LOAN AGREEMENT
between
___________________ , LENDER
and
___________________ , COMPANY
DATED
___________________ , 20 __
LOAN AGREEMENT
This loan agreement is made and entered into on this the ____ day of _________ , 20 __ ,
between ___________________ , hereinafter “Lender”, a banking corporation with its principal
offices located at _______________________________________________________________
and ___________________ , ___________________________ , __________________________ ,
___________________________ , a ___________________________ corporation, hereinafter
“Company".
WITNESSETH
WHEREAS, Company is in the business of leasing equipment, supplies and accessories
to persons, partnerships, corporations, the State of ___________________ and political
subdivisions thereof and the United States of America and desires to assign leases to Lender in
exchange for loans; and
WHEREAS, Lender is in the business of loaning funds as requested by Company within
the State of ___________________ ; and
WHEREAS, Lender and Company have been doing business together as Lender and
Company since ____________________ , 20 ____ and presently are doing business together; and
WHEREAS, there presently exists between Lender and Company certain security
agreements, financing statements, guaranty agreements and assignment of life insurance policies
as evidenced by the attached Exhibit "A"; and
WHEREAS, there also exists between Lender and Company dated prior to the date of
this agreement certain assignment; of leases to Lender by Company and certain security
agreements and notes executed by Company to Lender; and
WHEREAS, Lender and Company desire that all said security agreements, financing
statements, guaranty agreements, assignment of life insurance policies, promissory notes and
assignments of leases shall remain in full force and effect except as hereinafter stated, and all
said agreements are hereby ratified, approved and continued by Lender and Company; and
WHEREAS, all future assignment of leases, promissory notes, financing statements and
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loans by and between Lender and Company shall be made in reference to this agreement and no
additional financing will be made on the previous agreements executed prior to the date hereof
except that said agreements shall continue to secure and provide the payment of the assignment
of leases and promissory notes presently existing between Lender and Company; and
WHEREAS, any loan agreement amount provided for herein will be decreased by the
amount of the outstanding loan balance to Company under the previous agreements until such
time as the outstanding loan balance under the previous agreement is reduced, in which event the
loan amount pursuant to this agreement shall be automatically increased by the reduction to the
present outstanding loan balance; and
WHEREAS, Lender desires to agree to loan up to an aggregate and maximum total of
_____________________________ ($ _____________ ) to Company consistent with the terms of
this agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto covenant, contract and agree as follows:
1. Amount and Terms of Loan: Lender agrees, subject to the terms and conditions in this
loan agreement, to lend to Company up to an aggregate maximum of
_____________________________ ($ _____________ ), as evidenced by promissory
notes executed from time to time by Company to Lender at different intervals of time
upon receipt by Lender of assignment of leases, each such promissory note to bear
interest; at not more than ______ % above the New York Prime Rate as published in the
Wall Street Journal, each such promissory note to be paid in accordance with the terms
thereof.
2. Prepayment: Company shall have the right to prepay at any time before maturity of any
note or notes in the inverse order of maturity, provided each note having a later maturity
date has been paid in full, together with interest thereon, without prepayment penalty.
3. Conditions Precedent: Lender shall not be obligated to lend any monies until it has
received the following:
(a) An opinion of counsel of Company, satisfactory in form and substance to Lender
and its counsel, as to the validity of the organization of Company, its authority to
execute and deliver this agreement, and all agreements, notes and other
documents referred to herein.
(b) A copy of the certificate of incorporation of Company including all former names
and name changes of Company, certified by the Secretary of State of the State of
___________________ , including all amendments thereto.
(c) A certified copy of the by-laws of Company presently in force.
(d) A certified copy of the resolution of the Board of Directors of Company
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authorizing the execution of this agreement and all other agreements, notes and
documents referred to herein.
(e) A certified copy of audited financial statements of Company for the last fiscal
year of the Company.
4. Loan Procedures: Lender and Company shall abide by the following loan procedures:
(a) From time to time Company shall assign leases unto Bank as security for the
payment of any promissory notes executed by Company to Lender, said
assignment of leases to be in a form satisfactory to Lender. Company leases its
equipment for intervals of 12, 24 and 36 months. The 12 month leases shall be
placed in one category of security and the 24 and 36 month leases shall be placed
in a second category of security. One promissory note may be executed for any
number of 12 month leases or 24 and 36 month leases. 12 month leases and 24/36
month leases will not be combined in one promissory note.
(b) Lender will review the credit worthiness of each Lessee in the leases proposed to
be assigned to Lender by Company and may reject any lease which Lender
determines, in its sole discretion, is unsuitable to stand as security for a loan to
Company. Lender will notify Company within 10 days of receipt of any lease
whether or not the lease is acceptable.
(c) On 12 month leases which are accepted by Lender, Lender agrees to loan unto
Company up to a maximum of ______ % of the lease value. On 24 and 36 month
leases accepted by Lender, Lender agrees to loan unto Company up to a
maximum of ______ % of the lease value. Lease value is the total of payments to
made under the terms of any one lease.
(d) At each loan transaction, Company agrees to furnish Lender with a UCC
Financing Statement executed by Lessee and Company showing
_________________________ as assignee of Company, the original lease
agreement, simple interest note disclosure, and security agreement, extension of
master security agreement and assignment of lease.
(e) Company may continue to collect all rental payments on any lease assigned to
Lender until such time as Lender revokes their authority to do so by written
notice.
(f) Upon receipt of the assignment of any lease, Lender will notify the Lessee that the
lease has been assigned to Lender and request that Lessee acknowledge receipt of
the assignment and return same to Lender. Lessee will be notified that it may
continue to make payments unto Company until such time as it is notified
otherwise to make payments directly to Lender.
(g) On each installment due date in any promissory note executed by Company to
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Bank, Company's account; number _______________________ at
_______________________ Bank shall be debited for the amount due. Company
will at all times maintain a sufficient balance in said account to cover any debits
made to said account; by Lender. In the event that the funds presently deposited
in said account are insufficient on the date of the debit to the account; Company
will be immediately notified and given 24 hours to deposit an amount of funds
sufficient to cover said debit.
(h) In the event that the Lessee defaults in payment to Company or Lender, Company
agrees to continue making payments unto Lender in accordance with the
promissory note executed with the assignment of said lease. In the event that
Lessor desires to withdraw any lease previously assigned to Lender, Company
may do so upon payment unto Lender of the accelerated payments due under any
such lease.
(i) Upon full payment of any promissory note of which leases are assigned, the
original leases will be returned and reassigned to Company.
5. Security Agreement. Company agrees to execute and deliver unto Lender a security
agreement, _____________________ of financing statements, _____________________
Commercial Code in form and substance satisfactory to Lender and its counsel, covering
all of Company's inventory, equipment, chattel paper, contract rights and accounts
receivable as a master security agreement to secure the payment of any loans from
Lender unto Company up to the aggregate maximum of _______________________
($ _____________ ).
6. Additional Security. If at any time or times, in the opinion of Lender, or counsel, the
prospect of payment or performance hereunder is impaired, Company shall furnish unto
Lender within ten days of Lender's demand therefore, such further security as may be
satisfactory to Lender and shall duly execute and deliver all such instruments and
documents as in the opinion of Lender are necessary and desirable in connection
therewith.
7. Guaranties. Company shall cause to be duly executed and delivered unto Lender
guaranties of the Company's indebtedness to Lender of ___________________________
($ _____________ ), said guaranties to be executed by ___________________ ,
___________________ , ___________________ and ___________________ . Each
guaranty shall be in form and substance satisfactory to Lender and delivered on the date
this agreement is executed.
8. Assignment of Life Insurance. To further secure the payment of the indebtedness herein,
Company shall cause to be assigned unto Lender, life insurance policies on the lives of
___________________ and ___________________ in the amount of
___________________ ($ ___________________ ) each with ___________________ as
beneficiary of each such life insurance policy. In the event that either assignor of life
insurance policy shall die, the full ___________________ ($ ___________________ )
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proceeds shall be paid unto ___________________ by the insurer and
___________________ shall dispose of or maintain said funds in either of the following
options:
(a) Lender will, upon receipt of the insurance proceeds, pay $ ___________________
unto the spouse of the deceased and place the remainder in an interest bearing
escrow account until such time as two audited financial statements of Company
are received by Lender, one for the year in which the deceased, died and one for
the next fiscal year of Company. Upon receiving the audited financial statement
for said two years, Lender will determine, in its discretion, whether or not to
apply the life insurance proceeds to the outstanding debt of Company and refund
the remainder, or refund the entire insurance proceeds plus accrued interest.
OR
(b) Lender will apply the life insurance proceeds to the then existing accelerated
outstanding debt of Company to Lender and pay the remainder, if any, to
Company. In the event that this option is chosen by Lender, this agreement may
be continued in full force and effect after the application of said life insurance
proceeds as provided herein, provided that Lender and Company execute an
agreement agreeing to extend this agreement further.
9. Use of Proceeds. Company agrees that the proceeds of any loan to Company by Lender
shall be used for general working capital of Company and for no other purposes.
10. Affirmative Covenants. Company covenants and agrees that until all notes with interest
and all other indebtedness to Lender under this Agreement are fully paid unless
specifically waived by Lender in writing to:
(a) As soon as practical and in any event within forty-five (45) days after the close of
the fiscal year of Company, to provide Lender with audited consolidated and
consolidating sheets and financial statements of Company, including a
consolidated and consolidating statement of the income and surplus account of
Company, a consolidated and consolidating statement of changes in financial
position of Company as compared to the last fiscal year, all in reasonable detail
and certified by a certified public accountant to be true and correct.
(b) To provide Lender promptly upon receipt; thereof, of copies of all financial
reports, if any, submitted to Company in connection with each annual or interim
audit of their respective books by its auditors.
(c) Promptly upon receipt thereof, provide Lender with copies of all reports to or
from the Securities and Exchange Commission or any other governmental agency
or any Securities Exchange, and all reports, notices or statements sent to its
stockholders.
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(d) Promptly upon the commencement thereof, provide Lender with written notice of
any litigation, including arbitrations, and of any proceedings before any
governmental agency, where the amount involved exceeds $10,000.00 whether or
not same is covered by insurance.
(e) With reasonable promptness provide Lender with such other information
respecting the business, operations and financial condition of Company as Lender
may from time to time request. Lender is hereby authorized to deliver a copy of
any financial statement or any other information relating to the business,
operation or financial condition of Company which may be furnished to it or
come to its attention pursuant to this agreement or otherwise, to any regulatory
body or agency having jurisdiction over Lender or to any person which shall, or
shall have any right or obligation to, succeed to all or any part of the Lender's
interest in the notes or to its counsel or accountants.
11. Taxes and Claims. Company shall duly pay and discharge (a) all taxes, assessments and
governmental charges upon or against Company or its respective properties or assets
prior to the date on which penalties attach thereto, unless and to the extent that such taxes
are being diligently contested in good faith and by appropriate proceedings and
appropriate services therefore have been established and (b) all lawful claims, whether
for tort damages, labor, materials, supplies, services, repairs, wages or otherwise, which
might or could, if unpaid, become a lien or charge upon the properties or assets of the
Company, unless and to the extent only that same are being diligently contested in good
faith and by appropriate proceedings and appropriate reserves therefore have been
established.
12. Document Retention. (a) The Company shall (i) keep all of its proper copy of any
financial statement or any other information relating to the business, operation or
financial condition of Company which may be furnished to it or come to its attention
pursuant to this agreement or otherwise, to any regulatory body or agency having
jurisdiction over Lender or to any person which shall, or shall have any right or
obligation to, succeed to all or any part of the Lender's interest in the notes or to its
counsel or accountants.
13. Insurance. (a) The Company shall (i) keep all of its properties adequately insured at all
times and with responsible insurance carriers qualified to do business under the laws of
the State of ___________________ against loss or damage by fire or other hazards, (ii)
maintain adequate insurance at all times with responsible insurance carriers qualified to
do business in the State of ___________________ against liability on account of damage
to person or property and under all applicable workmen's compensation laws and (iii)
maintain adequate insurance covering such other risks as Lender may reasonable request.
For purpose of this section, insurance shall be deemed adequate if same is not less
extensive in coverage and amount as is customarily maintained by other persons engaged
in the same or similar business similarly situated. All insurance covering tangible
personal property subject to a lien or security interest in favor of Lender granted pursuant
to this agreement or under any other instrument or document given as security pursuant
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hereto shall provide that, in the case of each separate loss in excess of $2,000.00, the full
amount of insurance proceeds with respect thereto shall be payable to Lender as
mortgagee, said insurance proceeds to be applied by Lender to Company's debt on the
insured loss.
(1) Company shall from time to time upon request of Lender promptly furnish and
cause to be furnished to Lender evidence, in form and substance satisfactory to, of
the maintenance of all insurance as required by this section, including, but not
limited to such originals or copies as Lender may request of policies, certificates
of insurance, riders and endorsements relating to such insurance and proof of
premium payments.
14. Books and Reserves: Company shall maintain, at all times, true and complete books,
records, and accounts in which true and correct entries shall be made of its transactions in
accordance with generally accepted accounting principals consistently applied and
consistent with those applied in the preparation of the financial statements as referred to
above, and by means of appropriate quarterly entries, ___________________ in its
account and in all financial statements proper liabilities in reserves for all taxes and
proper reserves for depreciation, renewals and replacements, obsolescence, and
amortization of its properties and bad debts, all in accordance with generally accepted
accounting principals consistently applied.
15. Properties in Good Condition. Company shall keep and cause its lessees to keep, their
respective properties in good repair, working order and condition and, from time to time,
make a needful and proper repair, 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.
16. Inspection by Lender. Company shall allow and shall cause its lessees to allow, any
representative of Lender to visit and inspect; any of the properties of Company its
lessees, to examine the books of account and other records and files of the Company and
Lessees and to discuss affairs, business, finances, and accounts of Company and each of
its subsidiaries with their respective officers and employees, all at such reasonable times
and as often as Lender may request.
17. Pay Indebtedness to Lender and Perform Other Covenants. Company shall (a) make full
and timely payment of all principal and interest on the note or notes executed in
connection herewith and all other indebtedness of Company to Lender, whether now
existing or hereafter arising (b) duly comply with all terms and covenants contained in
each instrument and document given to Lender in connection with and pursuant to this
agreement, all at the times and places and in the manner set; forth therein, and (c) at all
times maintain the liens and security interest provided for under or pursuant to as valid
and perfected liens and security interest on the property intended to be covered thereby.
Company further agrees to duly execute and deliver to Lender such further instruments as
may be necessary to execute in order to further secure Lender and to do and cause to be
done such further acts as may be necessary or proper in the opinion of Lender to carry out
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more effectively the provisions and purposes of this agreement.
18. Negative Covenants. Company covenants and agrees that until the note or notes together
with all interest and all other indebtedness to Lender under this agreement are paid in full,
Company shall not, without prior written consent of Bank:
(a) permit working capital at any time to be less than $ _____________________ .
(b) make or be committed to make, or permit any subsidiary to make or be committed
to make, directly or indirectly, expenditures for fixed or capital assets (including
but not limited to payments on account of any mortgages, liens, or security
interest permitted pursuant to this agreement) amounting in the aggregate for
Company for any fiscal year of Company (on a non-cumulative basis, to the effect
that any amounts not expended in any one period may not be expended in any
subsequent) to more than $ _____________________ .
(c) create, incur, assume, or suffer to exist any mortgage, pledge, security interest,
encumbrance, lien, or charge of any kind upon or defect in title to or restriction
upon the use of any of Company's assets of any character, whether owned at the
date hereof or hereafter acquired, except:
(i) mortgages, liens, pledges and security interest in favor of lender.
(ii) liens arising out of judgments or awards in respect to which Company
shall in good faith be prosecuting an appeal or proceedings for review and
in respect of which Company shall have secured a substituting stay on
execution pending such appeal or proceedings for review provided
Company shall have set aside on its books adequate reserve with respect to
such judgment or award.
(iii) liens for taxes, assessments, or governmental charges or levies provided
payment therefore shall not be at the time be required in accordance with
paragraph _____
(iv) deposits, liens, or pledges to secure payments of workmen's compensation,
unemployment insurance, pensions or other social security obligations,
public or statutory obligations, surety, stay or appeal bonds or other
similar obligations arising in the ordinary course of business and securing
sums which are not passed due, or deposits or pledges to obtain the release
of any such liens.
(v) statutory landlord liens to which Company is a party.
(vi) zoning restrictions, easements, licenses, (and/or) restrictions on the use of
real property for minor irregularities entitled thereto which do not
materially impair the use of such property in the operation of the business
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of the Company or the value of such property for the purpose of such
business.
(vii) purchase money mortgages or other purchase money, liens or security
interest (including without limitations, finance leases) on any such assets
hereafter acquired existing at the time of acquisition thereof whether or
not assumed, provided that no such mortgage, lien or security interest shall
extend to or cover any other property of Company and provided that the
principal amount incurred by any such mortgage, lien or security interest
together with all other indebtedness, other than to Lender, secured by
mortgages, liens or security interest on such property shall not exceed 85%
of the cost, (including in the computation of such costs, the total amount
secured by any such mortgage, lien or security interest) of the property
acquired or the value thereof (determined upon request of Lender by
independent appraiser satisfactory to Lender) at the time of acquisition,
whichever shall be the lesser.
(viii) mortgages, liens and security interest existing on the date hereof but not
the extension of maturity, refunding or modification thereof in the whole
or in part except to Lender.
(d) permit tangible net worth at any time to be less than impair the use of such
property in the operation of the business of the Company or the value of such
property for the purpose of such business.
(e) lend or advance money, credit or property to any person, or invest in, by capital
contribution or otherwise (or purchase or repurchase the stock or indebtedness, of
all or a substantial part of the assets or properties or any person), guaranty,
assume, endorse or otherwise become responsible for (directly or indirectly or by
any instrument having the effect of assuring any persons payment or
performance) the indebtedness, performance, obligations, stock or dividends of
any person, or agree to do any of the foregoing, except: endorsement of
negotiable instruments for deposit or collection in the ordinary course of business.
19. Negative Covenants. Company shall not:
(a) Enter into any transaction of merger or consolidation, or transfer, sell, assign,
lease, or otherwise dispose of all or a substantial part of its properties or assets, or
any of its notes or accounts receivables or any stock or indebtedness of any
subsidiary or any assets or properties necessary or desirable for the proper
conduct of its business or change the nature of its business, or wind up, liquidate,
or dissolve or agree to do any of the foregoing, or permit any subsidiary to do so
except that any subsidiary may dissolve, or transfer all or a substantial part of its
properties and assets to, or may merge into the Company, the Company may
transfer or sell any stock or indebtedness of any subsidiary to another subsidiary
and any subsidiary may transfer or sell any stock or indebtedness of any other
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subsidiary.
(b) Permit or suffer any subsidiary to acquire, hold or own any shares of stock of the
Company or to issue or sell any shares of its own stock of any class to any person
except the Company or another subsidiary.
(c) To purchase, redeem or otherwise retire any common or other shares of Company,
or apply or set apart any of its assets therefore, or make any other substantial
change in the now existing structure of Company.
(d) Declare or pay any dividends on any shares of stock of any class of Company
other than dividends as have customarily been paid in previous years during
Company's business.
20. Events of Default. If any one or more of the following events, hereinafter "Events of
Default", shall occur for any reason whatsoever, whether voluntary or involuntary or by
operation of law, Company shall be in default:
(a) Company fails to make punctual payments on the promissory note or note
executed in accordance herewith when and as the same become due and payable,
whether at maturity or at a date fixed for prepayment or by acceleration or
otherwise.
(b) Company fails in the performance or observance of any covenant, agreement, or
other provision of this agreement or in any instrument or document delivered to
Lender in connection with or pursuant to this agreement, or if any such instrument
or document shall terminate or become void or unenforceable without written
consent of Lender.
(c) A representation or warranty or any other statement of fact herein or in any
writing, certificate report, or statement at any time furnished to Lender pursuant to
or in connection with this agreement, or otherwise, shall be false or misleading in
any material respect;
(d) The Company shall admit in writing its inability to pay its debts generally as they
become due, file a petition in bankruptcy or a petition to take advantage of any
insolvency act; make an assignment for the benefit of its creditors; commence a
proceeding for the appointment of a receiver, trustee, liquidator or conservator of
itself or of a whole or any substantial part of its property; file a petition or answer
seeking reorganization or arrangement or similarly relief under the federal
bankruptcy laws or any other applicable law or statute of the United States or any
other state.
(e) The Company shall be adjudged a bankrupt; or a court of competent jurisdiction
shall enter into an order, judgment, or decree appointing a receiver, trustee,
liquidator, or conservator of Company or of the whole or any substantial part of
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its properties or approve a petition filed against Company seeking reorganization
or similar relief under the federal bankruptcy law or any other applicable law or
statute of the United States or any other state, or if, under the provisions of any
other law for the relief or aid of debtors, a court of competent jurisdiction shall
assume custody or control of Company or of the whole or any substantial part of
its properties; or if there is commenced against the Company any proceeding or
any of the foregoing relief or if a petition in bankruptcy is filed against the
Company in any such proceeding or petition remains undismissed for a period of
ten days; or if the Company by any act indicates its consent to, approval of or
acquiescence in any such proceeding or petition.
(f) Any judgment against Company or any attachment or execution against any of its
property for any amount in excess of $ _______________ remains unpaid,
unstayed, or undismissed for a period of more than ten days.
(g) Lender shall consider the indebtedness of Company to Lender insecure or any part
of any collateral therefore unsafe, insecure, or insufficient, and Company shall not
on demand furnish other collateral or make payment on account satisfactory to
Lender.
In the event of default, and at any time thereafter, Lender may, at its option, declare all
notes to be due and payable whereupon the maturity of the unpaid balance of the note or
notes shall be accelerated and the same, and all interest accrued thereon, shall forthwith
become due and payable without presentment, demand, protest, or notice of any kind, all
of which are hereby expressly waived, anything contained herein or in any note or notes
to the contrary notwithstanding.
21. Suits for Enforcement. In case any one or more of the events of default shall occur and
be continuing, Lender may proceed to protest 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 security agreement,
promissory note or notes, or any other document or instrument delivered in connection
with or pursuant to this agreement, or to enforce the payment of any such note or notes or
any other legal or equitable right or remedy.
22. Non-Exclusive Remedy. No right or remedy herein conferred upon Lender is intended
to be exclusive of any other right or remedy contained herein, in the security agreement
or in the note or notes 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 thereafter or now
or hereafter existing at law or in equity or by statute, or by otherwise.
23. Rights and Remedies not Waived. No course of dealing between Lender and Company
or any failure or delay on the part of Lender in exercising any rights or remedies
hereunder shall operate as a waiver of any rights or remedies of Lender and no single or
partial exercise of any rights or remedies hereunder shall operate as a waiver or preclude
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the exercise of any other rights or remedies.
24. Representations and Warranties. In order to induce Lender to enter into this agreement
and to make the loans as herein provided for, Company makes the following
representations and warranties which shall survive the execution and delivery of this
agreement and the security agreement, assignments and note or notes, and any inspection
or examination at any time may be made on behalf of Bank:
(a) Corporate status. Company is a duly organized corporation in good standing of
the laws of the State of ___________________ with perpetual corporate
existence, and has the corporate power and authority to own its properties and to
transact the business in which it is engaged and presently proposes to engage.
The Company is duly qualified as a foreign corporation and in good standing in
all states where the nature of its business or the ownership or use of property
requires such qualification.
(b) Corporate Power and Authority. Company has the corporate power to borrow and
to execute, deliver and carry out the terms and provisions of this agreement, the
notes and all instruments and documents delivered by it pursuant to this
agreement, and Company has taken or caused to be taken all necessary corporate
action (including but not limited to, the obtaining of any consent of stockholders
required by law or by the articles or certificate of incorporation or by-laws of
Company) to authorized the execution, delivery, and performance of this
agreement, the borrowing hereunder, the making and delivery of the note, and the
execution, delivery and performance of the instruments and documents delivered
by it pursuant to this agreement.
(c) No violation of agreements. Company is not in default under any indenture,
mortgage, deed of trust, agreement, or other instrument to which it is a party or by
which it may be bound. Neither the execution and delivery of this agreement, the
note or notes or any other instrument or documents to be delivered pursuant to
this agreement, nor the consummation of the transaction herein and herein
contemplated, nor compliance with the provisions hereof or thereof will violate
any law or regulation, or any order or decree of any court of any governmental
instrumentality, or ___________________ will conflict with, or result in the
breach of, or constitute a default under, any indenture, mortgage, deed of trust,
agreement or other instrument to which the Company is a party or by which it
may be bound or result in the creation or imposition of any lien, charge, or
encumbrance upon any of the property of Company, or violate any provision of
the articles or certificate of incorporation or by-laws of the Company.
(d) No burdensome agreement. Company is not a party to any agreement or
instrument or subject to any corporate restriction materially or adversely affecting
its operations, business, properties or financial condition.
(e) No litigation. That there are no actions, suits, or proceedings pending, or to the
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knowledge of Company, threatened, against or affecting Company before any
court, arbitrator, or governmental or administrative body or agency which may
result in any material adverse change in the business, operations, properties or
assets or in the condition, financial or otherwise, of Company, except:
___________________________________________________ . Company is not
in default in any material respect under any applicable statute, rule, order, decree,
or regulation of any court, arbitrator, or governmental body or agency having
jurisdiction over Company.
(f) Company has good and marketable title to all their respective properties and
assets subject to no liens, mortgages, pledges, security interest, encumbrances, or
charges of any kind, except as those permitted to the terms of this agreement.
(g) Financial statements. That the consolidated balance sheets and financial
statements of Company for the preceding fiscal year of Company, and the related
consolidated statement of income and surplus account of Company, including in
such case the related schedules and notes prepared by the independent public
accountants reflected therein and certified by the chief accounting officer of
Company and heretofore deliver to bank, are all true and correct and present fairly
the financial condition of Company and of the state of any such balance sheets,
financial statements or statements of income and surplus. The Company has not
had any direct or contingent liabilities as of such date which are not provided for
or reflected in such balance sheets. That all such financial statements have been
prepared in accordance with generally accepted accounting principals applied on a
basis consistently maintained throughout the period involved. That there has been
no material adverse change in the assets, liabilities, pro-parties, business and
condition, financial or otherwise, of Company since its last audit.
(h) Company possesses all licenses required to conduct its respective business.
(i) Company has filed all tax returns which are required to be filed and have paid all
taxes which have become due pursuant to such returns and pursuant to any
assessment received by them.
(j) Governmental action - No action of, or filing with, any governmental or public
body or authority is required to authorize or is otherwise required in connection
with, the execution, delivery, and performance of this agreement, the note or
notes, or any of the instruments or documents to be delivered pursuant to this
agreement.
(k) Disclosure - neither the financial statements, nor any certificate, statement, report,
or other document; furnished to Lender by Company in connection herewith, or in
connection with any transaction contemplated hereby, nor this agreement contain
any untrue statement of any material fact or omit to state any material fact
necessary in order to make the statements contained herein not misleading.
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25. Definitions. For purposes of this agreement the following definitions shall apply:
"Current; Assets" shall be determined in accordance with generally accepted accounting
principals on a consolidated basis for Company and shall include only the following
items:
(i) Cash in bank, on hand, and in transit;
(ii) Prepaid items (excluding unamortized debt discount and expense);
(iii) Customer accounts, bills, and notes receivable acquired in the ordinary course of
business;
(iv) Inventories at not in excess of cost or current market value, whichever is lower;
(v) Readily marketable direct obligations of the United States of America and
certificates of deposit, in each case at not in excess of cost or current; market
value, whichever is lower;
(vi) Cash surrender value of any insurance policies on the lives of the Company's
officers, of which the Company is both owner and beneficiary; all after deduction
of adequate reserves in each case where reserve is proper in accordance with
generally accepted accounting principals; provided, however, that any of such
assets which are subject to a pledge, lien, or security interest to secure payments
of any indebtedness which is not included in current; liabilities shall be excluded
from current assets to the extent of such indebtedness.
"Current Liabilities" shall be determined in accordance with generally accepted
accounting principals on a consolidated basis for Company and shall include as of the
date of determination thereof,
(i) All indebtedness payable on demand or maturing within one year after such date
without any option on the part of the obligator to extend or renew beyond such
year,
(ii) Final maturity, installments, and pre-payments of indebtedness (incurring, with
respect to the note or notes, not only required payments) required to be made
within one year after such date, and
(iii) All other items (including taxes accrued as estimated and reserves for deferred
income taxes) which, in accordance with generally accepted accounting
principals, would be included on a balance sheet as current liabilities.
"Indebtedness" shall mean all items which, in accordance with generally accepted
accounting principals, would be included in determining total liabilities as shown on the
liabilities side of a balance sheet as of the date indebtedness is to be determined and, in
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any event, shall include all liabilities secured by any mortgage, pledge, lien, or security
interest on property owned or acquired, whether or not such liability shall have been
assumed, and guaranties, endorsements, (other than for collection in the ordinary course
of business), and other contingent obligations in respect of the obligations to others.
"Persona1 shall include an individual, corporation, association, joint; stock company,
business trust, partnership, joint venture, unincorporated organization, or government or
any agency or political subdivision thereof.
"Tangible Net Worth" shall mean the total of all assets appearing on a balance sheet
prepared in accordance with generally accepted accounting principals for Company on a
consolidated basis, after deducting therefrom (without duplication of deductions):
(i) Any right-of-set-off in the book carrying value of any asset resulting from a
revaluation thereof subsequent to _____________________ , 20 __ ;
(ii) All reserves, including but not limited to, reserves for liabilities, fixed or
contingent, deferred income taxes, obsolescence, depletion, insurance, and
inventory valuation, which are not deducted from assets;
(iii) The amount, if any, at which shares of stock of Company appear on the asset side
of such balance sheet;
(iv) All indebtedness of Company; and
(v) All goodwill, research and development and other intangible items of any kind
appearing on the asset side of such balance sheet.
"Working Capital" shall mean the amount by which current assets exceeds current;
liabilities.
26. Collection Costs. In the event that Lender shall retain or engage an attorney or attorneys
to collect, enforce, or protect its interest with respect to this agreement, the note or notes,
or any instrument or document delivered pursuant to this agreement, including leases,
Company shall pay all costs and expenses of such collection, enforcement, or protection
including reasonable attorney's fees and Lender may take judgment for all such amounts,
in addition to the unpaid principal balance of the note or notes and accrued interest
thereon.
27. Modification/Waiver. No modification or wavier of any provision of the note or notes or
of this agreement or any other agreement executed by Company in connection herewith
and no consent by Lender to any departure therefrom by Company shall be effective
unles such modification or waiver shall be in writing and signed by a duly authorized
officer of Lender and same shall then be effective only for the period, on the conditions
and for the specific instances and purposes specified in such writing. No notice to or
demand on the Company in any case shall entitle the Company to any other or further
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notice or demand in similar or other circumstances.
28. Applicable Law. The note or notes, this agreement or any other agreements executed in
connection herewith shall be construed in accordance and governed by the laws of the
State of ___________________ .
29. Notices. All notices, requests, demands, or other communications provided for herein
shall be in writing and shall be deemed to have been given when sent by registered or
certified mail, return receipt; requested, addressed as the case may be, to Lender at:
_______________________________________________________________________ ;
or to Company at: ________________________________________________________ ,
or to such other person or address as either party shall designate to the other from time to
time in writing forwarding in like manner.
30. Fees and Expenses. Whether or not any loans are made hereunder, Company shall pay
all out-of-pocket expenses incurred by Lender in connection with the transaction
contemplated hereunder, including but not; limited to all filing fees and expenses of
counsel for Lender.
31. Waiver of Jury Trial and Setoffs. Company hereby waives trial by jury and any litigation
in any court with respect to, in connection with, or arising out of this agreement, or the
security agreement, or note or notes, or any other instrument or document delivered
pursuant to this agreement, or the validity, protection, interpretation, collection, or
enforcement thereof, or any other claim or dispute howsoever arising between Company
and Lender; and Company hereby waives the right; to interpose any setoff or
counterclaim or cross claim in connection with any such litigation, herein respective of
the nature of such setoff, counterclaim, or cross claim.
32. Designated Bank. Lender shall be designated and shall continue to be the prime
depositary of funds of Company.
33. Captions. The captions of the various sections and paragraphs of this agreement have
been inserted only for the purposes of convenience; such captions are not a part of this
agreement and shall not be deemed in any manner to modify, explain, enlarge, or restrict
any of the provisions of this agreement.
34. Security Acts Status. Company represents and warrants that it has not caused and will
not offer to be caused the sell, or conduct any act which would bring the issuance or sell
of any note or notes referred to herein or any other provision or document referred herein
within the provisions of Section 5 of the Securities Act of 1933, as amended. Lender
represents and warrants that it is making or will make, the purchase and sale and the loan
herein contemplated for its account; and not with any present intentions of making any
public offering or affecting any distribution of the note or notes, but; Lender reserves the
right to transfer the note or notes, if, at any future date, Lender shall deem it advisable to
do so.
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35. Benefit of Agreement. This agreement shall be binding upon and inure to the benefit of
Company and Lender and their respective successors and assigns. Notwithstanding the
foregoing, Company may not assign, pledge, hypothecate, or otherwise transfer its
interest herein.
36. Entire Agreement. This agreement constitutes the entire agreement between Company
and Lender and no other prior or contemporaneous written or oral agreements shall be
binding or effective.
37. Severability. In case any clause, provision or section of this loan agreement, or any
covenant, stipulation, obligation, agreement, act, or action, or part thereof, made,
assumed, entered into or taken under this loan agreement or any application thereof, is
for any reason held to be illegal, invalid or inoperable, such illegality, invalidity or
inoperability shall not affect the remainder thereof or any other clause, provision or
section or any other covenant, stipulation, obligation, agreement, act or actions or part
thereof made, assume, entered into, or taken thereunder, which shall at the time be
construed and enforced as if such illegal or invalid or inoperable portion were not
contained therein, nor shall such illegality or invalidity or inoperability of any
application thereof affect any legal and valid and operable application thereof, from time-
to-time, and each clause, provision, or section, covenant, stipulation, obligation,
agreement, act, or action, or part thereof shall be deemed effective, operative, made,
entered into or taken in the manner and to the full extent from time-to-time permitted by
law.
THIS agreement is entered by and between Lender and Company on the day and year
above first written. Witness the signatures hereto:
Lender: Company:
By: By:
Its: Its:
(Title) (Title)
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STATE OF ___________________
COUNTY OF _________________
PERSONALLY appeared before me, the undersigned authority in and for the county and
state, within my jurisdiction, the within named ___________________ , who acknowledged that
he is Vice President of ___________________ , and that for and on behalf of the said
corporation, and as its act and deed, the signed, sealed and delivered the above and foregoing
Loan Agreement for the purposes mentioned on the day and year therein mentioned, after first
having been duly authorized by said corporation so to do.
GIVEN under my hand and official seal this the ____ day of _________ , 20 __ .
NOTARY PUBLIC
My Commission Expires:
___________________________
STATE OF ___________________
COUNTY OF _________________
PERSONALLY appeared before me, the undersigned authority in and for the county and
state, within my jurisdiction, the within named ___________________ , who acknowledged that
he is Vice President of ___________________ , and that for and on behalf of the said
corporation, and as its act and deed, the signed, sealed and delivered the above and foregoing
Loan Agreement for the purposes mentioned on the day and year therein mentioned, after first
having been duly authorized by said corporation so to do.
GIVEN under my hand and official seal this the ____ day of _________ , 20 __ .
NOTARY PUBLIC
My Commission Expires:
___________________________
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STATE OF ___________________
COUNTY OF _________________
PERSONALLY appeared before me, the undersigned authority in and for the county and
state, within my jurisdiction, the within named ___________________ , who acknowledged that
he is Vice President of ___________________ , and that for and on behalf of the said
corporation, and as its act and deed, the signed, sealed and delivered the above and foregoing
Loan Agreement for the purposes mentioned on the day and year therein mentioned, after first
having been duly authorized by said corporation so to do.
GIVEN under my hand and official seal this the ____ day of _________ , 20 __ .
NOTARY PUBLIC
My Commission Expires:
___________________________
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