Exhibit 10.29
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TERM LOAN AGREEMENT
AGREEMENT made this 28th day of August, 1997 between
TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC., a Delaware corporation
with its office for doing business at Fields Lane, XX Xxx 000,
Xxxxxxxx, Xxx Xxxx 00000-0000 (hereinafter referred to as the
Borrower) and MSB BANK, a federally chartered savings bank with
its principal office at 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000
(hereinafter referred to as the Bank);
WITNESSETH:
WHEREAS, the Borrower has agreed to borrow from the Bank and
the Bank has agreed to a revolving credit loan to Borrower up to
the sum of THREE HUNDRED THOUSAND and 00/100 ($300,000.00) DOLLARS
(hereinafter referred to as the Loan) subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties
hereby agree as follows:
1. THE LOAN: Subject to the terms and conditions stated
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herein the Borrower agrees to borrow from the Bank and the Bank
agrees to make available to the Borrower a loan facility for a
revolving credit loan not to exceed the sum of THREE HUNDRED
THOUSAND and 00/100 ($300,000.00) DOLLARS at any one time. This
Loan is being made simultaneously with the execution of this
Agreement.
2. PROMISSORY NOTE: The obligation to repay the Loan shall
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be evidenced by the Borrower's Promissory Notes dated the date of
the making of this Loan Agreement to be paid at MSB Bank at 00
Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000 or at such other place as
the holder of this Note may from time to time designate. The
outstanding remaining principal balance plus accrued interest on
the obligation contained in the Note for up to THREE HUNDRED
THOUSAND and 00/100 ($300,000.00) DOLLARS shall be paid on February
28, 1998, together with interest on the outstanding principal
balance at the rate of one-half (1/2%) percent per annum over the
highest Prime Rate published in the New York Times, provided such
bank is a bank doing business in the State of New York and/or is a
federally chartered bank (Prime Plus .50%) freely floating with the
changes in interest rate to be made simultaneously with any change
in the Prime Rate indicator set forth above. Interest at the rate
set forth above shall be payable monthly on the unpaid principal
balance commencing on the fifteenth day of September, 1997 and on
the fifteenth day of each and every month thereafter until he
principal balance shall be paid in full on February 28, 1998. This
loan facility shall require an annual thirty (30) day clean-up
prior to maturity.
3. REPRESENTATIONS OF THE BORROWER: The Borrower represents
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and warrants to the Bank:
(a) Place of Business: The Borrower maintains his
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principal office for the transaction of business at Fields Lane, XX
Xxx 000, Xxxxxxxx, Xxx Xxxx 00000-0000.
(b) Binding Agreement: This Agreement constitutes, and
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the Note, Security Agreements and any other documents when issued
and delivered pursuant hereto for value received will constitute,
the legal valid and binding obligations of the Borrower in
accordance with their terms.
(c) There are no proceedings pending or so far as the
officers and the board of directors of the Borrower knows,
threatened before any Court or administrative agency which in the
opinion of the stockholders and directors of the Borrower may or
will materially adversely affect the financial condition or
operations of the Borrower.
(d) No Conflicting Agreements: There is no provision of
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any existing mortgage, indenture, contract or agreement binding
upon the Borrower affecting its property which would conflict or in
any way prevent the execution, delivery or carrying out of the
terms of this Agreement or the Note.
(e) Financial Condition: The Borrower shall deliver to
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the Bank, within thirty (30) days after their preparation, the
quarterly 10K reports and the annual 10K report, which the Borrower
represents will be complete and correct and fairly present the
financial condition of the Borrower as of the date and for the
period referred to and have been prepared in accordance with sound
accounting practices consistently maintained by the Borrower for
the period involved. There are no liabilities, direct or indirect,
fixed or contingent, of the Borrower as of the date of such balance
sheet and profit and loss statement which are material and not
reflecting therein the financial condition or operations of the
Borrower since the date of said financial reports. If Borrower is
no longer required to file 10K reports, the Bank may require the
Borrower, at the Bank s sole discretion, to provide such financial
reports as the Bank may require on a quarterly and annual basis.
(f) Good Title: The Borrower has good and marketable
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title to all of its assets, none of which is subject to any
mortgage, indenture, pledge, lien, conditional sales contract,
security interest, encumbrance, claim, trust or charge, except as
may be otherwise permitted pursuant to the terms of this Agreement.
(g) No Consent or Filing: No consent, license,
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approval, authorization of or registration, declaration or filing
with any Court, governmental body or authority or other person or
entity is required in connection with the valid execution, delivery
and performance of this Agreement or any documents required by this
Agreement or in connection with any of the transactions
contemplated by this Agreement.
(h) No Violations: The Borrower is not in violation of
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any mortgage, borrowing agreement, other instrument or agreement
pertaining to indebtedness for borrowed money. The Borrower is not
in violation of any term of any other indenture, instrument, demand
or agreement to which it is a part or by which it may be bound,
resulting, or which might reasonably be expected to result, in a
material and adverse effect upon its business or assets. The
Borrower is not in violation of any order, writ, judgment,
injunction or decree of any Court of competent jurisdiction or of
any statute, rule or regulation of any competent governmental
authority. The execution and delivery of this Agreement, and the
other documents required by this Agreement and the performance of
all of the same is and will be in compliance with the foregoing and
will not result in any violation or result in the creation of any
mortgage, lien, security interest, charge or encumbrance upon any
properties or assets of the Borrower except in favor of the Bank.
There exists no fact or circumstance not disclosed in this
Agreement or in the documents furnished in connection herewith
which materially adversely affect or in the future, so far as the
Borrower can now foresee, may materially adversely affect the
condition, business or operations of the Borrower.
(i) No Negative Covenants To Others: None of its assets
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are subject to any negative covenant or negative pledge agreement
other than those specifically set forth herein.
4. CONDITIONS PRECEDENT TO LOAN: The obligation of the Bank
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to make the loan is subject to the following conditions precedent:
(a) Approval of Bank Counsel: All legal matters,
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including the form, substance and manner of execution of documents
incident to the Loan shall be satisfactory to counsel for the Bank.
(b) Compliance: The Bank shall have received a
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statement dated the date of the Loan and signed by an officer of
the corporation having authority to do so, to the effect that: (i)
The Borrower has complied and is then in compliance with all the
terms and covenants of this Agreement which are binding upon it;
(ii) there exists no event of default as defined in this Agreement
and no event, which, with the giving of notice or the lapse of
time, or both, would constitute such an event of default; and (iii)
the representations and warranties contained in Paragraph "3" are
true with the same effect as through such representations and
warranties had been made at the time of the Loan.
(c) Opinion of Borrower's Counsel: The Bank shall have
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received a favorable written opinion of counsel for the Borrower,
dated the date of the Loan and satisfactory in form and substance
to the Bank.
(d) Loan Security: A. This loan shall be secured by a
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first security interest pursuant to the Uniform Commercial Code,
and the Borrower shall execute and deliver to the Bank: (i)
security agreements in form, content and legal effect satisfactory
to the Bank, granting to the Bank a first security interest in all
of the Borrower's machinery, furniture, fixtures and equipment,
accounts receivable, inventory, causes in action, intangibles and
any and all personal property now or hereafter acquired by the
Borrower and any and all replacements thereof, as continuing
collateral security for the payment of any and all indebtedness and
liabilities of Borrower to the Bank, whether now or hereafter
existing; and (ii) appropriately executed financing statements
(Form UCC-1) to perfect the security interests, which security
shall on the date of execution of this Agreement be superior to all
others. Notwithstanding anything to the contrary contained above,
this security interest shall not apply to the $1,800,000.00
mortgage loan executed between the Borrower and the Bank
simultaneously herewith, when, as and if the mortgage indebtedness
is paid down to a sum less than $1,650,000.00.
5. AFFIRMATIVE COVENANTS: Until payment in full of the Note
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and performance of all the obligations of the Borrower hereunder,
the Borrower will:
(a) Financial Statements: Furnish to the Bank quarterly
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no later than ninety (90) days following the end of each quarter
the Borrower's 10K and, within thirty (30) days after the end of
the Borrower's fiscal year, its annual 10K. The financial reports
shall be in reasonably detailed and satisfactory in form and
substance to the Bank relating to the Borrower and signed by an
authorized officer of the Borrower. In the event the Bank shall
deem said reports to be insufficient to adequately reflect the
financial affairs of the Borrower, or if the Borrower is no longer
required to file those reports, the Bank may request, and the
Borrower shall provide such other financial reports and statements
as the Bank may, from time to time, request.
(b) Inspection of Books and Records: Permit the Bank
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and its duly authorized representatives at all reasonable times,
without prior notice, and at the Bank's expense, to examine and
audit the books, records and properties of the Borrower at the
Bank's expense, for the purpose of verifying the accuracy of the
reports delivered by the Borrower, whether pursuant to this
Agreement or otherwise, and ascertaining compliance by the Borrower
with this Agreement.
(c) Taxes: Pay and discharge all taxes, assessments and
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governmental charges upon it, its income and its properties prior
to the date on which penalties are attached thereto, unless and to
the extent only that such taxes are contested in good faith and by
appropriate proceedings by the Borrower.
(d) Insurance: Maintain adequate liability and hazard
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insurance upon all of its tangible assets against such risk as it
customarily maintained by similar businesses, and filed with the
Bank upon its request a detailed list of the insurance then in
effect and stating the names of the insurance companies, the
amounts and rates of the insurances, dates of the expiration
thereof and the properties and risks covered thereby, and, within
thirty (30) days after notice in writing from the Bank, obtain such
additional insurance as the Bank may reasonably request. Said
insurance coverage is to name the Bank as first mortgagee on the
real property and loss payee of personal property.
(e) Litigation: Promptly and fully notify the Bank in
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writing of any proceedings commenced or threatened before any Court
or administrative agency which may materially adversely affect the
financial condition or operations of the Borrower, or may affect
the ability of Borrower to meet its obligations hereunder, or which
questions the validity of this Agreement or the collateral
documents required to be furnished to the Bank hereunder.
(f) Other Acts: Execute and deliver, or cause to be
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executed and delivered, to the Bank all further documents and
perform all other acts and things which the Bank deems necessary or
appropriate to protect or perfect its security interests in any
property directly or indirectly securing payment of any
indebtedness of the Borrower to the Bank.
(g) Payments: Do and punctually pay the principal of
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and all interest on all indebtedness incurred by it pursuant to
this Agreement in the manner set forth in this Agreement according
to the true intent and meaning thereof.
6. NEGATIVE COVENANTS: During the term of this Agreement,
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and so long thereafter as any of the indebtedness of the Borrower
to the Bank (including any indebtedness for fees and expenses)
shall remain unpaid, and until performance of all other obligations
of the Borrower hereunder shall be completed, and until payment in
full of the Notes, the Borrower, without the prior written consent
of the Bank, will not:
(a) Borrowed Money: Create, incur, assume or suffer to
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exist any liability for borrowed money except: (i) indebtedness to
the Bank; (ii) indebtedness to others which shall be subordinated
by a written agreement satisfactory in form and substance to the
Bank, to all indebtedness of the Borrower to the Bank; or (iii)
purchase money security interests in personal property acquired by
the Borrower for use by the Borrower in the operation of its
business.
(b) Mortgages, Pledges and Encumbrances: Create, incur,
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assume or suffer to exist any mortgage, pledge, lien or encumbrance
upon any of its presently owned personal property or any
replacement thereof, except (i) those in favor of the Bank; (ii)
liens for taxes, governmental charges or claims not delinquent or
being contested in good faith and by appropriate proceedings, (iii)
purchase money security interests in personal property acquired by
the Borrower for use by the Borrower in the operation of its
business.
(c) Merger, Sale or Acquisition of Assets: Enter into
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any merger or consolidation with, or acquire all or substantially
all of the assets of any person, firm or corporation, or sell,
lease, assign, transfer, or otherwise dispose of all or any
substantial part of its assets, without prior written consent of
the Bank.
(d) Sale and Leaseback: Directly or indirectly enter
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into any arrangements whereby the Borrower shall sell or transfer
all or any substantial part of its assets then owned by it and
shall thereafter or thereupon rent or lease such property.
(e) Loans: Make or suffer to exist any loans or
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advances to any person, firm or corporation, except as may be
specifically permitted pursuant to this Agreement, provided,
however, it shall not be an Event of Default hereunder and prior
consent of the Bank shall not be required if the aggregate of such
loans and this Note do not exceed $600,000.00
(f) Investments: Make or suffer to exist any investment
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in, or purchase or acquire the obligations or stocks of, or any
other interest or investment in, any persons, firm, corporation or
other enterprise whatsoever, except (i) direct obligations of the
United States of America; (ii) prime commercial paper or the
certificate of deposit issued by a Bank or Banks, or (iii) such
investments of the grade made by Borrower and presently reported in
its financial statements, e.g. municipal investments.
(g) Contingent Liabilities: Assume, guarantee, endorse,
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contingently agree to purchase or otherwise become liable upon the
outstanding obligation of any person, firm or corporation, except
as otherwise permitted herein and except (i) by the endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (ii)
obligations to the Bank.
(h) Change of Business: Materially change the nature of
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its business as it exists as of the date of this Agreement.
(i) Books and Records: Move the location where the
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books and records of the Borrower are kept on the date of this
Agreement or prevent the Bank from examining, inspecting and
auditing the books and records of the Borrower and making extracts
from or copies of such books and records at any reasonable time and
from time to time without prior notice to the Borrower.
(j) Negative Covenants to Others: Enter into any
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negative covenant or negative pledge agreement with any person,
firm or entity other than the Bank without the prior written
consent of the Bank.
7. EVENTS OF DEFAULT: The occurrence of any one or more of
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the following events by or with respect to the Borrower shall
constitute an event of default and, if one or more of the following
events of default shall occur:
(a) Nonpayment: Nonpayment of any installment of
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principal and interest upon the Note after it shall have become due
and payable, whether at maturity, by acceleration, by notice of
intention to prepay, or otherwise; or
(b) Negative Covenants: Default in the observance of
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any of the covenants or agreements contained in Paragraph "6"
(Negative Covenants) of this Agreement; or
(c) Other Covenants: Default in the due observance or
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performance of any term, covenant or agreement (other than the
covenant of payment) contained in this Agreement, or in any other
agreement between the Borrower and the Bank, and such default shall
have continued unremedied for a period of thirty (30) days or which
is not remedied now or hereafter in effect, or if there is
commenced against the Borrower any such proceedings which remain
undismissed for a period of thirty (30) days, or the Borrower by
any act indicates its consent to, approval of, or acquiescence in,
any such proceeding or the appointment of any receiver of, or any
trustee for, the Borrower or any substantial part of its property,
or suffers any receivership or trusteeship to continue and
undischarged for a period of thirty (30) days;
(d) Representations: If any certificate, statement,
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representation, warranty or financial statement heretofore or
hereafter, furnished by or on behalf of the Borrower pursuant to or
in connection with this Agreement (including, without limitation,
representations and warranties contained herein) or as an
inducement to the Bank to enter into this Agreement or any other
lending agreement with the Borrower, or any material fact required
to be stated therein or necessary to make the statements therein
not misleading, proves to have been false in any material respect
at the time of which the facts therein set forth were stated or
certified, or to have omitted any substantial liability or claim
against the Borrower, or if on the date of execution of this
Agreement there shall have been any materially adverse change in
any of the facts disclosed by any such certificate, statement,
representation, warranty, or financial statement, which change
shall not have been disclosed to the bank at or prior to the time
of such execution; or
(e) Other Borrowings: Default in the payment, when due,
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of any other indebtedness for borrowed money owed by the Borrower
to the Bank or any other person or entity, or any obligation of the
Borrower for payment of borrowed money when it becomes, or is
declared to be due and payable prior to the expressed maturity
thereof; or
(f) Voluntary or Involuntary Insolvency Proceedings:
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The Borrower makes an assignment for the benefit of creditors,
files a petition in bankruptcy, is adjudicated insolvent or
bankrupt, petitions or applies to any tribunal for any receiver or
any trustee of the Borrower on any substantial part of its
property, commences any proceeding under any reorganization,
arrangement, or readjustment of debt, or applies for dissolution or
liquidation under any law or statute of any jurisdiction.
(g) Judgments: Any judgment or penalty against the
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Borrower or any lien or attachment against its property for any
amount in excess of FIFTY THOUSAND and 00/100 ($50,000.00) DOLLARS
remains unpaid, unstayed on appeal, unbonded or undismissed for a
period of thirty (30) days;
THEN, upon the happening of any one or more of the foregoing
events of default which shall be continuing, the Bank may declare
the entire Loan granted hereunder to be canceled and the Notes
shall become and be immediately due and payable upon declaration to
that effect delivered by the Bank to the Borrower; and the Borrower
hereby expressly waives any presentment, demand, protest or other
or further notice of any kind.
8. EXPENSES: The Borrower will, on demand, reimburse the Bank
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for any and all expenses incurred, which may hereafter be incurred,
by the Bank from time to time in connection with or by reason of
Borrower's application for, in the making and administration of
this Loan, including reasonable attorney s fees incurred by the
Bank in pursuing any of its rights and remedies pursuant to this
Agreement.
9. MISCELLANEOUS:
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(a) No Waiver: No failure on the part of the Bank to
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exercise, and no delay in exercising, any right, power or privilege
within ten (10) days after notice thereof shall have been given to
the Borrower by the Bank; or
(b) Properties To Be Kept In Good Condition: The
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Borrower shall keep its properties in good repair, working order
and condition and from time to time, make all needed and proper
repairs, renewals, replacements, additions and improvements thereto
so that the business carried on may be properly and advantageously
conducted at all times in accordance with prudent business
management.
(c) Lender's Inspection: The Borrower shall allow any
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representative of the MSB Bank or any other holder of the Note, to
visit and inspect any of the properties of the corporation, to
examine the books of account and other records and files of the
corporation, to make copies thereof and to discuss the affairs of
business, finances and accounts of the corporation with its
officers and employees, at all such reasonable times and as often
as the Bank may require.
(d) Applicable Law: This Agreement and the rights and
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obligations of the parties hereunder shall be construed and
interpreted in accordance with the laws of the State of New York
except as to any specific documents or agreements which by their
terms are controlled by federal law.
(e) Notices: Notices under this Agreement shall be
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given by postpaid first class mail, addressed as follows:
To the Borrower at Fields Lane, XX Xxx 000, Xxxxxxxx, Xxx Xxxx
00000-0000.
To the Bank at 00 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000.
(f) Suits for Enforcement: In case any one or more
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events of default shall occur and be continuing, the Bank may
proceed to protect and enforce its rights or remedies, either by
suit in equity or by action at law, or both, whether for the
specific performance of any covenant, agreement or other provision
contained herein, in the Note or in any document or instrument
delivered in connection with or pursuant to this Agreement, or to
enforce the payment of the Note or any other legal or equitable
right or remedy. No right or remedy herein conferred upon the Bank
is intended to be exclusive of any other right or remedy contained
herein, in the Note or any instrument or document delivered in
connection with or pursuant to this Agreement, and every such right
or remedy shall be cumulative and shall be in addition to every
other such right or remedy contained herein and therein, and now or
hereafter existing at law in equity or by statute or otherwise. No
course of dealing between the Borrower and the Bank for any failure
or delay on the part of the Bank in exercising any rights or
remedies hereunder shall operate as a waiver of any rights or
remedies of the Bank, and no single or partial exercise of any
rights or remedies hereunder shall operate as a waiver or preclude
the exercise of any other rights and remedies hereunder.
(g) Collection Costs: In the event that the Bank shall
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retain or engage an attorney or attorneys to collect or enforce or
protect its interests with respect to this Agreement, or the Note,
or any instrument or document delivered pursuant tot his Agreement,
or to protect the rights of any holder or holders with respect
thereto, the Borrower shall pay all of the costs and expenses of
such collection, enforcement or protection including reasonable
attorneys' fees and the Bank or the holder of such notes, as the
case may be, may take judgment for all such amounts in addition to
the unpaid principal balance of the Notes and accrued interest
thereon.
(h) Entire Agreement: This Agreement represents the
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entire understanding and agreement between the parties hereto with
respect to the subject matter hereof, supersedes all prior
negotiations between the parties with respect to the subject matter
hereof and cannot be amended or supplemented except in writing.
(i) Successors and Assigns: The Borrower and the Bank,
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as used herein, shall include the legal representatives or assigns
of those parties. The Borrower's rights under this Agreement may
not be assigned without the prior written consent of the Bank.
(j) Counterparts: This Agreement may be executed in any
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number of counterparts and by the Bank and the Borrower on separate
counterparts, each of which when so executed and delivered, shall
be an original, but all such counterparts shall together constitute
one and the same Agreement.
(k) Titles: Titles to the sections and subparagraphs of
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this Agreement are solely for the convenience of the Bank and the
Borrower and are not an aid in the interpretation of this Agreement
or any part thereof.
(l) In the interpretation of this Agreement, the
singular shall include the plural and the masculine gender shall
include the feminine gender as the context shall indicate.
(M) This Agreement shall be interpreted in accordance
with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be dully executed and signed as to the date first
above written.
IN PRESENCE OF: TOUCHSTONE APPLIED SCIENCE
ASSOCIATES, INC.
BY: /s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX, PRESIDENT
MSB BANK
BY: /s/ XXXXXXXXX XXXXXXXXX
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XXXXXXXXX XXXXXXXXX
ASSISTANT VICE PRESIDENT
STATE OF NEW YORK )
) ss.:
COUNTY OF ORANGE )
On the 28 day of August, 1997 before me personally came XXXXXX
X. XXXXX, to me known, who, being by me duly sworn, did depose and
say that he resides at No. Hunterbrook Rd, Yorktown Hts., NY that
he is the President of TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.,
the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the
Board of Directors.
/s/ XXXXXXX CRUSH
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Notary Public
XXXXXXX CRUSH
Notary Public, State of New York
No. 4892935
Qualified in Xxxxxx County
Commission Expires 4/13/99
STATE OF NEW YORK )
) ss.:
COUNTY OF ORANGE )
On the 28th day of August, 1997 before me personally came
XXXXXXXXX XXXXXXXXX to me known, who, being by me duly sworn, did
depose and say that he has offices at No. 00 Xxxxxxxx Xxxxxx,
Xxxxxx, Xxx Xxxx that he is the Assistant Vice President of MSB
BANK, the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the
Board of Directors.
/s/ XXXXX X. XXXXXXXXXX
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Notary Public
XXXXX X. XXXXXXXXXX
Notary Public, State of New York
No. 01DI5024690
Qualified in Orange County
Commission Expires 3-14-98
