TERM LOAN AGREEMENT
Exhibit 10.5
This Term Loan Agreement (the “Agreement”) is made and entered into by and between the
undersigned borrower (the “Borrower”) and the undersigned bank (the “Bank”) as of the date set
forth on the last page of this Agreement.
1.1 Terms for Advance(s). [Choose One:]
| Xo | Single Advance Term Loan. As of the date hereof, the Borrower has obtained a term loan from the Bank in the amount of $5,000,000 (the “Loan Amount”). The term loan is evidenced by a single promissory note of the Borrower to the order of the Bank in the principal amount of the Loan Amount and dated as of the date hereof (the “Note”). | ||
| o | Multiple Advance Term Loan. Prior to n/a or the earlier termination hereof, the Borrower may obtain advances from the Bank in an aggregate amount not exceeding $ n/a (the “Loan Amount”). The term loans will be evidenced by a single promissory note of the Borrower to the Bank In the principal amount of the Loan Amount and dated as of the date hereof (the “Note”). Although the Note will be expressed as payable in the full Loan Amount, the Borrower will be obligated to pay only the amounts actually disbursed hereunder, together with accrued interest on the outstanding balance at the rates and on the dates specified therein and such other charges provided for herein. |
1.2 Advances and Paying Procedure. The Bank is authorized and directed to credit any of the
Borrower’s accounts with the Bank (or to the account the Borrower designates in writing) for all
loans made hereunder, and the Bank is authorized to debit such account or any other account of the
Borrower with the Bank for the amount of any principal, interest or expenses due under the Note or
other amount due hereunder on the due date with respect thereto. It, upon any request by the
Borrower to the Bank to issue a wire transfer, there Is an inconsistency between the name of the
recipient of the wire and its identification number as specified by the Borrower, the Bank may,
without liability, transmit the payment via wire based solely upon the identification number.
1.3 Closing Fee. The Borrower will pay the Bank a one-time closing fee of
$ n/a contemporaneously with execution of this Agreement. This fee is in
addition to all other fees, expenses and other amounts due hereunder.
1.4 Compensating Balances. The Borrower will maintain on deposit with the Bank in
non-interest bearing accounts average daily collected balances, in excess of that required to
support account activity and other credit facilities extended to the Borrower by the Bank, an
amount at least equal to the sum of (i) $ n/a and (ii) $ n/a%
of the Loan Amount as computed on a monthly basis. If the Borrower fails to keep and maintain such
balances, it will pay a deficiency fee, payable within five days after receipt of a statement
therefor calculated on the amount by which the Borrower’s average daily balances are less than the
requirements set forth above, computed at a rate equal to the rate set forth in the Note.
1.5 Expenses and Attorneys’ Fees. Upon demand, the Borrower will immediately reimburse the
Bank and any participant in the Obligations (defined below) (“Participant”) for all attorneys’ fees
and all other costs, fees and out-of-pocket disbursements incurred by the Bank or any Participant
in connection with the preparation, execution, delivery, administration, defense and enforcement of
this Agreement or any of the other Loan Documents (defined below), including attorneys’ fees and
all other costs and fees (a) incurred before or after commencement of litigation or at trial, on
appeal or in any other proceeding, (b) incurred In any bankruptcy proceeding and (c) related to any
waivers or amendments with respect thereto (examples of costs and fees include but are not limited
to fees and costs for: filing, perfecting or confirming the priority of the Bank’s lien, title
searches or insurance, appraisals, environmental audits and other reviews related to the Borrower,
any collateral or the loans, if requested by the Bank). The
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Borrower will also reimburse the Bank and any Participant for all costs of collection,
including all attorneys’ fees, before and after judgment, and the costs of preservation and/or
liquidation of any collateral.
1.6 Conditions to Borrowing. The Bank will not be obligated to make (or continue to make)
advances hereunder unless (i) the Bank has received executed originals of the Note and all other
documents or agreements applicable to the loans described herein, including but not limited to the
documents specified in Article III (collectively with this Agreement the “Loan Documents), in form
and content satisfactory to the Bank; (ii) if the loan is secured, the Bank has received
confirmation satisfactory to It that the Bank has a properly perfected security interest, mortgage
or lien, with the proper priority; (iii) the Bank has received certified copies of the Borrower’s
governance documents and certification of entity status satisfactory to the Bank and all other
relevant documents; (iv) the Bank has received a certified copy of a resolution or authorization in
form and content satisfactory to the Bank authorizing the loan and all acts contemplated by this
Agreement and all related documents, and confirmation of proper authorization of all guaranties and
other acts of third parties contemplated hereunder; (v) if required by the Bank, the Bank has been
provided with Opinion of the Borrower’s counsel in form and content satisfactory to the Bank
confirming the matters outlined in Section 2.2 and such other matters as the Bank requests; (vi) no
default exists under this Agreement or under any other Loan Documents, or under any other
agreements by and between the Borrower and the Bank; and (vii) all proceedings taken in connection
with the transactions contemplated by this Agreement (including any required environmental
assessments),and an instruments, authorizations and other documents applicable thereto, are
satisfactory to the Bank and its counsel.
While any part of the credit granted to the Borrower under this Agreement or the other Loan
Documents is available or any obligations under any of the Loan Documents are unpaid or
outstanding, the Borrower continuously warrants and agrees as follows:
2.1 Accuracy of Information. Alt information, certificates or statements given to the Bank
pursuant to this Agreement and the other Loan Documents will be true and complete when given.
2.2 Organization and Authority; Litigation. This Agreement and the other Loan Documents are
the legal, valid and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms. The execution, delivery and performance of this Agreement and all
other Loan Documents to which the Borrower is a party (i) are within the borrower’s power; (ii)
have been duly authorized by all appropriate entity action; (iii) do not require the approval of
any governmental agency; and (iv) will not violate any law, agreement or restriction by which the
Borrower is bound. If the Borrower is not an Individual, the Borrower is validly existing and in
good standing under the laws of its state of organization, has all requisite power and authority
and possesses all licenses necessary to conduct its business and own Its properties. There is no
litigation or administrative proceeding threatened or pending against the Borrower which would, if
adversely determined, have a material adverse effect on the Borrower’s financial condition or its
property.
2.3 Existence; Business Activities; Assets; Change of Control. The Borrower will (i)
preserve its existence, rights and franchises; (ii) not make any material change in the nature or
manner of its business activities; (iii) not liquidate, dissolve, acquire another entity or merge
or consolidate with or into another entity or change its form of organization; (iv) not amend its
organizational documents In any manner that may conflict with any term or condition of the Loan
Documents; and (v) not sell, lease, transfer or otherwise dispose of all or substantially all of
its assets. Other than the transfer to a trust beneficially controlled by the transferor, no event
shall occur which causes or results in a transfer of majority ownership of the Borrower while any
Obligations are outstanding or while the Bank has any obligation to provide funding to the
Borrower.
2.4 Use of Proceeds; Margin Stock; Speculation. Advances by the Bank hereunder will be used
exclusively by the Borrower for the purposes represented to the Bank. The Borrower will not,
without the prior written consent of the Bank, redeem, purchase, or retire any of the capital stock
or declare or pay
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any dividends, or make any other payments or distributions of a similar type or nature
including withdrawal distributions. The Borrower will not use any of the loan proceeds to purchase
or carry “margin’ stock (as defined In Regulation U of the Board of Governors of the Federal
Reserve System). No part of any of the proceeds will be used for speculative investment purposes,
including, without limitation, speculating or hedging in the commodities and/or futures market.
2.5 Environmental Matters. Except as disclosed in a written schedule attached to this
Agreement (if no schedule Is attached, there are no exceptions), there exists no uncorrected
violation by the Borrower of any federal, state or local laws (including statutes, regulations,
ordinances or other governmental restrictions and requirements) relating to the discharge of air
pollutants, water pollutants or process waste water or otherwise relating to the environment or
Hazardous Substances as hereinafter defined, whether such laws currently exist or are enacted in
the future (collectively “Environmental Laws”). The term “Hazardous Substances” will mean any
hazardous or toxic wastes, chemicals or other substances, the generation, possession or existence
of which is prohibited or governed by any Environmental Laws. The Borrower is not subject to any
judgment, decree, order or citation, or a party to (or threatened with) any litigation or
administrative proceeding, which asserts that the Borrower (i) has violated any Environmental Laws;
(ii) is required to clean up, remove or take remedial or other action with respect to any Hazardous
Substances (collectively “Remedial Action”);or (iii) is required to pay all or a portion of the
cost of any Remedial Action, as a potentially responsible party. Except as disclosed on the
Borrower’s environmental questionnaire provided to the Bank, there are not now, nor to the
Borrower’s knowledge after reasonable investigation have there ever been, any Hazardous Substances
(or tanks or other facilities for the storage of Hazardous Substances) stored, deposited, recycled
or disposed of on, under or at any real estate owned or occupied by the Borrower during the periods
that the Borrower owned or occupied such real estate, which if present on the real estate or in
soils or ground water, could require Remedial Action. To the Borrower’s knowledge, there are no
proposed or pending changes In Environmental Laws which would adversely affect the Borrower or its
business, and there are no conditions existing currently or likely to exist while the Loan
Documents are in effect which would subject the Borrower to Remedial Action or other liability.
The Borrower currently complies with and will continue to timely comply with all applicable
Environmental Laws; and will provide the Bank, immediately upon receipt, copies of any
correspondence, notice, complaint, order or other document from any source asserting or alleging
any circumstance or condition which requires or may require a financial contribution by the
Borrower or Remedial Action or other response by or on the part of the Borrower under Environmental
Laws, or which seeks damages or civil, criminal or punitive penalties from the Borrower for an
alleged violation of Environmental Laws.
2.6 Compliance with Laws. The Borrower has complied with all laws applicable to its business
and its properties, and has all permits, licenses and approvals required by such laws, copies of
which have been provided to the Bank.
2.7 Restriction on Indebtedness. The Borrower will not create, incur, assume or have
outstanding any indebtedness for borrowed money (including capitalized leases) except (i) any
Indebtedness owing to the Bank and its affiliates, and (ii) any other indebtedness outstanding on
the date hereof, and shown on the Borrower’s financial statements delivered to the Bank prior to
the date hereof, provided that such other indebtedness will not be increased.
2.8 Restriction on Liens. The Borrower will not create, incur, assume or permit to exist any
mortgage, pledge, encumbrance or other lien or levy upon or security interest in any of the
Borrower’s property now owned or hereafter acquired, except (i) taxes and assessments which are
either not delinquent or which are being contested in good faith with adequate reserves provided;
(ii) easements, restrictions and minor title irregularities which do not, as a practical matter,
have an adverse effect upon the ownership and use of the affected property; (iii) liens in favor of
the Bank and its affiliates; and (iv) other liens disclosed in writing to the Bank prior to the
date hereof.
2.9 Restriction on Contingent Liabilities. The Borrower will not guarantee or become a
surety or otherwise contingently liable for any obligations of others, except pursuant to the
deposit and collection of checks and similar matters in the ordinary course of business.
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2.10 Insurance. The Borrower will maintain insurance to such extent, covering such risks and
with such insurers as is usual and customary for businesses operating similar properties, and as is
satisfactory to the Bank, Including insurance for fire and other risks insured against by extended
coverage, public liability Insurance and workers’ compensation insurance; and will designate the
Bank as loss payee with a “Lender’s Loss Payable” endorsement on any casualty policies and take
such other action as the Bank may reasonably request to ensure that the Bank will receive (subject
to no other interests) the insurance proceeds on the Bank’s collateral.
2.11 Taxes and Other Liabilities. The Borrower will pay and discharge, when due, all of its
taxes, assessments and other liabilities, except when the payment thereof is being contested In
good faith by appropriate procedures which will avoid foreclosure of liens securing such items, and
with adequate reserves provided therefor.
2.12 Financial Statements and Reporting. The financial statements and other Information
previously provided to the Bank or provided to the Bank in the future are or will be complete and
accurate and prepared In accordance with generally accepted accounting principles. There has been
no material adverse change In the Borrower’s financial condition since such information was
provided to the Bank. The Borrower will (i) maintain accounting records In accordance with
generally recognized and accepted principles of accounting consistently applied throughout the
accounting periods involved; (ii) provide the Bank with such information concerning its business
affairs and financial condition (including Insurance coverage) as the Bank may request; and (iii)
without request, provide the Bank with such specific financial statements, certifications and/or
information as may be set forth in an addendum to this Agreement.
2.13 Inspection of Properties and Records; Fiscal Year. The Borrower will permit
representatives of the Bank to visit and inspect any of the properties and examine any of the books
and records of the Borrower at any reasonable time and as often as the Bank may reasonably desire.
The Borrower will not change its fiscal year.
2.14 Financial Status. Financial Covenants, if any, will be as set forth in an addendum to
this Agreement.
3.1 Collateral. This Agreement and the Note are secured by any and all security interests,
pledges, mortgages/deeds of trust (except any mortgage/deed of trust expressly limited by its terms
to a specific obligation of Borrower to Bank) or liens now or hereafter in existence granted to the
Bank to secure indebtedness of the Borrower to the Bank, including without limitation as described
in the following documents:
| o | Real Estate Mortgage(s)/Deed(s) of Trust dated | |||||||
| covering real estate located at | ||||||||
| Xo | Security Agreement(s) dated 0/5/26/06 | |||||||
| o | Possessory Collateral Pledge Agreement(s) dated | |||||||
o
|
Other | |||||||
3.2 Guaranties. This Agreement and the Note are guarantied by each and every guaranty now or
hereafter in existence guarantying the indebtedness of the Borrower to the Bank (except for any
guaranty expressly limited by its terns to a specific separate obligation of Borrower to the Bank)
including, without limitation, the following:
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3.3 Credit Balances; Setoff. As additional security for the payment of the obligations
described in the Loan Documents and any other obligations of the Borrower to the Bank of any nature
whatsoever(collectively the “Obligations”, the Borrower hereby grants to the Bank a security
Interest in, a lien on and an express contractual right to set off against all depository account
balances, cash and any other property of the Borrower now or hereafter in the possession of the
Bank and the right to refuse to allow withdrawals from any account (collectively “Setoff”. The
Bank may, at any time upon the occurrence of a default hereunder (notwithstanding any notice
requirements or grace/cure periods under this or other agreements between the Borrower and the
Bank) Setoff against the Obligations whether or not the Obligations (including future installments)
are then due or have been accelerated, all without any advance or contemporaneous notice or demand
of any kind to the Borrower, such notice and demand being expressly waived.
The omission of any reference to an agreement In Sections 3.1 and 3.2 above will not affect
the validity or enforceability thereof. The rights and remedies of the Bank outlined In this
Agreement and the documents identified above are intended to be cumulative.
4.1 Defaults. Notwithstanding any cure periods described below, the Borrower will
Immediately notify the Bank In writing when the Borrower obtains knowledge of the occurrence of any
default specified below. Regardless of whether the Borrower has given the required notice, the
occurrence of one or more of the following will constitute a default:
| (a) | Nonpayment. The Borrower shall fail to pay (i) any interest due on the Note or any fees, charges, costs or expenses under the Loan Documents by 5 days after the same becomes due; or (ii) any principal amount of the Note when due. | ||
| (b) | Nonperformance. The Borrower or any guarantor of Borrower’s Obligations to the Bank (“Guarantor”) shall fail to perform or observe any agreement, term, provision, condition, or covenant (other than a default occurring under (a), (c), (d), (e), (f) or (g) of this Section 4.1) required to be performed or observed by the Borrower or any Guarantor hereunder or under any other Loan Document or other agreement with or in favor of the Bank. | ||
| (c) | Misrepresentation. Any financial information, statement, certificate, representation or warranty given to the Bank by the Borrower or any Guarantor (or any of their representatives) in connection with entering into this Agreement or the other Loan Documents and/or any borrowing thereunder, or required to be furnished under the terms thereof, shall prove untrue or misleading in any material respect (as determined by the Bank in the exercise of its judgment) as of the time when given. | ||
| (d) | Default on Other Obligations. The Borrower or any Guarantor shall be in default under the terms of any loan agreement, promissory note, lease, conditional sale contract or other agreement, document or instrument evidencing, governing or securing any indebtedness owing by the Borrower or any Guarantor to the Bank or any indebtedness in excess of $10,000 owing by the Borrower to any third party, and the period of grace, if any, to cure said default shall have passed. | ||
| (e) | Judgments. Any judgment shall be obtained against the Borrower or any Guarantor which, together with all other outstanding unsatisfied judgments against the Borrower (or such Guarantor), shall exceed the sum of $10,000 and shall remain unvacated, unbonded or unstayed for a period of 30 days following the date of entry thereof. | ||
| (f) | Inability to Perform; Bankruptcy/Insolvency. (i) The Borrower or any Guarantor shall die or cease to exist; or (ii) any Guarantor shall attempt to revoke any guaranty of the Obligations described herein, or any guaranty becomes unenforceable in whole or in part for any reason; or (iii) any bankruptcy, insolvency or receivership proceedings, or an assignment for the benefit of creditors, shall be commenced under any Federal or state law by or against the Borrower or any |
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| Guarantor; or (iv) the Borrower or any Guarantor shall become the subject of any out-of-court settlement with its creditors; or (v) the Borrower or any Guarantor is unable or admits in writing its inability to pay its debts as they mature; or (vi) if the Borrower is a limited liability company, any member thereof shall withdraw or otherwise become disassociated from the Borrower. | |||
| (g) | Adverse Change; Insecurity. (i) There is a material adverse change in the business, properties, financial condition or affairs of the Borrower or any Guarantor, or in any collateral securing the Obligations; or (ii) the Bank in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure. |
4.2 Termination of Loans; Additional Bank Rights. Upon the occurrence of any of the events
identified in Section 4.1, the Bank may at any time (notwithstanding any notice requirements or
grace/cure periods under this or other agreements between the Borrower and the Bank) (i)
immediately terminate its obligation, if any, to make additional loans to the Borrower, (ii)
Setoff; and/or (iii) take such other steps to protect or preserve the Bank’s interest in any
collateral, including without limitation, notifying account debtors to make payments directly to
the Bank, advancing funds to protect any collateral and insuring collateral at the Borrower’s
expense; all without demand or notice of any kind, all of which are hereby waived.
4.3 Acceleration of Obligations. Upon the occurrence of any of the events identified in
Sections 4.1 (a) through 4.1(e) and 4.1(g), and the passage of any applicable cure periods, the
Bank may at any time thereafter, by written notice to the Borrower, declare the unpaid principal
balance of any Obligations, together with the interest accrued thereon and other amounts accrued
hereunder and under the other Loan Documents, to be immediately due and payable; and the unpaid
balance will thereupon be due and payable, all without presentation, demand, protest or further
notice of any kind, all of which are hereby waived, and notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents. Upon the occurrence of any event under
Section 4.1(f), the unpaid principal balance of any Obligations, together with all Interest accrued
thereon and other amounts accrued hereunder and under the other Loan Documents, will thereupon be
immediately due and payable, all without presentation, demand, protest or notice of any kind, all
of which are hereby waived, and notwithstanding anything to the contrary contained herein or in any
of the other Loan Documents. Nothing contained in Section 4.1, Section 4.2 or this section will
limit the Bank’s right to Setoff as provided in Section 3.3 or otherwise in this Agreement.
4.4 Other Remedies. Nothing in this Article IV is intended to restrict the Bank’s rights
under any of the Loan Documents or at law, and the Bank may exercise all such rights and remedies
as and when they are available.
5.1 Additional Terms; Addendum/Supplements. The warranties, covenants, conditions and other
terms described in this Section and/or in the Addendum and/or other attached document(s) referenced
In this Section are incorporated into this Agreement:
6.1 Delay; Cumulative Remedies. No delay on the part of the Bank in exercising any right,
power or privilege hereunder or under any of the other Loan Documents will operate as a waiver
thereof, nor will any single or partial exercise of any right, power or privilege hereunder
preclude other or further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein specified are cumulative and are not exclusive of any rights or
remedies which the Bank would otherwise have.
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6.2 Relationship to Other Documents. The warranties, covenants and other obligations of the
Borrower (and the rights and remedies of the Bank) that are outlined in this Agreement and the
other Loan Documents are Intended to supplement each other. In the event of any inconsistencies in
any of the terms in the Loan Documents, all terms will be cumulative so as to give the Bank the
most favorable rights set forth in the conflicting documents, except that if there is a direct
conflict between any preprinted terms and specifically negotiated terms (whether included in an
addendum or otherwise), the specifically negotiated terms will control.
6.3 Successors. The rights, options, powers and remedies granted in this Agreement and the
other Loan Documents shall be binding upon the Borrower and the Bank and their respective
successors and assigns, and shall inure to the benefit of the Borrower and the Bank and the
successors and assigns of the Bank, including without limitation any purchaser of any or all of the
rights and obligations of the Bank under the Note and the other Loan Documents. The Borrower may
not assign its rights or obligations under this Agreement or any other Loan Documents without the
prior written consent of the Bank.
6.4 Disclosure. The Bank may, in connection with any sale or potential sale of all or any
interest in the Note and other Loan Documents, disclose any financial information the Bank may have
concerning the Borrower to any purchaser or potential purchaser. From time to time, the Bank may,
in its discretion and without obligation to the Borrower, any Guarantor or any other third party,
disclose information about the Borrower and this loan to any Guarantor, surety or other
accommodation party. This provision does not obligate the Bank to supply any information or
release the Borrower from its obligation to provide such information, and the Borrower agrees to
keep all Guarantors, sureties or other accommodation parties advised of its financial condition and
other matters which may be relevant to their obligations to the Bank.
6.5 Indemnification. Except for harm arising from the Bank’s willful misconduct, the
Borrower hereby indemnities and agrees to defend and hold the Bank harmless from any and all
losses, costs, damages, claims and expenses of any kind suffered by or asserted against the Bank
relating to claims by third parties arising out of the financing provided under the Loan Documents
or related to any collateral (including, without limitation, the Borrower’s failure to perform its
obligations relating to Environmental Matters described in Section 2.5 above). This
indemnification and hold harmless provision will survive the termination of the Loan Documents and
the satisfaction of the Obligations due the Bank.
6.6 Notice of Claims Against Bank; Limitation of Certain Damages. In order to allow the Bank
to mitigate any damages to the Borrower from the Bank’s alleged breach of its duties under the Loan
Documents or any other duty, if any, to the Borrower, the Borrower agrees to give the Bank
immediate written notice of any claim or defense it has against the Bank, whether in tort or
contract, relating to any action or inaction by the Bank under the Loan Documents, or the
transactions related thereto, or of any defense to payment of the Obligations for any reason. The
requirement of providing timely notice to the Bank represents the parties’ agreed-to standard of
performance regarding claims against the Bank. Notwithstanding any claim that the Borrower may
have against the Bank, and regardless of any notice the Borrower may have given the Bank, the Bank
will not be liable to the Borrower for consequential and/or special damages arising therefrom,
except those damages arising from the Bank’s willful misconduct.
6.7 Notices. Notice of any record shall be deemed delivered when the record has been (a)
deposited in the United States Mail, postage pre-paid, (b) received by overnight delivery service,
(c) received by telex, (d) received by telecopy, (e) received through the internet, or (f) when
personally delivered.
6.8 Payments. Payments due under the Note and other Loan Documents will be made in lawful
money of the United States. Alt payments may be applied by the Bank to principal, Interest and
other amounts due under the Loan Documents In any order which the Bank elects.
6.9 Applicable Law and Jurisdiction; Interpretation; Joint Liability; Severability. This
Agreement and all other Loan Documents will be governed by and interpreted in accordance with the
internal laws of the State of Minnesota, except to the extent superseded by Federal law. THE
BORROWER HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR
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▇▇▇▇▇▇▇ ▇▇▇▇▇ SITUATED IN THE COUNTY OR FEDERAL JURISDICTION OF THE BANK’S BRANCH WHERE THE
LOAN WAS ORIGINATED AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO
ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE NOTE, THE COLLATERAL
ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR
INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein will affect the Bank’s rights to serve
process in any manner permitted by law, or limit the Bank’s right to bring proceedings against the
Borrower in the competent courts of any other jurisdiction or jurisdictions. This Agreement, the
other Loan Documents and any amendments hereto (regardless of when executed) will be deemed
effective and accepted only at the Bank’s offices, and only upon the Bank’s receipt of the executed
originals thereof. If there is more than one Borrower, the liability of the Borrowers will be
joint and several, and the reference to “Borrower’ will be deemed to refer to all Borrowers.
Invalidity of any provision of this Agreement shall not affect the validity of any other provision.
6.10 Copies; Entire Agreement; Modification. The Borrower hereby acknowledges the receipt of
a copy of this Agreement and all other Loan Documents. This Agreement is a “transferable record”
as defined in applicable law relating to electronic transactions. Therefore, the holder of this
Agreement may, on behalf of Borrower, create a microfilm or optical disk or other electronic image
of this Agreement that is an authoritative copy as defined in such law. The holder of this
Agreement may store the authoritative copy of such Agreement in its electronic form and then
destroy the paper original as part of the holder’s normal business practices. The holder, on its
own behalf, may control and transfer such authoritative copy as permitted by such law.
IMPORTANT: READ BEFORE SIGNING. THE TERMS OF THIS AGREEMENT SHOULD BE READ CAREFULLY BECAUSE ONLY
THOSE TERMS IN WRITING, EXPRESSING CONSIDERATION AND SIGNED BY THE PARTIES ARE ENFORCEABLE. NO
OTHER TERMS OR ORAL PROMISES NOT CONTAINED IN THIS WRITTEN CONTRACT MAY BE LEGALLY ENFORCED. THE
TERMS OF THIS AGREEMENT MAY ONLY BE CHANGED BY ANOTHER WRITTEN AGREEMENT. THIS NOTICE SHALL ALSO
BE EFFECTIVE WITH RESPECT TO ALL OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE
BANK. A MODIFICATION OF ANY OTHER CREDIT AGREEMENTS NOW IN EFFECT BETWEEN BORROWER AND THE BANK,
WHICH OCCURS AFTER RECEIPT BY BORROWER OF THIS NOTICE, MAY BE MADE ONLY BY ANOTHER WRITTEN
INSTRUMENT. ORAL OR IMPLIED MODIFICATIONS TO SUCH CREDIT AGREEMENTS ARE NOT ENFORCEABLE AND SHOULD
NOT BE RELIED UPON.
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IN WITNESS WHEREOF, the undersigned have executed this TERM LOAN AGREEMENT as of May 26, 2006.
| (Individual Borrower) | Rochester Medical Corporation | |||||||||
| Borrower Name (Organization) | ||||||||||
| a Minnesota Corporation | ||||||||||
| Borrower Name n/a | By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||||
| Name and Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, | ||||||||||
| President/CEO | ||||||||||
| By | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||||||||
| Borrower Name | Name and Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial Officer | |||||||||
| U.S. Bank, N.A. | (Bank) | |||||||||
| By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||||
| Name and Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President | ||||||||||
Borrower Address: ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Borrower Telephone No.: |
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Page 9 of 11
Exhibit 10.5
This Addendum is made part of the Term Loan Agreement and Note (the “Agreement”) made and entered
into by and between the undersigned borrower (the `Borrower”) and the undersigned bank (the `Bank”)
as of the date identified below. The warranties, covenants and other terms described below are
hereby added to the Agreement.
Financial Covenants. Financial terms used herein which are not specifically defined herein shall
have the meanings ascribed to them under generally accepted accounting principles. For any
Borrower who does not have a separate fiscal year end for tax reporting purposes, the fiscal year
will be deemed to be the calendar year. Borrower (herein referred to as the “Subject Party”) will
maintain the following:
Fixed Charge Coverage Ratio as of the end of each fiscal quarter for the fiscal quarter then ended
of at least 1.30 to 1.
“Fixed Charge Coverage Ratio” shall mean (a) EBITDAR minus cash taxes, cash dividends and
Maintenance Capital Expenditures divided by (b) the sum of all required principal payments (on
short and long term debt and capital leases), interest and rental or lease expense.
“EBITDAR” shall mean net income, plus interest expense, plus income tax expense, plus depreciation
expense plus amortization expense plus rent or lease expense.
“Maintenance Capital Expenditures” shall mean the dollar amount of Capital Expenditures that are
necessary to maintain the current level of revenues. For the purposes of the covenant calculation,
at no time shall the amount of the Capital Expenditures used be less than $300,000.00 per fiscal
year, prorated evenly for the measurement periods required above.
“Capital Expenditures” shall mean the aggregate amount of all purchases or acquisitions of fixed
assets, including real estate, motor vehicles, equipment, fixtures, leases and any other items that
would be capitalized on the books of the Subject Party under generally accepted accounting
principles. The term “Capital Expenditures” will not include expenditures or charges for the usual
and customary maintenance, repair and retooling of any fixed asset or the acquisition of new
tooling in the ordinary course of business.
Net Working Capital as of the end of each fiscal quarter in the amount of at least $8,000,000.00.
“Net Working Capital” shall mean:
| (i) | the amount of all assets which under generally accepted accounting principles would appear as current assets on the balance sheet of the Subject Party, plus 60% of LIFO reserve, if any, |
Less
| (ii) | the amount of all liabilities which under generally accepted accounting principles would appear as current liabilities on such balance sheet, including all indebtedness payable on demand or maturing (whether by reason of specified maturity, fixed prepayments, sinking funds or accruals of any kind, or otherwise) within 12 calendar months or less from the date of the relevant statement, including all lease and rental obligations due in 12 calendar months or less under capitalized leases, and including customers’ advances and progress ▇▇▇▇▇▇▇▇ on contracts. |
Financial Information and Reporting. This provision replaces in its entirety the provision of the
Agreement titled “Financial Information and Reporting”. Financial terms used herein which are not
specifically defined herein shall have the meanings ascribed to them under generally accepted
accounting principles. For any Borrower who does not have a separate fiscal year end for tax
reporting purposes, the fiscal year will be deemed to be the calendar year. The financial
statements and other information previously provided to Bank or provided to Bank in the future are
or will be complete and accurate and prepared in accordance with generally accepted accounting
principles. There has been no
material adverse change in Borrower’s financial condition since such information was provided to
Bank. Borrower will (i) maintain accounting records in accordance with generally recognized and
accepted principles of accounting consistently applied throughout the accounting periods involved;
(ii) provide Bank with such information concerning its business affairs and financial condition
(including insurance coverage) as Bank may request; and (iii) without request, provide to Bank the
following financial information, in form and content acceptable to Bank, pertaining to Borrower;
Interim Financial Statements: Not later than 60 days after the end of each fiscal quarter, interim
financial statements, compiled by a certified public accounting firm acceptable to Bank.
Annual Financial Statements: Not later than 120 days after the end of each fiscal year, annual
financial statements, audited by a certified public accounting firm acceptable to Bank.
Permitted Indebtedness. Notwithstanding the restrictions on indebtedness in Section 2.7 of the
Agreement, and so long as (a) no default has occurred and (b) no default would be caused by such
indebtedness, Borrower may without the prior consent of Bank incur indebtedness to third parties in
an aggregate amount not to exceed $6,000,000.00 outstanding at any time.
Dated as of |
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(Individual)
|
(Non-Individual) | |||||||
| Rochester Medical Corporation | ||||||||
| Borrower Name n/a | a/an Minnesota Corporation | |||||||
| By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||
| Borrower Name n/a | Name and Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, | |||||||
| President/CEO | ||||||||
| By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||||||
| Name and Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Chief Financial | ||||||||
| Officer | ||||||||
| Agreed to: | ||||||||
| U.S. BANK N.A. | ||||||||
| By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||||||
| Name and Title: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President | ||||||||