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EXHIBIT 4.6
LOAN AGREEMENT
THIS AGREEMENT made on March 29, 1996, by and between SUNINCO, INC., a
Florida corporation ("Borrower"), NORTHERN TRUST BANK OF FLORIDA, N.A.
("Lender"), and SUN HYDRAULICS CORPORATION, a Florida corporation
("Guarantor").
W I T N E S S E T H :
WHEREAS, Borrower has requested Lender to modify an existing loan
outstanding from Borrower to Lender in the current principal amount of
$1,692,194.38, and to make an additional advance to Borrower in the amount of
$782,805.62, for a total consolidated loan amount of $2,475,000.00 ("Loan"),
and Lender is willing to modify the Loan on the conditions herein and in other
Loan Documents, and
WHEREAS, the Loan is evidenced by a consolidated promissory note of
even date herewith ("Note") and secured by a real estate mortgage ("Mortgage")
encumbering property located in Sarasota County, Florida, which is described on
Exhibit "A" attached hereto ("Property"), and
WHEREAS, the Loan is guaranteed by Guarantor pursuant to a continuing
guaranty agreement of even date herewith ("Guaranty"),
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements herein contained and the agreement by Lender to modify the Loan,
the parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES. To induce Lender to modify the
Loan, Borrower and Guarantor make the following representations and warranties:
A. The financial information furnished to Lender is
complete and accurate and neither Borrower nor Guarantor have any undisclosed
direct or contingent liability.
B. Borrower is a duly organized corporation, existing
and in good standing under the laws of the State of Florida, has corporate
power to carry on the business in which it is engaged, and the obtaining and
performing of the Loan has been duly authorized by all necessary actions of the
board of directors and shareholders of the corporation under applicable law,
and do not and will not violate any provisions of law or any of its
organizational documents.
C. Guarantor is a duly organized corporation, existing
and in good standing under the laws of the State of Florida, has corporate
power to carry on the business in which it is engaged, and the obtaining and
performing of the Loan has been duly authorized by all necessary actions of the
board of directors and shareholders of the corporation under applicable law,
and do not
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and will not violate any provisions of law or any of its organizational
documents.
D. The obtaining and performing of the Loan do not and
will not result in a breach of, constitute a default under, require any consent
under, or result in the creation of any lien, charge, or encumbrance upon any
property of Borrower or Guarantor pursuant to any instrument, order, or other
agreement to which Borrower or Guarantor is a party or by which Borrower,
Guarantor, any of their officers as such, or any of their respective properties
are bound.
E. There are no judgments, liens, encumbrances, or other
security interests outstanding against Borrower, Guarantor, or any of their
respective properties other than those disclosed to Lender in connection with
Borrower's request for the Loan.
F. Neither Borrower nor Guarantor has incurred any
debts, liabilities, or obligations and has not committed itself to incur any
debts, liabilities, or obligations other than those disclosed to Lender in
connection with Borrower's request for the Loan or shown on the financial
statements submitted to Lender.
G. There are no actions, suits or proceedings pending
or, threatened against or affecting Borrower, Guarantor, the Property, or
involving the validity or enforceability of the Mortgage or the priority of the
liens thereof, at law or in equity, or before or by any governmental
authorities, and neither Borrower nor Guarantor is in default with respect to
any order, writ, injunction, decree or demand of any court or any governmental
authority.
2. AFFIRMATIVE COVENANTS OF BORROWER. Borrower will:
A. Preserve and keep in force all licenses, permits, and
franchises necessary for the proper conduct of its business and duly pay and
discharge all taxes, assessments, and governmental charges upon Borrower or
against Borrower's property before the date on which penalties attach thereto,
unless and to the extent only that the same shall be contested in good faith
and by appropriate proceedings.
B. Furnish to Lender (i) within 90 days after the close
of each fiscal year an annual profit and loss statement and balance sheet on
Borrower reviewed by an independent certified public accountant who is
satisfactory to Lender; and (ii) such other information reflecting the
financial condition of Borrower as Lender may request from time to time.
C. Maintain with financially sound and reputable
insurance companies insurance of the kinds, covering the risks, and in the
amounts usually carried by companies engaged in businesses similar to that of
Borrower. Borrower will also exhibit or deliver
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such policies of insurance to Lender upon request of Lender and provide
appropriate loss payable or mortgagee clauses in the insurance policies in
favor of Lender, as its interest may appear, when requested by Lender.
D. Maintain executive personnel and management
reasonably satisfactory to Lender.
E. Permit any representative or agent of Lender to
examine and audit any or all of Borrower's books and records when requested by
Lender.
F. Inform Lender immediately of any material adverse
change in the financial condition of Borrower. Borrower will also promptly
inform Lender of any litigation or threatened litigation which might
substantially affect Borrower's financial condition.
G. Maintain Borrower's property and equipment in a state
of good repair.
3. AFFIRMATIVE COVENANTS OF GUARANTOR. Guarantor will:
A. Preserve and keep in force all licenses, permits, and
franchises necessary for the proper conduct of its business and duly pay and
discharge all taxes, assessments, and governmental charges upon Guarantor or
against Guarantor's property before the date on which penalties attach thereto,
unless and to the extent only that the same shall be contested in good faith
and by appropriate proceedings.
B. Furnish to Lender (i) within 90 days after the close
of each fiscal year an annual consolidated profit and loss statement and
balance sheet on Guarantor audited by an independent certified public
accountant who is satisfactory to Lender, and consolidated financial statements
prepared by Guarantor; (ii) within 30 days after filing each year, an executed
copy of Guarantor's Federal income tax return, and if any extensions have been
filed, copies of each Extension Notice shall be furnished to Lender within 30
days of filing; and (iii) such other information reflecting the financial
condition of Guarantor as Lender may request from time to time.
C. Maintain with financially sound and reputable
insurance companies insurance of the kinds, covering the risks, and in the
amounts usually carried by companies engaged in businesses similar to that of
Guarantor. Guarantor will also exhibit or deliver such policies of insurance
to Lender upon request of Lender and provide appropriate loss payable or
mortgagee clauses in the insurance policies in favor of Lender, as its interest
may appear, when requested by Lender.
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D. Maintain executive personnel and management
reasonably satisfactory to Lender.
E. Permit any representative or agent of Lender to
examine and audit any or all of Guarantor's books and records when requested by
Lender.
F. Inform Lender immediately of any material adverse
change in the financial condition of Guarantor. Guarantor will also promptly
inform Lender of any litigation or threatened litigation which might
substantially affect Guarantor's financial condition.
G. Maintain Guarantor's property and equipment in a
state of good repair.
H. Maintain Guarantor's net working capital ("Net
Working Capital") in an amount not less than $1,300,000.00 and a current ratio
("Current Ratio") of not less than 1.2:1.0 at all times during the term of this
Agreement. For the purposes of this Agreement, Net Working Capital shall mean
the excess of Guarantor's current assets over current liabilities, which shall
be determined in accordance with generally accepted accounting principles as
consistently applied in the preparation of Guarantor's previous financial
statements, and Current Ratio shall mean the quotient of current assets divided
by current liabilities.
I. Maintain Guarantor's tangible net worth ("Tangible
Net Worth") in an amount not less than $9,000,000.00 for fiscal year 1996, but
increasing the minimum level of Guarantor's Tangible Net Worth to the following
levels as of December 31, for each of the following fiscal years: (i)
$11,000,000 minimum Tangible Net Worth by December 31, 1996; (ii) $10,875,000
minimum Tangible Net Worth by December 31, 1997 [Lender acknowledges that this
is a decrease over the previous fiscal year minimum level]; (iii) $12,775,000
minimum Tangible Net Worth by December 31, 1998; (iv) $13,270,000 minimum
Tangible Net Worth by December 31, 1999; and (v) $16,875,000 for fiscal years
2000 through 2006, inclusive. For the purposes of this Agreement, Tangible Net
Worth shall mean (i) the aggregate amount of assets shown on the balance sheet
of Guarantor at any particular date (but excluding from such assets capitalized
organization and development costs, capitalized interest, debt discount and
expense, goodwill, patents, trademarks, copyrights, franchises, licenses,
amounts due from officers, directors, stockholders and affiliates, and such
other assets as are properly classified "intangible assets" under generally
accepted accounting principles) less (ii) liabilities at such date, all
computed in accordance with generally accepted accounting principles applied on
a consistent basis.
J. Maintain Guarantor's ratio of total liabilities to
equity throughout the term of the Loan at a maximum of 2.5:1.
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K. Maintain Guarantor's fixed asset coverage throughout
the term of the Loan at a minimum of 2.25:1.0. For purposes of this Agreement,
the term "Fixed Asset Coverage" shall be computed as follows: Earnings before
interest and taxes, plus depreciation, all divided by interest expense plus
current maturities of long term debt and capitalized leases.
L. Maintain Guarantor's debt service coverage ("Debt
Service Coverage") ratio throughout the term of the Loan at a minimum of 1.45:1
on a calendar year basis for all operations of the Guarantor, computed as
follows: net profits plus interest, plus depreciation, all divided by interest
plus current maturities of long term debt and capitalized leases.
4. NEGATIVE COVENANTS OF BORROWER. Borrower will not, without
prior written consent of Lender:
A. Assign, mortgage, pledge, encumber, grant any
security interest in, or transfer any of Borrower's assets, whether now owned
or hereafter acquired, except in the ordinary course of Borrower's business.
B. Enter into any merger or consolidation, or sell,
lease, transfer, or otherwise dispose of all or any substantial part of its
assets, whether now owned or hereafter acquired.
C. Change the name in which it does business.
D. Move its principal place of business without giving
written notice thereof to Lender at least 30 days prior thereto.
E. Incur any new debt whether secured or unsecured.
F. Make any loans or advances to any stockholder of
Borrower.
G. Execute any guarantees or assumptions of any debt, or
endorse any obligation.
H. Enter into any asset sale/leaseback arrangement.
I. Cause or permit any change in management of
Borrower's operations.
5. NEGATIVE COVENANTS OF GUARANTOR. Guarantor will not, without
prior written consent of Lender:
A. Assign, mortgage, pledge, encumber, grant any
security interest in, or transfer any of Guarantor's assets, whether now owned
or hereafter acquired, except in the ordinary course of Guarantor's business.
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B. Enter into any merger or consolidation, or sell,
lease, transfer, or otherwise dispose of all or any substantial part of its
assets, whether now owned or hereafter acquired.
C. Change the name in which it does business.
D. Move its principal place of business without giving
written notice thereof to Lender at least 30 days prior thereto.
E. Incur any new debt whether secured or unsecured.
F. Make any loans or advances to any stockholder of
Guarantor; except that Guarantor may make annual distributions to its
stockholders which do not exceed the total of all Federal income tax liability
of the individual shareholders of Guarantor which is the direct result of the
pass-through of gains or losses from Guarantor to the shareholders, plus
$500,000.00.
G. Cause or permit Guarantor's capital expenditures to
exceed $5,000,000.00 per year.
H. Execute any guarantees or assumptions of any debt, or
endorse any obligation; except, however, that Guarantor may guarantee up to a
maximum of $8,000,000.00 of debt incurred by non-U.S. affiliates of Guarantor.
I. Enter into any asset sale/leaseback arrangement.
J. Cause or permit any change in management of
Guarantor's operations.
6. EVENTS OF DEFAULT. The Lender shall have the option to declare
the entire unpaid balance due on the Loan without notice of any kind,if any of
the following events occur:
A. Any payment of principal or interest on the Loan is
not made when due.
B. Any other default occurs under the Note, Mortgage,
this Agreement or any other document executed by Borrower and Guarantor in
connection with the Loan.
C. Any provision of the Note, Mortgage, this Agreement,
or any other document executed or furnished in connection with the Loan, proves
to be untrue or misleading in any material respect.
D. Any warranty, representation, or statement made or
furnished the Lender by Borrower and/or Guarantor in connection with the Loan
and this Agreement (including any warranty, representation, or statement in the
Borrower's and Guarantor's financial statement(s)) or to induce the Lender to
extend the Loan, is untrue or misleading in any material respect.
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E. Any default occurs under any agreement now or
hereafter existing between Borrower and/or Guarantor and another financial
institution which default is not corrected within the cure period provided in
such agreement, if any.
F. Any voluntary or involuntary bankruptcy,
reorganization, insolvency, arrangement, receivership, or similar proceeding is
commenced by or against Borrower and/or Guarantor under any federal or state
law, or Borrower or Guarantor makes any assignment for the benefit of
creditors.
G. Any substantial part of the inventory, equipment, or
other property of the Borrower or Guarantor, real or personal, tangible or
intangible, is damaged or destroyed and the damage or destruction is not
covered by collectible insurance.
H. Borrower or Guarantor defaults in the payment of any
principal or interest on any obligation to Lender or any other creditor.
I. Borrower or Guarantor suffers or permits any lien,
encumbrance, or security interest to arise or attach to any of their respective
properties, or any judgment is entered against Borrower or Guarantor that is
not satisfied or appealed within 30 days.
7. REMEDIES UPON DEFAULT. Upon the occurrence, or the discovery
by Lender of the occurrence, of any of the foregoing events, circumstances, or
conditions of default, Lender shall have, in addition to its option to
accelerate to maturity the full unpaid balance of the Loan, all of the rights
and remedies under applicable law, and in addition shall have the following
specific rights and remedies:
A. To exercise Lender's right of set-off against any
account, fund, or property of any kind, tangible or intangible, belonging to
Borrower or Guarantor which shall be in Lender's possession or under its
control.
B. To cure such defaults, with the result that all costs
and expenses incurred or paid by Lender in effecting such cure shall be
additional charges on the Loan, shall bear interest at the highest rate
permitted by law, and shall be payable upon demand.
8. ATTORNEYS' FEES AND COSTS. Borrower and Guarantor promise and
agree to pay all costs of collection and attorneys' fees, including fees for
appellate proceedings, bankruptcy proceedings or otherwise, incurred or paid by
Lender in enforcing this Agreement or preserving any right or interest of
Lender hereunder.
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9. WAIVER. No failure or delay on the part of Lender in
exercising any power or right hereunder, and no failure of Lender to give
Borrower or Guarantor notice of a default hereunder, shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder. No modification or waiver of any provision of this
Agreement or any instrument executed pursuant hereto or consent to any
departure by Borrower or Guarantor from this Agreement or such instrument shall
in any event be effective unless the same shall be in writing, and such waiver
or consent shall be effective only in the specific instance and for the
particular purpose for which given.
10. BENEFIT. This Agreement shall be binding upon and inure to the
benefit of Borrower, Guarantor and Lender and their respective successors and
assigns. Lender may assign this Agreement in whole or in part. Neither Borrower
nor Guarantor may assign this Agreement or its obligations hereunder without
Lender's written consent.
11. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida, and any litigation arising
out of or relating to this Agreement or the Loan shall be commenced and
conducted in the courts of the State of Florida or in the federal courts of the
State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed this Loan
Agreement on the day and year first above written.
SUNINCO, INC., a Florida NORTHERN TRUST BANK OF FLORIDA,
corporation N.A.
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxxxx X. XxXxxxxx
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Xxxxx X. Xxxxx Xxxxxxx X. XxXxxxxx
As its President As its Vice President
BORROWER LENDER
SUN HYDRAULICS CORPORATION,
a Florida corporation
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
As its President
GUARANTOR
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