EXHIBIT 10.8
[LOGO FIRST NATIONAL BANK
OF OMAHA]
RESTATED REVOLVING LOAN AND
SECURITY AGREEMENT
THIS RESTATED REVOLVING LOAN AGREEMENT, dated April 30, 2000, by and
between M-TRON INDUSTRIES, a South Dakota corporation (the "Borrower") and FIRST
NATIONAL BANK OF OMAHA, a national banking association with principal business
offices in Omaha, Nebraska ("Bank").
In consideration of the promises herein contained, and each intending
to be legally bound thereby, the parties agree as follows:
SECTION I. DEFINITIONS AS USED HEREIN:
1. "Accounts", "Chattel Paper", "Contracts", "Documents" "Equipment",
"Fixtures", "General Intangibles", "Goods", "Instruments", and "Inventory" shall
have the same respective meanings as are given to those terms in the Uniform
Commercial Code as presently adopted and in effect in the State of Nebraska.
2. "ACCOUNTING" Accounting terms used and not otherwise defined in this
AGREEMENT have the meanings determined by, and all calculations with respect to
accounting or financial matters unless otherwise provided herein be computed in
accordance with, GAAP.
3. "AFFILIATE" means as to any PERSON, each other PERSON that directly,
or indirectly through one or more intermediaries, controls, or is controlled by,
or under common control with, such PERSON.
4. "AGREEMENT" means this AGREEMENT, as the same may from time to time
be amended or supplemented.
5. "BORROWING BASE" means, at any time, the amount computed as Total
Borrowing Base on the BORROWING BASE CERTIFICATE most recently delivered to, and
accepted by, the BANK in accordance with this AGREEMENT, and equal to the lesser
of:
A. $3,700,000.00; or
B. an amount equal to the sum of the aggregate of (1) 80% of
ELIGIBLE ACCOUNTS of the BORROWER and (2) 50% of INVENTORY of the
BORROWER; provided, however, such aggregate shall contain no more than
$1,500,000.00 attributable to INVENTORY.
6. "BORROWING BASE CERTIFICATE" means a fully completed certificate in
the form of Exhibit A to this AGREEMENT certified by the President or Principal
Financial Officer of the BORROWER to be correct and delivered to, and accepted
by, the BANK.
7. "COLLATERAL" has the meaning given to such term in Section IV.
8. "COLLATERAL DOCUMENTS" means the note, security agreement, financing
statements and other documents required by BANK as set forth herein, together
with any real estate mortgage documents used in this transaction.
9. "CONSOLIDATED CURRENT ASSETS" and "CONSOLIDATED CURRENT LIABILITIES"
mean, at any time, all assets or liabilities, respectively, that should, in
accordance with GAAP, be classified as current assets or current liabilities
respectively, on a balance sheet of the BORROWER;
10. "CONSOLIDATED FIXED ASSETS" means, at any time, all assets (other
than CONSOLIDATED CURRENT ASSETS) that should, in accordance with GAAP, be
classified as assets on a balance sheet of the BORROWER.
11. "CONSOLIDATED LIABILITIES" means all INDEBTEDNESS that, in
accordance with GAAP, should be classified as liabilities on a balance sheet of
the BORROWER.
12. "CONSOLIDATED NET WORKING CAPITAL" means, at any time, the amount
by which CONSOLIDATED CURRENT ASSETS exceed CONSOLIDATED CURRENT LIABILITIES.
13. "CONSOLIDATED TANGIBLE NET WORTH" means, at any time, Stockholders'
Equity, less the sum of:
A. Any surplus resulting from any write-up of assets
subsequent to December 31, 1986;
B. Goodwill, including any amounts, however designated on a
balance sheet of the BORROWER, representing the excess of the purchase
price paid for assets or stock acquired over the value assigned thereto
on the books of the BORROWER;
C. Any amount reflecting value of patents, trademarks, trade
names, and copyrights.
D. Any amount at which shares of capital stock of the BORROWER
appear as an asset on the BORROWER's balance sheet;
E. Loans and advances to stockholders, directors, officers,
employees, or affiliates;
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F. Deferred expenses; and
G. Any other amount in respect of an intangible that should be
classified as an asset on a balance sheet of the BORROWER in accordance
with GAAP.
14. "ELIGIBLE ACCOUNT" means, at any time, an Account that conforms and
continues to conform to the following conditions:
A. The Account arose from a bona fide outright sale of goods
by the BORROWER or from services performed by the BORROWER and such
Goods have been shipped to the appropriate account debtors of their
designees (or the sale has otherwise been consummated), or the services
have been performed for the appropriate account debtors;
B. The Account is due and payable not more than 60 days from
the date of the invoice therefor;
C. The Account has not remained unpaid in excess of 61 days
from date of invoice.
D. The BORROWER has not received any notice of the filing of a
petition in bankruptcy or insolvency laws by or against, the account
debtor. Upon the receipt by the BORROWER of any such notice, it will
immediately give the BANK written advice thereof;
E. The account debtor is not a subsidiary or other AFFILIATE
of the BORROWER; and
F. The BANK, upon the sound exercise of its banking judgment
in the ordinary course of business, has not deemed such account
ineligible because of uncertainty about the credit worthiness of the
account debtor or because the BANK otherwise considers the collateral
value thereof to the BANK to be impaired or its ability to realize such
value to be insecure.
In the event of any dispute, under the foregoing criteria, about
whether an Account is or has ceased to be an ELIGIBLE ACCOUNT the
decision of the BANK shall control.
15. "EQUIPMENT" means all of BORROWER's goods and equipment of every
type and description, now owned without limiting the generality of the
foregoing, all machinery, furniture, furnishings, fixtures, supplies, and tools,
together with all parts and accessories of or to any of the foregoing, and all
of BORROWER's tangible property, and all products and proceeds of all the
foregoing.
16. "EVENT OF DEFAULT" has the meaning provided for in
Section VII.
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17. "FINANCIAL STATEMENTS" means the internally prepared balance sheet
and income statement of the BORROWER as of December 31, 1999 and statements of
income, stockholder's equity, and changes in financial position, and notes
thereto, of the BORROWER for the years or, as appropriate, month ended on such
dates as reviewed by independent certified public accountants of recognized
standing to present fairly the consolidated financial position and results of
operations of the BORROWER at such dates and for such periods in accordance with
GAAP.
18. "GAAP" means generally accepted accounting principles applied
consistently as was done in the preparation of the FINANCIAL STATEMENTS with
such changes or modifications hereto as may be approved in writing by the BANK.
19. "INDEBTEDNESS" means, as to the BORROWER, all items of
indebtedness, obligation or liability, whether matured or unmatured, liquidated
or unliquidated, direct or contingent, joint or several, including, but without
limitation:
A. All INDEBTEDNESS guaranteed, directly or indirectly, in any
manner, or endorsed (other than for collection or deposit in the
ordinary course of business) or discounted with recourse;
B. All INDEBTEDNESS in effect guaranteed, directly or
indirectly, through agreements, contingent or otherwise: (1) To
purchase such INDEBTEDNESS; or (2) to purchase, sell, or lease (as
lessee or lessor) property, products, materials, or supplies or to
purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such INDEBTEDNESS or to insure the owner of
the INDEBTEDNESS against loss;
C. All INDEBTEDNESS secured by (or for which the holder of
such INDEBTEDNESS has a right, contingent or otherwise, to be secured
by any mortgage, deed of trust, pledge, lien, security interest, or
other charge or encumbrance upon property owned or acquired subject
thereto, whether or not the liabilities secured thereby have been
assumed; and
D. All INDEBTEDNESS incurred as the lessee of goods or
services under leases that, in accordance with GAAP, should not be
reflected on the lessee's balance sheet.
20. "INVENTORY" shall mean any and all goods, merchandise, and other
property now owned or hereafter acquired by BORROWER which are held for sale or
lease, furnished under any contract of service or held as raw materials, work in
process, supplies or materials used or consumed in BORROWER's business, and
valued at lower of cost or market.
21. "LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs, or decrees of any government or political subdivision or
agency thereof, or of any court or similar entity established by any thereof.
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22. "LOAN TERMINATION DATE" means the earliest to occur of the
following: (i) April 30, 2001, (ii) the date the obligations are accelerated
pursuant to this AGREEMENT, and (iii) the date BANK receives (a) notice in
writing from BORROWER of BORROWER's election to terminate this AGREEMENT and (b)
indefeasible payment in full of the OBLIGATIONS, or such other date as may later
be agreed to by BANK and BORROWER in a written amendment to this AGREEMENT.
22. "NOTE" or "NOTES" means any and all of the promissory notes
referred to in Section II hereof.
23. "OBLIGATIONS" means the obligation of the BORROWER:
A. To pay the principal of, and interest on, any promissory note
in accordance with the terms thereof and to satisfy all of its other
liabilities to the BANK, whether hereunder or otherwise, whether now
existing or hereafter incurred, matured or unmatured, direct or
contingent, joint or several, including any extensions,
modifications, renewals thereof, and substitutions therefor and
including, but not limited to, any obligations under letter of
credit agreements.
B. To repay to the BANK all amounts advanced by the BANK
hereunder or otherwise on behalf of the BORROWER, including, but
without limitation, advances for principal or interest payments to
prior secured parties, mortgagees or licensors, or taxes, levies,
insurance, rent, or repairs to, or maintenance or storage of, any of
the COLLATERAL; and
C. To reimburse the BANK, on demand, for all of the BANK's
expenses and costs, including the reasonable fees and expenses of its
counsel, in connection with the preparation, administration, amendment,
modification, or enforcement of this AGREEMENT and the documents
required hereunder, including, without limitation, any proceeding
brought or threatened, to enforce payment of any of the OBLIGATIONS
referred to in the foregoing Paragraphs A and B.
24. "PERMITTED LIENS" means:
A. Liens for taxes, assessments, or similar charges, incurred
in the ordinary course of business that are not yet due and payable;
B. Pledges or deposits made in the ordinary course of business
to secure payment of workers' compensation, or to participate in any
fund in connection with workers' compensation, unemployment insurance,
old-age pensions or other social security programs;
C. Liens of mechanics, materialmen, warehousemen, carriers, or
other like liens, securing obligations incurred in the ordinary course
of business that are not yet due and payable.
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D. Good faith pledges or deposits made in the ordinary course
of business to secure performance of bids, tenders, contracts (other
than for the repayment of money) or leases, not in excess of ten
percent (10%) of the aggregate amount due thereunder, or to secure
statutory obligations, or surety, appeal, indemnity, performance or
other similar bonds required in the ordinary course of business;
E. Encumbrances consisting of zoning restrictions, easements,
or other restrictions on the use of real property, none of which
materially impairs the use of such property by the BORROWER in the
operation of its business, and none of which is violated in any
material respect by existing or proposed structures or land use;
F. Liens in favor of the BANK;
G. The following, if the validity or amount thereof is being
contested in good faith by appropriate and lawful proceedings, so long
as levy and execution thereon have been stayed and continue to be
stayed and they do not, in the aggregate, materially detract from the
value of the property of the BORROWER or materially impair the use
thereof in the operation of its business;
1. Claims or liens and encumbrances upon, and defects
of title to, real or personal property, including any
attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits;
2. Claims, liens and encumbrances upon, and defects
of title to, real or personal property, including any
attachment of personal property, including any attachment of
personal or real property or other legal process prior to
adjudication of a dispute on the merits;
3. Claims or liens of mechanics, materialmen,
warehousemen, carriers, or other like liens; and
4. Adverse judgments on appeal.
H. Any lien or security interest on personal property leased by
BORROWER under a lease required to be capitalized under generally
accepted accounting principles;
I. Any security interest or interests securing purchase money
contracts aggregating more than $50,000.00 in total balance due.
J. Any lien or security interest junior and inferior to the
interests of BANK in any COLLATERAL provided, however, that the
foregoing in no respect waives or amends the requirements of any
other provision of this AGREEMENT.
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25. "PERSON" means any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, joint
venture, court, or government or political subdivision or agency thereof.
26. "STOCKHOLDERS' EQUITY" means, at any time, the sum of the following
accounts set forth on a consolidated balance sheet of the BORROWER prepared in
accordance with GAAP: (A) the par or stated value of all outstanding capital
stock; (B) capital surplus; and (C) retained earnings.
SECTION II. THE LOAN.
1. TYPES OF CREDIT. The BANK will provide a combined credit facility to
BORROWER which shall consist of a WORKING CAPITAL LOAN and continuing LETTERS OF
CREDIT. The BORROWER may obtain credit from BANK under either the WORKING
CAPITAL LOAN or continuing LETTERS OF CREDIT, which are collectively and
individually referred to herein as the "LOAN" or "LOANS".
2. WORKING CAPITAL LOAN and continuing LETTERS OF CREDIT. BANK agrees
to lend $3,700,000.00 to BORROWER pursuant to this facility, as follows:
A. BANK will issue its continuing LETTERS OF CREDIT on behalf
of BORROWER. Such transactions will be evidenced by separate
application and LETTER OF CREDIT AGREEMENTS. Each LETTER OF CREDIT
AGREEMENT shall constitute a COLLATERAL DOCUMENT. The repayment
requirements contained therein shall constitute a NOTE for purposes of
the AGREEMENT and amendments thereto. Each LETTER OF CREDIT shall
terminate according to its terms but in any event, on LOAN TERMINATION
DATE. As to any such LETTER OF CREDIT AGREEMENT, any terms or
provisions therein which conflict with provisions hereof shall take
precedence over the terms hereof as to such LETTER OF CREDIT.
B. With regard to the WORKING CAPITAL LOAN, BANK will credit
proceeds of this revolving loan ("WORKING CAPITAL LOAN"") to BORROWER's
deposit account with the BANK bearing number 00000000. Subject to the
terms hereof, the BANK will lend the BORROWER, from time to time until
the "LOAN TERMINATION DATE" such sums in integral multiples of
$25,000.00 as the BORROWER may request by reasonable same day notice to
the BANK, received by the BANK not later than 11:00 A.M. of such day,
but which shall not exceed in the aggregate principal amount at any one
time outstanding, $3,700,000.00 (the "LOAN COMMITMENT") and which shall
not exceed the BORROWING BASE in the aggregate principal amount at any
one time outstanding, when combined with the aggregate of any
outstanding LETTERS OF CREDIT. The BORROWER may borrow, repay without
penalty or premium and reborrow hereunder, from the date of this
AGREEMENT until the LOAN TERMINATION DATE.
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C. It is the intention of the parties that the outstanding
principal amount of the WORKING CAPITAL LOAN and continuing LETTER OF
CREDIT shall at no time exceed the amount of the then existing
BORROWING BASE and if, at any time, an excess shall for any reason
exist, the full amount of such excess together with accrued and unpaid
interest thereon as herein provided, shall be immediately due and
payable in full.
3. NOTE. The WORKING CAPITAL LOAN shall be evidenced by a NOTE having
stated maturity on the LOAN TERMINATION DATE, in the form attached hereto as
Exhibit "B".
4. INTEREST RATE AND PAYMENTS OF INTEREST.
A. Interest on the principal balance of the WORKING CAPITAL
LOAN from time to time outstanding will be payable at a rate (the
"RATE") equal to the RATE announced by BANK from time to time as its
"New York Base Rate".
B. Each time the BASE RATE shall change, the RATE shall change
contemporaneously with such change in the BASE RATE. Interest shall be
calculated on the basis of a 360-day year, counting the actual number
of days elapsed.
C. Interest on the WORKING CAPITAL LOAN shall be payable
monthly on the first BUSINESS DAY of each month, with all outstanding
principal and unpaid interest due and payable on TERMINATION DATE,
unless earlier paid or due as the result of acceleration.
5. PAYMENT TO THE BANK AND COLLECTIONS.
A. All sums payable to the BANK hereunder shall be paid
directly to the BANK in immediately available funds. The BANK shall
provide the BORROWER statements of all amounts due hereunder, which
statements shall be considered correct and conclusively binding on the
BORROWER unless BORROWER notifies the BANK to the contrary within
thirty (30) days of its receipt of any statement that it deems to be
incorrect. Alternatively, at its sole discretion after an EVENT OF
DEFAULT the BANK may charge against any deposit account, including the
LOCKBOX CHECKING ACCOUNT of the BORROWER all or any part of any amount
due hereunder. LOCKBOX CHECKING ACCOUNT is defined in paragraph (B)
hereof.
B. COLLECTION OF ACCOUNTS AND LOCKBOX.
1. Accounts will be collected through direct lockbox deposit
by account debtors, pursuant to the provisions of subparagraph 4 below.
BORROWER will take such action with respect to the collection of
Accounts and of the proceeds thereof, as BANK may reasonably request.
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2. BANK shall have the right, after an EVENT OF DEFAULT, at
any time or times thereafter, to notify all Account Debtors that
Accounts have been assigned by BORROWER and that BANK has a security
interest therein; to direct all such Account Debtors to make payments
to BANK of all or any part of the sums owing BORROWER by such Account
Debtors; to enforce collection of any of the Accounts by suit or
otherwise; to surrender, release or exchange all or any part of such
Accounts; or to compromise, settle, extend or renew for any period
(whether or not longer than the original period) any INDEBTEDNESS
thereunder or evidenced thereby.
3. BORROWER hereby authorizes BANK to endorse, in the name of
BORROWER, any item, howsoever received by BANK representing payment on
or other proceeds of any of the COLLATERAL.
4. BORROWER covenants that all receipts on account of the
Accounts or any other payments of money to be received by the BORROWER
shall be directed to a lockbox previously established at post office
xxx 0000, Xxxxx, Xxxxxxxx, under the exclusive control of BANK, it
being the intention that all monies coming to the BORROWER on account
of any of the COLLATERAL shall be directed to such lockbox, and
thereafter deposited in a checking account established for such
purpose, herein referred to as the LOCKBOX CHECKING ACCOUNT. BORROWER
may make deposits to such LOCKBOX CHECKING ACCOUNT by depositing funds
to an account established for that purpose at First National Bank South
Dakota, Yankton, South Dakota. BORROWER agrees that all invoices or
other instructions for payment will bear a notation that payment must
be made to such lockbox number. Deposits in the LOCKBOX CHECKING
ACCOUNT shall be deemed payments directly to BANK and all such deposits
shall be the property of the BANK. The LOCKBOX CHECKING ACCOUNT herein
established shall be deemed a "deposit or other account", for the
purposes of Section 5.1 of this AGREEMENT.
5. For purposes of determining the amount of the OBLIGATIONS,
including, without limitation, the computations of interest which may
from time to time be owing by BORROWER to BANK, the receipt of a check
or other item of payment by BANK shall not be treated as a payment on
account of the liabilities until such check or other item of payment is
actually paid in cash or cash equivalent.
6. Notwithstanding the foregoing, however, BORROWER is
authorized to establish and maintain, in the United Kingdom, a
depository account (the "U.K. ACCOUNT") for collection of overseas
accounts. Account Debtors' funds may be deposited in the U.K. ACCOUNT,
but BORROWER will cause a transfer of such deposits, whenever such
funds aggregate US $30,000.00, to the LOCKBOX CHECKING ACCOUNT. No
other transfer or withdrawal from the U.K. ACCOUNT is permitted.
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SECTION III. CONDITIONS PRECEDENT.
1. CERTAIN EVENTS. At the time of, and as a condition to, the CLOSING
and each disbursement of any part of the REVOLVING LOAN to be made by the BANK
at or subsequent to the CLOSING:
A. No EVENT OF DEFAULT shall have occurred and be continuing,
an no event shall have occurred and be continuing that, with the giving
of notice or passage of time or both, would be an EVENT OF DEFAULT;
B. No material adverse change shall have occurred in the
business prospects, financial condition, or results of operations of
the BORROWER since the dates of the FINANCIAL STATEMENTS; and
C. All of the COLLATERAL DOCUMENTS shall have remained in full
force and effect.
SECTION IV. COLLATERAL SECURITY.
1. COMPOSITION OF THE COLLATERAL. The property in which a security
interest is granted pursuant to the provisions of Section IV, Paragraph 2, is
herein collectively called "COLLATERAL". The COLLATERAL, together with all other
property of the BORROWER of any kind held by the BANK, shall stand as one
general, continuing collateral security for all OBLIGATIONS and may be retained
by the BANK until all OBLIGATIONS have been satisfied in full. BORROWER has
executed a security agreement, granting a security interest in and to certain
property ("COLLATERAL") to BANK. Such separate security agreement is a
COLLATERAL DOCUMENT.
2. RIGHTS IN PROPERTY HELD EITHER BY THE BORROWER OR BY THE BANK. As
security for the prompt satisfaction of all OBLIGATIONS, the BORROWER hereby
assigns to the BANK all of its right, title and interest in and to, and grants
the BANK a lien upon and a security interest in, all of the following property
owned, rented, or used by BORROWER, wherever located, whether now owned or
hereafter acquired, together with all replacements therefore and proceeds
(including, but without limitation, insurance proceeds) and products thereof:
Accounts;
Chattel Paper;
Contracts;
Contract Rights;
Documents;
EQUIPMENT;
Fixtures;
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General Intangibles;
Instruments;
Inventory;
Investment Property;
Motor Vehicles;
Rights as seller of Goods or Services and rights to returned or
repossessed goods; and ALL RECORDS pertaining to COLLATERAL.
BORROWER is further granting a lien in real property by a separate
mortgage, which realty also constitutes COLLATERAL, and which mortgage
constitutes a COLLATERAL DOCUMENT. BANK agrees that in the event of any default
hereunder, it will first resort to the personal property COLLATERAL prior to
attempting to foreclosure of real property COLLATERAL, though this covenant in
no way requires BANK to exhaust other COLLATERAL prior to realizing value from
any real property COLLATERAL.
SECTION V. REPRESENTATIONS AND WARRANTIES.
1. ORIGINAL. To induce the BANK to enter into this AGREEMENT, the
BORROWER represents and warrants to the BANK as follows:
A. The BORROWER is a corporation duly organized, validly
existing, and in good standing under the laws of the State of South
Dakota; the BORROWER has the lawful power to own its properties and to
engage in the businesses it conducts and is duly qualified and in good
standing as a foreign corporation in the jurisdictions wherein the
nature of the business transacted by it or property owned by it makes
such qualifications necessary; the states in which the BORROWER is
qualified to do business are disclosed to the BANK in writing; the
addresses of all places of business of the BORROWER are disclosed to
the BANK in writing; and the BORROWER has not change its name, been the
surviving corporation in a merger, acquired any business, or changed
its principal executive office within five (5) years and one (1) month
prior to the date hereof except as is set forth in an Exhibit hereto.
B. The BORROWER is not directly or indirectly controlled by,
or acting on behalf of, any PERSON which is an "Investment Company"
within the meaning of the Investment Company Act of 1940, as amended.
C. The BORROWER is not in default with respect to any of its
existing INDEBTEDNESS, and the making and performance of this AGREEMENT
and the COLLATERAL DOCUMENTS will not (immediately or with the passage
of time, the giving of notice, or both):
1. Violate the articles of incorporation or bylaws of
the BORROWER, or violate any laws or result in a default under
any contract,
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agreement, or instrument to which the BORROWER is a party or
by which the BORROWER or its property is bound; or
2. Result in the creation or imposition of any
security interest in, or lien or encumbrance upon, any of the
assets of the BORROWER except in favor of the BANK:
D. The BORROWER has the power and authority to enter into and
perform this AGREEMENT, the NOTE, and the COLLATERAL DOCUMENTS, and to
incur the obligations herein and therein provided for, and has taken
all actions necessary to authorize the execution, delivery, and
performance of this AGREEMENT, the NOTE, and the COLLATERAL DOCUMENTS;
E. This AGREEMENT and the COLLATERAL DOCUMENTS are, or when
delivered will be, valid, binding, and enforceable in accordance with
their respective terms;
F. There is no pending order, notice, claim, litigation,
proceeding, or investigation against or affecting the BORROWER, whether
or not covered by insurance, that would in the aggregate involve the
payment of $10,000.00 or more or would otherwise materially or
adversely affect the financial condition or business prospects of the
BORROWER if adversely determined;
G. The BORROWER has good and marketable title to all of its
assets, none of which is subject to any security interest, encumbrance
or lien, or claim of any third person except for PERMITTED LIENS;
H. The FINANCIAL STATEMENTS, including any schedules and notes
pertaining thereto, have been prepared in accordance with GAAP, and
fully and fairly present the financial condition of M-TRON Industries
at the dates thereof and the results of operations for the periods
covered thereby, and there have been no material adverse changes in the
consolidated financial condition or business of M-TRON Industries from
December 31, 1999 to the date hereof;
I. As of the date hereof the BORROWER has no material
INDEBTEDNESS of any nature, including but without limitation,
liabilities for taxes and any interest or penalties relating thereto
except to the extent reflected (in a footnote or otherwise) in the
FINANCIAL STATEMENT or as disclosed in, or permitted by, this
agreement; and the BORROWER does not know or have reasonable ground to
know of any basis for the assertion against it of any such INDEBTEDNESS
as of the date of the CLOSING;
J. Except as otherwise permitted herein, the BORROWER has
filed all appropriate federal, state and local tax returns and other
reports required by any applicable laws to have been filed prior to the
date hereof, has paid or caused to be paid all taxes, assessments, and
other governmental charges that are due and payable prior to
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the date hereof, and has made adequate provision for the payment of
such taxes, assessments, or other charges accruing but not yet payable;
the BORROWER has no knowledge of any deficiency or additional
assessment in a materially important amount in connection with any
taxes, assessments, or charges not provided for on its books;
K. Except to the extent that the failure to comply would not
materially interfere with the conduct of the business of the BORROWER,
the BORROWER has complied with all applicable LAWS with respect to (i)
any restrictions, specifications, or other requirements pertaining to
products that it manufactures or sells or to the services it performs;
(ii) the conduct of its business; and (iii) the use, maintenance, and
operation of the real and personal properties owned or leased by it in
the conduct of its business;
L. No representations or warranty by or with respect to the
BORROWER contained herein or in any certificate or other document
furnished by the BORROWER pursuant hereto contains any untrue statement
of a material fact or omits to state a material fact necessary to make
such representation or warranty not misleading in light of the
circumstances under which it was made;
M. Each consent, approval or authorization of, or filing,
registration or qualification with, any PERSON required to be obtained
or effected by the BORROWER in connection with the execution and
delivery of this AGREEMENT, any NOTE, and the COLATERAL DOCUMENTS or
the undertaking or performance of any obligation hereunder or
thereunder has been duly obtained or effected;
N. All existing INDEBTEDNESS of the BORROWER: i) for money
borrowed, or ii) under any security agreement, mortgage, or agreement
covering the lease by the BORROWER as lessee of real or personal
property is described in a writing delivered to BANK this date;
O. Except as disclosed to the BANK in writing i) the BORROWER
has no material leases, contracts, or commitments of any kind
(including, without limitation, employment agreements, collective
bargaining agreements, powers of attorney, distribution arrangements,
patent license agreements, contracts for future purchase or delivery of
goods or rendering of services, bonuses, pension, and retirement plans
or accrued vacation pay, insurance and welfare agreements; ii) to the
best of BORROWER's knowledge, all parties to all such material leases,
contracts and other commitments to which the BORROWER is a party have
complied with the provisions of such leases, contracts, and other
commitments; and iii) to the best of BORROWER's knowledge, no party is
in default under any thereof and no event has occurred which, but for
the giving of notice or the passage of time, or both, would constitute
a default;
P. The BORROWER has not made any agreement or taken any action
which may cause anyone to become entitled to a commission or a finder's
fee as a result of or in connection with the making of this AGREEMENT;
13
Q. Any federal tax returns for all years of operation,
including the last tax year for BORROWER have been filed with the
Internal Revenue Service and have not been challenged;
R. Any Employee Pension Benefit Plans, as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
of the BORROWER meet, as of the date hereof, the minimum funding
standards of 29 U.S.C. Sec. 1082 (Section 302 of ERISA), and no
Reportable Event or Prohibited Transaction as defined in ERISA, has
occurred with respect to any Employee Benefit Plans, as defined in
ERISA, of the BORROWER; and
S. The liens and security interests created pursuant to
Section IV of this AGREEMENT, including any separate real estate liens
granted in connection herewith, are in all cases first and prior liens
except for PERMITTED LIENS;
T BORROWER warrants (and this shall be a continuing warranty
which shall survive until all the OBLIGATIONS of BORROWER to BANK have
been fully satisfied) that it is in compliance with all federal, state
and local environmental laws and regulations and has obtained all
environmental permits necessary of appropriate to the conduct of its
business. There is not pending nor, to the best of the BORROWER's
knowledge after due inquiry, are there any threatened environmental
enforcement actions, suits or proceedings before any court, tribunal or
administrative body of official. Responsible officers and agents of the
BORROWER have made an extensive investigation and have determined that
the BORROWER has not, nor has any former owner of real property
occupied by BORROWER stored, used or disposed of any toxic or hazardous
substance on its properties or transported any such substance to or
from its properties in violation of any presently existing or
previously existing laws, regulations or policies. The BORROWER will
not store, use or dispose of such substances on its properties.
2. SURVIVAL. All of the representations and warranties set forth in
Section V hall survive until all OBLIGATIONS are satisfied in full and there
remain no outstanding commitments hereunder.
SECTION VI. COVENANTS OF THE BORROWER.
1. AFFIRMATIVE COVENANTS. The BORROWER does hereby covenant and agree
with the BANK that, so long as any of the OBLIGATIONS remain unsatisfied or any
commitments hereunder remain outstanding, it will comply at all times with the
following covenants:
A. The BORROWER will furnish the BANK:
14
1. Within twenty (20) days after the close of each
monthly accounting period in each fiscal year an income
statement and balance sheet of the BORROWER for such month in
reasonable detail, subject to normal year-end audit
adjustments and certified by the BORROWER's president or
principal financial officer to have been prepared in
accordance with GAAP;
2. Contemporaneously with each monthly financial
report required by the foregoing paragraph, a certificate of
the president or principal financial officer of the BORROWER
stating that he has individually reviewed the provisions of
this AGREEMENT and that a review of the activities of the
BORROWER during such monthly period, has been made by him or
under his supervision, with a view to determining whether the
BORROWER has fulfilled all its obligations under this
AGREEMENT and is not in default in the observance or
performance of any of the provisions hereof or, if the
BORROWER shall be so in default, specifying all such defaults
and events of which he may have knowledge;
3. Promptly after the sending or making available of
filing of the same, copies of all reports bearing on the
financial condition of BORROWER, proxy statements, and
financial statements that the BORROWER sends or makes
available to its stockholders and all registration statements
and reports that the BORROWER files with the Securities and
Exchange Commission or any successor person;
4. Within fifteen (15) days after the end of each
calendar month, in such form and detail as shall be
satisfactory to the BANK, an aging, as of the end of such
month, of (a) the then ELIGIBLE ACCOUNTS, and (b) all other
Accounts of the BORROWER, certified by the president or chief
financial officer of the BORROWER to be complete and correct.
5. Each month (and at additional time in the
discretion of the BORROWER or if any material deterioration in
the BORROWING BASE would be disclosed thereby) a BORROWING
BASE CERTIFICATE as of the end of such month. Each BORROWING
BASE CERTIFICATE shall be effective only as accepted by the
BANK (and with such revisions, if any, as the BANK may require
as a condition to such acceptance), such acceptance to be
presumed after receipt of such BORROWING BASE CERTIFICATE
unless the BANK otherwise notifies the BORROWER, whether
thereafter, theretofore, or contemporaneously therewith;
6. Upon the BANK's request, from time to time, copies
of any or all agreements, contracts or commitments referred to
in Section 5.I hereof;
B. The BORROWER will maintain its Inventory, Equipment, real
estate, and other properties in workable and operable condition and
repair, and will pay and discharge or cause to be paid and discharged,
when due, the cost of repairs to, or
15
maintenance of, the same, and will pay or cause to be paid in a timely
manner all rental or mortgage payments due on such real estate. The
BORROWER hereby agrees that, in the event it fails to pay or cause to
be paid any such payment, it will promptly notify the BANK thereof, and
the BANK may, in its discretion, do so and on demand be reimbursed
therefor by the BORROWER;
C. The BORROWER will maintain, or cause to be maintained,
public liability insurance (subject to a maximum of $10,000.00 in
deductibles) and fire and extended coverage insurance on all assets
that are of a character usually insured by corporations engaged in the
same or similar businesses, all in form and amount sufficient to
indemnify the BORROWER for 100% of the replacement value of any such
asset lost or damaged (subject to any deductible customary in the
BORROWER's industry) or in an amount consistent with the amount of
insurance generally carried on comparable assets within the industry
and with such insurers rated A or higher by the latest rating published
A.M. Best & Co. The BORROWER will cause all such insurance policies to
contain a standard mortgage clause and to be payable to the BANK as its
interest may appear, and BORROWER shall deliver the policies of
insurance to the BANK. Such policies shall contain a provision whereby
they cannot be cancelled except after ten (10) days' written notice to
the BANK. The BORROWER will furnish to the BANK such evidence of
insurance as the BANK may require. The BORROWER hereby agrees that, in
the event it fails to pay or cause to be paid the premium on any such
insurance when due, the BANK, in its discretion, may do so and be
reimbursed by the BORROWER therefor. The BORROWER hereby agrees that,
in the event it fails to pay or cause to be paid the premium on any
such insurance when due, the BANK, in its discretion, may do so and be
reimbursed by the BORROWER therefor. The BORROWER hereby assigns to the
BANK any returned or unearned premiums that may be due the BORROWER
upon cancellation by the insurer or any such policy for any reason
whatsoever and direct any such insurer to pay the BANK any amounts so
due. BANK agrees to allow such funds to be used for payment of
insurance required hereunder, or to pay such funds to BORROWER if it
has properly replaced such insurance, but BANK may retain such funds if
there has occurred an EVENT OF DEFAULT. The BANK is hereby appointed
the attorney-in-fact of the BORROWER (without requiring the BANK to act
as such) to endorse any check which may be payable to the BORROWER to
collect any premiums or the proceeds of such insurance (other than
proceeds of public liability insurance), and any amount so collected
may be applied by the BANK toward satisfaction of any of the
OBLIGATIONS if an EVENT OF DEFAULT has occurred and is continuing.
D. The BORROWER will pay or cause to be paid when due, all
taxes, assessments, and charges or levies imposed upon it or on any of
its property on which it is required to withhold and pay except where
contested in good faith by appropriate proceedings with adequate
reserves therefor having been set aside on its books; provided,
however, that the BORROWER shall pay or cause to be paid all such
taxes, assessments, charges or levies forthwith whenever foreclosure on
any lien that may have attached (or security therefor) appears
imminent;
16
E. The BORROWER will maintain:
1. A ratio of Consolidated Liabilities to
Consolidated Tangible Net Worth of not more than 2.3 to 1.0;
2. A BORROWING BASE such that the balance of the
BORROWER's outstanding LOANS will not, at any time, exceed the
BORROWING BASE.
F. The BORROWER will, when requested to do so, make available
for inspection by duly authorized representatives of the BANK any of
its books and records and will furnish the BANK any information
regarding its business affairs and financial condition within a
reasonable time after written request therefor;
G. The BORROWER will take all necessary steps to preserve its
corporate existence and franchises and comply with all present and
future laws applicable to it in the operation of its business, and all
material agreements to which it is subject;
H. The BORROWER will collect is Accounts and sell its
Inventory only in the ordinary course of business;
I. The BORROWER will keep accurate and complete Records of its
Accounts, Inventory and Equipment, consistent with sound business
practices;
J. The BORROWER will give immediate notice to the BANK of (1)
any litigation or proceeding in which it is a party if an adverse
decision therein would require it to pay more than $10,000.00 or
deliver assets the value of which exceeds such sum (whether or not the
claim is considered to be covered by insurance); and (2) the
institution of any other suit or proceeding involving it that might
materially and adversely affect its operations, financial condition,
property, or business prospects;
K. The BORROWER will pay when due (or within applicable grace
periods) all of its INDEBTEDNESS due third persons except when the
amount there of is being contested in good faith by appropriate
proceedings and with adequate reserves therefor being set aside on its
books. If default be made by the BORROWER in the payment of any
principal (or installment thereof) of, or interest on, any such
INDEBTEDNESS, the BANK shall have the right, in its discretion, to pay
such interest or principal for the account of the BORROWER and be
reimbursed by the BORROWER therefor;
L. The BORROWER will notify the BANK immediately if it becomes
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 if it becomes aware of
any material adverse change in the business prospects, financial
condition (including, without limitation, proceedings in bankruptcy,
insolvency, or reorganization, or results of operations of the
BORROWER, or the failure of the to
17
observe any of its respective undertakings hereunder or under the
COLLATERAL DOCUMENTS;
M BORROWER will (1) fund any of its Employee Pension Benefit
Plans in accordance with no less than the minimum funding standards of
29 U.S.C. Sec. 1082 (Section 302 of ERISA); (2) furnish the Bank,
promptly after the filing of the same, with copies of any reports or
other statements filed with the United States Department of Labor or
the Internal Revenue Service with respect to any such Plan; and (3)
promptly advise the BANK of the occurrence of any Reportable Event or
Prohibited Transaction with respect to any Employee Benefit Plan.
2. NEGATIVE COVENANTS. The BORROWER does hereby covenant and agrees
with the that, so long as any of the OBLIGATIONS remain unsatisfied or any
commitments hereunder remain outstanding, it will comply at all times with the
following negative covenants, unless the BANK shall otherwise have agreed in
writing.
A. The BORROWER shall not change its name, enter into any
merger, consolidation, reorganization or recapitalization, or
reclassify its capital stock;
B. The BORROWER will not sell, lease, transfer, assign, or
otherwise dispose of any of the COLLATERAL except in the ordinary
course of business; BORROWER shall not move or transfer possession of
any of its CONSOLIDATED FIXED ASSETS without prior approval of BANK.
C. BORROWER will not mortgage, pledge, grant, or permit to
exist a security interest in, or a lien upon, any of its assets of any
kind, now owned or hereafter acquired, except for liens in favor of
BANK, or PERMITTED LIENS.
D. BORROWER will not become liable, directly or indirectly, as
Guarantor or otherwise for any OBLIGATION of any other person;
E. BORROWER will not incur, create, assume or permit to exist
any INDEBTEDNESS except: (1) the OBLIGATION, (2) trade indebtedness
incurred in the ordinary course of business (provided, however, that
the BORROWER may not acquire inventory other than for cash or on open
account except as expressly approved in writing and in advance by the
BANK), (3) contingent INDEBTEDNESS permitted by Section 6.2(e), and (4)
INDEBTEDNESS secured by PERMITTED LIENS.
F. BORROWER will not declare or pay any dividends, or make any
other payment or distribution on account of its capital stock in excess
of fifty percent (50%) of its prior year earnings as long as BORROWER
is in compliance with the covenants contained within this AGREEMENT;
G. BORROWER will form no subsidiary, make no investment in
(including any assignment of inventory or other property), or make any
loan in the nature of an
18
investment to, any PERSON, except for a $350,000.00 investment in the
BORROWER'S Hong Kong subsidiary;
H. BORROWER will not make any loan or advance to any officer,
shareholder, director, or employee of the BORROWER, except for business
travel and similar temporary advances in the ordinary course of
business;
I. BORROWER will not make payments on account of the purchase
or lease of Fixed Assets that, in the aggregate, in any fiscal year
(commencing with the current fiscal year) will exceed $950,000.00; as
used in this paragraph the term "lease" means a lease reflected on a
consolidated balance sheet of the BORROWER or a lease that should be so
reflected under GAAP, as well as tax retention operating leases not
reflected on BORROWER's balance sheet;
J. BORROWER will not pay or commit to pay, in an aggregate
amount, automobile lease obligations in excess of $50,000.00;p as used
in this paragraph, the term "lease" means a lease that is for the
purpose of acquiring motor vehicles and is capitalized in a balance
sheet of the BORROWER and should be so capitalized under GAAP;
K. BORROWER will not redeem, purchase, or retire any of its
capital stock or grant or issue, or purchase or retire for any
consideration, any warrant, right or option pertaining thereto, or
permit any redemption, retirement, or other acquisition by BORROWER of
the ownership of the outstanding capital stock of the BORROWER;
L. BORROWER shall not furnish the BANK any certificate or
other document that will contain any untrue statement of material fact
or that will omit to state a material fact necessary to make it not
misleading in light of the circumstances under which it was furnished;
and
M. BORROWER will not directly or indirectly apply any part of
the proceeds of the OBLIGATIONS to the purchasing or carrying of any
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System, or any regulations,
interpretations, or rulings thereunder.
N. BORROWER will not pay, or commit to pay, management fees to
any AFFILIATE of BORROWER in excess of $100,000.00 in any fiscal year
without prior consent of BANK.
SECTION VII. DEFAULT.
1. EVENTS OF DEFAULT. The occurrence of any one or more of the
following events shall constitute an EVENT OF DEFAULT hereunder:
A. The BORROWER shall fail to observe or perform any other
obligation to be observed or performed by it hereunder or under any of
the COLLATERAL
19
DOCUMENTS, provided, however, BORROWER shall have a grace period of 15
days as to any reporting requirement herein;
B. The BORROWER shall fail to observe or perform any covenant,
agreement, promise, or other obligation to be observed or performed by
it hereunder or under any of the COLLATERAL DOCUMENTS;
C. Any PERSON or PERSONS shall in good faith file a complaint
or series of complaints against BORROWER seeking judgment of a court of
competent jurisdiction against BORROWER in the aggregate sum of
$250,000.00 or more, and such suit or suits remain undismissed for 30
days;
D. Any financial statement, representation, warranty, or
certificate made or furnished by or with respect to the BORROWER to the
BANK in connection with this AGREEMENT, or as an inducement to the BANK
to enter into this AGREEMENT, or in any separate statement or document
to be delivered to the BANK hereunder, shall be materially false,
incorrect, or incomplete when made;
E. The BORROWER shall admit its inability to pay its debts as
they mature or shall make an assignment for the benefit of itself or
any of its creditors;
F. Proceedings in bankruptcy, or for reorganization of the
BORROWER, or for the readjustment of debt under the Bankruptcy Code, as
amended, or any part thereof, or under any other laws, whether state or
federal, for the relief of debtors, now or hereafter existing, shall be
commenced against or by the BORROWER and, except with respect to any
such proceedings instituted by the BORROWER, shall not be discharged
within thirty (30) days of their commencement;
G. A receiver or trustee shall be appointed for the BORROWER
or for any substantial part of its respective assets, or any
proceedings shall be instituted for the dissolution or the full or
partial liquidation of the BORROWER, and except with respect to any
such appointments requested or instituted by the BORROWER, such
receiver or trustee shall not be discharged within thirty (30) days of
his appointment, and except with respect to any such proceedings
instituted by the BORROWER, such proceedings shall not be discharged
within thirty (30) days of their commencement, or the BORROWER shall
discontinue business or materially change the nature of its business,
or the COLLATERAL becomes, in the reasonable judgment of the BANK,
insufficient in value to satisfy the OBLIGATIONS, or the BANK otherwise
reasonably finds itself insecure as to the prompt and punctual payment
and discharge of the OBLIGATIONS;
H. The BORROWER shall suffer final judgments for payment of
money aggregating in excess of $25,000.00 and shall not discharge the
same within a period of thirty (30) days unless, pending further
proceedings, execution has not been commenced or, if commenced, has
been effectively stayed;
20
I. A judgment creditor of the BORROWER shall obtain possession
of any of the COLLATERAL by any means, including (without implied
limitation) levy, distraint, replevin, or self-help.
2. ACCELERATION. At the option of the BANK upon the occurrence of any
EVENT OF DEFAULT, all OBLIGATIONS, whether hereunder or otherwise, shall
immediately become due and payable.
3. REMEDIES. After any acceleration, as provided for in Section VII,
2., the BANK shall have, in addition to the rights and remedies given it by this
AGREEMENT and the COLLATERAL DOCUMENTS, all those allowed by all applicable
laws, including, but without limitation, the Uniform Commercial Code as enacted
in any jurisdiction in which any COLLATERAL may be located. The rights of the
BANK under this Section VII. 3. are in addition to the other rights and remedies
(including, without limitation, other rights of set-off) which the BANK may
have.
SECTION VIII. MISCELLANEOUS
1. CONSTRUCTION. Nothing herein contained shall prevent the BANK from
enforcing any or all other guaranty, pledge or security agreements, notes,
mortgages, or other evidences of liability in accordance with their respective
terms.
2. ENFORCEMENT AND WAIVER BY THE BANK. The BANK shall have the right at
all times to enforce the provisions of this AGREEMENT and the COLLATERAL
DOCUMENTS in strict accordance with the terms hereof and thereof,
notwithstanding any conduct or custom on the part of the BANK in refraining from
so doing at any time or times to enforce its rights under such provisions,
strictly in accordance with the same, shall not be construed as having created a
custom in any way or manner contrary to specific provisions of this AGREEMENT or
as having in any way or manner modified or waived the same. All rights and
remedies of the BANK are cumulative and concurrent and the exercise of one right
or remedy shall not be deemed a waiver or release of any other right or remedy.
3. RENEWAL. On the existing LOAN TERMINATION DATE, the OBLIGATION
becomes due, and the BANK's commitment to lend shall terminate. BORROWER may
request an amendment of the LOAN TERMINATION DATE and a renewal, in some form,
of the commitment. BANK agrees to consider such request when made, using as a
basis for its decision all of the FINANCIAL STATEMENTS furnished by BORROWER,
together with any other information or amendment if, in BANK's sole discretion,
such renewal or amendment is warranted in the exercise of sound banking
practices.
4. EXPENSE OF THE BANK. The BORROWER will, on demand, reimburse the
BANK for all expenses, including the reasonable fees and expenses of legal
counsel for the BANK, incurred by the BANK in connection with the preparation,
administration, amendment, modification, or enforcement of this AGREEMENT, the
COLLATERAL DOCUMENTS, and the collection or attempted collection of the
OBLIGATIONS.
21
5. NOTICES. Any notice or consents required or permitted by this
AGREEMENT shall be in writing and shall be deemed delivered if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
or telegraph, as follows, unless such address is changed by written notice
hereunder:
A. If to the BORROWER:
M-TRON Industries, Inc.
Attention: Xx. Xxxxx Xxxx
XX Xxx 000
Xxxxxxx, Xxxxx Xxxxxx 00000-0000
B. If to the BANK:
First National Bank of Omaha
One First National Center
0000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxxxxxx X. Xxxxxx
6. WAIVER AND RELEASE BY THE BORROWER. To the maximum extent permitted
by applicable LAWS, the BORROWER:
A. Waives notice of acceleration and of intention to
accelerate; and notice and opportunity to be heard, after acceleration
in the manner provided in Section VII. 2., before exercise by the BANK
of the remedies of self-help, set-off, or of or other summary
procedures permitted by any applicable laws or by any agreement with
the BORROWER, and, except where required hereby or by any applicable
law, notice of any other action taken by the BANK; and
B. Releases the BANK and its officers, attorneys, agents, and
employees from all claims for loss or damage caused by any act or
omission on the part of any of them except willful misconduct or gross
negligence.
7. APPLICABLE LAW. This AGREEMENT is entered into and performable in
Omaha, Xxxxxxx County, Nebraska and shall be subject to and construed and
enforced in accordance with the laws of the State of Nebraska.
8. BINDING EFFECT, ASSIGNMENT, AND ENTIRE AGREEMENT. This AGREEMENT
shall inure to the benefit of, and shall be binding upon, the respective
successors and permitted assigns of the parties hereto. The BORROWER has no
right to assign any of its rights or OBLIGATIONS hereunder without the prior
written consent of the BANK. This AGREEMENT, including the Exhibits hereto, all
of which are hereby incorporated herein by reference, and the documents executed
and delivered pursuant hereto, constitute the entire
22
AGREEMENT between the parties and may be amended only by a writing signed on
behalf of each party.
9. SEVERABILITY. If any provision of this AGREEMENT shall be held
invalid under any applicable law, such invalidity shall not affect any other
provision of this AGREEMENT that can be given effect without the invalid
provision, and, to this end, the provisions hereof are severable.
A CREDIT AGREEMENT MUST BE IN WRITING TO BE ENFORCEABLE UNDER NEBRASKA LAW. TO
PROTECT YOU AND US FROM ANY MISUNDERSTANDINGS OR DISAPPOINTMENTS, ANY CONTRACT,
PROMISE, UNDERTAKING, OR OFFER TO FOREBEAR REPAYMENT OF MONEY TO MAKE ANY OTHER
FINANCIAL ACCOMMODATION IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR
EXTENSION OF CREDIT, OR ANY AMENDMENT OF, CANCELLATION OF, WAIVER OF, OR
SUBSTITUTION FOR ANY OR ALL OF THE TERMS OR PROVISIONS OF ANY INSTRUMENT OR
DOCUMENT EXECUTED IN CONNECTION WITH THIS LOAN OF MONEY OR GRANT OR EXTENSION OF
CREDIT, MUST BE IN WRITING TO BE EFFECTIVE.
IN WITNESS WHEREOF, the parties hereto have duly executed this
AGREEMENT as of the day and year first above written.
FIRST NATIONAL BANK OF OMAHA
By:
-------------------------------
Title:
----------------------------
ATTEST: M-TRON INDUSTRIES, INC.
--------------------------------- By:
Secretary -------------------------------
Title:
----------------------------
FIRST AMENDMENT TO RESTATED LOAN AND SECURITY AGREEMENT
This First Amendment to Restated Loan and Security Agreement (this
"FIRST AMENDMENT"), made as of the 4th day of December, 2000, by and among
M-Tron Industries, a South Dakota corporation with principal offices at Yankton,
South Dakota (herein called "OLD M-TRON"), M-Tron Industries, a Delaware
corporation with principal offices at Yankton, South Dakota (herein called "NEW
M-TRON"), and First National Bank of Omaha, a national banking association
established at Omaha, Nebraska ("BANK").
WHEREAS, OLD M-TRON and BANK executed a written Restated Revolving Loan
and Security Agreement dated April 30, 2000 (the "AGREEMENT");
WHEREAS, OLD M-TRON intends to merge Xxxxx Systems, Inc., a Delaware
corporation, with and into OLD M-TRON (the "MERGER"); and
WHEREAS, OLD M-TRON intends to re-incorporate in the State of Delaware
by transferring substantially all of its assets and liabilities, including
BANK'S COLLATERAL and its liabilities and obligations under the AGREEMENT and
the COLLATERAL DOCUMENTS, to NEW M-TRON (the "ASSIGNMENT").
NOW, THEREFORE, in consideration of the AGREEMENT and their mutual
promises made herein, the parties hereby agree as follows:
1. Terms defined in the AGREEMENT shall have the same meanings when
used in this FIRST AMENDMENT.
2. Immediately following the effectiveness of the MERGER, OLD M-TRON
and NEW M-TRON will effect the ASSIGNMENT pursuant to a. written Assignment and
Assumption Agreement ("ASSUMPTION AGREEMENT") in substantially the form attached
hereto as Exhibit A, by this reference made a part hereof.
3. As of the EFFECTIVE DATE, the term "BORROWER" shall be amended to
mean only NEW M-TRON, and NEW M-TRON shall thereafter have all the duties,
responsibilities and privileges of BORROWER under the AGREEMENT.
4. As of the EFFECTIVE DATE, NEW M-TRON shall be deemed to have made
all of the warranties and representations of BORROWER made in the AGREEMENT, and
with the exception of the warranty contained in Section V.1.A. of the AGREEMENT,
as to the BORROWER's state of good standing, NEW M-TRON warrants it is duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
5. As of the EFFECTIVE DATE, all of OLD M-TRON's rights, privileges,
duties, liabilities and obligations under the AGREEMENT and the COLLATERAL
DOCUMENTS, including the privilege to borrow accorded to OLD M-TRON by the
AGREEMENT, shall be terminated. In consideration of the execution and delivery
of this FIRST AMENDMENT by
1
NEW M-TRON, as of the EFFECTIVE DATE, the BANK shall be deemed to have released
and forever discharged OLD M-TRON from any and all duties, obligations and
liabilities under the AGREEMENT and the COLLATERAL DOCUMENTS.
6. BANK hereby waives BORROWER's compliance with the representations,
warranties and covenants contained in the AGREEMENT to the extent necessary to
allow: (a) OLD M-TRON to effect the MERGER; (b) OLD M-TRON and NEW M-TRON to
effect the ASSIGNMENT; (c) OLD M-TRON to declare and pay a dividend in the form
of a demand promissory note in the original principal amount of $1,500,000, to
its shareholder, Xxxxx Corporation (the "DIVIDEND NOTE"); and (d) NEW M-TRON to
assume the obligations of OLD M-TRON under the DIVIDEND NOTE.
7. BANK is not required to make any advance of the WORKING CAPITAL LOAN
until the occurrence of each of the following events:
A. The receipt by BANK of an opinion of counsel to NEW M-TRON,
in form satisfactory to BANK, with respect to the effectiveness of the
MERGER.
B. The receipt by BANK of an ASSUMPTION AGREEMENT, with
original signatures evidencing execution of the parties thereto.
C. The receipt by BANK of an opinion of counsel to NEW M-TRON,
in form satisfactory to BANK, with respect to the effectiveness of the
ASSIGNMENT and other matters pertaining to the execution and delivery
by NEW M-TRON of this FIRST AMENDMENT.
D. The receipt by BANK of FINANCING STATEMENTS from BORROWER
satisfactory to BANK, as well as evidence of their filing in South
Dakota and Delaware.
E. The receipt of such other documents as BANK may reasonably
request to evidence the perfection of BANK's liens in the COLLATERAL as
first and paramount liens.
8. The term "EFFECTIVE DATE" as used in this FIRST AMENDMENT shall mean
December 5, 2000, the time as of which the ASSUMPTION AGREEMENT became
effective.
9. Except as amended or waived herein, the parties hereto acknowledge
and reconfirm as binding upon them all the terms and conditions of the
AGREEMENT.
2
IN WITNESS WHEREOF, the parties have set their hands as of the date
first set forth above.
M-Tron Industries, Inc., a South Dakota M-Tron Industries, Inc., a Delaware
corporation corporation
By: By:
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First National Bank of Omaha
By:
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Exhibit A - form of Assignment and Assumption Agreement
3
