Exhibit 10.2
BUSINESS LOAN AGREEMENT
THIS BUSINESS LOAN AGREEMENT dated this 23rd day of January, 2001, by and
between CHEMICAL AND EQUIPMENT SPECIALTIES, INC. ("CESI"), an Ok1ahoma
corporation, 3109 Stagestand, Xxxxxx, Xxxxxxxx 00000, PADKO INTERNATIONAL
INCORPORATED, an Oklahoma corporation ("Padko"), 00 Xxxxx 0xx, Xxxxxx. Xxxxxxxx.
00000, XXXX'X TECHNOLOGY, INC., an Oklahoma corporation ("Xxxx'x"), 0000 Xxxxx
00xx, Xxxxxx, Xxxxxxxx, 00000, PLAINSMAN TECHNOLOGY, INC., an Oklahoma
corporation ("Plainsman"), P. O. Xxx 000, Xxxxxx, Xxxxxxxx, 00000, and ESSES,
INC., an Oklahoma corporation ("Esses"), 000 Xxxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx,
00000, individually, collectively and interchangeably referred to herein as
"Borrower" (whether one or more, see Section 8.20 below), and LEGACY BANK,
Legacy Bank Duncan North Branch, Post Office Box 1109, 0000 X. Xxxxxxx 00,
Xxxxxx, Xx0xxxxx 00000-0000, hereinafter referred to as "Lender", and XXXXX X.
XXXXX, 3109 Stagestand, Xxxxxx, Xxxxxxxx 00000, hereinafter referred to as
"Guarantor" (whether one or more). Borrower understands and agrees that: (A) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements as set forth in this Agreement, and
(B) all such Loans shall be and remain subject to the terms and conditions of
this Agreement.
WITNESSETH
BACKGROUND
CESI has entered into agreements to purchase certain stock as a part of
interdependent steps of a series of transaction intended to qualify under
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code"),
pursuant to which CESI is acquiring the stock of Padko, Esses, Xxxx'x and
Plainsman as a result of which Padko, Esses, Xxxx'x and Plainsman will become
wholly owned subsidiaries of CESI. In addition, CESI has entered into agreements
to purchase certain assets of Esses and Xxxx'x. As a part and parcel of the
purchase agreements Plainsman, Esses and Xxxx'x are required to payoff
indebtedness which they owe to certain financial institutions.
Borrower has requested Lender to loan to Borrower certain sums and lender is
willing to do so upon the terms and conditions hereinafter set forth.
Borrower understands and agrees that: (A) in granting, renewing, or extending
any Loan, Lender is relying upon Borrower's representations, warranties, and
agreements as set forth in this Agreement, and (B) all such Loans shall be and
remain subject to the terms and conditions of this Agreement.
ARTICLE I.
THE LOAN AND ACCOUNTS RECEIVABLE PURCHASE
Section 1.01. Term Loan. Lender agrees on the terms and conditions hereinafter
set forth, to make a loan to Borrower on the date of this Agreement in the
principal sum of Two Million Seven Hundred Nine Thousand Nine Hundred Eighty and
no/100 Dollars ($2,709,980.00).
Section 1.02. Interest and Late Charge.
(a) Variable Interest Rate. The interest rate on the Note Is subject to change
from time to time based on changes in an independent index which is the minimum
prime lending rate for large U. S. Money Center Commercial banks as published in
the Money Rate Section of the Wall Street Journal (the "Index"). The index is
not necessarily the lowest rate charged by Lender on its loans. If the Index
becomes unavailable during the term of the Loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the current
Index rate upon Borrower's request. The Interest rate change will not occur more
often than each quarter. Borrower understands that Lender may make loans based
on other rates as well. The Index currently is 9.000% per annum. The Interest
rate to be applied to the unpaid principal balance of the Note will be at a rate
of 1.000 percentage point over the Index, resulting in an initial rate of
10.000% per annum. Under no circumstances will the interest rate on the Note be
more than the maximum rate allowed by applicable law. Whenever increases occur
in the interest rate, Lender, at its option, may do one or more of the
following: (a) Increase Borrower's payments to insure Borrower's loan will
payoff by its original final maturity date, (b) Increase Borrower's payments to
cover accruing interest, (c) Increase the number of Borrower's payments, and (d)
continue Borrower's payments at the same amount and Increase Borrower's final
payment. The annual interest rate is computed on a 365/360 basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual number
of days the principal balance is outstanding.
(b) Interest After Default. Upon default, including failure to pay upon the
maturity date, lender, at lender's option, may, if permitted under applicable
law, increase the variable interest rate on the Note to 15.000% per annum. The
interest rate will not exceed the maximum rate permitted by applicable law.
(c) Late Charge. If a payment on the Note is eleven (11) days or more late,
Borrower will be charged 2.000% of the unpaid portion of the regularly scheduled
payment or $20.00, whichever is greater.
Section 1.03. Term Note. Borrower's obligation to repay the Loan shall be
evidenced by Borrower's promissory Note (the "Note", which term shall include
all renewals, extensions and deferrals):
(a) Note. In substantially the form of "Exhibit A" hereto, with blanks
appropriately filled in, and payable to the order of Lender, which Note shall be
dated the date of this Agreement, and the principal of the Note in the amount of
$2,709,980.00 shall be repaid in eighty-four (84) consecutive monthly
installments, the first eighty-three (83) consecutive monthly installments shall
be in the amount of $45,179.48, which amount shall include principal and accrued
interest, with the first installment being due on the 23rd day of February,
2001, with subsequent installments on the 23rd day of each month thereafter,
with the entire principal balance, plus accrued interest, being due and payable
on the 23rd day of January, 2008 (the "maturity date").
Section 1.04. Prepayments. Borrower agrees that all loan fees and other prepaid
finance charges are earned fully as of the date of the Loan and will not be
subject to refund upon early payment (whether voluntary or as a result of
default), except as otherwise required by law. If the Loan is prepaid in whole
or in part, said prepayment shall include accrued interest to the date of such
prepayment, and in addition, each prepayment shall include the following
additional amounts:
(a) 5% of the amount prepaid during the first Loan year;
(b) 4% of the amount prepaid during the second loan year;
(c) 3% of the amount prepaid during the third Loan year;
(d) 2% of the amount prepaid during the fourth Loan year;
(e) 1% of the amount prepaid during the fifth loan year.
Provided, however, that there shall be a prepayment charge of 1 % of the amount
of the outstanding principal balance in the event that the Borrower shall pay
and satisfy in full the indebtedness and provide satisfactory evidence to Lender
that the source of the funds for the prepayment was the sale of securities of
Borrower and not from debt.
Partial prepayments will not, unless agreed by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the payment
schedule set out in the Note. Rather, partial prepayments will reduce the
principal balance due and may result in Borrower's making fewer payments.
Borrower agrees not to send Lender payments marked "paid in full", "without
recourse" or similar language. If Borrower sends such a payment, Lender may
accept it without losing any of Lender's rights under the Loan, and Borrower
will remain obligated to pay any further amount owed to Lender. All written
communications concerning disputed amounts, including any check or other payment
instrument that indicates that the payment constitutes "payment in full" of the
amount owed or that is tendered with other conditions or limitations or as full
satisfaction of a disputed amount must be mailed or delivered to: Legacy Bank,
Legacy Bank Duncan North Branch, P. O. Box 1109, 0000 X. Xxxxxxx 00, Xxxxxx, XX
00000-0000.
Section 1.05. Method of Payment. Borrower shall make each payment under this
Agreement and under the Notes not later than 3:00 o'clock P.M., Oklahoma time,
on the date when due, in lawful money of the United States, to Lender at
Lender's Office (Legacy Bank, Legacy Bank Duncan North Branch, P. O. Xxx 0000,
0000 X. Xxxxxxx 00, Xxxxxx, XX 73534-1109) in immediately available funds.
Borrower hereby authorizes Lender, if, and to the extent payment is not made
when due under this Agreement, and under the Note, to charge from time to time
against any account of Borrower with Lender any amount so due. Whenever any
payment to be made under this Agreement or under the Notes shall be stated to be
due on Saturday, Sunday or public holiday, or the equivalent for banks generally
under the laws of the State of Oklahoma, such payment shall be made on the next
succeeding business day, and such extension of time shall in such case be
included in the computation of payment of interest. Unless otherwise agreed or
required by applicable law, payments will be applied first to any unpaid
collection costs and any late charges, then to any unpaid interest, and any
remaining amount to principal.
Section 1.06. Use of Proceeds. The proceeds of the Loan hereunder shall be used
by Borrower:
(a) For CESI to purchase all of the outstanding common stock of Plainsman.
(b) For CESI to purchase customer lists, business records, work force,
intellectual property, know how of the Esses and Xxxx'x. (c) For CESI
to purchase all of the outstanding common stock of Padko.
(d) To pay and satisfy in full Loans of Xxxx'x with Lender.
(e) To pay and satisfy in full a loan of Esses with BancFirst.
(f) To pay and satisfy in full a loan of Plainsman to First National
Bank, Xxxxxx, Oklahoma. (g) To pay for capital expenditures,
origination fees, pay for attorney fees and closing costs of Borrower.
Borrower will not, directly or indirectly, use any part of such proceeds for the
purpose of purchasing or carrying any margin stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or to
extend credit to others for the purpose of purchasing or carrying any such
margin stock.
1.07. Accounts Receivable Purchase. At Closing, Borrower and Lender will enter
into an Account Receivable Purchase Agreement, in substantially the form of
"Exhibit B" hereto, with blanks appropriately filled in ("Accounts Receivable
Purchase Agreement"), wherein Borrower will assign and sell to Lender certain of
Borrower's Accounts Receivable in accordance with the terms and conditions of
the Accounts Receivable Purchase Agreement.
ARTICLE II.
CONDITIONS PRECEDENT
Section 2.01. Condition Precedent to Loan. The obligation of Lender to make the
Loan to Borrower and to fund the initial Advance and any subsequent Advance
hereunder is subject to the conditions precedent that Lender shall have received
on or before the day of the initial Advance, each of the following, in form and
substance satisfactory to Lender and Lender's counsel unless waived in writing
by lender:
(a) The Note duly executed by Borrower.
(b) Security Agreement. A Security Agreement, in substantially the form of
"Exhibit C" hereto attached, with blanks appropriately filled in ("Security
Agreement"), granting Lender a first, paramount and superior lien on Accounts,
Chattel Paper, Commercial Tort Claims, Commingled Goods, Deposit Accounts,
Documents of Title, Fixtures, General Intangibles (including, without
limitation, the property set out in Schedule 1), Instruments, Goods, Investment
Property, Inventory, Equipment, Letter of Credit Rights, Money, Payment
Intangibles, Software, Accessions, Products and Proceeds (including, without
limitation, the property set out in Schedule 2 attached thereto) whether now
owned or hereafter acquired, together with duly executed Lien Entry Forms
("LEFs")and Certificate of Title, Application for a new Certificate of Title and
Manufacturer's Certificate of Origin, whichever is applicable on all vehicles
owned by Borrower, and financing statements ("Financing Statements"), duly
executed in substantially the form of "Exhibit D" and "Exhibit E", respectively,
hereto, with blanks appropriately filled in.
(c) Plainsman Mortgage. A mortgage duly executed and acknowledged by Plainsman,
in substantially the form of "Exhibit F" with blanks appropriately filled in,
granting to Lender a first, paramount and superior mortgage lien and security
interest in the property set out in Schedule 3 attached hereto and made a part
hereof ("Plainsman Mortgage").
(d) Esses Mortgage. A mortgage duly executed and acknowledged by Esses, in
substantially the form of "Exhibit G" with blanks appropriately filled in,
granting to Lender a first, paramount and superior mortgage lien and security
interest in the property set out in Schedule 4 attached hereto and made a part
hereof ("Esses Mortgage").
(e) Guaranty. A Commercial Guaranty duly executed by Guarantor in the
substantially the form of "Exhibit H", with blanks appropriately filled in
("Guaranty").
(f) Pledge Agreement. A Security Agreement from CESI, pledging to Lender all of
the issued and outstanding stock of Plainsman, Esses, Xxxx'x and Padko to
Lender, in substantially the form of "Exhibit I" hereto, together with Stock
Powers duly endorsed in blank ("Pledge Agreement"). Said pledge shall grant to
Lender a first, paramount and superior lien on all of the issued and outstanding
common stock of Plainsman, Esses, Xxxx'x and Padko as well as all treasury stock
which has not been cancelled and restored to the status of authorized by
unissued stock.
(g) Life Insurance and Assignment of Life Insurance Policy. As soon as
practical, but in any event within six (6) months from the date of this
Agreement, obtain life insurance in form and with insurance companies acceptable
to Lender on the life of Xxxxx X. Xxxxx in the amount of Two Million and no/100
Dollars ($2,000,000.00), and deliver to Lender a duly executed Assignment of
life Insurance Policy as collateral, assigning to Lender said life insurance
policy, in substantially the form of "Exhibit J" hereto, with blanks
appropriately filled in ("Assignment of Life Insurance Policy"). Borrower shall
obtain and maintain said life insurance on the life of Guarantor during the term
of the Loan and Lender, at lender's option, may apply the proceeds of any
insurance policy to the unpaid balances of any Loan.
(h) Subordination Agreement. Subordination Agreement, duly executed and
acknowledged by all of Stockholders of Xxxx'x and Xxxxx, subordinating their
indebtedness, lien and security interest to the indebtedness of the Loan and the
liens, mortgages and security interest to Lender securing the same, in
substantially the form of "Exhibit K" hereto, with blanks appropriately filled
in ("Subordination Agreement").
(i) Evidence of Insurance. Evidence of Insurance as required below.
(j) Corporate Resolution to Borrow/Grant Collateral. Duly executed Corporate
Resolution to Borrow/Grant Collateral of each Borrower, authorizing the
execution, delivery and performance of this Agreement and the Related Documents
to which Borrower is a party, and of the Documents to be delivered pursuant to
this Agreement in the form of "Exhibit L" hereto, with blanks appropriately
filled in ("Corporate Resolution to Borrow/Grant Collateral"). Said Corporate
Resolution to Borrow/Grant Collateral shall contain a provision wherein each
Borrower has cancelled and restored to the status of authorized but unissued all
treasury stock of each of the Borrower, if any.
(k) Verification of Registration and Good Standing. A duly executed Verification
of Registration and Good Standing of Borrower, and each of them, in the form of
"Exhibit M" hereto, with blanks appropriately filled in ("Verification of
Registration and Good Standing").
(l) Certificate. The following statement shall be true and lender shall have
received a certificate ("Certificate") in the form of "Exhibit N" hereto
attached, with blanks appropriately filled in and documents and signatures
appropriately attached, signed by a duly authorized officers of Borrower, and
each of them, dated the date of this Agreement stating that:
(i) The representations and warranties contained in this Agreement, in the
Related Documents, and in any document or certificate delivered to Lender
hereunder, are correct on and as of the date of this Agreement; and, (ii) No
default or event of default has occurred and is continuing or would result from
the Loan.
(m) Agreement to Provide Insurance. A duly executed Agreement to Provide
Insurance by each Borrower in the form of 'Exhibit O' hereto attached with
blanks appropriately filled in ('Agreement to Provide Insurance').
(n) Related Documents. All approvals, opinions, resolutions, authorizations,
instruments or documents as Lender, or Lenders counsel, may require.
(o) Origination Fee. The origination fee of $26.800.00.
(p) Lender's Attorney Fees. All attorney fees which Lender incurs for the
preparation of this Agreement and the Related Documents and closing of the
transaction contemplated by this Agreement.
Section 2.02. Additional Conditions Precedent. The Obligation of Lender to make
the initial advance and each subsequent advance under this Agreement shall be
subject to the fulfillment to Lenders satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents:
(a) At the time of execution of this Agreement and at the time of each advance,
no Event of Default shall have occurred and be continuing and no events shall
have occurred and be continuing that with giving of notice or passage of time
would be an Event of Default.
(b) The representations and warranties set forth in this Agreement, in the
Related Documents and in any document or certificate delivered to Lender
hereunder are true and correct.
(c) Borrower shall have paid all fees, charges and other expenses which are then
due and payable as specified in this Agreement and in any Related Documents.
(d) No litigation, including without limitation, governmental proceeding, shall
be pending or known to be threatened against Borrower and Guarantor except as
specifically disclosed n Schedule 5 attached.
(e) At the time of the execution of this Agreement and at the time of funding
all actions, proceedings, instruments and documents required to carry out the
transaction contemplated by this Agreement or incident thereto shall be approved
by lender and Lender's counsel.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
Borrower, and each of them, and Guarantor represent and warrant to Lender:
Section 3.01. Corporation in Good Standing and Due Qualification. Borrower, and
each of them, is a corporation duly incorporated, validly existing, and in good
standing under the laws of the State of Oklahoma; has the corporate power and
authority to own its assets and to transact the business in which it is now
engaged or proposed to be engaged in. Borrower, and each of them, is duly
authorized to transact business in all other states in which Borrower, and each
of them, is doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would have
a material adverse effect on its business or financial condition. Borrower has
the full power and authority to own its properties and to transact business in
which it is presently engaged or presently proposes to engage. Borrower, and
each of them, maintain an office as set out in the caption hereof, Unless
Borrower has designated otherwise in writing, the principle office is the office
at which each Borrower keeps its books and records including its records
concerning the Collateral. Borrower, and each of them, will notify Lender of any
change in the location of any principle office. Borrower, and each of them shall
do all things necessary to preserve and to keep in full force and effect its
existence, rights and privileges, and shall comply with all regulations, rules,
ordinances, statutes, orders and decrees of any governmental or
quasi-governmental authority or court applicable to Borrower and Borrower's
business activities. Notwithstanding the above and foregoing representation,
upon thirty (30) days written notice to Lender:
(a) Padko, Plainsman, Esses or Xxxx'x may be merged in to CESI
(b) CESI may acquire all of the assets of and/or all of the issued
and outstanding stock in Xxxxx'x Enterprises, Inc.
("Xxxxx'x");
(c) Xxxxx'x may be merged into CESI
Provided, Borrower and Guarantor will make, execute and deliver to Lender such
promissory notes, mortgages, deeds of trust, security agreements, assignments,
financing statements, instruments, documents and other documents as Lender or
its attorneys may reasonably request to evidence and secure the Loan and to
perfect all Security Interests and will pay any and all costs of Lender,
including reasonable attorney fees in connection therewith.
Section 3.02. Corporate Power and Authority. The execution, delivery and
performance of the terms, covenants and provisions in this Agreement, in the
Related Documents and in any document or certificate delivered to Lender
hereunder by Borrower, and each of them, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) require any consent or approval of the Stockholders of any such corporation;
(b) contravene any corporation's Certificate of Incorporation or By-Laws
including all amendments thereto as of the date hereof:
(c) violate any provisions of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect, have an
applicability to such corporation;
(d) result in a breach of or constitute a default under any indenture or loan or
other credit agreement, or any other agreement, lease or instrument to which
such corporation is a party, or by which it, or its properties, may be bound or
affected;
(e) result in, or require the creation or imposition of any lien, upon or with
respect to any of the properties now owned or hereafter acquired by such
corporation: and,
(f) cause Borrower, or any of them, to be in default under any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award,
or any such indenture, agreement, lease or instrument.
Section 3.03. Legally Enforceable Agreement. This Agreement is, and each of the
Related Documents, when delivered under this Agreement, will be, legal, valid
and binding obligations of Borrower, and each of them, or Guarantor, as the case
may be, enforceable against Borrower, and each of them, or Guarantor, as the
case may be, in accordance with their respective terms.
Section 3.04. Other Agreements. Neither Borrower nor Guarantor is a party to any
Indenture, loan or credit agreement, or to any lease or other agreement or
instrument, or subject to any charter or corporate restriction which could have
a material adverse effect on the business, properties, assets, operations or
conditions, financial or otherwise, of Borrower or Guarantor, or the ability of
Borrower or Guarantor to carry out its obligations under this Agreement or the
Related Documents to which they are a party. Neither Borrower nor Guarantor is
in default in any respect in the performance, observation or fulfillment of any
of the obligations, covenants or conditions contained in any agreement or
instrument material to its business to which it is a party, EXCEPT as herein set
out.
Section 3.05. Litigation and Claims. No litigation, claim, investigation.
administrative proceeding or similar action (including those for unpaid taxes)
against Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or properties,
other than litigation, claims, or other events, if any, that have been disclosed
to and acknowledged by Lender in writing.
Section 3.06. No Default on Outstanding Judgments or Orders. Borrower and
Guarantor have satisfied all judgments, and neither Borrower, nor Guarantor, is
in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court, arbitrator or federal, state, municipal or other
governmental authority, commission, board, bureau, agency or instrumentality,
domestic or foreign.
Section 3.07. Lien Priority. Unless otherwise previously disclosed to lender in
writing, Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or affecting any
of the Collateral directly or indirectly securing repayment of Borrower's Loan
and Note, that would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Section 3.08. Operation of Business. Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks and trade names and the rights
thereto to conduct the respective business substantially as now conducted and as
presently proposed to be conducted, and Borrower is not in violation of any
valid legal rights of others with respect to any of the foregoing.
Section 3.09. Taxes. To the best of Borrower's knowledge, all of Borrower's tax
returns and reports that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith in the
ordinary course of business and for which adequate reserves have been provided.
Section 3.10. Debt. Borrower and Guarantor have furnished to Lender a complete
and correct list of all the credit arrangements, indentures, purchase agreements
and guaranties, leases and other investments, agreements and arrangements
presently in effect providing for or relating to the extension of credit
(including agreements and arrangements for the issuance of letters of credit or
for acceptance financing) in respect of which Borrower and Guarantor is in any
manner directly or incontentionally obligated; the maximum agreed to be given as
security therefor are correctly described and indicated in such document.
Section 3.11. Assumed Business Names. Borrower, and each of them, has filed or
recorded all documents or filings required by law relating to all assumed
business names or trade names used by each Borrower. Excluding the name of
Borrower, the following is a complete list of all assumed business names or
trade names under which Borrower, and each of them, does Business: NONE.
Section 3.12. Financial Information. Each of Borrower's financial statements
supplied to Lender truly and completely disclosed Borrower's financial condition
as of the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Each Borrower has no material contingent
obligations except as disclosed in such financial statements.
Section 3.13. Properties. Except as contemplated by this Agreement or as
previously disclosed in Borrower's financial statements or in writing to Lender
and as accepted by Lender, and except for property tax liens for taxes not
presently due and payable, each Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in each Borrower's legal
name, and each Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Section 3.14. Authorization. Borrower's execution, delivery, and performance of
this Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a violation of,
or constitute a default under (1) any provision of Borrower's articles of
incorporation or organization, or bylaws, or any agreement or other instrument
binding upon Borrower or (2) any law, governmental regulation, court decree, or
order applicable to Borrower or to Borrower's properties.
Section 3.15. Hazardous Substances. Borrower represent and warrants that:
(a) Borrower has complied with and will comply with all Federal, state
and local laws, regulations and orders applicable to any Collateral and
relating to air, water (including surface and groundwater) and land
pollution, and the storage, disposal, use, generation, manufacture,
treatment, disposal, release or threatened release of any Hazardous
Substance of hazardous or toxic materials.
(b) Borrower has no knowledge of, or reason to believe that there has
been (i) any breach or violation of any Environmental Laws applicable
to the Collateral; (ii) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral which would violate
any Federal, state and local laws, regulations and orders by any prior
owners or occupants of any of the Collateral; or (iii) any actual or
threatened litigation or claims of any kind by any person relating to
such matters, (c) Borrower and any tenant, contractor, agent or other
authorized user of any of the Collateral shall comply with all Federal,
state and local laws, regulations and orders applicable to any
Collateral and relating to air, water (including surface and
groundwater) and land pollution, and the storage, disposal, use,
generation, manufacture, treatment, disposal, release or threatened
release of any Hazardous Substance of hazardous or toxic materials.
Borrower authorizes Lender and its agents to enter upon the Collateral to make
such inspections and tests as Lender may deem appropriate to determine
compliance of the Collateral with this section of the Agreement. Any inspections
or tests made by lender shall be at Borrower's expense and for Lender's purposes
only and shall not be construed to create any responsibility or liability on the
part of Lender to Borrower or to any other person. Borrower hereby (i) releases
and waives any future claims against Lender for indemnity or contribution in the
event Borrower becomes liable for cleanup or other costs under any such laws,
and (ii) agrees to indemnity and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which Lender may
directly or indirectly sustain or suffer resulting from a breach of this section
of the Agreement or as a consequence of any use, generation, manufacture,
storage, disposal, release or threatened release of a hazardous waste or
substance on the Collateral. The provisions of this section of the Agreement,
including the obligation to indemnity, shall survive the payment of the
indebtedness and the termination, expiration or satisfaction of this Agreement
and shall not be affected by Lender's acquisition of any interest in any of the
Collateral, whether by foreclosure or otherwise.
ARTICLE IV.
AFFIRMATIVE COVENANTS
So long as the Loan shall remain unpaid, Guarantor and Borrower, and each of
them will:
Section 4.01. Maintenance of Existence. Except as may be specifically set out in
Section 3.01 above, preserve and maintain, and cause each Borrower to preserve
and maintain, its corporate existence and good standing in the jurisdiction of
its incorporation.
Section 4.02. Financial Records. Maintain its books and records in accordance
with GAAP, applied on a consistent basis, and permit Lender to examine and audit
each Borrower's books and records at all reasonable times.
Section 4.03. Maintenance of Properties. Maintain, keep and preserve, and cause
each Borrower to maintain, keep and preserve, all of its properties (tangible
and intangible) necessary or useful in the proper conduct of its business in
good working order and condition, ordinary wear and tear excepted.
Section 4.04. Conduct of Business. Continue, and cause each Borrower to
continue, to engage in an efficient and economical manner in a business of the
same general type as now conducted by it on the date of this Agreement.
Section 4.05. Insurance. Maintain fire and other risk insurance, public
liability insurance, and such other insurance as Lender may require with respect
to each Borrower's properties and operations, in form, amounts, coverages and
with insurance companies acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages
will not be cancelled or diminished without at lest ten (10) days prior written
notice to Lender, Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any way by
any act, omission or default of Borrower or any other person. In connection with
all policies covering assets in which Lender holds or is offered a security
interest for the loan, Borrower will provide Lender with such lender's loss
payable or other endorsements as Lender may require.
Section 4.06. Compliance with Governmental Requirements. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all governmental
authorities applicable to the conduct of Borrower's properties, businesses and
operations, and to the use or occupancy of the Collateral, including without
limitation, the Americans With Disabilities Act, where applicable. Borrower may
contest in good faith any such law, ordinance, or regulation and withhold
compliance during any proceeding, including appropriate appeals, so long as
Borrower has notified lender in writing prior to doing so and so long as, in
lender's sole opinion, Lender's interests in the Collateral are not jeopardized.
Lender may require Borrower to post adequate security or a surety bond,
reasonably satisfactory to Lender, to protect Lender's Interest.
Section 4.07. Inspection. Permit employees or agents of Lender at any reasonable
time to inspect any and all Collateral for the loan or loans and Borrower's
other properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.
Section 4.08. Reporting Requirements. Furnish to Lender:
(a) Monthly Financial Statements. As soon as available and in any event
within fifteen (15)days after the end of each month in each fiscal year
of each Borrower, balance sheets of Borrower as of the end of such
month, statements of income and retained earnings of Borrower for the
period commencing at the end of the previous fiscal year and ending
with the end of such month, all in reasonable detail and all prepared
in accordance with GAAP consistently applied and certified by the chief
financial officer of Borrower (subject to year-end adjustments). As
soon as available after the end of each fiscal year, but in no event
later than thirty (30) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended,
prepared by Borrower.
(b) Notices of Claims and Litigation. Promptly inform Lender in writing
of (1) all material adverse changes in Borrower's financial condition,
and (2) all existing and all threatened litigation, claims,
investigations, administrative proceedings or similar actions affecting
Borrower or any Guarantor which could materially affect the financial
condition of Borrower or the financial condition of any Guarantor.
(c) Notice of Defaults and Events of Default. As soon as possible and
in any event within fifteen (15) days after the occurrence of each
Default or Event of Default, a written notice setting forth the details
of such Default or Event of Default and the action which is proposed to
be taken by Borrower with respect thereto.
(d) Reports to Other Creditors. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other party pursuant
to the terms of any indenture, loan or credit or similar agreement and
not otherwise required to be furnished to Lender pursuant to any other
clause of this Section 4.08.
(e) Tax Returns. As soon as available after the applicable filing date
for the tax reporting period ended, Federal and other governmental tax
returns, prepared by a tax professional reasonably satisfactory to
Lender.
(f) Insurance Reports. Upon request of Lender, reports on each
existing insurance policy showing such information as Lender
may reasonably request, including without limitation the following:
(i) the name of the insurer;
(ii) the risks insured;
(iii) the amount of the policy;
(iv) the properties insured;
(v) the then current property values on the basis of
which Insurance has been obtained, and the manner of
determining those values; and
(vi) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually).
Borrower will have an independent appraiser satisfactory to
lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal
shall be paid by Borrower.
(g) Compliance Certificates. Unless waived in writing by Lender,
provide lender at least annually, with a certificate executed by
Borrower's chief financial officer, or other officer or person
acceptable to Lender, certifying that the representations and
warranties set forth in this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of
the certificate, no Event of Default exists under this Agreement.
(h) Additional Information. Furnish such additional information and
statements, as Lender may request from time to time.
All financial reports required to be provided under this Agreement shall be
prepared in accordance with GAAP, applied on a consistent basis, and certified
by Borrower as being true and correct.
Section 4.09. Guaranties. Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loan in favor of Lender, executed by Guarantor named
below, on Lender's forms, and in the amount and under the conditions set forth
in those guaranties.
Name of Guarantor: Xxxxx X. Xxxxx
Amount: Unlimited
Section 4.10. Other Agreements. Comply with all terms and conditions of all
other agreements, whether now or hereafter existing, between Borrower and any
other party and notify lender immediately in writing of any default in
connection with any other such agreements.
Section 4.11. Loan Proceeds: Use all Loan proceeds solely for Borrower's
business operations, unless contrary by Lender in writing.
Section 4.12. Taxes, charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid, might become a
lien or charge upon any of Borrower's properties, income, or profits.
Section 4.13. Performance. Perform and comply, in a timely manner, with all
terms, conditions, and provisions set forth in this Agreement, in the Related
Documents, and in all other instruments and agreements between Borrower and
Lender. Borrower shall notify Lender immediately in writing of any default in
connection with any agreement.
Section 4.14. Operations. Maintain executive and management personnel with
substantially the same qualifications and experience as the present executive
and management personnel; provide written notice to lender of any change in
executive and management personnel; conduct its business affairs in a reasonable
and prudent manner.
Section 4.15. Environmental Studies. Promptly conduct and complete, at
Borrower's expense, upon demand from lender after receipt of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity, all such investigations, studies, samplings and testings
as may be requested by lender or any governmental authority relative to any
substance, or any waste or by-product of any substance defined as toxic or a
hazardous substance under applicable federal, state, or local law, rule,
regulation, order or directive, at or affecting any property or any facility
owned, leased or used by Borrower.
Section 4.16. Environmental Compliance and Reports. Comply in all respects with
any and all Environmental Laws; and furnish to Lender promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any governmental
agency or instrumentality concerning any intentional or unintentional action or
omission on Borrower's part in connection with any environmental activity
whether or not there is damage to the environment and/or other natural
resources.
Section 4.17, Maintenance of Bank Accounts. As a further means of enabling
Lender to be fully cognizant of the financial condition of each Borrower,
Borrower agrees to maintain all deposit accounts with Lender during the term of
this Agreement.
Section 4,18. Life Insurance. As set forth in Section 2.01 (g),obtain and
maintain life insurance in form and with insurance companies acceptable to
Lender on Xxxxx X. Xxxxx in the amount indicated in Section 2.01 above, and at
Lender's option, cause such insurance policy or policies to be pledged, made
payable to, or assigned to Lender on Lender's forms. Lender, at Lender's option,
may apply the proceeds of any insurance policy to the unpaid balances of any
Loan.
ARTICLE V.
NEGATIVE COVENANTS
So long as the Loan shall remain unpaid, Guarantor and each Borrower will not,
without the prior written consent of Lender:
Section 5.01. Indebtedness and Liens.
(a) Create, incur or assume indebtedness for borrowed money, including
capital leases except: (i) trade debt incurred in the normal course of
business, (ii) indebtedness to Lender contemplated by this Agreement,
(iii) CESI promissory notes to Xxx X. Xxxx, Xxxx Xxxx Xxxxxx and Xxxx
E, Xxxxxx in connection with CESI's acquisition of Xxxx'x and Xxxxx,
and (iv) CESI promissory notes to the stockholders of Xxxxx'x in
connection with the acquisition of Xxxxx'x as set forth in Section 3.01
above, (v) Guaranty of Guarantor to First Bank & Trust Co, Duncan,
Oklahoma on the purchase of real property used by Xxxxx'x,
(b) Sell, transfer, mortgage, assign, pledge, lease, grant a security
interest in, or encumber any of Borrower's assets (except as allowed as
Permitted Liens), or
(c) Sell with recourse any of Borrower's accounts, except to Lender.
Section 5.02. Continuity of Operations.
(a) Engage in any business activities substantially different than those in
which Borrower is presently engaged.
(b) Except as may be specifically set out in Section 3.01 above, cease
operations, liquidate, merge, transfer, acquire or consolidate with
any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (c) Except actions
required of Borrower under employment agreements, executed copies of which
Borrower has delivered to Lender herewith, pay any dividends on Borrower's
stock (other than dividends payable in its stock), provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends,
if Borrower is a 'Subchapter S Corporation' (as defined in the Internal
Revenue Code of 1986, as amended), Borrower may pay cash dividends on its
stock to its shareholders from time to time in amounts necessary to enable
the shareholders to pay income taxes and make estimated income tax
payments to satisfy their liabilities under federal and state law which
arise solely from their status as Shareholders of a Subchapter S
Corporation because of their ownership of shares of Borrower's stock, or
purchase or retire any of Borrower's outstanding shares or alter or amend
Borrower's capital structure.
Section 5.03. Loans, Acquisitions and Guaranties.
(a) Loan, invest in or advance money or assets.
(b) Except as may be specifically set out in Section 3.01 above,
purchase, create or acquire any interest in any other enterprise or
entity, or (c) Incur any obligation as surety, endorser or guarantor other
than in the ordinary course of business.
ARTICLE VI.
EVENTS OF DEFAULT
Section 6.01. Event of Default. Each of the following shall constitute events
of default ("Event of Default") under the Agreement:
(a) Payment Default. Any Borrower fails to make any payment when due under
the Loan.
(b) False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement, the Note, or the Related Documents is false or misleading in
any material respect, either now or at the time made or furnished or
becomes false or misleading at any time thereafter.
(c) Other Defaults. Any Borrower falls to comply with or to perform any
other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents or to comply with or to
perform any term, obligation, covenant or condition contained in any
other agreement between Lender and Borrower.
(d) Default in Favor of Third Parties. Any Borrower or any Grantor defaults
under any loan, extension of credit, security agreement, purchase or
sales agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's or any Grantor's
property or Borrower's or any Grantor's ability to repay the Loan or
perform their respective obligations under this Agreement or any of the
Related Documents.
(e) Insolvency. The dissolution or termination of the existence as a going
business of any Borrower, the insolvency of any Borrower, the
appointment of a receiver for any part of Borrower's property, any
assignment for the benefit of creditors, any type of creditor workout,
or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against any Borrower.
(f) Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of any Borrower or by
any governmental agency against any collateral securing the Loan, this
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply
if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower gives Lender written notice of
the creditor or forfeiture proceeding and deposits with Lender monies
or a surety bond for the creditor or forfeiture proceeding, in an
amount determined by Lender, in its sole discretion, as being an
adequate reserve or bond for the dispute.
(g) Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of
any collateral document to create a valid and perfected security
interest or lien) at any time and for any reason.
(h) Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the indebtedness. In the event of a
death, Lender, at its option, may, but shall not be required to, permit
Guarantor's estate to assume unconditionally the obligations arising
under the guaranty in a manner satisfactory to Lender, and, in doing
so, cure any Event of Default.
(i) Chance in Ownership. Any change in ownership of twenty-five percent
(25%) or more of the common stock of any Borrower, except for issuance
of additional stock in CESI in connection with the purchase of Xxxxx'x
as set forth in section 3.01 above after notice to Lender and the
execution and delivery by Borrower of any additional loan payments.
(j) Adverse Change. A material adverse change occurs in the consolidated
financial condition of Borrower, or Lender believes the prospect of
payment or performance of the Loan is impaired.
Section 6.02. Right to Cure. If any default, other than a default on
indebtedness, is curable and if Borrower or Grantor, as the case may be, has not
been given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if Borrower
or Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default (a) cure the default within thirty (30) days: or
(b) if the cure requires more than thirty (30) days, immediately initiate steps
which Lender deems in Lender's sole discretion to be sufficient to cure the
default and thereafter continue and complete all reasonable and necessary steps
sufficient to produce compliance as soon as reasonably practical.
Section 6.03. Cessation of Advances. If Lender has made any commitment to make
any Loan to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that Borrower
or any Guarantor has with Lender: (B) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there occurs a materiel adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender.
Section 6.04. Right of Setoff. To the extent permitted by applicable law, Lender
reserves a right of setoff in all Borrower's accounts with Lender (whether
checking, savings, or some other account). This includes all accounts Borrower
holds jointly with someone else and all accounts Borrower may open in the
future. However, this does not include any XXX or Xxxxx accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the indebtedness against any and all such accounts, and, at lender's
option, to administratively freeze all such accounts to allow lender to protect
Lander's charge and setoff rights provided in this paragraph.
Section 6.05. Effect of an Event of Default. If any Event of Default shall
occur, except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of lender under this Agreement or the
Related Documents or any other agreement immediately will terminate (including
any obligation to make further Loan Advances or disbursements), and, at Lender's
option, all indebtedness immediately will become due and payable, all without
notice of any kind to Borrower, except that in the case of an Event of Default
of the type described in the "Insolvency" subsection above, such acceleration
shall be automatic and not optional.
Section 6.06. Selective Enforcement. In the event Lender shall elect to
selectively and successively enforce Lender's rights under any one or more of
the Related Documents, which action shall not be deemed a waiver or discharge of
any other lien or encumbrance securing payment of the indebtedness. The
acceptance by Lender at any time, and from time to time, of partial payments on
the indebtedness shall not be deemed to be a waiver of any default then
existing. No waiver by Lender of any default shall be deemed to be a waiver of
such other then existing or subsequent default.
Section 6.07. Cumulative Rights. All rights and remedies available to Lender
under this Agreement or under any provision of the Related Documents shall be
cumulative of and in addition to all other rights and remedies granted to
Lender, at law or in equity.
ARTICLE VII.
DEFINITIONS
The following capitalized words and terns shall have the following meanings when
used in this Agreement. Unless specifically stated to the contrary, all
references to dollar amounts shall mean amounts in lawful money of the United
States of America. Words and terns used in the singular shall include the
plural, and the plural shall include the singular, as the context may require.
Words and terms not otherwise defined in this Agreement shall have the meanings
attributed to such terms in the Uniform Commercial Code. Accounting words and
terms not otherwise defined in this Agreement shall have the meanings assigned
to them in accordance with generally accepted accounting principles as in effect
on the date of this Agreement:
Section 7.01. Advance. The word "Advance" means a disbursement of Loan funds
made, or to be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.
Section 7.02. Agreement The word "Agreement" means this Business Loan Agreement,
as this Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Section 7.03. Borrower. The word "Borrower" means Chemical and Equipment
Specialties, Inc. ("CESI"}. Padko International, Incorporated ("Padko"), Esses,
Inc. ("Esses"), Xxxx'x Technology, Inc. ("Xxxx'x") and Plainsman Technology,
Inc.("Plainsman"), and all other persons and entities signing the Note in
whatever capacity.
Section 7.04. Collateral. The word "Collateral" means all property and assets
granted as collateral security for a Loan, whether real or personal property,
whether granted directly or indirectly, whether granted now or in the future,
and whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chatte1 mortgage,
collateral chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien, charge, lien or tide retention contract,
lease or consignment intended as a security device, or any other security or
lien interest whatsoever, whether created by law, contract, or otherwise.
Section 7.05. Environmental laws. The words "Environmental Laws" mean any and
all state, federal and local statutes, regulations and ordinances relating to
the protection of human health or the environment, including without limitation
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"), the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or
other applicable state or federal laws, rules, or regulations adopted pursuant
thereto.
Section 7.06. Event of Default. The words "Event of Default" mean any of the
events of default set forth in this Agreement in the default section of this
Agreement.
Section 7.07. GAAP. The word "GAAP" means generally accepted accounting
principles.
Section 7.08. Grantor. The word "Grantor" means each and all of the persons or
entities granting a Security Interest in any Collateral for the Loan, including
without limitation all Borrowers granting such a Security Interest.
Section 7.09. Guarantor. The word "Guarantor" means Xxxxx X. Xxxxx and any
guarantor, surety, or accommodation party of any or all of the loan.
Section 7.10. Guaranty. The word "Guaranty" means the guaranty from Guarantor to
Lender, including without limitation a guaranty of all or part of the Note.
Section 7.11. Hazardous Substances. The words "Hazardous Substances" mean
materials that, because of their quantity, concentration or physical, chemical
or infectious characteristics, may cause or pose a present or potential hazard
to human health or the environment when improperly used, treated, stored,
disposed of, generated, manufactured, transported or otherwise handled. The
words "Hazardous Substances" are used in their very broadest sense and include
without limitation any and all hazardous or toxic substances, materials or waste
as defined by or listed under the Environmental laws. The term "Hazardous
Substances" also includes, without limitation, petroleum and petroleum
by-products or any fraction thereof and asbestos.
Section 7.12. Indebtedness. The word "Indebtedness" means the indebtedness
evidenced by the Note or Related Documents, including all principal and interest
together with all other indebtedness and costs and expenses for which Borrower
is responsible under this Agreement or under any of the Related Documents.
Section 7.13. Lender. The word "Lender" means Legacy Bank. Its successors and
assigns.
Section 7.14. Loan. The word "Loan" means the Loan described in Article I and
any and all loans and financial accommodations from Lender to Borrower whether
now or hereafter existing, and however evidenced, including without limitation
those loans and financial accommodations described herein or described on any
exhibit or schedule attached to this Agreement from time to time.
Section 7.15. Note. The word "Note" means the Note described in Section 1.03,
together with all renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.
Section 7.16. Permitted liens. The words "Permitted Liens" mean (a) liens and
security interests securing indebtedness owed by Borrower to Lender: (b) liens
for taxes, assessments, or similar charges either not yet due or being contested
in good faith; (c) liens of materialmen, mechanics, warehousemen, or carriers,
or other like liens arising in the ordinary course of business and securing
obligations which are not yet delinquent; (d) purchase money liens or purchase
money security interests upon or in any property acquired or held by Borrower in
the ordinary course of business to secure indebtedness outstanding on the date
of this Agreement or permitted to be incurred under the paragraph of this
Agreement titled "Indebtedness and Liens", (e) liens and security interests
which, as of the date of this Agreement, have been disclosed to and approved by
Lender in writing; and (f) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
Section 7.17. Related Documents. The words "Related Documents" mean the
documents set forth in Section 2.01 and all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, security deeds, collateral mortgages, and all other
instruments, agreements and documents, whether now or hereafter existing,
executed in connection with the loan.
Section 7.18. Security Agreement, The words "Security Agreement" mean and
include without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security Interest.
Section 7.19. Security Interest. The words "Security Interest" mean, without
limitation, any and all types of collateral security, present and future,
whether in the form of a lien, charge, encumbrance, mortgage, deed of trust,
security deed, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor's lien, equipment trust, conditional
sale, trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest whatsoever
whether created by law, contract, or otherwise.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Construction. The provisions of this Agreement shall be in
addition to those of loan document held by Lender, all of which shall be
construed as complementary to each other. Nothing herein contained shall prevent
lender from enforcing any or all Related Documents in accordance with their
respective terms.
Section 8.02. Further Assurance. From time to time, Borrower and Guarantor will
make, execute and deliver to Lender such promissory notes, mortgages, deeds of
trust, security agreements, assignments, financing statements, instruments,
documents and other agreements as Lender or its attorneys may reasonably request
to evidence and secure the Loan and to perfect all Security interests.
Section 8.03. No Waiver by Lender. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in writing and signed by
Lender. No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or any
other provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's rights or of any of Borrower's or any
Grantors obligations as to any future transactions. Whenever the consent of
Lender is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
Section 8.04. Attorneys' Fees; Expenses. Borrower agrees to pay upon demand all
of Lender's costs and expenses, including Lender's reasonable attorneys' fees
and Lender's legal expenses, incurred in connection with the enforcement of this
Agreement. Lender may hire or pay someone else to help enforce this Agreement,
and Borrower shall pay the costs and expenses of such enforcement. Costs and
expenses include Lender's attorneys' fees and legal expenses whether or not
there is a lawsuit, including attorneys' fees and legal expenses for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services.
Borrower also shall pay all court costs and such additional fees as may be
directed by the court.
Section 8.05. Notices. To the extent permitted by applicable law, any notice
required to be given under this Agreement shall be given in writing, and shall
be effective when actually delivered, when actually received by telefacsimile
(unless otherwise required by law), when deposited with a nationally recognized
overnight courier, or, if mailed, when deposited in the United States mail, as
first class, certified or registered mail postage prepaid. directed to the
addresses shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice to the
other parties, specifying that the purpose of the notice is to change the
party's address. For notice purposes, Borrower and Guarantor agree to keep
Lender informed at all times of their current addresses. To the extent permitted
by applicable law, if there is more than one Borrower, any notice given by
Lender to any Borrower is deemed to be notice given to all Borrowers.
Section 8.06. Notification by Borrower. Borrower and Guarantor will notify
Lender immediately if any of them become aware of the occurrence of any Event of
Default or of any fact, condition or event that only with the giving of notice
or passage of time, or both, could become an Event of Default, or of the failure
of Borrower to Observe any of its respective undertakings hereunder.
Section 8.07. Survival of Representations and Warranties. Borrower and Guarantor
understand and agree that in making the Loan, Lender is relying on all
representations, warranties, and covenants made by Borrower and Guarantor in
this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement or the Related Documents. Borrower and Guarantor
further agree that regardless of any investigation made by Lender, all such
representations, warranties and covenants will survive the making of the Loan
and delivery to Lender of the Related Documents, shall be continuing in nature,
and shall remain in full force and effect until such time as Borrower's
indebtedness shall be paid in full, or until this Agreement shall be terminated
in the manner provided above, whichever is the last to occur.
Section 8.08. Successors and Assigns. All covenants and agreements contained by
or on behalf of Borrower shall bind Borrower's successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower shall
not, however, have the right to assign Borrowers rights under this Agreement or
any interest therein, without the prior written consent of Lender.
Section 8.09. 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.
Section 8.10. Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. All prior and contemporaneous
representations and discussions concerning such matters either are included in
this document or do not constitute an aspect of the agreement of the parties.
Except as may be specifically set forth in this Agreement, no conditions
precedent or subsequent, of any kind whatsoever, exist with respect to
Borrower's obligations under this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.
Section 8.11. Right of Setoff. To the extent permitted by applicable law, lender
reserves a right of setoff in all Borrower's accounts with lender (whether
checking, savings, or some other account). This includes all accounts Borrower
holds jointly with someone else and all accounts Borrower may open in the
future. However, this does not include any XXX or Xxxxx accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the indebtedness against any and all such accounts, and, at Lender's
option, to administratively freeze all such accounts to allow Lender to protect
lender's charge and setoff rights provided in this paragraph.
Section 8.12. Governing Law. This Agreement will be governed by, construed and
enforced in accordance with federal law and the laws of the State of Oklahoma.
This Agreement has been accepted by Lender in the State of Oklahoma.
Section 8.13. Severability. If a court of competent jurisdiction finds any
provision of this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal, valid
and enforceable. If the offending provision cannot be so modified, it shall be
considered deleted from this Agreement. Unless otherwise required by law, the
illegality, invalidity, or unenforceability of any provision of this Agreement
shall not affect the legality, validity or enforceability of any other provision
of this Agreement.
Section 8.14. Caption Headings. Caption headings in this Agreement are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Agreement.
Section 8.15. Consent to loan Participation. Borrower agrees and consents to
lender's sale or transfer, whether now or later, of one or more participation
interests in the loan to one or more purchasers whether related or unrelated to
Lender. Lender may provide, without any limitation whatsoever, to anyone or more
purchasers, or potential purchasers, any information or knowledge Lender may
have about Borrower or about any other matter relating to the loan, and Borrower
hereby waives any rights to privacy Borrower may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the loan and will have all the rights granted under the
participation agreement or agreements governing the sale of such participation
interests. Borrower further waives all rights of offset or counterclaim that it
may have now or later against Lender or against any purchaser of such a
participation interest and unconditionally agrees that either Lender or such
purchaser may enforce Borrower's obligation under the loan irrespective of the
failure or insolvency of any holder of any interest in the loan. Borrower
further agrees that the purchaser of any such participation interests may
enforce its interests irrespective of any personal claims or defenses that
Borrower may have against lender.
Section 8.16. Lender's Expenditures. If any action or proceeding is commenced
that would materially affect Lender's interest in the Collateral or if Borrower
fails to comply with any provision of this Agreement or any Related Documents,
including but not limited to Borrower's failure to discharge or pay when due any
amounts Borrower is required to discharge or pay under this Agreement or any
Related Documents, lender on Borrower's behalf may (but shall not be obligated
to) take any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral. All such
expenditures incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note including any default interest rate,
from the date incurred or paid by Lender to the date of repayment by Borrower.
All such expenses will become a part of the indebtedness and, at Lender's
option, will (A) be payable on demand; (B) be added to the balance of the Note
and be apportioned among and be payable with any installment payments to become
due during either (1) the term of any applicable insurance policy: or (2) the
remaining term of the Note: or (c) be treated as a balloon payment which will be
due and payable at the Note's maturity. If Lender is required by law to give
Borrower notice before or after Lender makes an expenditure, Borrower agrees
that notice sent by regular mail at least five (5) days before the expenditure
is made or notice delivered two (2) days before the expenditure is made is
sufficient, and that notice within sixty (60) days after the expenditure is made
is reasonable.
Section 8.17. Binding Effect. This Agreement, the Note, all Security Agreements
(if any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms.
Section 8.18. Time is of the Essence. Time is of the essence in the performance
of this Agreement.
Section 8.19. Cessation of Advances. If Lender has made any commitment to make
any Loan to Borrower, whether under this Agreement or under any other agreement,
Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (a) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that Borrower
or any Guarantor has with Lender; (b) Borrower or any Guarantor dies, becomes
incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse
change in Borrower'sfinancial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (d) any
Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the loan or any other loan with Lender.
Section 8.20. Multiple Borrower's: This Agreement has been executed by multiple
obligors who are referred to in this Agreement individually, collectively and
interchangeably as "Borrower". Unless specifically stated to the contrary, the
word "Borrower" as used in this Agreement, including without limitation all
representations, warranties and covenants, shall include all Borrowers. Borrower
understands and agrees that, with or without notice to any one Borrower, lender
may (A) make one or more additional secured or unsecured loans or otherwise
extend additional credit with respect to any other Borrower; (B) with respect to
any other Borrower alter, compromise, renew, extend, accelerate, or otherwise
change one or more times the time for payment or other terms of any
indebtedness, including increases and decreases of the rate of interest on the
indebtedness; (C) exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any security, with or without the substitution of new
collateral: (D) release, substitute, agree not to xxx, or deal with any one or
more of Borrower's or any other Borrower's sureties, endorsers, or other
guarantors on any terns or in any manner Borrower may choose; (E) determine how,
when and what application of payments and credits shall be made on any
indebtedness; (F) apply such security and direct the order or manner of sale of
any Collateral, including without limitation, any non-judicial sale permitted by
the terms of the controlling security agreement or deed of trust, as Lender in
its discretion may determine; (G) sell, transfer, assign or grant participations
in all or any part of the Loan; (H) exercise or refrain from exercising any
rights against Borrower or others, or otherwise act or refrain from acting; (I)
settle or compromise any indebtedness; and (J) subordinate the payment of all or
any part of any of Borrower's indebtedness to Lender to the payment of any
liabilities which may be due Lender or others.
Section 8.21. Term. This Agreement shall be effective as of January 23, 2001,
and shall continue in full force and effect until such time as all of Borrower's
Loans in favor of Lender have been paid in full, including principal, interest,
costs, expenses, attorneys' fees, and other fees and charges, or until such time
as the parties may agree in writing to terminate this Agreement.
Section 8.22. Schedules and Exhibits. Any and all exhibits are hereby expressly
incorporated by reference as though fully set forth at that point verbatim. All
terms and provisions as defined or set forth herein and in Schedule are hereby
incorporated into and made a part of this Agreement. Any term used herein which
is not defined shall have the meanings ascribed to such terms, as of the date of
this Agreement, by the Uniform Commercial Code as enacted and amended, to the
extent the same are defined therein.
BORROWER AND GUARANTOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
BUSINESS LOAN AGREEMENT AND AGREE TO ITS TERMS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
CHEMICAL AND EQUIPMENT SPECIALTIES, INC., an Oklahoma corporation
By /s/ Xxxxx X. Xxxxx, President
By /s/ Xxx X. Xxxxxx, Chief Financial Officer
Address:
3109 Stagestand
Xxxxxx, Xxxxxxxx 00000
LEGACY BANK
By /s/ Authorized Signer
Address:
Legacy Bank Duncan North Branch
Post Office Box 1109
0000 X. Xxxxxxx 00
Xxxxxx, Xxxxxxxx 00000-0000
