisfactory to Bank (the
"PERMITTED MERGER").
(b) With prior written notice to Bank, the articles of incorporation
and corporate by-laws of D & K and of Krelitz may each be amended, modified
and/or restated in writing, and D & K and/or Krelitz may adopt written
articles of merger and other appropriate documents, in order to effect and
consummate the Permitted Merger, without Bank's consent, provided that the
amendments, modifications and/or restatements of the articles of incorporation
and corporate by-laws of D & K and of Krelitz, and articles of merger and
other appropriate documents, all are reasonably satisfactory to Bank.
(c) With prior written notice to Bank, Krelitz may sell, transfer,
convey and/or lease to D & K all or any portion of the Collateral now or
hereafter owned by Krelitz, without Bank's consent, provided that D & K
assumes in writing and/or ratifies all of Krelitz's obligations under this
Loan Agreement, the Security Documents and the other Loan Documents with
respect to the sold, transferred, conveyed and/or leased Collateral, upon
terms and conditions reasonably satisfactory to Bank.
14
4.5 ATTORNEY'S FEES. Borrower shall pay to Bank all reasonable
---------------
attorney's fees, costs and expenses incurred by Bank in exercising and
enforcing any of its rights and remedies under this Loan Agreement, the
Security Documents or any of the other Loan Documents, and in connection with
the enforcement and/or collection by Bank of the Loan.
4.6 LOAN COMMITMENT. This Loan Agreement has been entered into in
---------------
furtherance of that certain "LOAN COMMITMENT" dated July 30, 1996, issued by
Bank, and accepted by Borrower on August 2, 1996. In all respects, the Loan
Commitment is superseded by the Loan Documents, and the terms and conditions
of the Loan Commitment shall not survive the Closing, the execution of this
---
Loan Agreement and of the other Loan Documents. The terms, conditions,
provisions and agreements of the Note, the Security Documents and this Loan
Agreement shall prevail, govern and control in any and all events.
4.7 MISCELLANEOUS. This Agreement shall be binding upon Borrower and
-------------
Bank, and their respective successors and assigns. This Agreement may be
executed in several counterparts, each of which shall, for all purposes, be
deemed an original and all of such counterparts, taken together, shall
constitute one and the same agreement, even though all of the parties hereto
may not have executed the same counterpart of this Agreement. If any
provision or provisions of this Agreement shall be unlawful, then such
provision or provisions shall be null and void, but the remainder of this
Agreement shall remain in full force and effect and be binding on the parties.
This Agreement and the Loan Documents referenced herein contain all the
agreements and commitments of Bank relating to or connection with this
Agreement. Any prior agreements or commitments of Bank, whether oral or
written, relating to or connected with this Agreement not expressly set forth
herein or in the exhibits hereto (if any), or in the other Loan Documents, are
null and void and superseded in their entirety by the provisions hereof.
Borrower and Bank hereby submit and consent to the jurisdiction and venue of
any Federal District Court located in the City of St. Louis, State of Missouri
or any Missouri State Circuit Court located in the City or County of St. Louis
for purposes of litigation involving this Agreement or any of the Loan
Documents. BORROWER AND BANK HEREBY WAIVE AND RELINQUISH ALL RIGHTS TO TRIAL
BY JURY IN ANY LITIGATION ARISING UNDER THIS AGREEMENT.
15
4.8 ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND BANK FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS BORROWER AND BANK REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN BORROWER AND BANK, EXCEPT AS
BORROWER AND BANK MAY LATER AGREE IN WRITING TO MODIFY IT.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
BORROWER:
--------
D & K WHOLESALE DRUG, INC.,
a Delaware corporation
By:--------------------------
XXXXXX X. XXXXXX,
President
KRELITZ INDUSTRIES, INC.,
a Minnesota corporation
By:--------------------------
XXXXXX X. XXXXXX,
President
BANK:
----
MAGNA BANK, N.A.,
a national banking association
By:---------------------------
XXXX XXXXXX
Vice President
Exhibits:
--------
Exhibit A -- Note
Exhibit B -- Form of Draw Request
Exhibit C -- Budget
Exhibit D -- Additional Definitions
Exhibit E -- Disclosed Litigation
16
PROMISSORY NOTE
---------------
$1,495,000.00 DECEMBER --, 0000
Xx. Xxxxx, Xxxxxxxx
FOR VALUE RECEIVED, the undersigned D & K WHOLESALE DRUG, INC., a
corporation organized and existing under the laws of the State of Delaware and
qualified to do business in the State of Missouri ("D & K") and KRELITZ
INDUSTRIES, INC., a Minnesota corporation ("KRELITZ") (said D & K and Krelitz
being hereinafter referred to collectively as the "MAKERS"), jointly and
severally, promise to pay to the order of MAGNA BANK, N.A., a national banking
association (the "PAYEE"), at: One Magna Place, 0000 Xxxxx Xxxxxxxxx Xxxx.,
Xx. Xxxxx, Xxxxxxxx 00000, or at such other place or places as may be
hereafter designated in writing from time to time by the holder of this Note,
the principal sum of ONE MILLION FOUR HUNDRED NINETY-FIVE THOUSAND AND 00/XX
DOLLARS ($1,495,000.00), or such lesser principal amount as is from time-to-time
outstanding and unpaid hereunder, together with interest, from the date hereof,
on the whole of said principal sum remaining from time-to-time outstanding and
unpaid hereunder, at the rate or rates hereinafter specified, said principal and
interest to be paid as hereinafter provided.
A. MATURITY DATE. This Note, if not sooner paid, shall mature
-------------
on DECEMBER --, 2000 (THE "MATURITY DATE"). On the Maturity Date of this
Note, all unpaid principal hereon, together with all unpaid accrued interest
hereon, shall be due and payable in full.
B. MISSOURI FIRST LINKED DEPOSIT JOB CREATION LOAN PROGRAM. The
-------------------------------------------------------
Makers have been approved for participation in, and the loan to the Makers
under this Note for the first (1st) year of this Note has been extended by
Payee to Makers pursuant to, the MISSOURI FIRST LINKED DEPOSIT JOB CREATION
PROGRAM (the "FIRST LINK PROGRAM"). The initial interest rate under this Note
for the first (1st) year of this Note has been established based upon Makers'
participation in the First Link Program for the first (1st) year of this Note.
Prior to the first (1st) anniversary date of this Note, at the request of
Makers, the Makers and Payee agree to and shall reapply to the State of
Missouri for Makers'
17
participation in the First Link Program for the second (2nd) year of this Note.
C. INTEREST RATE.
-------------
(1) From and after the date of this Note, through the first (1st)
-----------
anniversary date of this Note, the from time-to-time principal balance
----------------
outstanding hereunder shall bear interest at a fixed rate of interest per
annum equal to FIVE AND NINETY-FIVE ONE-HUNDREDTHS PERCENT (5.95%). Provided,
however, that said interest rate is subject to amendment and adjustment in
accordance with the terms, conditions and provisions of Section 1.3 of the
-----------
"LOAN AGREEMENT" (as defined in Paragraph F hereof.
-----------
(2) If the State of Missouri approves in writing the Makers'
-- --------
participation in the First Link Program for the second (2nd) year of this
Note, then from and after the first (1st) anniversary date of this Note,
---- ----------------------------
through the second (2nd) anniversary date of this Note, the from
-----------------------------
time-to-time principal balance outstanding hereunder shall bear interest at a
fixed rate of interest per annum equal to: THAT PER ANNUM INTEREST RATE WHICH
IS EQUAL TO THE SUM OF: (1) SEVENTY PERCENT (70%) OF THE "PRIME RATE" (AS
------
DEFINED BELOW) ON THE FIRST (1ST) ANNIVERSARY DATE OF THIS NOTE, PLUS (2)
----
ONE-HALF PERCENT (1/2%).
(3) If the State of Missouri fails to approve in writing the
-- ----------------
Makers' participation in the First Link Program for the second (2nd) year of
this Note, then from and after the first (1st) anniversary date of this
---- ----------------------------
Note, through the second (2nd) anniversary date of this Note, the from
-----------------------------
time-to-time principal balance outstanding hereunder shall bear interest at a
variable rate of interest per annum equal to: THAT PER ANNUM INTEREST RATE
WHICH IS EQUAL TO ONE-HALF PERCENT (1/2%) OVER AND IN ADDITION TO THE FROM
TIME-TO-TIME PRIME RATE.
(4) From and after the second (2nd) anniversary date of this Note,
-----------------------------
through the Maturity Date of this Note, the from time-to-time principal
-------------
balance outstanding hereunder shall bear interest at a variable rate of
interest per annum equal to: THAT PER ANNUM INTEREST RATE WHICH IS EQUAL TO
ONE-HALF PERCENT (1/2%) OVER AND IN ADDITION TO THE FROM TIME-TO-TIME PRIME
RATE.
(5) Any change in the interest rate hereunder resulting from a change
in the Prime Rate shall be effective on the same date on which the Prime Rate
changes. Payee's invoices to Makers shall reflect any applica-
18
ble changes in the interest rate hereunder. Interest hereunder shall be
computed on the basis of a year consisting of three hundred sixty (360) days,
and charged on the basis of the actual number of days elapsed.
D. INTEREST AND PRINCIPAL PAYMENTS.
-------------------------------
(1) Commencing on JANUARY 1, 1997, and on the FIRST (1ST) day of each
month thereafter prior to Maturity, Makers shall pay to Payee the accrued
interest on the then outstanding principal balance of this Note at the
applicable interest rate set forth in Paragraph C hereof. At Maturity,
-----------
Makers shall pay to Payee all unpaid accrued interest hereon.
(2) The principal under this Note shall be due and payable in install-
ments, as follows:
(a) A cash installment of principal in the amount of $182,500.00
shall be due and payable on the FIRST (1ST) ANNIVERSARY DATE of this Note.
(b) If the State of Missouri approves in writing the Makers'
-- --------
participation in the First Link Program for the second (2nd) year of this
Note, then: (i) a cash installment of principal in the amount of $437,500.00
----
shall be due and payable on the SECOND (2ND) ANNIVERSARY DATE of this Note;
(ii) a cash installment of principal in the amount of $36,458.33 shall be due
and payable on January 1, 1999; and (iii) a like cash installment of principal
---------------
in the amount of $36,458.33 shall be due and payable on the FIRST (1ST) day of
each and every month thereafter continuing to and including December 1, 2000.
-----------------
(c) If the State of Missouri fails to approve in writing the
-- ----------------
Makers' participation in the First Link Program for the second (2nd) year of
this Note, then: (i) a cash installment of principal in the amount of
----
$36,458.33 shall be due and payable on January 1, 1998; and (ii) a like cash
---------------
installment of principal in the amount of $36,458.33 shall be due and payable on
FIRST (1ST) day of each and every month thereafter continuing to and including
December 1, 2000.
-----------------
(d) On the Maturity Date of this Note, a final cash installment
of principal shall be due and payable, such installment to be in an amount
equal to the then outstanding principal balance of this Note. At Maturity,
19
Makers shall pay to Payee the full amount of the then outstanding principal
balance of this Note, together with all unpaid accrued interest thereon.
E. PRIME RATE. For purposes of this Note, the "PRIME RATE", as
----------
of any date, is that variable interest rate periodically reported as the
highest Prime Rate in the "Money Rates" column or any successor column of The
---
Wall Street Journal, currently defined as being the base rate on corporate
-------------------
loans posted by at least seventy-five percent (75%) of the nation's thirty
(30) largest banks (regardless of whether such rate has actually been charged
by any such bank). In the event The Wall Street Journal ceases publication
-----------------------
of the Prime Rate, then "Prime Rate" shall mean the "prime rate" or "base
rate" announced by Payee or any other bank designated by Payee, from time to
time (regardless of whether such rate has actually been charged by such bank).
In the event the Wall Street Journal: (a) publishes more than one Prime Rate,
the highest of such rates shall be the "Prime Rate", or (b) publishes a
retraction or correction of any such rate, the rate reported in such retrac-
tion or correction shall be the "Prime Rate".
F. LOAN AGREEMENT. This Note has been executed and delivered by the
--------------
Makers to the Payee pursuant to the terms of that certain LOAN AGREEMENT (the
"LOAN AGREEMENT") of even date herewith, by and between Makers and Payee; to
which Loan Agreement reference is hereby made for the terms and conditions
under which the loan proceeds evidenced by this Note have been and shall be
disbursed and advanced by Payee to Makers.
G. SECURITY. This Note is secured by a SECURITY AGREEMENT (the
--------
"SECURITY AGREEMENT") of even date herewith, executed by the Makers hereof, as
the debtor, in favor of the Payee hereunder, as the secured party; which
Security Agreement grants to Payee a security interest in certain personal
property, furniture, fixtures and equipment owned by Makers located at the
following addresses: (1) 0000 Xxxx Xxxxxx, Xxxx Xxxxxxxxx, Xxxxxxxx 00000; (2)
000 Xxxxx Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000; and (3) 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000; all as more particularly described in said
Security Agreement. This Note also is secured by a DEED OF TRUST AND SECURITY
AGREEMENT (the "MORTGAGE") of even date herewith, executed by Krelitz, as the
grantor, in favor of the Payee hereunder, as the beneficiary; which Mortgage
creates a first lien on certain real estate located in the COUNTY OF HENNEPIN,
STATE OF MINNESOTA; all as more particularly described in said Mortgage. The
Security Agreement and the Mortgage provide, inter
-----
20
alia, for the acceleration of the maturity of this Note under the circumstances
----
specified in the Security Agreement and the Mortgage.
H. DEFAULT RATE; LATE FEE. Any and every payment of principal,
----------------------
interest or any other sums shall be made in the lawful money of the United
States that is legal tender for payment of all debts and dues, public and
private, at the time of payment, and shall be credited on interest then due
and the remainder on principal; and after the proper crediting of any
principal payments, interest shall cease upon the portion of the principal so
credited. If any payment of principal, interest or the balance of principal
shall not have been paid within twenty (20) days after due, whether by
acceleration or otherwise, as herein provided, the same shall thereafter bear
interest (the "DEFAULT RATE") at the rate of TWO PERCENT (2%) above and in
addition to the Prime Rate, until paid; provided, however, that in no event
shall interest by charged at a rate in excess of the highest interest rate
allowable by applicable law. In addition, if Makers fail to make any payment
of principal or interest under this Note within fifteen (15) days after due,
then Makers agree to and shall pay to the order of Payee a late fee in an
amount equal to five percent (5%) of the amount of the late payment.
I. EVENTS OF DEFAULT. The occurrence of any of the following
-----------------
events shall constitute an "EVENT OF DEFAULT" or a "DEFAULT" hereunder by
Makers (or any of them), to-wit:
(1) Any default or failure by Makers in respect to any promise to pay
made in this Note, and such payment default continues for twenty (20) days
beyond the due date; or
(2) Any other default hereunder, or under the terms of the Loan
Agreement, or under the terms of the Security Agreement, or under the terms of
the Mortgage, which default remains uncured after the expiration of any
applicable notice and cure period contained in the Loan Agreement, if any; or
(3) Makers (or any of them) shall (a) apply for or consent to the
appointment of a receiver, trustee, custodian or liquidator for itself, or for
all of or a substantial part of its assets, (b) be unable, or admit in writing
its inability, to pay its debts as they mature, (c) make a general assignment
for the benefit of creditors, (d) be adjudicated a bankrupt or insolvent, (e)
file a voluntary petition in Bankruptcy, or seek an arrangement with
creditors, or take advantage of any insolvency law or file an
21
answer admitting the material allegations of a petition filed against itself in
any Bankruptcy, reorganization or insolvency proceedings, or (f) take any action
to effectuate any of the foregoing; or
(4) An injunction or attachment shall be issued against any of the
property or assets of Makers (or any of them) with respect to a claim having a
value in excess of $100,000.00; or
(5) A final non-appealable judgment(s) (individually or collectively in
excess of $100,000.00) is entered against Makers (or any of them) by a court
of competent jurisdiction in the premises, and such judgment shall not be
satisfied by Makers within thirty (30) days after the date on which such
judgment becomes final; or
(6) A default or event of default (after the expiration of any
applicable notice and cure period, if any) has been committed by Makers (or
any of them) under or within the meaning of any agreement, document or instru-
ment to which Makers (or any of them) are a party evidencing, securing or
guaranteeing the payment of or otherwise relating to this Note, or any such
agreement, document or instrument shall cease to be in full force and effect
(not due to any act or omission of Payee); or
(7) Any assignment, sale, transfer, assignment or other conveyance of
corporate stock or other ownership interest in Makers (or any of them)
(including transfers caused by the death or incompetency of any individual),
which effects a change in control of Makers (or any of them), without the
prior written consent of Payee first obtained (which consent shall not be
unreasonably withheld, conditioned or delayed); or
(8) Dissolution, termination of existence, reorganization, merger or
consolidation of Makers (or any of them), or sale or transfer of a substantial
part of the property of Makers (or any of them), without the prior written
consent of Payee first obtained (which consent shall not be unreasonably
withheld, conditioned or delayed), or except as expressly permitted in
Section 4.4 of the Loan Agreement; or
-----------
(9) Any encumbrance, pledge, mortgage, sale, transfer, assignment or
other conveyance of any personal property or real property which is collateral
for this Note, without the prior written consent of Payee first obtained,
except as expressly permitted in Section 4.4 of the Loan Agreement; or
-----------
22
(10) Makers (or any of them) shall be in default (after the expiration
of any applicable notice and cure period, if any) on, or pursuant to the terms
of, (a) any other present or future obligation of Makers (or any of them) to
Payee, including, without limitation, any loan, line of credit, revolving
credit, guaranty or letter of credit reimbursement obligation, or (b) any
other present or future agreement purporting to convey to Payee a lien or
encumbrance upon, or a security interest in, any of the property or assets of
Makers (or any of them); or
(11) A default or event of default (after the expiration of any
applicable notice and cure period, if any) shall occur under or within the
meaning of any present or future material agreement or obligation of Makers
(or any of them) to any third party, including (without limitation) the loan
obligations of Makers (or any of them) to Fleet Capital Corporation and any
other material loan, line of credit, revolving credit, guaranty or letter of
credit reimbursement obligations of Makers (or any of them) to any third
parties.
Upon the occurrence of any such Event of Default, the Payee may, at its
option, declare in writing the entire indebtedness hereby evidenced to be due,
payable and collectible, then or thereafter as the holder may elect, whereupon
all of the unpaid principal amount due under this Note, all unpaid accrued
interest due under this Note, and all such other amounts due under this Note,
shall become and be immediately due and payable in full, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by the Makers, and the Payee may exercise any and all other
rights and remedies which it may have under this Note or under any other
agreement, document or instrument evidencing, securing or guaranteeing the
payment of this Note or under applicable law. The failure of the Payee to
exercise such option or any other right to which the Payee may be entitled
shall not constitute a waiver of the right to exercise such option or any
other right in the event of any subsequent default.
J. The Makers and any endorsers, guarantors, sureties and all other
parties liable for the payment of any sum or sums due or to become due under
the terms of this Note severally waive demand, presentment, demand for
payment, protest, notice of protest, nonpayment and dishonor except as
specifically provided herein or otherwise mandated by applicable law, and
consent that the time of payment of this Note may be extended, renewed, or
modified, from time to time, without notice to them or their consent, and
further agree that the security for this Note or any
23
portion thereof may from time to time be modified, adjusted, subordinated or
released in whole or in part without affecting the liability of any party liable
or becoming liable for the payment of this Note.
K. If this Note be not paid as hereinbefore provided or should it
become necessary in the reasonable opinion of the holder hereof to employ
counsel to collect or enforce this Note or to protect the security for the
same, the undersigned Makers and all other parties liable for the payment of
any sum or sums due or to become due under the terms of this Note shall pay to
the holder hereof, to the extent permitted by applicable law, all costs,
charges, disbursements and reasonable attorneys' fees incurred by the holder
hereof in collecting or enforcing payment thereof or in protecting the same,
whether incurred in or out of court, or in litigation, including probate
proceedings, appeals and bankruptcy proceedings.
L. Any indebtedness, including deposits due, from the legal holder
hereof to the undersigned Makers (or any of them) or any guarantor, endorser,
or surety hereof, shall be deemed to be pledged to secure the payment hereof
and may at any time while the whole or any part of the debt evidenced hereby
remains unpaid (whether before or after the Maturity Date hereof) be
appropriated, held or applied toward the payment of this obligation.
M. Provided that the undersigned Makers are not then in default in
the payment of any monies due from Makers to Payee hereunder, or under the
Loan Agreement, or under the Security Agreement, or under the Mortgage, the
undersigned Makers shall have the right, at any time, to prepay all or any
portion hereof; provided that, upon the first voluntary prepayment of
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principal of this Note (e.g., excluding involuntary prepayments resulting from
any required application of insurance or condemnation proceeds to the
repayment of this Note), the Makers shall pay to Payee a one time prepayment
penalty of FIVE THOUSAND DOLLARS ($5,000.00), except that no such prepayment
-----------
penalty shall be due and payable if such first prepayment of principal of this
Note is a prepayment of the entire principal balance of this Note made during
the ninety (90) day period immediately prior to the Maturity Date of this
Note. Any prepayment made hereon will be applied first to accrued and unpaid
interest hereon, and the remainder of such prepayment will be applied to the
balance of the principal then remaining unpaid. No prepayment shall postpone
the installment payments required hereunder, or affect the obligation to pay
the same on the Maturity Date when the entire indebtedness must be paid in
full.
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N. To the extent that Payee receives any payment on account of
Makers' liabilities and any such payment(s) or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set
aside, subordinated and/or required to be repaid to a trustee, receiver or any
other party under any bankruptcy act, state or Federal law, common law or
equitable cause, then, to the extent of such payment(s) received, Makers'
liabilities or part thereof intended to be satisfied and any and all liens,
security interests, mortgages and/or other encumbrances upon or pertaining to
any collateral for this Note and theretofore created and/or existing in favor
of Payee as security for the payment of such Makers' liabilities shall be
revived and continue in full force and effect, the same as if such payment(s)
had not been received by Payee and applied on account of Makers' liabilities.
O. Any notices sent by Payee to Makers hereunder shall be deemed
given if sent by United States Certified Mail, return receipt requested, or if
hand delivered to Makers at Makers' address listed at the end of this Note,
and the same shall be deemed given two business days after deposit in the
mails, if mailed, or upon receipt if hand delivered.
P. The obligations of Makers under this Note shall be binding upon
each Maker and the respective successors and assigns thereof and shall inure
to the benefit of Payee and Payee's successors and assigns. If any provision
of this Note or any portion thereof, is adjudicated by a court of competent
jurisdiction to be invalid or unenforceable, the remainder of this Note shall
be construed as if such invalid or unenforceable provision was never included
herein.
Q. This Note is secured by the above described Security Agreement and
Mortgage of even date herewith. This Note is payable in the State of
Missouri. This Note is to be construed and enforced according to, and
governed by, the laws of the State of Missouri, without regard to its conflict
of laws provisions, and the laws of the United States applicable to
transactions in Missouri. Any litigation arising hereunder shall be subject
to the jurisdiction of any state or federal court located in the State of
Missouri as Payee may designate and, in the absence of designation, the situs
for jurisdiction shall be in any state court located in the City or County of
St. Louis, Missouri or the federal court district and division in which the
aforesaid City or County is located. Makers and Payee each hereby consent to
the jurisdiction of such courts and waive any and all rights to contest
jurisdiction and venue and waive any right to commence any action against the
other in any other jurisdiction. MAKERS
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AND PAYEE HEREBY WAIVE AND RELINQUISH ALL RIGHTS TO TRIAL BY JURY IN ANY
LITIGATION ARISING UNDER THIS NOTE.
R. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT ARE NOT ENFORCEABLE. TO PROTECT MAKERS AND PAYEE FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS WE REACH COVERING SUCH
MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING
TO MODIFY IT.
IN WITNESS WHEREOF, the undersigned Makers have executed this Note on
the date first hereinabove stated, in St. Louis, Missouri.
D & K WHOLESALE DRUG, INC.,
a Delaware Corporation
By:---------------------------
XXXXXX X. XXXXXX, President
KRELITZ INDUSTRIES, INC.,
a Minnesota Corporation
By:---------------------------
XXXXXX X. XXXXXX, President
Borrower's Address
For Receipt of Notices: c/o D & K Wholesale Drug, Inc.
----------------------
Attn: Xx. Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx - Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
