EXHIBIT 10.1
LOAN AGREEMENT
THIS LOAN AGREEMENT IS
made on this
26th day of July, 1996, by and between:
SunTrust Bank Miami, National Association
a national banking association, having an address at
0000 Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx 00000
hereafter referred to as
("BANK");
and the following entity:
Advanced Electronic Support Products, Inc.
("AESP")
a Florida corporation having an address at
0000 Xxxxxxxxx 000xx Xxxxxx, Xxxxx, Xxxxxxx 00000
hereafter referred to as
("BORROWER").
RECITALS:
BORROWER has applied to the BANK for a Revolving Line of Credit which will
enable BORROWER to borrow from BANK up to $2,500,000.00, subject to the terms
and conditions hereof. The proceeds of the requested Revolving Line of Credit
are to be used for working capital of BORROWER as needed from time to time.
BANK is willing to grant the request of BORROWER provided that: (i) the
BORROWER pledges certain collateral to BANK, including, but not limited to,
presently existing and hereafter acquired accounts, accounts receivable,
equipment and inventory, including the proceeds thereof, as security for the
repayment of the total indebtedness represented by the Revolving Promissory Note
executed by BORROWER in favor of BANK of even date herewith; (ii) BORROWER
agrees to be bound by the terms and conditions of this Agreement and all other
Loan Documents executed
concurrently herewith; and (iii) the persons and/or entities defined as
Guarantors herein execute enforceable continuing guarantees of the obligations
created hereby.
NOW, THEREFORE, in consideration of the extension of credit from BANK to
BORROWER and other good and valuable consideration hereby acknowledged as
received by each party from the other, it is agreed that:
I. DEFINITIONS:
For purposes of this Loan Agreement, including any Exhibits hereto, unless
specifically excepted or the context otherwise requires:
1.1 "Available Credit" shall mean the amount of money available to
BORROWER hereunder which amount shall be calculated by subtracting the
outstanding principal balance under the Revolving Promissory Note, plus any
accrued and unpaid interest, from $2,500,000.00.
1.2 "BORROWER" shall mean Advanced Electronic Support Products, Inc., a
Florida corporation.
1.3 "Domestic Accounts Receivable" shall be accounts receivable due on
account of deliveries to be made within the United States.
1.4 "Domestic Eligible Accounts Receivable" shall mean at any date of
determination thereof (which date shall be in BANK's sole reasonable discretion)
Domestic Accounts Receivable of the BORROWER which are unpaid for a period of
less than ninety (90) days from the original date of the invoices issued to
solvent going concerns. There shall be excluded from Eligible Domestic Accounts
Receivable (i) all receivables from subsidiaries, affiliated companies or
entities related to the BORROWER; and (ii) all accounts receivable from Syquest.
1.5 "Eligible Foreign Accounts Receivable" shall mean at any date of
determination thereof (which date shall be selected in BANK's sole reasonable
discretion) all Foreign Accounts
2
Receivable of AESP/MIAMI which are unpaid for a period of less than ninety (90)
days from the date of original invoices issued to solvent going concerns. There
shall be excepted from Eligible Foreign Accounts Receivable all receivables from
subsidiaries, affiliated companies, or entities related to BORROWER.
1.6 "Eligible Inventory" shall mean all inventory of the BORROWER which is
located in Dade County, Florida and encumbered by the UCC-1 of even date
herewith.
1.7 "Event of Default" shall have the meaning assigned thereto in Article
VII hereof.
1.8 "Foreign Accounts Receivable" shall be accounts receivable due on
account of deliveries to be made outside of the United States.
1.9 "Guarantors" shall mean Xxxxx Xxxxxxx and Xxxxxxxxxx Xxxxx.
1.10 "Letters of Credit" shall mean documentary letters of credit issued
by BANK for the account of BORROWER not to exceed the aggregate of any Available
Credit at the time requested.
1.11 "Loan" shall mean the extension of credit, including the issuance of
any Letter of Credit, by BANK to BORROWER as set forth herein and in the Loan
Documents.
1.12 "Loan Documents" shall mean this Loan Agreement, the Revolving
Promissory Note, Security Agreement, UCC-1 Financing Statements, Guaranty
Agreements, and any and all other instruments or documents delivered to BANK in
connection with the Loan.
1.13 "Maturity Date" shall mean July 26, 1997.
1.14 "Note" shall mean the Revolving Promissory Note executed by BORROWER
to evidence the Loan governed hereby.
1.15 "Person" (or "Persons") shall mean a natural person, a corporation, a
business trust, an association, a company, partnership, a joint venture, trust
or other entity or a government or any agency or political subdivision thereof.
3
1.16 "Prime Rate" shall mean the interest rate (not necessarily the lowest
or best rate) charged by SunTrust Banks, Inc. in its sole discretion, as its
prime rate, calculated on a daily moving basis.
1.17 "Revolving Line of Credit" shall mean the maximum amount available to
BORROWER, or so much thereof as shall be outstanding from time to time, not in
any event, to exceed $2,500,000.00.
1.18 "Security Agreement" shall mean that certain Security Agreement
executed simultaneously herewith in which BORROWER pledges to BANK all of
BORROWER's assets including but not limited to presently owned or hereafter
acquired accounts, accounts receivable, inventory, intangibles, contract
rights,, furniture, fixtures, equipment, including the proceeds, products, and
offspring thereof.
1.19 "Tangible Net Worth" means the aggregate value of all assets, less
(i) goodwill and other intangible assets, (ii) accounts receivable due from
Stockholders of the BORROWER, (iii) accounts receivable due from affiliates of
the BORROWER, and (iv) the aggregate amount of all liabilities of the BORROWER.
For purposes hereof, the value of the assets of the BORROWER and the goodwill of
the BORROWER shall be determined in accordance with generally accepted
accounting principles.
II. EXTENSION OF CREDIT:
2.1 REVOLVING CREDIT. Subject to the terms and conditions hereof and so
long as there exists no Event of Default or event which, with the lapse of time
or the giving of notice or both, would become an Event of Default, the BANK
will, from time to time, until the Maturity Date, at the request of BORROWER,
make loan advances to BORROWER which loan advances may be repaid and reborrowed
subject to each of the following conditions:
4
(a) BANK shall have no obligation to make any loan advances or issue
any Letters of Credit which in the aggregate exceed the principal sum of
$2,500,000.00, reduced by the aggregate principal amount of any and all loan
advances and Letters of Credit outstanding at the time of request, and further
reduced by any outstanding accrued and unpaid interest or other amounts owing
under any of the Loan Documents.
(b) The total of all advances made hereunder from time to time shall
not exceed the sum of the following, determined at the time of each advance,
subject to the further limits of section (c) below:
(i) 80% of Eligible Domestic Accounts Receivable;
(ii) 50% of Eligible Foreign Accounts Receivable, up to a
maximum of $250,000.00 of the aggregate of such Eligible
Foreign Accounts Receivable which amount shall not
include more than $100,000.00 of Eligible Foreign
Accounts Receivable due from any one entity;
(iii) 40.0% of all domestic inventory located in the
BORROWER's offices or warehouses, encumbered by the
UCC-1 executed simultaneously herewith, and not pre-sold
to a third party purchaser. Inventory is "domestic" if
it is held for sale to customers located in the United
States of America;
(iv) 50.0% of domestic pre-sold OEM inventory, up to
$750,000.00 of such inventory; and
(v) 40% of domestic pre-sold OEM inventory in excess
$750,000.00 of such inventory.
(c) The provisions of section (b) above shall be subject to the
following:
5
(i) For purposes of subsections (iv) and (v), domestic
presold OEM inventory shall be OEM inventory which has
been presold (as evidenced by written orders) to a third
party purchaser in the United States who is unrelated to
and unaffiliated with the BORROWER, which is located in
the BORROWER's offices or warehouses, and which is
encumbered by the UCC-1 executed simultaneously
herewith.
(ii) The total of all advances made pursuant to the
qualifications set forth in sections (b)(iii), (b)(iv)
and (b)(v) shall not exceed $1,500,000.00, at any one
time.
(d) BORROWER shall confirm all advances under the Revolving Line of
Credit in writing within five (5) days after an advance request.
(e) BORROWER agrees that the proceeds of the Revolving Promissory
Note will be used for basic working capital requirements and inventory purchases
including issuance of commercial Letters of Credit for BORROWER.
2.2 TERMS OF NOTE.
(a) The obligation of the BORROWER to repay the indebtedness is
evidenced by the Revolving Promissory Note. The Note bears interest at a rate
per annum equal to one-half of one percent (1/2%) in excess of the Prime Rate.
All interest calculations are made on a daily moving basis, computed on a
360-day year.
(b) Interest shall be due and payable monthly commencing August 26,
1996 and shall be billed and payable monthly thereafter. BANK may automatically
debit BORROWER's account held by the BANK when BORROWER is billed for accrued
and unpaid interest.
6
BORROWER shall execute at closing BANK's form of automatic debit authorization
in the form attached hereto as Exhibit "B".
(c) The Note shall mature on the Maturity Date at which time the
entire outstanding principal balance together with accrued and unpaid interest
(and any fee due under Sections 4.04 and 8.03 hereof) shall be due and payable
in full immediately by the BORROWER.
2.3 OPTIONAL PREPAYMENT OF NOTE. Upon at least three (3) business days
prior written or telegraphic notice to BANK, BORROWER may prepay the obligation
evidenced by the Note in whole at any time or in part from time to time, without
premium or penalty, but only if interest accrued on the principal amount is
current or prepaid to the date of prepayment. No optional, partial prepayment of
the Note shall excuse BORROWER from the next required regular payment due
thereunder.
2.4 MANNER OF PAYMENT AND DEFAULT CLAUSE. All payments of principal and
interest are payable at the office of BANK addressed as follows: SunTrust Bank
Miami, National Association, Miami Beach Office, Attention: Vice President
Commercial Loans; 0000 Xxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxx 00000; or such other
office of the BANK as is acceptable to the parties hereto. Payments shall be
made in lawful money of the United States of America which shall be legal tender
for debts public and private at the time of payment. If any principal or
interest payment shall not be paid on or before five (5) days from the due date,
then the entire unpaid principal balance together with any accrued and unpaid
interest on the Note shall be immediately due and payable without notice or
demand at the option of the BANK and the unpaid principal balance and unpaid
accrued interest on the Note shall bear default interest at the maximum rate
allowed by law.
7
III. REPRESENTATIONS AND WARRANTIES.
BORROWER hereby represents and warrants to BANK, in order to induce BANK
to extend the credit requested, that:
3.1 AUTHORIZATION OF LOAN, ETC. The execution, delivery, and performance
by BORROWER of this Loan Agreement, the Note, and all other Loan Documents
delivered to BANK by the BORROWER: (a) have been duly authorized by the BORROWER
through its Board of Directors and do not violate BORROWER's Articles of
Incorporation; and (b) will not violate (i) any provision of law (including,
without limitation, any applicable usury or similar law), (ii) any order of any
court or other agency of government in any matter to which BORROWER is a party
or as a result of which it is bound, or (iii) any material indenture, agreement
or other instrument or obligation to which BORROWER is a party or subject to, or
by which the BORROWER or any off its assets are subject to, or will be in
conflict with, result in a breach of, or constitute (with notice or lapse of
time or both) a default under any such indenture, agreement instrument or
obligation.
3.2 NO ADVERSE CHANGE. There has been no material adverse change in the
business, properties, assets, operations or condition (financial or otherwise)
of BORROWER since the date of the last financial statements of BORROWER
furnished to BANK. As of the date hereof, there are no material unrealized or
anticipated losses in connection with any loans, advances and other commitments
of the BORROWER. BORROWER further represents that there will be no change of
ownership or management of BORROWER through the Maturity Date. BORROWER shall
give BANK thirty (30) days written notice of any proposed change in management,
including any officers and directors of the company. BANK shall not unreasonably
withhold its consent to a change in management. Any change of ownership, or any
change in management not approved by BANK prior to approval by BANK shall
constitute an Event of Default under Article VII herein.
8
3.3 LITIGATION. There are no actions, suits, or proceedings (whether or
not purportedly on behalf of BORROWER) pending or affecting BORROWER at law or
in equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, which involves or affects the extension of credit herein contemplated
or the possibility of any judgment or liability which if determined adversely to
BORROWER would result in any material adverse change in the business,
operations, properties or assets or in the condition (financial or otherwise) of
BORROWER. BORROWER is not in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have a materially adverse
effect on BORROWER.
3.4 PAYMENT OF TAXES. BORROWER has filed all federal, state and local tax
returns as well as paid any and all import or export duties, fees, taxes,
licenses or other mandatory charge which may result in a material effect on
BORROWER's financial condition or affect in any way the Collateral given BANK
hereunder if not so filed or paid with respect to the operations of BORROWER
which are required to be filed or paid for the present fiscal year, and all
prior fiscal years or as are otherwise due. BORROWER has paid or caused to be
paid to any respective taxing or licensing authority all taxes as shown on said
returns or on any assessment or deficiency received by any of them to the extent
that such taxes have become due.
3.5 AGREEMENTS. BORROWER is not a party to any agreement or instrument or
subject to any charter or other restriction materially and adversely affecting
its business, properties, assets, operations or condition (financial or
otherwise). BORROWER is not in material default in the performance, observation,
or fulfillment of any of the obligations, covenants, or conditions contained in
any material agreement, instrument or obligation to which the BORROWER is a
party. This Loan
9
Agreement is not prohibited by the terms or affected by any other agreement or
instrument referred to hereinabove.
3.6 COMPLIANCE WITH APPLICABLE LAWS. BORROWER is in compliance with all
laws, ordinances, rules, regulations, and all other legal requirements, the
violation of which would have a material effect on the business, properties,
assets, operations or condition of BORROWER.
3.7 LOCATION OF BORROWER'S ASSETS. All inventory and other assets of
BORROWER are located in properties specified in the UCC-1.
3.8 BROKERS. There is no broker entitled to a commission on account of the
loan.
IV. CONDITIONS OF LENDING.
The obligation of the BANK to make the Loan hereunder and any advances
subsequent to the execution of this Agreement is, and hereafter through the
Maturity Date, will be subject to the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. As of the date hereof and at the time
of every advance made under the Note, the representations and warranties set
forth in Article III hereof shall be true and correct. Should any material
change occur which affects the representations and warranties set forth in
Article III above, BORROWER agrees to immediately notify BANK in writing of such
changes.
4.2 NO DEFAULT. At the time of each advance hereunder and after giving
effect thereto, BORROWER shall be in compliance with all the terms and
provisions set forth herein on its part to be observed or performed, and no
Event of Default specified in Article VII or otherwise herein, nor any event
which upon notice or lapse of time or both would constitute such an Event of
Default, shall have occurred and be continuing. On the date of each advance
hereunder, at BANK's request BORROWER shall deliver to the BANK a certificate,
dated as of the date of such loan and signed
10
by the appropriate corporate officer(s) of the BORROWER, confirming such
compliance as aforesaid and with the condition precedent set forth in Section
4.01 hereof; whether or not BANK requests such a certificate, BORROWER's request
for an advance shall be deemed to be a representation by BORROWER that the
conditions of this Section 4.02 have been satisfied.
4.3 FINANCIAL AUDITS. BANK shall be entitled to conduct quarterly audits
of BORROWER's business operation in the event BANK believes the BORROWER is
experiencing material adverse changes to business operations. BANK shall charge
BORROWER's account for any audit fees subsequent to any audit actually
conducted. The audit fee shall be $250.00 per day. Failure by BANK to conduct
one or more audits shall not operate as a waiver of BANK's right to conduct any
other audit. BORROWER shall provide BANK semi-annual financial statements of all
affiliates and/or subsidiaries of BORROWER together with annual financial
statements and tax returns of the Guarantors.
4.4 ADDITIONAL FINANCIAL INFORMATION. The BANK shall have the right from
time-to-time to demand additional financial information from the BORROWER and
Guarantors, and the BORROWER shall forthwith supply such additional information
to the BANK. The BANK shall also have the right to require additional covenants
to be performed by the BORROWER based upon changes in business conditions of the
BORROWER.
V. AFFIRMATIVE COVENANTS.
BORROWER covenants and agrees that from the date hereof and until payment
in full of all the principal and accrued interest on the Note, unless the BANK
shall otherwise consent in writing, BORROWER will:
5.1 NOTICE. Give prompt written notice to the BANK of (a) any proceedings
instituted by or against BORROWER in any federal or state court or before any
commission or other regulatory
11
body, federal, state or local, or of any such proceedings threatened against
BORROWER in writing by any federal, state or other governmental agency, which,
if adversely determined, would have a material adverse effect the businesses,
properties, assets, operations or condition (financial or otherwise) of
BORROWER; and (b) any other action, event or condition of any nature which may
reasonably be expected to lead to or result in a material adverse effect the
businesses, properties, assets, operations or condition (financial or otherwise)
of BORROWER, or which, with notice or lapse of time or both, would constitute an
Event of Default under this Loan Agreement or a default under any other material
agreement by which BORROWER is bound.
5.2 PAYMENT OF DEBTS TAXES ETC. Pay all debts and perform all obligations
promptly and in accordance with the terms thereof and pay and discharge or cause
to be paid and discharged promptly all taxes, assessments and governmental
charges or levies imposed upon BORROWER or upon its income or receipts or upon
any of its properties and assets before the same shall be in default, as well as
all lawful claims for labor, materials and supplies or otherwise which, if
unpaid, might become a lien or charge upon such properties and assets or any
part thereof; provided, however, that BORROWER shall not be required to perform
such obligations or pay such debts (except for obligations for money borrowed),
taxes, assessments, or governmental charges or levies or claims for labor,
materials, and supplies which are being contested in good faith and by proper
proceedings diligently pursued.
5.3 COMPLIANCE WITH APPLICABLE LAWS. Promptly and faithfully comply with,
conform to, and obey all present and future laws, ordinances, rules,
regulations, and all other legal requirements applicable to BORROWER, the
violation of which would have a materially adverse effect on the business,
properties, assets or operations of BORROWER.
12
5.4 INSURANCE POLICIES. Maintain ordinary and necessary insurance policies
in good standing and pay promptly all premiums when due and payable thereon,
including but not limited to coverage against general liability, fire, and
theft. All coverages shall include BANK as a Loss Payee with thirty (30) days
prior written notice of cancellation. BORROWER shall deliver to BANK copies of
all insurance policies and/or binders in force no later than ten (10) days prior
to the expiration of any current policy.
5.5 FINANCIAL COVENANTS.
(a) Maintain a minimum current ratio of 1.5, calculated by dividing
current assets by current liabilities. Current assets will be valued by
generally accepted accounting principles; current liabilities will be valued at
their face value.
(b) Maintain a minimum Tangible Net Worth of $3,300,000.
(c) Maintain a ratio of Debt to Tangible Net Worth of no more than
1.5. On or before ten (10) days after the end of each fiscal quarter of the
BORROWER, BORROWER shall provide BANK with proof of BORROWER's compliance with
the foregoing requirements. Said proof shall be prepared by an independent
certified public accountant reasonably satisfactory to BANK and shall be
certified by BORROWER to be true and correct.
5.6 FINANCIAL REPORTS. Deliver the following financial reports to BANK:
(a) Within one hundred twenty (120) days after the end of each
fiscal year of BORROWER: (i) the consolidated audited financial statements of
BORROWER for such year, together with an unqualified opinion with respect to
same from a certified public accounting firm acceptable to the BANK in its
reasonable discretion. The first such report, shall include all such information
retroactive to the BORROWER's fiscal year which began in 1994.
13
(b) Within one hundred twenty (120) days after the end of the fiscal
year of each of BORROWER's affiliates, a compilation prepared by an certified
public accounting firm acceptable to the BANK in its reasonable discretion. The
first such report shall include said compilation retroactive to the affiliates
fiscal year which began in 1994.
(c) Within thirty (30) days after filing with the I.R.S., a complete
copy of the BORROWER's and each of its subsidiary's corporate income tax
returns;
(d) On a quarterly basis, no later than twenty (20) days after the
end of each fiscal quarter, management prepared financial statements of the
BORROWER and all entities related to the BORROWER. Such statements shall be
certified by the manager to be true and correct.
(e) On a monthly basis, a Borrowing Base Certificate, substantially
in the form attached hereto as Exhibit "A", supported by a current accounts
receivable aging, a detailed pre-sold (OEM) inventory breakdown and a compliance
certificate, in the form attached to the Borrowing Base Certificate. Said
certificate will be provided ten (10) days after the end of each month of the
term of the Revolving Promissory Note;
(f) Annually within one hundred twenty (120) days after the end of
each calendar year, current personal financial statements and copies of filed
tax returns of each Guarantor, provided that if a Guarantor has not filed a tax
return on or before one hundred twenty (120) days after the end of a calendar
year, copies of said returns within ten (10) days after the filing
5.7 INVENTORY AUDIT. Provide an audit of the inventory of the BORROWER as
of the last day of each fiscal year of the BORROWER . The audit shall be
prepared at the BORROWER 's expense, by an auditor acceptable to the BANK. The
audit shall identify the type and quantity of the assets contained within the
inventory and the value for same. The audit shall be delivered no later than
thirty (30) days after the end of each fiscal year of the BORROWER.
14
5.8 DEPOSITORY ACCOUNTS. Maintain the depository accounts of the BORROWERS
and the Guarantors in the BANK. Said account shall include, but not be limited
to, monies received from the issuance of equity offerings, pending the use of
such funds.
VI. NEGATIVE COVENANTS.
BORROWER covenants and agrees that from the date hereof until payment in
full of the principal and interest on the Note, unless the BANK shall otherwise
consent in writing, BORROWER will not (directly or indirectly):
6.1 INDEBTEDNESS, GUARANTEES AND LIENS. Incur, create, assume or permit
any type of indebtedness, guarantee or lien, which would in the BANK' s sole
judgment, taken in the aggregate or individually, materially affect the
BORROWER's business, properties, assets or operations or jeopardize the
BORROWER's ability to repay the loan hereunder. The BORROWERS covenants include,
but are not limited to, agreeing not to pledge, hypothecate, or otherwise
encumber the equipment or inventory of BORROWER. BORROWER shall not change its
business address and shall continually collect all accounts receivable at said
address. Should BORROWER propose to change its business address or the address
where accounts receivable are collected, BORROWER shall give BANK thirty (30)
days prior written notice of said change.
6.2 SALARY AND OTHER PAYMENTS TO PRINCIPALS. Annually pay to either of its
owners, XXXXX XXXXXXX and XXXXXXXXXX XXXXX salary, bonuses and all other forms
of compensation or distribution, including but not limited to loans and
dividends, in excess of $125,000.00 to each individual plus to the two owners
combined, 70% of the BORROWER's net income for such year.
6.3 RECEIVABLES FROM AFFILIATES. Allow receivables due from its affiliates
(including, but not limited to affiliates in Sweden, Germany, Russia and the
Ukraine) to exceed $1,022,000.00.
15
VII. EVENTS OF DEFAULT.
Each and every occurrence of one or more of the following events shall
constitute an "Event of Default" (hereinafter called "Events of Default"):
(a) any representation or warranty made herein shall prove to be
false or misleading in any material respect;
(b) any report, certificate, financial statement or other instrument
furnished in connection with this Loan Agreement or Loan Document shall prove to
be false or misleading in any material respect;
(c) default shall be made in the payment of the principal of, or the
interest on the Note,, for a period of seven (7) days from the date when said
payments are due and payable;
(d) default shall be made by BORROWER with respect to (i) any
liability for borrowed money beyond any applicable period of grace, or (ii) the
performance of any other obligation incurred in connection with any such
liability for borrowed money beyond any applicable period of grace, if, in each
case, the effect of such default is to accelerate the maturity of such liability
or cause any other material liability to become due prior to its stated
maturity;.
(e) default shall be made under the terms and conditions of any of
the Loan Documents; (f) default shall be made in the due observance or
performance of any other covenant, condition or agreement on the part of
BORROWER to be observed or performed pursuant to the terms of this Loan
Agreement or the other Loan Documents and such default shall have continued for
a period of thirty (30) days;
(g) BORROWER shall (i) apply for or consent to the appointment of a
receiver, trustee, or liquidator of the BORROWERS business, properties, assets
or operations, (ii) admit in
16
writing their inability to pay their debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or
insolvent, or (v) file a voluntary petition in bankruptcy, or a petition or an
answer seeking reorganization or an arrangement with creditors or take advantage
of any bankruptcy, reorganization, insolvency, readjustment of debts,
dissolution or liquidation, law or statute, or an answer admitting the material
allegations of a petition filed against it in any proceeding under any such law
or statute or if action shall be taken by BORROWER for the purpose of effecting
any of the foregoing, or (vi) any order, judgment, decree or writ shall be
entered upon an application of a creditor of any BORROWER by a court of
competent jurisdiction which either: (1) attaches any material portion of any
BORROWER's assets under judicial process, or (2) approves a petition seeking an
appointment of a receiver or trustee of any material part of any BORROWER's
assets, or (vii) any order, judgment, decree or writ shall be entered against
BORROWER for an amount in excess of $25,000.00;
(h) an order, judgment or decree shall be entered without the
application, approval, or consent of the debtor by any court of competent
jurisdiction, approving a petition seeking reorganization of BORROWER or any of
them or appointing a receiver, trustee or liquidator of BORROWER and such order,
judgment, or decree shall continue unstayed and in effect for any period of
forty-five (45) consecutive days, provided the order, judgment or decree shall
have a material adverse effect on BORROWER.
During the continuance of any such event, BANK at its option exercised by
written notice from the BANK to BORROWER, may declare the Note to be forthwith
due and payable, both as to principal and interest, without presentment, demand,
protest, or other notice of any kind, all of which are hereby expressly waived,
anything herein or in the Note to the contrary notwithstanding and the BANK may
enforce any or all of the BANK's rights and remedies set forth in the Loan
Documents.
17
VIII. MISCELLANEOUS.
8.1 NOTICE. Any notice shall be conclusively deemed to have been received
by a party hereto and to be effective on the day on which delivered to such
party at the address set forth below (or at such other address as such party
shall specify to the other parties in writing) or if sent by registered mail, on
the third business day after the day on which mailed, postage prepaid, addressed
to such party at said address
(a) If to the BANK at the following address:
SunTrust Bank Miami, National Association
Commercial Lending Division
0000 Xxxxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Vice President
(b) If to the BORROWER at the following address:
Advanced Electronic Support Products, Inc.
0000 Xxxxxxxxx 000xx Xxxxxx
Xxxxx, Xxxxxxx 00000
8.2 SURVIVAL OF REPRESENTATIONS. All covenants, agreements,
representations, and warranties made herein and in the certificates delivered
pursuant hereto shall survive the Maturity Date. Whenever in this Loan Agreement
reference is made to any of the parties hereto, such reference shall be deemed
to include the successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of BORROWER which are contained in this Loan
Agreement shall inure to the benefit of the successors of the BANK.
8.3 APPLICABLE LAW. This Loan Agreement and all Loan Documents shall be
construed in accordance with and governed by the laws of the State of Florida.
8.4 INTEREST. Nothing herein contained nor in any instrument or
transaction related hereto shall be construed or so operate as to require
BORROWER or any person liable for the payment of
18
this Note to pay interest in an amount or at a rate greater than the maximum
allowed by applicable laws in effect from time to time. Should any interest or
other charges in the nature of the interest paid by BORROWER or any parties
liable for the payment of this Note result in the computation or earning of
interest in excess of the maximum rate of interest allowed by applicable law in
effect from time to time, then any and all such excess shall be and the same is
hereby waived by BANK, and all such excess received shall automatically be
credited against and in reduction of the Principal, and any portion of said
excess which exceeds the Principal shall be paid by BANK to BORROWER or any
parties liable for the payment of this Note, it being the intent of the parties
hereto that under no circumstances shall BORROWER or any parties liable for
payment hereunder be required to pay interest in excess of the maximum rate
allowed by applicable law in effect from time to time.
8.5 EXPENSES. BORROWER will pay (a) any and all documentary stamp taxes,
intangible taxes, costs and expenses applicable to the loans hereunder at,
before or after execution of any Note hereunder; (b) for all recording and
filing costs hereunder; and (c) any and all costs for preparation of loan
documents, consummation and protection of the Loan, including, but not limited
to, attorney's fees for BANK's counsel.
8.6 MODIFICATION OF AGREEMENT. No modification, amendment or waiver of any
provision of this Loan Agreement, any Loan Document, or of the Note, nor any
consent to any departure by BORROWER therefrom, shall in any event be effective
unless the same shall be in writing and signed by the BANK and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on BORROWER shall in any case entitle
BORROWER to any other or further notice or demand in the same, similar or other
circumstances.
19
8.7 WAIVER OF RIGHTS BY BANK. Neither any failure nor any delay on the
part of the BANK in exercising any right, power, or remedy hereunder or under
the Note or Loan Documents shall operate as a waiver thereof, nor shall a single
or partial exercise thereof preclude any other or further exercise of any other
right, power, or remedy hereunder.
8.8 TIME OF PERFORMANCE AND EXTENSIONS. Time is of the essence with regard
to any required action, payment or other covenant of BORROWER hereunder or in
any other Loan Document. Failure to timely comply with any required action,
payment or covenant hereunder shall constitute an Event of Default under Article
VII herein. Should any payment of principal of or interest on the Note become
due and payable on other than a business day, the maturity thereof shall be
extended to the next succeeding business day, and, in the case of any prepayment
of principal, interest shall be payable thereon at the rate per annum herein
specified during such extension. The term "business day" shall mean any day not
a Saturday, Sunday, or legal bank holiday in the State of Florida.
8.9 SEVERABILITY. In case any one or more of the provisions contained in
this Loan Agreement or the Loan Documents shall be invalid, illegal or
unenforceable in any respect, the validity, legality or enforceability of the
remaining provisions contained herein and therein shall not in any way be
affected or impaired thereby.
8.10 COUNTERPARTS. This Loan Agreement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which when
taken together shall constitute one agreement. This Loan Agreement shall be
effective when counterparts which, when taken together, bear the signatures of
all the parties hereto, shall have been lodged with the BANK.
20
8.11 REPRESENTATION AND WARRANTY BY THE BANK. The BANK represents and
warrants to BORROWER that the Note evidencing this Loan is made in the ordinary
course of its commercial banking business.
8.12 HEADINGS. The headings used herein have been inserted for convenience
only and do not constitute matters to be considered in interpreting this Loan
Agreement.
8.13 WAIVER OF JULY TRIAL. THE BORROWER HEREBY KNOWINGLY VOLUN TARILY AND
INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT AND ANY AGREEMENT CONTEM PLATED TO BE EXECUTED IN
CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BANK ENTERING INTO THIS AGREEMENT AND THE BANK
MAKING ANY LOAN ADVANCE OR OTHER EXTENSION OF CREDIT TO BORROWER.
IN WITNESS WHEREOF, BORROWER and the BANK have caused this Loan Agreement
to be executed by their duly authorized representatives, all as of the date
first above written.
BORROWER
ADVANCED ELECTRONIC SUPPORT
PRODUCTS, INC., a Florida corporation
By: /s/ XXXXXXXXXX XXXXX
-------------------------
Xxxxxxxxxx Xxxxx, President
21
BANK
SunTrust Bank Miami, National Association,
a national banking association
By: /s/ XXXXXXX XXXXXXXX
---------------------------
Xxxxxxx Xxxxxxxx, Asst. Vice President
Commercial Lending Department
22
