EXHIBIT 10.17 - LOAN AGREEMENT
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BORROWER BANK
INNOSERV TECHNOLOGIES, INC. OVERTON BANK & TRUST, NATIONAL ASSOCIATION
0000 XXXXXXX XXXXX 000 PO BOX 150049
XXXXXXXXX, XXXXX 00000 XXXXXXXXX, XXXXX 00000
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THIS LOAN AGREEMENT ("Agreement") is made and entered into this 14TH day of
APRIL, 1997, by and between the Borrower and Bank named above.
IN CONSIDERATION OF THE MUTUAL COVENANTS AND AGREEMENTS CONTAINED HEREIN, IT
IS AGREED AS FOLLOWS:
1. THE LOAN.
Subject to the terms and conditions of this Agreement, and in reliance upon
the representations and warranties of Borrower contained herein, Bank agrees to
lend an amount not to exceed the sum of ONE MILLION ONE HUNDRED NINETY SEVEN
THOUSAND FIVE HUNDRED SEVENTY THREE AND NO/100 DOLLARS ($1,197,573.00) (the
"Loan"). The Loan will be evidenced by Borrower's note (the "Note") payable to
the order of Bank, with interest and principal being payable as therein
provided.
2. PURPOSE OF LOAN: COMBINE TWO NOTES INTO ONE TERM LOAN
3. COLLATERAL.
The Note and all other obligations of Borrower to Bank shall be secured by,
among other things, a first and superior security interest in the following
property (collectively, the "Collateral")
ACCOUNTS RECEIVABLE, INVENTORY AND EQUIPMENT
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Borrower shall execute such security agreements and other documents as Bank
may require, from time to time, to further describe, create and perfect such
security interests.
4. GUARANTIES.
The Loan will be unconditionally guaranteed as evidenced by guaranties
executed by SIETEC, INC. AND INNOSERV TECHNOLOGIES MAINTENANCE SERVICES, INC.
(collectively, "Guarantor", whether one or more).
/ / IF THIS BOX IS CHECKED, THE FOLLOWING PARAGRAPH 5 SHALL BE PART OF THIS
AGREEMENT.
5. BORROWING BASE.
The term "Borrowing Base" means an amount determined at any time as the sum
of % of the Eligible Accounts Receivable of Borrower and % of Borrower's
Eligible Inventory. As used herein, the term "Eligible Accounts Receivable"
shall mean, at any particular time, all accounts receivable of Borrower which
are subject to a perfected first priority security interest in favor of Bank,
EXCLUDING (i) all accounts receivable that are greater than ( ) days old
from the original date of the invoice, and (ii) any account that is subject to
any dispute, offset, counterclaim or other claim or defense on the part of the
account debtor denying liability under such account, and (iii) the amount of all
such accounts arising out of contracts or orders which, by their terms, forbid
an assignment or which make such an assignment void and unenforceable, and (iv)
any account receivable of Borrower from any officer, stockholder, director or
related company of Borrower. As used herein, the term "Eligible Inventory" shall
mean, at any particular time, all salable inventory then owned by Borrower and
held for sale or disposition in the ordinary course of business, in which Bank
has a perfected first priority security interest, valued at the
lower of cost or market, EXCLUDING any work-in-process. For purposes of
determining the Borrowing Base, the Eligible Inventory shall not exceed at any
time the sum of $ .
Borrower shall at all times maintain a Borrowing Base of not less than the
outstanding balance owing on the Note. If, as a result of Bank's determination,
the Borrowing Base should ever become less than the outstanding balance owing
under the Note, or any renewals or extensions thereof, Bank may notify Borrower
of the insufficiency, and within ( ) days of Bank's giving notice, Borrower
shall either pay the indebtedness down to the Borrowing Base or increase the
Borrowing Base up to the amount of the outstanding balance of the Note. Bank's
determination of the Borrowing Base and whether Collateral qualifies for
inclusion in such Borrowing Base, will be final.
6. REPRESENTATIONS AND WARRANTIES.
To induce Bank to enter into this Agreement and to advance funds from time
to time, and for Bank's reliance in so doing, Borrower warrants and represents
to Bank as follows:
A. GOOD STANDING. Borrower is a corporation duly organized and in good
standing under the laws of the State of CALIFORNIA AND TEXAS, and has the power
to own its properties and carry on its business in each jurisdiction in which
Borrower operates.
B. AUTHORITY AND COMPLIANCE. Borrower has full power and authority to
enter into this Agreement, to make the borrowing hereunder, to execute and
deliver the Note and to incur the obligations provided for herein, all of which
has been duly authorized by all proper and necessary corporate action. No
consent or approval of stockholders or of any public authority is required as a
condition to the validity of this Agreement or the Note, and Borrower is in
compliance with all laws and regulatory requirements to which it is subject.
C. BINDING AGREEMENT. This Agreement constitutes, and the Note when issued
and delivered pursuant hereto for value received will constitute, valid and
legally binding obligations of Borrower enforceable in accordance with their
terms.
D. LITIGATION. There are no proceedings pending or, to the knowledge of
Borrower, threatened before any court or administrative agency which will or may
have a material adverse effect on the financial condition or operations of
Borrower or any subsidiary or any Guarantor, except as disclosed to Bank in
writing prior to the date of this Agreement.
E. NO CONFLICTING AGREEMENTS. There are no charter, bylaw or stock
provisions of Borrower and no provisions of any existing agreement, mortgage,
indenture or contract binding on Borrower or affecting its property, which would
conflict with or in any way prevent the execution, delivery or carrying out of
the terms of this Agreement and the Note.
F. OWNERSHIP OF ASSETS. Borrower has good and marketable title to any
Collateral pledged and the Collateral is owned free and clear of liens. Borrower
will at all times maintain its tangible property, real and personal, in good
order and repair taking into consideration reasonable wear and tear.
G. TAXES. All income taxes and other taxes due and payable by Borrower to
the date of this Agreement have been paid prior to becoming delinquent.
H. FINANCIAL STATEMENTS. All financial statements and financial
information of Borrower and Guarantor which have been delivered to Bank have
been presented in conformity with generally accepted accounting principles and
fairly and accurately represent the financial condition of the Borrower and
Guarantor, as of the date of such financial statements or reports, and since
such dates, there has been no material adverse changes in the financial
condition of Borrower or Guarantor.
I. NO DEFAULTS. Borrower and Guarantor are not in default with respect to
any obligation to which Borrower or Guarantor is a party or by which Borrower or
Guarantor, or any of Borrower's or Guarantor's properties is bound.
7. AFFIRMATIVE COVENANTS.
In addition to the other agreements contained herein, Borrower covenants and
agrees that from the date hereof and until payment in full of principal and
interest owing under the Note, unless Bank shall otherwise consent in writing,
Borrower will do the following:
A. BORROWER'S FINANCIAL STATEMENTS. Borrower shall furnish to Bank: (i) as
soon as available and in any event within ONE HUNDRED TWENTY (120) days after
the end of each fiscal year of Borrower, a copy of Borrower's annual AUDITED
financial statement consisting of at least a balance sheet and statement of
income and retained earnings; (ii) on a quarterly basis, financial statements,
to include balance sheet and profit and loss statement, within FORTY FIVE (45)
days after the end of each such accounting period; (iii) if Paragraph 5 above is
applicable to this Agreement, furnish Bank on a monthly basis a Borrowing Base
report in such form as Bank may require and an aging of accounts receivable of
Borrower, such report and aging to be delivered to Bank not later than N/A (N/A)
days after the end of each calendar quarter; and (iv) promptly upon request,
such additional information, tax returns, officer's certificates, reports or
statements respecting its business operations and financial condition as Bank
may reasonably request from time to time.
B. Omitted. d
C. INSURANCE. Maintain insurance with responsible insurance companies on
such of its properties, in such amounts and against such risks as is customarily
maintained by similar businesses operating in the same vicinity, specifically to
include a policy of fire and extended coverage insurance covering all assets,
business interruption insurance and liability insurance, all to be with such
companies and in such amounts satisfactory to Bank and to contain a mortgage
clause naming Bank as its interest may appear. Evidence of such insurance shall
be supplied to Bank.
D. CORPORATE EXISTENCE AND COMPLIANCE. Maintain its corporate existence in
good standing and comply with all laws, regulations and governmental
requirements applicable to it or to any of its property, business operations and
transactions.
E. ADVERSE CONDITIONS OR EVENTS. Promptly advise Bank in writing of any
condition, event or act which comes to its attention that would or might
materially affect Borrower's or any Guarantor's financial condition, Bank's
rights in or to the Collateral under this Agreement or the Loan documents, and
of any litigation filed against Borrower or any Guarantor.
F. TAXES. Pay all taxes as the same become due and payable.
G. MAINTENANCE. Maintain all of its tangible property in good condition
and repair and make all necessary replacements thereof, and preserve and
maintain all licenses, privileges, franchises, certificates and the like
necessary for the operation of its business.
H. INSPECTION. Permit Bank, its officers, employees and agents, to inspect
the Collateral and all records of Borrower pertaining to the Collateral, at
Borrower's place of business as set forth above, and to make and remove copies
of such records. Borrower shall promptly pay to Bank the reasonable costs and
expenses of any Collateral audit performed by or for Bank.
I. PAYMENT OF DEBTS. Pay all indebtedness and obligations of Borrower as
the same become due in accordance with the terms of the instruments or documents
evidencing the same.
J. FINANCIAL COVENANTS. In accordance with generally accepted accounting
principles, Borrower shall:
(a) maintain a tangible net worth of not less than $4,500,000;
(b) maintain a ratio of current assets to current liabilities of not less
than 1.0 to 1.0;
(c) not permit the ratio of Borrower's total liabilities to tangible net
worth to be more than N/A to 1.0;
(d) maintain a ratio of after tax net income plus depreciation to current
maturities of long-term debt of not less than N/A to 1.0; and
(e) other financial covenants, if applicable:
1) No cash dividends,
2) No further notes receivable due from equipment sales, other than
those that are on the books as of 12-15-95,
3) Primary depository account to be maintained w/Xxxxxxx Bank and Trust,
including use of lockbox,
4) Cash flow ratio of 1.0 to 1.0, defined as net income after taxes plus
depreciation and amortization divided by CMLTD, calculated on a
quarterly basis using the last twelve months of operation.
8. NEGATIVE COVENANTS.
In addition to the other agreements contained herein, Borrower agrees that,
so long as the Loan pursuant to this Agreement is outstanding, Borrower will
not, unless Bank shall otherwise consent in writing:
A. Incur or suffer to exist any indebtedness except (i) indebtedness to Bank,
(ii) indebtedness to trade creditors incurred in the ordinary course of its
business, (iii) for purchase money on lease vehicles, all of which are
necessary to conduct the normal course of Borrower's business, above
$500,000 on a cumulative basis per financial year;
B. Enter into any merger or consolidation, or sell, lease, assign or otherwise
dispose of or transfer any of its assets except in the ordinary course of
its business;
C. Become a guarantor, endorser or contingently liable on any debt;
D. Make any advances or loans (directly or indirectly) to any director,
officer, employee or shareholder of Borrower;
E. Engage in any business which differs substantially or materially from the
business which Borrower is presently engaged in;
F. Create or permit to exist any mortgage, lien or other encumbrance, except as
permitted herein, with respect to any assets now owned by Borrower or
hereafter acquired, except purchase money liens on equipment and/or vehicles
not currently owned by Borrower;
G. Substantially change its present executive or management personnel.
9. EVENTS OF DEFAULT; REMEDIES.
The occurrence of any of the following shall constitute an event of default
hereunder: (i) the failure or refusal of Borrower to timely perform any term,
covenant or agreement contained herein, (ii) any representation or warranty
contained herein or in any financial statement, report or certificate submitted
to Bank in connection with the Loan or pursuant to the requirements of this
Agreement shall prove to have been incorrect or misleading in any material
respect when made, (iii) default shall occur under the terms of the Note or any
security document now or hereafter securing payment of the Note or under any
other promissory note executed by Borrower and held by Bank, or (iv) if Bank, in
good faith believes that the prospect of payment or the prospect of performance
by Borrower hereunder or under the Note or security documents is impaired.
Likewise, a default hereunder shall constitute a default under the Note and all
security documents securing payment of the Note and all other promissory notes
executed by Borrower and held by Bank. Upon the occurrence of any such default,
Bank shall have the option to declare immediately due and payable all
outstanding principal plus unpaid interest on the Note, and Bank shall have no
further obligation to fund under this Agreement. Upon the occurrence of a
default, Bank
shall be entitled to exercise any and all remedies (i) under the Note and any
security document securing payment of the Note, and (ii) available to Bank at
law or in equity.
10. MISCELLANEOUS.
A. CUMULATIVE RIGHTS AND NO WAIVER. Each and every right granted to Bank
hereunder or under any other document delivered hereunder or in connection
herewith, or allowed by law or equity shall be cumulative of and may be
exercised in addition to any and all other rights of Bank, and no delay in
exercising any right shall operate as a waiver thereof, nor shall any single or
partial exercise by Bank of any right preclude any other or future exercise
thereof, or the exercise of any other right. Any of the foregoing covenants and
agreements may be waived by Bank, but only in writing, signed by a vice
president or higher level officer of Bank. Borrower expressly waives any
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind. No notice to or demand on Borrower in
any case shall, of itself, entitle Borrower to any other or further notice or
demand in similar or other circumstances.
B. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED AND IS INTENDED TO BE
PERFORMED IN THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. ALL OBLIGATIONS HEREUNDER ARE
PERFORMABLE IN TARRANT COUNTY, TEXAS.
C. BINDING EFFECT. This Agreement shall inure to the benefit of and be
enforceable by Bank and any assignee or participant of Bank, and shall bind
Borrower and its successors and assigns; provided, however, that Borrower may
not assign its rights or obligations hereunder without the prior written
approval of Bank.
D. TEXAS CREDIT CODE. Chapter 15 of the Texas Credit Code shall not apply
to the Loan contemplated hereby.
E. EXPENSES. Borrower agrees to pay all out-of-pocket expenses of Bank in
connection with this Agreement and the collection of the Note.
F. RENEWAL. While the Bank is under no obligation to renew any
indebtedness incurred pursuant to the terms of this Agreement at maturity (or
any renewal or extension term), in the event the Note is renewed, this Agreement
shall apply to said renewal and the representations and warranties made by
Borrower herein shall be deemed to be made again as of the date of any such
renewal. The term "Note" shall include any renewal note.
G. TIME OF ESSENCE. Time is of the essence of this Agreement.
H. NO FIDUCIARY RELATIONSHIP. Borrower acknowledges and agrees that the
relationship between Borrower and Bank is solely that of debtor/creditor and in
no event shall Bank be considered as a partner of Borrower or otherwise have any
fiduciary duties to Borrower or Guarantor.
I. USURY SAVINGS. The parties hereto intend to comply with all usury laws
applicable to national banks and the subject Loan. Nothing contained herein, in
the Note or in any of the security documents shall authorize the collection or
constitute charging of interest in excess of that permitted by applicable law.
J. INDEMNIFICATION OF BANK. BORROWER SHALL INDEMNIFY AND HOLD BANK
HARMLESS AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, SUITS, CLAIMS, COSTS, EXPENSES AND DISBURSEMENTS
OR ANY KIND OR NATURE WHATSOEVER, WHICH MAY BE IMPOSED ON, INCURRED BY OR
ASSERTED AGAINST BANK, IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT
OR ANY INSTRUMENT EXECUTED PURSUANT HERETO, OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREIN, TO THE EXTENT THAT ANY SUCH INDEMNIFIED MATTERS RESULT,
DIRECTLY OR INDIRECTLY, FROM ANY CLAIMS MADE OR ACTIONS, SUITS OR PROCEEDINGS
COMMENCED BY OR ON BEHALF OF ANY PERSON OR ENTITY OTHER THAN BANK; PROVIDED,
THAT BANK
SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED HEREUNDER FOR ITS GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT.
K. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
L. ADDITIONAL PROVISIONS (WHICH SHALL CONTROL IN THE EVENT OF ANY CONFLICT WITH
THE PRECEDING PROVISIONS):
EXECUTED as of the day and year first above written.
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BANK: BORROWER:
XXXXXXX BANK & TRUST, INNOSERV TECHNOLOGIES, INC.
NATIONAL ASSOCIATION
By: /s/ XXXXXX X. VON DER AHE By: /s/ XXXXXXX X. XXXX
Name Printed: XXXXXX X. VON DER AHE Name Printed: XXXXXXX XXXX
Title: PRESIDENT Title: PRESIDENT
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