EXHIBIT 10.4
$2,350,000.00 Chicago, Illinois
Dated as of August 27, 1997
TERM NOTE
This Note has been executed by ACADEMIC REVIEW, INC., a corporation formed under
the laws of the State of Illinois ("Borrower"); if more than one entity executes
this Note, the term "Borrower" refers to each of them individually and some or
all of them collectively, and their obligations hereunder shall be joint and
several.
FOR VALUE RECEIVED, on or before September 1, 2004, the scheduled maturity date
hereof, Borrower promises to pay to the order of THE NORTHERN TRUST COMPANY, an
Illinois banking corporation (hereafter, together with any subsequent holder
hereof, called "Lender"), at its main banking office at 00 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx 00000, or at such other place as Lender may direct the
principal sum of Two Million Three Hundred Fifty Thousand no/100 United States
Dollars ($2,350,000.00) (the "Loan"), payable in 84 consecutive monthly
principal installments consisting of $27,976.19 each plus interest, beginning
October 1, 1997 and a last and final installment of all then remaining
outstanding principal shall be due and payable in full on the 1st day of
September, 2004, the scheduled maturity date of this Note.
1. INTEREST.
Xxxxxxxx agrees to pay the per annum rate of interest equal to Two percent
(2.0%) in addition to the current average yield on One Year United States
Treasury Notes as determined by Xxxxxx as of the date hereof or as of any
anniversary date hereof on the unpaid principal amount from time to time
outstanding hereunder. The initial rate of interest shall be 7.512% which shall
be fixed for the first year of this Note, subject to change annually commencing
on the anniversary date of this loan.
After the maturity of the Loan, whether by acceleration or otherwise, the
Loan shall bear interest until paid at a rate equal to two percent (2%) in
addition to the rate in effect immediately prior to maturity.
Interest shall be computed for the actual number of days elapsed on the
basis of a year consisting of 360 days, including the date the Loan is made and
excluding the date the Loan or any portion thereof is paid or prepaid. Interest
shall be due and payable monthly, on the 1st day of each month, beginning
October 1, 1997, with all accrued but unpaid interest being due and payable in
full with the final principal payment due hereunder. After maturity interest
shall be payable on demand.
2. PREPAYMENTS.
If the Loan bears interest at the Prime-Based Rate, WSJ Prime Rate or a
Treasury Note-Based Rate, Borrower may prepay the Loan without penalty or
premium. If the Loan bears interest at the Fixed Rate, and Borrower prepays the
Loan in whole or in part, or the maturity of the Loan is accelerated, then,
to the fullest extent permitted by law Borrower shall also pay Lender for all
losses (including but not
limited to interest rate margin and any other losses of anticipated profits) and
expenses incurred by reason of the liquidation or re-employment of deposits
acquired by Lender to make the Loan or maintain principal outstanding at the
Fixed Rate. Upon Xxxxxx's demand in writing specifying such losses and expenses,
Borrower shall promptly pay them; Xxxxxx's specification shall be deemed correct
in the absence of manifest error. If bearing interest at the Fixed Rate, the
Loan shall be conclusively deemed to have been funded by or on behalf of Lender
by the purchase of a deposit corresponding in amount and in maturity to the
Loan.
3. REFERENCES TO PREVIOUS NOTES, FACILITY TYPE, COLLATERAL,
GUARANTIES, LOAN & OTHER AGREEMENTS.
This Note evidences a transaction or term loan in the amount of this Note.
This Note is secured without limitation as provided in the following and
all related documents, in each case as amended, modified, renewed, restated
or replaced from time to time:
Security Agreement dated as of August 27, 1997 executed by Xxxxxxxx in
favor of Xxxxxx;
Covenant Agreement dated as of August 27, 1997 executed by Xxxxxxxx in
favor of Xxxxxx;
UCC-1 Financing Statement executed by Xxxxxxxx as Debtor in favor of Xxxxxx
to be filed in Illinois and California; and
UCC-2 Financing Statement executed by Xxxxxxxx as Debtor in favor of Xxxxxx
to be filed in Illinois.
Payment of this Note has been unconditionally guaranteed by ARGOSY
INTERNATIONAL, INC., AN ILLINOIS CORPORATION AMERICAN EDUCATION CORPORATION, AN
ILLINOIS CORPORATION AND AMERICAN SCHOOL OF PROFESSIONAL PSYCHOLOGY, AN ILLINOIS
CORPORATION (each individually and all collectively referred to as "guarantor")
as provided in separately executed guaranties.
4. USE OF PROCEEDS.
Borrower represents and warrants that the proceeds of this Note will be
used solely for business purposes, and not for personal, family or household
use, within the meaning of Federal Truth-in-Lending and similar state laws and
regulations.
5. REPRESENTATIONS.
Borrower hereby represents and wan-ants to Lender that:
(i) Borrower and any "Subsidiary" (as defined below) are existing and in
good standing under the laws of their state of formation, are duly
qualified, in good standing and authorized to do business in each
jurisdiction where failure to do so might have a material adverse impact on
the consolidated assets, condition or prospects of Borrower; the execution,
delivery and performance
of this Note and all related documents and instruments are within
Borrower's powers and have been authorized by all necessary corporate,
partnership or joint venture action;
(ii) the execution, delivery and performance of this Note and all related
documents and instruments have received any and all necessary governmental
approval, and do not and will not contravene or conflict with any provision
of law or of the partnership or joint venture or similar agreement, charter
or by-laws of Borrower or any agreement affecting Borrower or its property;
and
(iii) there has been no material adverse change in the business,
condition, properties, assets, operations or prospects of Borrower or any
guarantor since the date of the latest financial statements provided on
behalf of Borrower or any guarantor to Lender.
"Subsidiary" means any corporation, partnership, joint venture, trust, or
other legal entity of which Borrower owns directly or indirectly fifty percent
(50%) or more of the outstanding voting stock or interest, or of which Borrower
has effective control, by contract or otherwise.
6. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute
an "Event of Default":
(a) failure to pay, within five (5) days of when due, any principal,
interest or other amounts payable hereunder, failure to comply with or perform
any agreement or covenant of Borrower contained herein; or failure to furnish
(or caused to be furnished to) Lender when and as requested by Xxxxxx (but not
more often than once every twelve months) fully completed personal financial
statement(s) of any individual guarantor on Lender's then-standard form together
with such supporting information as Lender may reasonably request and such
failure shall continue and remain unremedied for ten (10) days after written
notice there of shall have been made by Lender to Borrower; or
(b) any default, event of default, or similar event shall occur or
continue under any other instrument, document, note, agreement, or guaranty
delivered to Lender in connection with this Note, or any such instrument,
document, note, agreement, or guaranty shall not be, or shall cease to be,
enforceable in accordance with its terms; or
(c) there shall occur any default or event of default, or any event or
condition that might become such with notice or the passage of time or both, or
any similar event, or any event that requires the prepayment of borrowed money
or the acceleration of the maturity thereof, under the terms of any evidence of
indebtedness or other agreement issued or assumed or entered into by Borrower,
any Subsidiary, any general partner or joint venturer of Borrower, or any
guarantor, or under the terms of any indenture, agreement, or instrument under
which any such evidence of indebtedness or other agreement is issued, assumed,
secured, or guaranteed, and such event shall continue beyond any applicable
period of grace; or
(d) any representation, warranty, schedule, certificate, financial
statement, report, notice, or other writing furnished by or on behalf of
Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor to Lender is false or misleading in any material
respect on the date as of which the facts therein set forth are stated or
certified; or
(e) any guaranty of or pledge of collateral security for this Note shall
be repudiated or become unenforceable or incapable of performance; or
(f) Borrower or any Subsidiary shall fail to maintain their existence in
good standing in their state of formation or shall fail to be duly qualified, in
good standing and authorized to do business in each jurisdiction where failure
to do so might have a material adverse impact on the consolidated assets,
condition or prospects of Borrower; or
(g) Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor shall die, become incompetent, dissolve, liquidate,
merge, consolidate, or cease to be in existence for any reason; or any general
partner or joint venturer of Borrower shall withdraw or notify any partner or
joint venturer of Borrower of its or his/her intention to withdraw as a partner
or joint venturer (or to become a limited partner) of Borrower; or any general
or limited partner or joint venturer of Borrower shall fail to make any
contribution required by the partnership or joint venture agreement of Borrower
as and when due under such agreement; or there shall be any change in the
partnership or joint venture agreement of Borrower from that in force on the
date hereof which may have a material adverse impact on the ability of Borrower
to repay this Note; or
(h) any person or entity presently not in control of a corporate,
partnership or joint venture Borrower, any corporate general partner or joint
venturer of Borrower, or any guarantor, shall obtain control directly or
indirectly of Borrower, such a corporate general partner or joint venturer, or
any guarantor, whether by purchase or gift of stock or assets, by contract, or
otherwise; or
(i) any proceeding (judicial or administrative) shall be commenced against
Borrower, any Subsidiary, any general partner or joint venturer of Borrower, or
any guarantor, or with respect to any assets of Borrower, any Subsidiary, any
general partner or joint venturer of Borrower, or any guarantor which shall
threaten to have a material and adverse effect on the assets, condition or
prospects of Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor; or final judgment(s) and/or settlement(s) in an
aggregate amount in excess of Fifty Thousand and no/100 UNITED STATES DOLLARS
($50,000.00) in excess of insurance for which the insurer has confirmed coverage
in writing, a copy of which writing has been furnished to Lender, shall be
entered in any suit or action commenced against Borrower, any Subsidiary, any
general partner or joint venturer of Borrower, or any guarantor; or
(j) Borrower shall grant or any person (other than Lender) shall obtain a
security interest in any collateral for this Note; Borrower or any other person
shall perfect (or attempt to perfect) such a security interest; a court shall
determine that Lender does not have a first-priority security interest in any of
the collateral for this Note enforceable in accordance with the terms of the
related documents; or any notice of a federal tax lien against Borrower or any
general partner or joint venturer of Borrower shall be filed with any public
recorder; or
(k) there shall be any material loss or depreciation in the value of any
collateral for this Note for any reason, or Lender shall otherwise reasonably
deem itself insecure; or, unless expressly permitted by the related documents,
all or any part of any collateral for this Note or any direct, indirect, legal,
equitable or beneficial interest therein is assigned, transferred or sold
without Lender's prior written consent; or
(l) any bankruptcy, insolvency, reorganization, arrangement, readjustment,
liquidation, dissolution, or similar proceeding, domestic or foreign, is
instituted by or against Borrower, any Subsidiary, any general partner or joint
venturer of Borrower, or any guarantor; or Borrower, any Subsidiary, any general
partner or joint venturer of Borrower, or any guarantor shall take any steps
toward, or to authorize, such a proceeding; or
(m) Borrower, any Subsidiary, any general partner or joint venturer of
Borrower, or any guarantor shall become insolvent, generally shall fail or be
unable to pay its debts as they mature, shall admit in writing its inability to
pay its debts as they mature, shall make a general assignment for the benefit of
its creditors, shall enter into any composition or similar agreement, or shall
suspend the transaction of all or a substantial portion of its usual business.
7. DEFAULT REMEDIES.
(a) Upon the occurrence and during the continuance of any Event of Default
specified in Section 6(a)-(k), Lender at its option may declare this Note
(principal, interest and other amounts) immediately due and payable without
notice or demand of any kind except as required hereby or by applicable law.
Upon the occurrence of any Event of Default specified in Section 6(l)-(m), this
Note (principal, interest and other amounts) shall be immediately and
automatically due and payable without action of any kind on the part of Lender.
Upon the occurrence and during the continuance of any Event of Default, Lender
may exercise any rights and remedies under this Note, any related document or
instrument (including without limitation any pertaining to collateral), and at
law or in equity.
(b) Lender may, by written notice to Borrower, at any time and from time
to time, waive any Event of Default or "Unmatured Event of Default" (as defined
below), which shall be for such period and subject to such conditions as shall
be specified in any such notice. In the case of any such waiver, Lender and
Xxxxxxxx shall be restored to their former position and rights hereunder, and
any Event of Default or Unmatured Event of Default so waived shall be deemed to
be cured and not continuing; but no such waiver shall extend to or impair any
subsequent or other Event of Default or Unmatured Event of Default. No failure
to exercise, and no delay in exercising, on the part of Lender of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies of Lender herein provided are cumulative and not exclusive of any
rights or remedies provided by law. "Unmatured Event of Default" means any
event or condition which would become an Event of Default with notice or the
passage of time or both.
8. NO INTEREST OVER LEGAL RATE.
Borrower does not intend or expect to pay, nor does Lender intend or expect
to charge, accept or collect any interest which, when added to any fee or other
charge upon the principal which may legally be treated as interest, shall be in
excess of the highest lawful rate. If acceleration, prepayment or any other
charges upon the principal or any portion thereof, or any other circumstance,
result in the
computation or earning of interest in excess of the highest lawful rate, then
any and all such excess is hereby waived and shall be applied against the
remaining principal balance. Without limiting the generality of the foregoing,
and notwithstanding anything to the contrary contained herein or otherwise, no
deposit of funds shall be required in connection herewith which will, when
deducted from the principal amount outstanding hereunder, cause the rate of
interest hereunder to exceed the highest lawful rate.
9. PAYMENTS, ETC.
All payments hereunder shall be made in immediately available funds, and
shall be applied first to accrued interest and then to principal; however, if an
Event of Default occurs, Lender may, in its sole discretion, and in such order
as it may choose, apply any payment to interest, principal and/or lawful charges
and expenses then accrued. Borrower shall receive immediate credit on payments
received during Lender's normal banking hours if made in cash, immediately
available funds, or by debit to available balances in an account at Lender;
otherwise payments shall be credited after clearance through normal banking
channels. Borrower authorizes Xxxxxx to charge any account of Xxxxxxxx
maintained with Lender for any amounts of principal, interest, taxes, duties, or
other charges or amounts due or payable hereunder, with the amount of such
payment subject to availability of collected balances in Lender's discretion;
unless Borrower instructs otherwise, the Loan shall be credited to an account(s)
of Borrower with Xxxxxx. LENDER AT ITS OPTION MAY MAKE THE LOAN HEREUNDER UPON
TELEPHONIC INSTRUCTIONS AND IN SO DOING SHALL BE FULLY ENTITLED TO RELY SOLELY
UPON INSTRUCTIONS, INCLUDING WITHOUT LIMITATION INSTRUCTIONS TO MAKE TRANSFERS
TO THIRD PARTIES, REASONABLY BELIEVED BY XXXXXX TO HAVE BEEN GIVEN BY AN
AUTHORIZED PERSON, WITHOUT INDEPENDENT INQUIRY OF ANY TYPE. All payments shall
be made without deduction for or on account of any present or future taxes,
duties or other charges levied or imposed on this Note or the proceeds, Lender
or Borrower by any government or political subdivision thereof. Borrower shall
upon request of Lender pay all such taxes, duties or other charges in addition
to principal and interest, including without limitation all documentary stamp
and intangible taxes, but excluding income taxes based solely on Lender's
income.
10. SETOFF.
At any time and without notice of any kind, except as provided herein, upon
the occurrence and during the continuance of any Event of Default, any account,
deposit or other indebtedness owing by Xxxxxx to Borrower, and any securities or
other property of Xxxxxxxx delivered to or left in the possession of Lender or
its nominee or bailee, may be set off against and applied in payment of any
obligation hereunder, whether due or not.
11. NOTICES.
All notices, requests and demands to or upon the respective parties hereto
shall be deemed to have been given or made when deposited in the mail, postage
prepaid, addressed if to Lender to its main banking office indicated above
(Attention: Division Head, Business Banking Division), and if to Borrower to its
address set forth below, or to such other address as may be hereafter designated
in writing by the respective parties hereto or, as to Borrower, may appear in
Lender's records.
12. MISCELLANEOUS.
This Note and any document or instrument executed in connection herewith
shall be governed by and construed in accordance with the internal law of the
State of Illinois, and shall be deemed to have been executed in the State of
Illinois. Unless the context requires otherwise, wherever used herein the
singular shall include the plural and vice versa, and the use of one gender
shall also denote the other. Captions herein are for convenience of reference
only and shall not define or limit any of the terms or provisions hereof,
references herein to Sections or provisions without reference to the document in
which they are contained are references to this Note. This Note shall bind
Borrower, its heirs, trustees (including without limitation successor and
replacement trustees), executors, personal representatives, successors and
assigns, and shall inure to the benefit of Xxxxxx, its successors and assigns,
except that Borrower may not transfer or assign any of its rights or interest
hereunder without the prior written consent of Xxxxxx. Xxxxxxxx agrees to pay
upon demand all expenses (including without limitation attorneys' fees, legal
costs and expenses, and time charges of attorneys who may be employees of
Xxxxxx, in each case whether in or out of court, in original or appellate
proceedings or in bankruptcy) incurred or paid by Xxxxxx or any holder hereof in
connection with the enforcement or preservation of its rights hereunder or under
any document or instrument executed in connection herewith. Borrower expressly
and irrevocably waives notice of dishonor or default as well as presentment,
protest, demand and notice of any kind in connection herewith. If there shall be
more than one person or entity constituting Borrower, each of them shall be
primarily, jointly and severally liable for all obligations hereunder.
13. WAIVER OF JURY TRIAL, ETC.
XXXXXXXX HEREBY IRREVOCABLY AGREES THAT, SUBJECT TO LENDERS SOLE AND
ABSOLUTE ELECTION, ALL SUITS, ACTIONS OR OTHER PROCEEDINGS WITH RESPECT TO,
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR ANY DOCUMENT OR INSTRUMENT
EXECUTED IN CONNECTION HEREWITH SHALL BE SUBJECT TO LITIGATION IN COURTS HAVING
SITUS WITHIN OR JURISDICTION OVER COOK COUNTY, ILLINOIS. BORROWER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT
LOCATED IN OR HAVING JURISDICTION OVER SUCH COUNTY, AND HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO REQUEST OR DEMAND TRIAL BY JURY, TO TRANSFER OR
CHANGE THE VENUE OF ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT BY XXXXXX IN
ACCORDANCE WITH THIS PARAGRAPH, OR TO CLAIM THAT ANY SUCH PROCEEDING HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.
Lender is hereby authorized by Borrower without notice to Borrower to fill in
any blank spaces and dates and strike inapplicable terms herein or in any
related document to conform to the terms upon which the Loan evidenced hereby is
or may be made, for which purpose Lender shall be deemed to have been granted an
irrevocable power of attorney coupled with an interest.
Address for Notices:
ACADEMIC REVIEW, INC. 00 X. XXXXX XXXXXX
XXXXXXX, XXXXXXXX 00000
ATTENTION: XXXXXXX XXXXXXXXX
BY:_____________________
XXXXXXX XXXXXXXXX
TITLE:__________________
