Term Loan Agreement between Business or Corporate Borrower and Bank
Loan Agreement, made _________________ (date) , between ____________________
(Name of Bank) , a Banking corporation organized and existing under the laws of the of
______________, with its principal office located at ___________________________________
_________________________________________________ (street address, city, state, zip
code) , referred to herein as Bank , and _____________________________ (Name of
Business Borrower) , a corporation organized and existing under the laws of the state of
______________, with its principal office located at ___________________________________
______________________________________________________ (street address, city,
state, zip code) , referred to herein as Borrower ,
Whereas, Borrower has requested Bank to lend it up to $____________ on a term Loan
basis (the Loan ); and
Whereas, Bank is willing to lend Borrower up to $____________ on the terms and the
conditions set forth below;
Now, therefore, for and in consideration of the mutual covenants contained in this
Agreement, and other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
1. Definitions
As used in this Agreement, the following terms have the following definitions:
A. Accounts, chattel paper, contracts, contract rights, documents, equipment,
fixtures, general intangibles, goods, instruments, and inventory shall have the same
respective meanings as are given to those terms in the Uniform Commercial Code as
enacted in ________________ (name of state) .
B. Collateral documents means all those documents specified in Section 3,
Subparagraph A of this Agreement.
C. Consolidated cash flow means, as to Borrower, the aggregate of (i) net income
after taxes; (ii) amortization of intangible assets; (iii) depreciation and depletion; and (iv)
deferred taxes and expenses, all as shown by the consolidated income statement of
Borrower and its subsidiaries, calculated in accordance with generally accepted
accounting principles.
D. Consolidated current assets and consolidated current liabilities mean, at any
time, all assets or liabilities, respectively, that, in accordance with generally accepted
accounting principles consistently applied, should be classified as current assets or
current liabilities, respectively, on a consolidated balance sheet of Borrower and its
subsidiaries.
E. Consolidated fixed assets means, at any time, all assets (other than consolidated
current assets) that, in accordance with generally accepted accounting principles
consistently applied, should be classified as assets on a consolidated balance sheet of
Borrower and its subsidiaries.
F. Consolidated liabilities means all indebtedness that, in accordance with generally
accepted accounting principles consistently applied, should be classified as liabilities on
a consolidated balance sheet of Borrower and its subsidiaries.
G. Consolidated long-term liabilities means consolidated liabilities less the portion
that constitutes consolidated current liabilities.
H. Consolidated Net Working Capital means, at any time, the amount by which
consolidated current assets exceed consolidated current liabilities.
I. Consolidated tangible net worth means, at any time, stockholders' equity, less
the sum of:
1. Any surplus resulting from any write-up of assets subsequent to
__________________ (date) ;
2. Good will, including any amounts, however designated on a consolidated
balance sheet of Borrower and its subsidiaries, representing the excess
of the purchase price paid for assets or stock acquired over the value assigned
to them on the books of Borrower;
3. Patents, trademarks, trade names, and copyrights;
4. Any amount at which shares of capital stock of Borrower appear as an
asset on Borrower's balance sheet;
5. Loans and advances to stockholders, directors, officers, or employees;
and
6. Deferred expenses.
J. Financial statements means the consolidated balance sheets of Borrower and its
subsidiaries as of _________________ (date) , __________________ (date) ,
_________________ (date) , and _________________ (date) , and consolidated
statements of income and retained earnings of Borrower and its subsidiaries for the
years or months ended on those dates.
K. Indebtedness means, as to Borrower or any subsidiary, all items of
indebtedness, obligation, or liability, whether matured or unmatured, liquidated or
unliquidated, direct or contingent, joint or several, including, but not limited to:
1. All indebtedness guaranteed, directly or indirectly, in any manner, or
endorsed (other than for collection or deposit in the ordinary course of
business) or discounted with recourse;
2. All indebtedness in effect guaranteed, directly or indirectly, through
Agreements, contingent or otherwise:
a. To purchase such indebtedness;
b. To purchase, sell, or lease (as lessee or lessor) property,
products, materials, or supplies, or to purchase or sell services,
primarily for the purpose of enabling Borrower to make payment of
such indebtedness or to assure the owner of the indebtedness
against loss; or
c. to supply funds to or in any other manner invest in the debtor;
3. All indebtedness secured by (or for which the holder of the indebtedness
has a right, contingent or otherwise, to be secured by) any mortgage,
deed of trust, pledge, lien, security interest, or other charge or
encumbrance on property owned or acquired subject to the same, whether or
not the liabilities secured by the same have been assumed; and
4. All indebtedness incurred as the lessee of goods or services under leases
that, in accordance with generally accepted accounting principles, should not be
reflected on the lessee's balance sheet.
L. Laws means all ordinances, statutes, rules, regulations, orders, injunctions, writs,
or decrees of any government or political subdivision or agency, or any court or similar
entity.
M. Obligations means the obligation of Borrower:
1. To pay the principal of any interest on the Note in accordance with its
terms and to satisfy all of its other liabilities to Bank, whether under this
Agreement or otherwise, whether now existing or later incurred,
matured or unmatured, direct or contingent, joint or several, including any
extensions, modifications, renewals, and substitutions;
2. To repay to Bank all amounts advanced by Bank under this Agreement or
otherwise on behalf of Borrower, including, but not limited to, advances for
principal or interest payments to prior secured parties, mortgagees, or
lienors, or for taxes, levies, insurance, rent, repairs to or maintenance or
storage of any of the collateral; and
3. To reimburse Bank, on demand, for all of Bank's expenses and costs,
including reasonable fees and expenses of its counsel, in connection with
the preparation, administration, amendment, modification, or enforcement of
this Agreement and the documents required under this Agreement, including,
but not limited to, any proceeding brought or threatened to enforce
payment of any of the obligations referred to in subparagraphs M-1 and M-2 of
this Section.
N. Permitted liens means:
1. Liens for taxes, assessments, or similar charges, incurred in the ordinary
course of business, that are not yet due and payable;
2. Pledges or deposits made in the ordinary course of business to secure
payment of workers' compensation, or to participate in any fund in
connection with workers' compensation, unemployment insurance, old-age
pensions, or other social security programs;
3. Liens of mechanics, materialmen, warehousemen, carriers, or other like
liens, securing obligations incurred in the ordinary course of business,
that are not yet due and payable;
4. Good faith pledges or deposits made in the ordinary course of business to
secure performance of bids, tenders, contracts (other than for the repayment of
borrowed money), or leases, not in excess of ______% of the aggregate
amount due under the same, or to secure statutory obligations, or surety,
appeal, indemnity, performance, or other similar bonds required in
the ordinary course of business;
5. Encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, none of which materially impairs
the use of such property by Borrower or any subsidiary in the operation of
its business, and none of which is violated in any material respect by existing or
proposed structures or land use;
6. Liens in favor of Bank;
7. Existing liens set forth or described on Exhibit A , attached and made a
part of this Agreement;
8. Purchase money security interests granted to secure not more than
______% of the purchase price of assets, the purchase of which is
permitted by Section 6 ;
9. The following, if the validity or amount is being contested in good faith by
appropriate and lawful proceedings, so long as levy and execution on
them have been stayed and continued to be stayed and they do not, in the
aggregate, materially detract from the value of the property of Borrower or in
any subsidiary, or materially impair its use in the operation of the business:
a. Claims or liens for taxes, assessments, or charges due and
payable and subject to interest or penalty;
b. Claims, liens, and encumbrances on, and defects of title to, real or
personal property, including any attachment of personal or real property
or other legal process prior to adjudication of a dispute on the merits;
c. Claims or liens of mechanics, materialmen, warehousemen,
carriers, or other like liens; and
d. Adverse judgments on appeal.
O. Person means any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, joint venture, court, or government or
political subdivision or agency.
P. Records means correspondence, memoranda, tapes, disks, papers, books, and
other documents, or transcribed information of any type, whether expressed in ordinary
or machine-readable language.
Q. Shareholders' Equity means, at any time, the aggregate of subordinated
indebtedness plus some of the following accounts set forth in a consolidated balance
sheet of the Borrower and its subsidiaries, prepared in accordance with generally
accepted accounting principles consistently applied:
1. The par or stated value of all outstanding capital stock;
2. Capital surplus; and
3. Retained earnings.
R. Subordinated indebtedness means all indebtedness incurred at any time by
Borrower or any subsidiary, repayment of which is subordinated to the obligations in
form and manner satisfactory to Bank. All existing subordinated indebtedness is so
specified in Exhibit B.
S. Subsidiary means any corporation of which more than ______% of the
outstanding voting securities, at the time of determination, shall be owned directly or
indirectly through one or more intermediaries by Borrower.
2. The Loan
A. Disbursement of the Loan.
Bank will credit the proceeds of the Loan to Borrower's deposit account with
Bank.
B. General terms.
Subject to the terms of this Agreement, Bank will lend Borrower the principal sum
of $____________ on a term basis (the Loan ).
C. The Note.
At the time of the making of the Loan, Borrower will execute and deliver a Note to
Bank, in the form of Exhibit C ( the Note ).
D. Payments of principal.
The principal of the Loan will be repaid in ______ (number) equal, consecutive,
______________ (monthly) installments, payable on the last day of each month .
E. Prepayment.
Borrower, without penalty or premium, may prepay the principal of the Loan in
whole or, from time to time, in part, any partial payment to be made in the sum of
$____________ or an integral multiple of such sum. All such partial prepayments shall
be applied against the installments of principal required by Paragraph D of this Section
in the inverse order of maturity.
F. Interest rate and payments of interest.
1. Interest shall be paid as follows:
a. Subject to the provisions of Subparagraph F of this Section,
interest on the principal balance of the Loan, from time to time
outstanding, will be payable at the rate (the rate ) of ______
% above the prime rate in effect from time to time prior to maturity or
______% above the prime rate in effect from time to time after
maturity, whether maturity is brought about by acceleration in the event
of default or otherwise. For these purposes, prime rate shall mean the
prime commercial rate announced by the Bank from time to
time as its prime rate.
b. Each time the prime rate shall change, the rate shall change
contemporaneously with such change. Interest shall be calculated on the
basis of a 360-day year, counting the actual number of days elapsed, and
shall be payable on the last day of each month, commencing on
__________________ (date) . After maturity, whether by acceleration or
otherwise, accrued interest shall be payable on demand.
2. The rate is predicated on the condition that Borrower will maintain
aggregate demand deposit balances with Bank in which (i) the average
free balances will equal ______% of the unpaid principal amount of the term
Loan; and (ii) in addition, in which the average free balances will equal ______
% of the undisbursed portion of any revolving Loan commitment. If, during
any quarterly period, Borrower shall fail to maintain the aggregate demand
deposit balances required, Borrower shall pay Bank a deficient balances fee
calculated by multiplying the dollar amount of the deficiency in demand
deposit balances by Bank's average per annum interest rate charged on
domestic commercial Loans during the quarterly period. For these purposes,
free balances shall mean gross balances minus the aggregate amount of
deposits required to cover activity in the Borrower's deposit accounts, based on
Bank's standard analysis.
3. It is the intention of the parties to conform strictly to applicable usury laws
in effect from time to time during the term of the Loan. Accordingly, if any
transaction or transactions contemplated would be usurious under
applicable law -- including the laws of the United States of America or of any
other jurisdiction whose law may be applicable -- then, in that event,
notwithstanding anything to the contrary in this Agreement, or any other
Agreement entered into in connection with this Agreement, it is agreed as
follows:
a. The provisions of this Subparagraph F shall govern and
control;
b. The aggregate of all interest under applicable law that is
contracted for, charged, or received under this Agreement, or
under any of the other above-mentioned Agreements or otherwise in
connection with this Agreement, shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any
excess shall be promptly credited to Borrower by Bank (or, if the
consideration shall have been paid in full, the excess shall be
promptly refunded to Borrower by Bank);
c. Neither the Borrower nor any person or entity now or later liable in
connection with this Agreement shall be obligated to pay the amount of
such interest to the extent that it is in excess of the maximum
interest permitted by the applicable usury laws; and
d. The effective rate of interest shall be ipso facto reduced to the
highest lawful rate defined below.
4. All sums paid, or agreed to be paid, to Bank for the use, forbearance,
and detention of the indebtedness of Borrower to Bank, to the extent
permitted by applicable law, shall be amortized, prorated, allocated, and
spread throughout the full term of the Note until payment is made in full so that the
actual rate of interest does not exceed the highest lawful rate in effect in any
particular time during the full term. The maximum lawful interest rate, if
any, referred to in Subparagraph F of this Section, that may accrue pursuant
to this Agreement is referred to as the highest lawful rate. If at any time the
rate exceeds the highest lawful rate, the rate of interest to accrue pursuant
to this Agreement shall be limited, notwithstanding anything to the contrary
in this Agreement, to the highest lawful rate, but any subsequent reductions
in the prime rate shall not reduce the interest to accrue pursuant to this
Agreement below the highest lawful rate until the total amount of interest accrued
pursuant to this Agreement equals the amount of interest that would have
accrued if a varying rate per annum equal to the rate had at all times been in
effect. If the total amount of interest paid or accrued pursuant to this Agreement
under the preceding provisions is less than the total amount of interest that
would have accrued if a varying rate per annum equal to the rate had at all
times been in effect, then Borrower agrees to pay to Bank an amount
equal to the difference between (a) the lesser of (i) the amount of interest that
would have accrued if the highest lawful rate had at all times been in effect; or (ii)
the amount of interest that would have accrued if a varying rate per annum
equal to the rate had at all times been in effect; and (b) the amount of
interest accrued in accordance with the other provisions of this Agreement.
G. Payment to Bank.
All sums payable to Bank shall be paid directly to Bank in immediately available
funds. Bank shall send Borrower statements of all amounts due, which statements shall
be considered correct and conclusively binding on Borrower unless Borrower notifies
Bank to the contrary within _____ days of its receipt of any statement that it deems to be
incorrect. Alternatively, at its sole discretion, Bank may charge against any deposit
account of Borrower all or any part of any amount due.
3. Conditions Precedent
The obligation of Bank to make the Loan is subject to the following conditions precedent:
A. Documents required for closing. Borrower shall have delivered to Bank, prior to
the disbursement of the Loan (the Closing ), the following:
1. The Note;
2. A Pledge Agreement in the form attached as Exhibit D executed by
____________________ (name of owner) , together with certificates
representing the shares pledged, endorsed in blank;
3. A duly executed Guaranty Agreement of _______________________
(Name of Guarantor) , in the form attached as Exhibit E ;
4. Financing statements and lessors' and mortgagees' waivers required by
Section 4 ;
5. A certified (as of the date of the closing) copy of resolutions of Borrower's
Board of Directors authorizing the execution, delivery, and performance of
this Agreement, the Note, the collateral documents, and each other document
to be delivered pursuant to this Agreement;
6. A certified (as of the date of the closing) copy of Borrower's Bylaws;
7. A certificate (as of the date of the closing) of Borrower's corporate
secretary as to the incumbency and signatures of the officers of Borrower
signing this Agreement, the Note, the collateral documents, and each other
document to be delivered pursuant to this Agreement;
8. A copy, certified as of the most recent date practicable, by the Secretary
of State of ___________________ (name of state) , of Borrower's Certificate of
Incorporation, together with a certificate (as of the date of the closing) of
Borrower's corporate secretary to the effect that the Certificate of Incorporation
has not been amended since the date of the certification;
9. Certificates, as of the most recent dates practicable, of the Secretary of
State of __________________ (name of state) , each state in which the
Borrower is qualified as a foreign corporation, and the department of revenue or
taxation of each such state, as to the good standing of Borrower;
10. A written opinion of _______________________ (name of attorney or
law firm) , the Borrower's counsel, as of the date of the closing and addressed to
the Bank, in form satisfactory to the Bank, to the effect that:
a. Borrower and its subsidiaries are corporations organized, existing,
and in good standing under the laws of their respective states of
incorporation (naming such states) and are qualified to transact
business and are in good standing in those states where the nature
of business or property owned by them requires qualification, as set forth
in Exhibit F , attached and made a part of this Agreement, and, to the
knowledge of such counsel, are not required to be qualified as foreign
corporations in any other jurisdiction;
b. Borrower has the power to execute and deliver this Agreement, to
borrow money under this Agreement, to grant the collateral
required under it, to execute and deliver the Note and the collateral
documents, and to perform such obligations;
c. All corporate action by Borrower, all consents and approvals of
any persons, necessary to the validity of this Agreement, the Note,
the collateral documents, and each other document to be delivered,
has been obtained, and this Agreement, the Note, the collateral documents,
and such other documents do not conflict with any provision of the
charter or bylaws of Borrower, or of any applicable laws or any other
Agreement binding Borrower or its property of which such counsel has
knowledge;
d. This Agreement, the Note, the collateral documents, and all other
Agreements to be delivered have been executed by, and each is a
valid and binding obligation of, Borrower, enforceable in accordance
with its terms;
e. The pledged stock constitutes all of the issued and outstanding
capital stock of the respective issuers, and all pledged stock is
fully paid and non-assessable; and
f. Such counsel is without any knowledge of any matters contrary to
the representations and warranties contained in Section 5 ;
11. A certificate, as of the date of the closing, signed by the President or a
vice president of Borrower, to the effect that:
a. The representations and warranties set forth within Section 5 ,
are true as of the date of the closing; and
b. No event of default, and no event that with the giving of notice or
passage of time, or both, would become such an event of default,
has occurred as of such date;
12. Copies of all documents evidencing the terms and conditions of any debt
specified as subordinated indebtedness on Exhibit B ;
13. A Federal Reserve Form (e.g., U-1) ________, completed and executed
by Borrower.
B. Certain Events.
At the time of the closing:
1. No event of default shall have occurred and be continuing, and no
event shall have occurred and be continuing that, with the giving
of notice or passage of time, or both, would be an Event of Default;
2. No material adverse change shall have occurred in the financial
condition of Borrower or any subsidiary since the date of this
Agreement or the closing, as applicable; and
3. All of the collateral documents shall have remained in full force
and effect.
C. Legal matters.
At the time of the closing, all incidental legal matters shall be satisfactory to
________________________ (name of attorney or law firm) , counsel to Bank.
4. Collateral Security
A. Composition of the collateral.
The property in which a security interest is granted pursuant to the provisions of
Paragraphs B and C of this Section is collectively called the collateral. The collateral,
together with all of Borrower's other property of any kind held by Bank, shall stand as
one general, continuing, collateral security for all obligations and may be retained by
Bank until all obligations have been satisfied in full.
B. Rights in property held by Bank.
As security for the prompt satisfaction of all obligations, Borrower assigns,
transfers, and sets over to Bank all of its right, title, and interest in and to, and grants
Bank a lien on and a security interest in, all amounts that may be owing from time to time
by Bank to Borrower in any capacity, including, but not limited to, any balance or share
belonging to Borrower, or any deposit or other account with Bank, which lien and
security interest shall be independent of any right of setoff that Bank may have.
C. Rights in property held by Borrower.
As further security for the prompt satisfaction of all obligations arising under this
Agreement, Borrower assigns to Bank all of its right, title, and interest in and to, and
grants Bank the lien on and a security interest in, all of the following, wherever located,
whether now owned or later acquired, together with all replacements and proceeds
(including, but not limited to, insurance proceeds):
1. Accounts;
2. Chattel paper;
3. Contracts;
4. Contract rights;
5. Documents;
6. Equipment;
7. Fixtures;
8. General intangibles;
9. Instruments;
10. Inventory;
11. The realty described in Exhibit G ;
12. The pledged stock;
13. Rights as seller of goods and rights to return or repossessed goods; and
14. All records pertaining to any other collateral.
D. Priority of liens.
The above-stated liens shall be first and prior liens except for permitted liens.
E. Financing statements.
1. Borrower will:
a. Join with Bank in executing such financing statements (including
amendments and continuation statements) in form satisfactory to
Bank, as Bank may from time to time specify;
b. Pay to or reimburse Bank for all costs and taxes of filing or
recording the statements in such public offices as Bank may
designate; and
c. Take such other steps as Bank may direct, including the noting of
Bank's lien on the collateral and on any certificates of title, to
perfect Bank's interest in the collateral.
2. In addition to the foregoing, and not in limitation:
a. A carbon, photographic, or other reproduction of this Agreement
shall be sufficient as a financing statement and may be filed in any
appropriate office in lieu of a financing statement; and
b. To the extent lawful, Borrower appoints Bank as its attorney-in-
fact (without requiring Bank to act as such) to execute any
financing statement in the name of Borrower, and to perform all
other acts that Bank deems appropriate to preserve and continue
its security interest in, and to protect and preserve, the collateral.
F. Mortgagees' and Lessors' Waivers.
Borrower will cause each mortgagee of all real estate owned by Borrower and
each lessor of premises leased by Borrower to execute and deliver to Bank instruments,
in form and substance satisfactory to Bank, by which such mortgagee or lessor waives
its rights, if any, to all goods composing a part of the collateral.
5. Representations and Warranties
A. Original.
To induce Bank to enter into this Agreement, Borrower represents and warrants
to Bank as follows:
1. Borrower is a corporation organized, validly existing, and in good standing
under the laws of ________________ (name of state) ; each subsidiary of
Borrower is a corporation organized, validly existing, and in good standing under
the laws of its state of incorporation, all as set forth in Exhibit F ; Borrower and its
subsidiaries have the lawful power to own their properties and to engage in the
business they conduct, and each is qualified and in good standing as a foreign
corporation in the jurisdictions in which the nature of the business transacted by it
or property owned by it makes such qualification necessary; the states in which
Borrower and each subsidiary are qualified to do business are set forth in Exhibit
F ; the percentage of Borrower's ownership of the outstanding stock of each
subsidiary is as listed in Exhibit H ; the addresses of all places of business of
Borrower and each subsidiary are as set forth in Exhibit I ; and neither Borrower
nor any subsidiary has changed its name, been the surviving corporation in a
merger, acquired any business, or changed its principal executive office within
_______ years prior to the effective date of this Agreement, except as set forth in
Exhibit J ;
2. Neither Borrower nor any subsidiary is in default with respect to any of its
existing indebtedness, and the making and performance of this
Agreement, the Note, and the collateral documents will not immediately or
with the passage of time, or the giving of notice, or both:
a. Violate the Charter or Bylaw provisions of Borrower, or violate any
laws or result in a default under any contract, Agreement, or Agreement
to which Borrower or any subsidiary is a party or by which
Borrower or any subsidiary or its property is bound; or
b. result in the creation or imposition of any security interest in, or
lien or encumbrance on, any of the assets of Borrower or any
subsidiary, except in favor of Bank;
3. Borrower has the power and authority to enter into and perform this
Agreement, the Note, and the collateral documents, and to incur such
obligations, and has taken all corporate action necessary to
authorize the execution, delivery, and performance of this Agreement,
the Note, and the collateral documents;
4. This Agreement and the collateral documents are, and the Note when
delivered will be, valid, binding, and enforceable in accordance with their
respective terms;
5. Except as disclosed in Exhibit K , there is no pending order, notice,
claim, litigation, proceeding, or investigation against or affecting Borrower
or any subsidiary, whether or not covered by insurance, that would involve the
payment of $____________ or more or materially and adversely affect the
business or prospects of Borrower or any subsidiary if adversely determined;
6. Borrower and its subsidiaries have good and marketable title to all of their
assets, which are not subject to any security interest, encumbrance, lien, or claim
of any third person, except for permitted liens;
7. The financial statements, including any schedules and notes pertaining to
the statements, have been prepared in accordance with generally accepted
accounting principles consistently applied, and fully and fairly present the
financial condition of Borrower and its subsidiaries at the dates of the financial
statements and the results of operations for the periods covered by the same,
and there have been no material adverse changes in the consolidated financial
condition or business of Borrower and its subsidiaries from ________________
(date) to the date of this Agreement;
8. As of __________________ (date) , Borrower and its subsidiaries had no
material indebtedness of any nature, including, but not limited to, liabilities for
taxes and any interest or penalties relating to the same, except to the extent
reflected (in a footnote or otherwise) and reserved against in the _____________
(date) financial statements, or any material indebtedness of any nature not fully
reflected and reserved against in the _______________ (date) financial
statements;
9. Except as otherwise permitted in this Agreement, Borrower and its
subsidiaries have filed all federal, state, and local tax returns and other
reports they are required by law to file prior to the effective date of this
Agreement and that are material to the conduct of their respective
businesses; have paid or caused to be paid all taxes, assessments, and
other governmental charges that are due and payable prior to the effective
date of the same; and have made adequate provision for the payment of such
taxes, assessments, or other charges accruing but not yet payable; and
Borrower has no knowledge of any deficiency or additional assessment in a
materially important amount in connection with any taxes,
assessments, or charges, not provided for on its books;
10. Except as otherwise disclosed in Exhibit L , or except to the extent that
the failure to comply would not materially interfere with the conduct of the
business of Borrower or any subsidiary, Borrower and its
subsidiaries have complied with all applicable laws with respect to:
a. Any restrictions, specifications, or other requirements pertaining to
products that Borrower or any subsidiary manufactures or sells or to the
services each performs;
b. The conduct of their respective businesses; and
c. The use, maintenance, and operation of the real and personal
properties owned or leased by them in the conduct of their
respective businesses;
11. No representation or warranty by Borrower contained in this Agreement
or in any certificate or other document furnished by Borrower pursuant to
this Agreement contains any untrue statement of material fact or omits to
state a material fact necessary to make such representations or warranty
not misleading in light of the circumstances under which it was made;
12. Each consent, approval, or authorization of, or filing, registration, or
qualification with, any person required to be obtained or effected by
Borrower or any subsidiary in connection with the execution and delivery of
this Agreement, the Note, and the collateral documents, or the undertaking
or performance of such obligations, has been obtained or effected;
13. All existing indebtedness of Borrower:
a. For money borrowed; or
b. Under any security Agreement, mortgage, or Agreement covering
the lease by Borrower as lessee or real or personal property, is
described in Exhibit M ;
14. Except as described in Exhibit N , Borrower and its subsidiaries have no
material lease, contract, or commitment of any kind (such as employment
Agreements; collective bargaining Agreements; powers of
attorney; distribution arrangements; patent license Agreements; contracts for
future purchase or delivery of goods or rendering of services; bonus, pension,
and retirement plans; or accrued vacation pay, insurance, and welfare
Agreements); all parties to all such material leases, contracts, and other
commitments to which Borrower or any subsidiary is a party have complied with
provisions of such leases, contracts, and other commitments; no party is in default under
any such leases, contracts, and other commitments, and no event has occurred
that, but for the giving of notice or the passage of time, or both, would
constitute a default;
15. Neither Borrower nor any subsidiary has made any Agreement or has
taken any action that may cause anyone to become entitled to a
commission or finder's fee as a result of the making of the Loan;
16. Borrower's consolidated federal tax return for the year ended (year) has
been audited and accepted as filed by the United States Internal Revenue
Service;
17. All defined benefit pension plans, as defined in the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended, of Borrower and
each subsidiary meet, as of this date, the minimum funding standards of
Section 302 of ERISA, and, with respect to all employee benefit plans, as
defined in ERISA, of Borrower and each subsidiary, no reportable event or
prohibited transaction, as defined in ERISA, has occurred.
B. Survival.
All of the representations and warranties set forth in Paragraph A of this
Section shall survive until all obligations are satisfied in full.
6. Borrower’s Covenant
Borrower covenants and agrees with Bank that, so long as any of its obligations arising
under this Agreement remain unsatisfied, Borrower will comply, and will cause its subsidiaries to
comply, with the following covenants:
A. Affirmative covenants.
1. Borrower will use the proceeds of the Loan only for the purposes set forth
in Exhibit O , and will furnish Bank such evidence as it may reasonably require
with respect to such use.
2. Borrower will furnish Bank:
a. Within ________ (number) days after the close of each quarterly
accounting period in each fiscal year (i) a consolidated statement of
shareholders' equity and a consolidated statement of changes in
financial position of Borrower and its subsidiaries for the quarterly period;
(ii) consolidated and consolidating income statements of Borrower and
subsidiaries for the quarterly period; and (iii) consolidated and
consolidating balance sheets of Borrower and subsidiaries as of the end
of the quarterly period -- all in reasonable detail, subject to year-end audit
adjustments, and certified by Borrower's president or principal financial
officer to have been prepared in accordance with generally accepted
accounting principles consistently applied;
b. Within ______ (number ) days after the close of each fiscal year
(i) a consolidated statement of shareholders' equity and a consolidated
statement of changes in financial position of Borrower and its subsidiaries
for the fiscal year; (ii) consolidated and consolidating income statements
of Borrower and subsidiaries for the fiscal year; and (iii) consolidated and
consolidating balance sheets of Borrower and subsidiaries as of the end
of the fiscal year -- all in reasonable detail, including all supporting
schedules and comments -- the consolidated statement and balance
sheet to be audited by ___________________ (name of certified public
accountant) or another independent certified public accountant selected
by Borrower and acceptable to Bank, and certified by the accountants to
have been prepared in accordance with generally accepted accounting
principles consistently applied by Borrower and subsidiaries, except for
any inconsistencies explained in the certificate. In addition, Borrower will
obtain from the independent certified public accountants and deliver to
Bank, within _______ days after the close of each fiscal year, the
accountants' written statement that, in making the examination necessary
to their certification, they have obtained no knowledge of any event of
default by Borrower, or disclosing all events of default of which they have
obtained knowledge; provided, however, that in making their examination
the accountants shall not be required to go beyond the bounds of
generally accepted auditing procedures for the purpose of certifying
financial statements; Bank shall have the right, from time to time, to
discuss Borrower's affairs directly with Borrower's independent certified
public accountants after written notice to Borrower and opportunity of
Borrower to be present at any such discussion;
c. Contemporaneously with each quarterly and year-end financial
report required by Subparagraph A , a certificate of the president
or principal financial officer of Borrower stating that he or she has
individually reviewed the provisions of this Agreement and
that a review of the activities of Borrower and its subsidiaries
during such year or quarterly period, as the case may be, has been
made by or under the supervision of the signer of the certificate with a
view to determine whether Borrower has kept, observed, performed,
and fulfilled all its obligations under this Agreement, and that, to the
best of his or her knowledge, Borrower has observed and performed
every undertaking contained in this Agreement and is not at the time
in default in the observance or performance of any of its
terms and conditions or, if Borrower shall be so in default, specifying
all such defaults and events of which he or she may have
knowledge; and
d. Promptly after the sending or making available or filing of the
same, copies of all reports, proxy statements, and financial
statements that Borrower sends or makes available to its shareholders
and all registration statements and reports that Borrower files with the
Securities and Exchange Commission or any successor.
3. Borrower and its subsidiaries will maintain their inventory, equipment, real
estate, and other properties in good condition and repair (normal wear and tear
excepted); will pay and discharge or will cause to be paid and discharged
when due the cost of repairs to or maintenance of the same; and will pay or
cause to be paid all rental or mortgage payments due on the real estate.
Borrower agrees that, if it or any subsidiary fails to pay or cause to be paid
any such payment, Bank may do so and on demand be reimbursed by
Borrower.
4. Borrower and its subsidiaries will maintain, or cause to be maintained,
public liability insurance and fire and extended coverage insurance on all
assets owned by them, all in such form and amounts as are consistent with
industry practices and with such insurers as may be satisfactory to Bank.
The policies shall contain a provision by which they cannot be canceled except
after _____ days' written notice to the Bank. Borrower will furnish to
Bank such evidence of insurance as Bank may require. Borrower agrees that,
if it or any subsidiary fails to pay or cause to be paid the premium on any
such insurance, Bank may do so and on demand be reimbursed by
Borrower. Borrower assigns to Bank any returned or unearned premiums that
may be due Borrower on cancellation of any such policies for any reason
whatever and directs the insurers to pay Bank any amounts so due. Bank is
appointed Borrower's attorney-in-fact (without requiring Bank to act as
such) to endorse any check that may be payable to Borrower to
collect such returned or unearned premiums or the proceeds of the insurance,
and any amount so collected may be applied by Bank toward the satisfaction of any
of the obligation.
5. Borrower and its subsidiaries will pay or cause to be paid when due all
taxes, assessments, and charges or levies imposed on them or on any of
their property or that any of them is required to withhold and pay over, except
when contested in good faith by appropriate proceedings, with adequate
reserves for the same having been set aside on their books. But Borrower and
each subsidiary shall pay or cause to be paid all such taxes,
assessments, charges, or levies promptly when foreclosure on any lien that has
attached (or security for the same) appears imminent.
6. Borrower will maintain:
a. Consolidated net working capital in the following minimum
amounts:
During _________________ (dates) , $____________;
During _________________ (dates) , $____________; and
During _________________ (dates) , $____________.
b. Consolidated tangible net worth in the following minimum
amounts: :
During __________________ (dates) , $____________;
During __________________ (dates) , $____________; and
During __________________ (dates) , $____________.
c. A ratio of consolidated liabilities to consolidated tangible net worth
of not more than _________; and
d. A ratio of consolidated current assets to consolidated current
liabilities of not less than _________.
7. Borrower and its subsidiaries, within a reasonable time after written
request, will make available for inspection by authorized representatives
of Bank any of their books and records, and will furnish Bank any
information regarding their business affairs and financial condition.
8. Borrower and its subsidiaries will take all necessary steps to preserve
their corporate existence and franchises and comply with all present and
future laws applicable to them in the operation of their respective businesses
and all material Agreements to which they are subject.
9. Borrower and its subsidiaries will collect their accounts and sell their
inventory only in the ordinary course of business.
10. Borrower and its subsidiary will keep accurate and complete records of
their accounts, inventory, and equipment, consistent with sound business
practices.
11. Borrower and its subsidiaries will give immediate notice to the Bank of:
a. Any litigation or proceeding in which any of them is a party, if an
adverse decision in the litigation or proceeding would require them
to pay over more than $____________ or deliver assets, the value of
which exceeds such sum (whether or not the claim is considered to be
covered by insurance); and
b. The institution of any other suit or proceeding involving any of
them that might materially and adversely affect their operations,
financial condition, property, or business.
12. Within ______ (number) days after Bank's request, Borrower will furnish
Bank with copies of federal income tax returns filed by Borrower.
13. Borrower and its subsidiaries will pay when due (or within applicable
grace periods) all indebtedness due third persons, except when the
amount is being contested in good faith by appropriate proceedings and with
adequate reserves for the same being set aside on the books of Borrower
and its subsidiaries. If Borrower or any subsidiary defaults in the payment
of any principal (or installment of the same) of, or interest on, any such
indebtedness, Bank shall have the right, in its discretion, to pay the interest or
principal for the account of Borrower or such subsidiary and be reimbursed
by Borrower on demand.
14. Borrower and its subsidiaries will notify Bank immediately if any of them
becomes aware of the occurrence of any event of default or of any fact,
condition, or event that, with the giving of notice or passage of
time, or both, could become an event of default, or of the failure of Borrower or a
subsidiary to observe any of their respective undertakings under this
Agreement.
15. Borrower and its subsidiaries will notify Bank ____________ days in
advance of any change in the location of any of their places of business
or of the establishment of any new, or the discontinuance of any existing,
place of business.
16. Borrower and its subsidiaries will:
a. Fund all their defined benefit pension plans in accordance with no
less than the minimum funding standards required under ERISA;
b. Furnish Bank, promptly after the filing of the same, with copies of
all reports or other statements filed with the United States
Department of Labor or the Internal Revenue Service with respect
to all employee benefit plans; and
c. Promptly advise Bank of any reportable event or prohibited
transaction, as defined in ERISA, with respect to any
employee benefit plan.
B. Negative covenants.
1. Neither Borrower nor any subsidiary will change its name, enter into any
merger, consolidation, reorganization or recapitalization, or reclassify its
capital stock.
2. Neither Borrower nor any subsidiary will sell, transfer, lease, or otherwise
dispose of all, or (except in the ordinary course of business) any material
part of, its assets.
3. Neither Borrower nor any subsidiary will mortgage, pledge, grant, or
promote to exist a security interest in or lien on any of its assets of any
kind, now owned or later acquired, except for permitted liens.
4. Neither Borrower nor any subsidiary will become liable, directly or
indirectly, as guarantor or otherwise, for any obligation of any other
person, except for the endorsement of commercial paper for deposit or
collection in the ordinary course of business.
5. Neither Borrower nor any subsidiary will incur, create, assume, or permit
to exist any indebtedness except:
a. The Loan;
b. Existing indebtedness as set forth in Exhibit B ;
c. Trade indebtedness incurred in the ordinary course of business;
d. Contingent indebtedness permitted by Subparagraph B of this
Section;
e. Indebtedness secured by permitted liens;
f. Lease obligation permitted by Subparagraph B of this Section.
6. Neither Borrower nor any subsidiary will declare or pay any dividends, or
make any other payment or distribution on account of its capital stock.
7. Neither Borrower nor any subsidiary will form any subsidiary or make any
investment in, or make any Loan in the nature of an investment to, a
person.
8. Neither Borrower nor any subsidiary will make any Loan or advance to
any officer, shareholder, director, or employee of Borrower or a
subsidiary, except temporary advances in the ordinary course of business,
nor pay salary to executive and management personnel aggregating more
than $____________ per year.
9. Neither Borrower nor any subsidiary will make payments on account of
the purchase or lease of consolidated fixed assets that, in the aggregate,
in any fiscal year, commencing with the current fiscal year, will exceed the
depreciation taken or to be taken with respect to consolidated fixed assets
during that year. As used in this paragraph, the term lease means a lease reflected on
a consolidated balance sheet of Borrower and its subsidiaries or a
lease that should be so reflected under generally accepted accounting
principles.
10. Neither Borrower nor any subsidiary will pay, in an aggregate amount in
any fiscal year, commencing with the current fiscal year, lease obligations
in excess of $____________. As used in this paragraph, the term lease
means a lease that is not reflected on a consolidated balance sheet of
Borrower and its subsidiaries and should not be so reflected under generally
accepted accounting principles.
11. Neither Borrower nor any subsidiary will purchase, or otherwise invest in
or hold, securities, non-operating real estate, or other non-operating
assets, except:
a. Direct obligations of the United States of America;
b. The present investment in any such asset; and
c. Operating assets that subsequently become non-operating assets.
12. Neither Borrower nor any subsidiary will issue, redeem, purchase, or
retire any of its capital stock or grant or issue any warrant, right, or option
pertaining to its capital stock, or other security convertible into any
of the foregoing.
13. Neither Borrower nor any subsidiary will prepay any subordinated
indebtedness, indebtedness for borrowed money, or indebtedness
secured by any of its assets (except the obligations) or enter into or modify
any Agreement as a result of which the terms of payment of any of the
foregoing indebtedness are waived or modified.
14. Neither Borrower nor any subsidiary will enter into any sale-leaseback
transaction.
15. Neither Borrower nor any subsidiary will acquire any stock in, or all or
substantially all of the asset of, any person.
16. Neither Borrower nor any subsidiary will furnish Bank with any certificate
or other document that will contain any untrue statement of material fact
or that will omit to state a material fact necessary to make it not misleading in
light of the circumstances under which it was furnished.
17. Neither Borrower nor any subsidiary will directly or indirectly apply any
part of the proceeds of the Loans to the purchasing or carrying of any
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, or any regulations,
interpretations, or rulings under the same.
7. Default
A. Events of default.
The occurrence of any one or more of the following events shall constitute an
event of default under this Agreement:
1. Borrower shall fail to pay when due any installment of principal or interest,
or any fee or charge payable under this Agreement, and such failure shall
continue for a period of _____ days.
2. Borrower or any subsidiary shall fail to observe or perform any other
obligation to be observed or performed by them under this Agreement or
under any of the collateral documents, and this failure shall continue for ______
days after (i) Notice of the failure from the Bank; or (ii) the Bank is notified of
the failure or should have been so notified pursuant to the provisions of this
Agreement, whichever is earlier.
3. Borrower or any subsidiary shall fail to pay any indebtedness due to any
third persons, and this failure shall continue beyond any applicable grace
period, or Borrower or any subsidiary shall suffer to exist any other event
of default under Agreement binding Borrower or any subsidiary.
4. Any financial statement, representation, warranty, or certificate made or
furnished by Borrower or any subsidiary to Bank in connection with this
Agreement, or as inducement to Bank to enter into this
Agreement, or in any separate statement or document to be delivered under this
Agreement to Bank, shall be materially false, incorrect, or incomplete when
made.
5. Borrower or a subsidiary shall admit its inability to pay its debts as they
mature, or shall make an assignment for the benefit of its or any of its
creditors.
6. Proceedings in Bankruptcy, or for reorganization of Borrower or any
subsidiary, or for the readjustment of any of their respective debts, under
the Bankruptcy Code, as amended, or any part of the same, or under any
other laws, whether state or federal, for the relief of debtors, now or later existing,
shall be commenced against Borrower or any subsidiary and shall not be
discharged within ______ days of their commencement, or any such
proceeding shall be commenced by Borrower or a subsidiary.
7. A receiver or trustee shall be appointed for Borrower or any subsidiary or
for any substantial part of their respective assets, or any proceedings
shall be instituted for the dissolution or the full or partial liquidation of
Borrower or any subsidiary, and the receiver or trustee shall not be
discharged within ______ days of his or her appointment, or the proceedings
shall not be discharged within ______ days of their commencement, or
Borrower or any subsidiary shall discontinue business or materially
change the nature of its business.
8. Borrower or any subsidiary shall suffer final judgments for payment of
money aggregating in excess of $____________ and shall not discharge
the same within a period of _____ days, unless, pending further proceedings,
execution has not been commenced or, if commenced, has been
effectively stayed.
9. A judgment creditor of Borrower or any subsidiary shall obtain possession
of any of the collateral by any means, including, but not limited to, levy, distraint,
replevin, or self-help.
10. Any obligee of subordinated indebtedness shall fail to comply with the
subordination provisions of the instruments evidencing the subordinated
indebtedness.
B. Acceleration. Immediately, and without notice, on the occurrence of an event of
default specified in Subparagraph A of this Section, or at the option of Bank, but only on
written notice to Borrower, or on the occurrence of any other event of default, all
obligations, whether under this Agreement or otherwise, shall immediately become due
and payable without further action of any kind.
C. Remedies. After any acceleration, as provided in Paragraph B of this Section,
Bank shall have, in addition to the rights and remedies given to it by this Agreement, the
Note, and the collateral documents, all those rights and remedies allowed by all
applicable laws, including, but not limited to, the Uniform Commercial Code as enacted
in any jurisdiction in which any collateral may be located. Without limiting the generality
of the foregoing, Bank, immediately and without demand of performance and without
other notice — except as specifically required by this Agreement or the collateral
documents—for any demand whatever to Borrower, all of which are by this Agreement
expressly made, and, without advertisement, may sell at public or private sale, or
otherwise realized on, in (city and state) , or elsewhere, the whole, or from time to time,
any part of the collateral, or any interest that Borrower may have in it. After deducting
from the proceeds of sale or other disposition of the collateral all expenses, including all
reasonable expenses for legal services, Bank shall apply the proceeds towards the
satisfaction of the obligations. Any remainder of the proceeds after satisfaction in full of
the obligation shall be distributed as required by applicable laws. Notice of any sale or
other disposition shall be given to Borrower at least ____ days before the time of any
intended public sale or of the time after which any intended private sale or other
disposition of the collateral is to be made, which Borrower agrees shall be reasonable
notice of the sale or other disposition. Borrower agrees to assemble, or cause to be
assembled, at its own expense the collateral at such place or places as Bank shall
designate. At any such sale or other disposition, Bank, to the extent permissible under
applicable laws, may purchase the whole or any part of the collateral, free from
any right of redemption on the part of Borrower, which right is by this Agreement waived
and released. Without limiting the generality of any of the rights and remedies conferred on
Bank under this paragraph, Bank, to the full extent permitted by applicable laws, may:
1. Enter on the premises of Borrower, exclude from the premises Borrower
or any affiliate, and take immediate possession of the collateral, either
personally or by means of a receiver appointed by a court of competent jurisdiction;
2. At Bank's option, use, operate, manage, and control the collateral in any
manner;
3. Collect and receive all rents, income, revenue, earnings, issues, and
profits; and
4. Maintain, repair, renovate, alter, or remove the collateral as Bank may
determine in its discretion.
8. Construction of Agreement
The provisions of this Agreement shall be in addition to those of any guaranty, pledge,
security Agreement, Note, or other evidence of liability held by Bank, all of which shall be
construed as complementary to each other. Nothing contained in this Agreement shall prevent
Bank from enforcing any or all other notes, guaranty, pledge, or security Agreements in
accordance with their respective terms.
9. Further Assurance
From time to time, Borrower shall execute and deliver to Bank such additional
documents and will provide such additional information as Bank may reasonably require to carry
out the terms of this Agreement and be informed of Borrower's status and affairs.
10. Enforcement and Waiver by Bank
Bank shall have the right at all times to enforce the provisions of this Agreement and the
collateral documents in strict accordance with their terms, notwithstanding any conduct or
custom on the part of Bank in refraining from so doing at any time or times. The failure of Bank
at any time or times to enforce its rights under such provisions, strictly in accordance with the
same, shall not be construed as having created a custom in any way or manner contrary to
specific provisions of this Agreement or as having in any way or manner modified or waived the
same. All rights and remedies of Bank are cumulative and concurrent, and the exercise of one
right or remedy shall not be deemed a waiver or release of any other right or remedy.
11. Expenses of Bank
Borrower, on demand, will reimburse Bank for all expenses, including the reasonable
fees and expenses of legal counsel for Bank, incurred by Bank in connection with the
preparation, administration, amendment, modification, or enforcement of this Agreement and
the collateral documents, and the collection or attempted collection of the Note.
12. Notices
Unless provided herein to the contrary, any notice provided for or concerning this
Agreement shall be in writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at the beginning of
this Agreement.
13. Waiver and Release by Borrower
To the maximum extent permitted by applicable laws, Borrower and each subsidiary of
Borrower:
A. Waive (i) protest of all commercial paper at any time held by Bank on which
Borrower or any subsidiary is in any way liable; and (ii) notice of acceleration and of
intention to accelerate, and notice and opportunity to be heard, after acceleration in the
manner provided in Section 7 , before exercise by Bank of the remedies of self-help, set
off, or of other summary procedures committed by any applicable laws or by any
Agreement with Borrower or any subsidiary, and, except when required by this
Agreement or by any applicable laws, notice of any other action taken by Bank; and
B. Release Bank and its officers, attorneys, agents, and employees from all claims
for loss or damage caused by any act or omission on the part of any of them, except
willful misconduct.
14. Severability
The invalidity of any portion of this Agreement will not and shall not be deemed to affect
the validity of any other provision. If any provision of this Agreement is held to be invalid, the
parties agree that the remaining provisions shall be deemed to be in full force and effect as if
they had been executed by both parties subsequent to the expungement of the invalid provision.
15. Governing Law
This Agreement shall be governed by, construed, and enforced in accordance with the
laws of the State of ______________.
16. Entire Agreement
This Agreement shall constitute the entire agreement between the parties and any prior
understanding or representation of any kind preceding the date of this Agreement shall not be
binding upon either party except to the extent incorporated in this Agreement.
17. Modification of Agreement
Any modification of this Agreement or additional obligation assumed by either party in
connection with this Agreement shall be binding only if placed in writing and signed by each
party or an authorized representative of each party.
18. Assignment of Rights
The rights of each party under this Agreement are personal to that party and may not be
assigned or transferred to any other person, firm, corporation, or other entity without the prior,
express, and written consent of the other party.
19. Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all of which together shall constitute but one and the same
instrument.
20. Compliance with Laws
In performing under this Agreement, all applicable governmental laws, regulations,
orders, and other rules of duly-constituted authority will be followed and complied with in all
respects by both parties.
21. Necessary Acts and Further Assurances
The parties shall at their own cost and expense execute and deliver such further
documents and instruments and shall take such other actions as may be reasonably required or
appropriate to evidence or carry out the intent and purposes of this Agreement or to show the
ability to carry out the intent and purposes of this Agreement.
22. In this Agreement, any reference to a party includes that party's heirs, executors,
administrators, successors and assigns, singular includes plural and masculine includes
feminine.
WITNESS our signatures as of the day and date first above stated.
________________________ ________________________
(Name of Bank) (Name of Borrower)
By:____________________________ By:_______________________________
________________________ _________________________
(P rinted Name & Office in Corporation) (P rinted Name & Office in Corporation)
