AGREEMENT
TO MAKE SECURED LOAN
Agreement
made ____________19___ between ______________________________, of
___________________________________________________________ (address), in this agreement referred to
as debtor, and __________________________________, of
___________________________________________________________ (address), in this agreement referred to
as secured party.
In
consideration of the mutual covenants and promises in this agreement contained,
debtor and secured party agree:
SECTION
ONE: Agreement For Loan; Terms
1.1.
Secured party shall loan to debtor and debtor shall borrow from secured party,
on or before ____________19___, the sum of __________ Dollars. At the time the loan is made, debtor shall
execute, as evidence of the indebtedness hereunder, a __________ (term) note in a form similar to that
attached to this agreement as Exhibit __________ and made a part hereof by this
reference. Such loan shall be subject to the terms and conditions of this
agreement.
1.2.
The indebtedness evidenced by the note shall be repaid in __________ (number) principal installments of
__________ Dollars each, payable __________ (monthly),
commencing on ____________19___, until ____________19___, when the entire
unpaid balance of principal and interest shall be due and payable. In addition
to the above required payments on principal, debtor shall pay interest on each
installment date on the unpaid principal balance of the note outstanding at a
rate of __________ percent above the prime interest rate of secured party for
__________ (commercial) borrowers
as such rate may vary from time to time, but not less than __________ percent
nor more than __________ percent per annum. Interest shall be computed on a
daily basis using a year of 365 days, and in such computation effect shall be
given daily to any change in the interest rate resulting from a change in such
prime rate.
1.3.
In addition to the payments required by Section 1.2, debtor shall make
additional principal payments on the note within __________ days after the end
of each of its fiscal years, commencing with the fiscal year ending
____________19___, in aggregate amount equal to __________ percent of a figure
computed by deducting from net earnings of debtor for such fiscal year (after
federal income taxes have been deducted and after depreciation and amortization
charges have been deducted in accordance with generally accepted principals of
accounting) all installments paid on the note pursuant to Section 1.2, during
such fiscal year.
1.4.
In the event that the real property of debtor located at
_______________________________________ (address),
is sold pursuant to SECTION FIVE, debtor shall forthwith pay to secured party
not less than __________ percent of the net sales proceeds received for the
real property, which sum shall be applied to the indebtedness hereunder in
accordance with the provisions of Section 1.6.
1.5.
All sums payable by debtor hereunder are to be first applied to reduce or repay
the present indebtedness of debtor to secured party, if any such indebtedness
shall exist at time of borrowing.
1.6.
The indebtedness may be prepaid at any time in whole or in part without
premium. Any partial prepayment hereunder shall be applied to the installments
of the note in inverse order of their maturities.
SECTION
TWO: Security
As
security for all indebtedness of debtor to secured party hereunder and pursuant
to the note as in this agreement provided, debtor shall execute and deliver to
secured party prior to or simultaneously with the initial making of the loan
hereunder, in a form satisfactory to secured party __________ (if corporate debtor, add: and supported by
appropriate resolution authorizing the same) the following:
A.
The following security __________ (agreement
or agreements) to be executed in accordance with __________ (cite local enactment of UCC Article 9).
__________
(Add one or more of the following paragraphs, as appropriate:
(1) An assignment of the life insurance
policy in the amount of ____________ Dollars ($__________) on the life of
__________ (insured) issued by ____________ (insurer), policy number
__________, which policy has a present cash surrender value of __________
Dollars ($__________) or more.
(2) A security agreement in the form of a
pledge, pledging to secured party, accompanied by physical delivery of and
granting to secured party a first priority security interest in all of the
stocks, bonds, instruments and documents of title, whether negotiable or
nonnegotiable owned by debtor, including but not limited to __________
(specify).
(3) A security agreement covering leases and
leased goods, granting to secured party a first priority security interest in
all chattel leases in which debtor is lessor, present and future, and all goods
and inventory relating thereto.
(4) A security agreement pertaining to
tangible personal property owned by debtor, granting to secured party a first
priority security interest in, and pertaining to all of the machinery and
equipment, furniture and fixtures, and other tangible personal property of
debtor, whether then owned or thereafter acquired by debtor.
(5) A security agreement pertaining to
equipment and fixtures owned by debtor, granting to secured party a first
priority security interest in all installed equipment and fixtures of debtor,
then owned or thereafter acquired.
(6) A security agreement pertaining to
accounts receivable ______________________ (and contract rights), chattel paper
and inventory, in a form satisfactory to secured party, granting to secured
party a first priority security interest in all of the present and future
accounts receivable of debtor __________ (and contract rights), chattel paper,
inventory, general intangibles and instruments, and such additional documents
as relate thereto or shall be required by the terms of such security agreement
or this agreement.
(7) A security agreement pertaining to
inventory of debtor, or other appropriate lien instrument or instruments, in
form satisfactory to secured party, granting to secured party a lien on all of
the inventories, including raw materials, work in process and finished goods of
every nature and description, whether then owned or thereafter acquired by
debtor.)
B.
A guaranty agreement given by __________________ (guarantor), guaranteeing to secured party the repayment of
indebtedness of debtor hereunder.
C.
A subordination agreement, subordinating in favor of secured party the sum of
__________ Dollars owed by debtor to ___________________________ (designate), and providing to secured
party a security interest in such obligation and in any and all security
therefor.
D.
Such financing statements as may be required or requested by secured party to
perfect all security interests to be conferred on secured party under this
agreement and to accord secured party a perfected first priority security
position under __________ (cite local
enactment of UCC Article 9).
E.
Such documents or certificates as may be requested by secured party, are
required under the terms of any and every security agreement, or both.
F.
Such other documents or agreements of security and appropriate assurances of
validity and perfected first priority of lien or security interest as secured
party may request at any time, including, but not limited to, such additional
security as is contemplated by the provisions of SECTION FOUR.
SECTION
THREE: Representations and Warranties of Debtor
3.1.
Debtor represents and warrants as follows, such representations and warranties
to be deemed continuing representations and warranties during the entire term
of this agreement:
(a) This agreement, the security agreements
and other documents and instruments required hereunder, and the note provided
for in this agreement, when issued and delivered, will all be valid and binding
in accordance with their terms. __________ (If
corporate debtor, add: Debtor is a corporation duly organized and existing and
in good standing under the laws of __________ (state), having its principal
place of business at ____________________________________________________
(address) Execution, delivery and performance of this agreement, the security
agreements and other documents and instruments required hereunder, and the
issuance of the note provided for in this agreement are within its corporate
powers, have been duly authorized, and are not in contravention of law or the
terms of the __________ (articles or certificate) of incorporation or bylaws of
debtor, and do not require the consent or approval of any governmental body,
agency, or authority.)
(b) The execution, delivery and performance
of this agreement, the security agreements and other documents and instruments
required hereunder, and the issuance of the note required in this agreement is
not in contravention of the unwaived terms of any indenture, agreement or
undertaking to which debtor is a party or by which debtor is bound.
(c) No litigation or other proceeding before
any court or administrative agency is pending, or to the knowledge of
______________ (debtor or the officers of
debtor) is threatened against debtor, the outcome of which could
materially impair the financial condition of debtor or the ability of debtor to
carry on business.
(d) There are no security interests in or
liens, mortgages or other encumbrances on any of the assets of debtor referred
to in SECTION FOUR or any other assets of debtor, except to secured party or as
permitted in this agreement.
(e) The balance sheet of debtor dated
________________ (date),
previously furnished secured party, is complete and correct and fairly presents
the financial condition of debtor. Since the date of such balance sheet, there
has been no material adverse change in the financial condition of debtor. To
the knowledge of __________ (debtor or the
officers of debtor), debtor has no contingent obligations, including
any liability for taxes, not disclosed by or reserved against in such balance
sheet and, at the time of execution of this agreement, there are no material
unrealized or anticipated losses from any known commitment of debtor.
3.2.
Debtor shall furnish secured party, in a form satisfactory to secured party, an
opinion of counsel for debtor with respect to the legal matters referred to in
Subsections 3.1(a) through 3.1(d). Such opinion shall be submitted prior to the
making of an initial loan pursuant to this agreement.
SECTION
FOUR: Affirmative Covenants of Debtor
Debtor
covenants and agrees that debtor will so long as any indebtedness remains
outstanding under this agreement:
4.1.
Furnish secured party with the following:
(a) Within __________ days after the
execution of this agreement and as of the end of each of the fiscal years of
debtor, a detailed audit report of debtor certified to by independent certified
public accountants satisfactory to secured party.
(b) Within __________ days after the
execution of this agreement and as of the end of each of the fiscal years of
debtor, a balance sheet and statement of profit and loss of debtor, certified
by __________ (if appropriate, add: an authorized officer of) debtor.
(c) Within __________ days and as of the end
of each __________ (month) a
certificate in the form of Exhibit __________ (C), attached to this agreement
and made a part hereof by this reference.
(d) Such information as is required by the
terms and conditions of the security agreements or other documents or
instruments of security referred to in this agreement.
(e) Promptly, and in a form satisfactory to
secured party, such other information as secured party may request from time to
time.
4.2.
Maintain, at all times, cash and current trade accounts receivable in an
aggregate amount of not less than the total of all current liabilities of
debtor as such total current liabilities may vary from time to time. For
purposes of this agreement, “total current liabilities” means, without limiting
the generality of the expression, all liabilities of debtor that are payable
within any __________ (12) month period, including such liabilities and
obligations of longer term to the extent of the current portion thereof that
may mature within any __________ (12) month period.
4.3.
Maintain net current assets of not less than __________ Dollars. For purposes of this agreement, “net current
assets” means the excess of current assets over current liabilities, computed
in accordance with generally accepted principles of accounting, including in
current liabilities all payments under the note provided for in this agreement
that shall fall due within one year.
4.4.
Maintain a tangible net worth of not less than __________ Dollars from and
after __________ (date), computed
in accordance with generally accepted accounting practice.
4.5.
Pay and discharge all taxes and other governmental charges, and all contractual
obligations requiring the payment of money, before such become overdue, unless
and to the extent only that such payment is being contested in good faith.
4.6.
Maintain insurance coverage on the physical assets of debtor and against other
business risks in such amounts and of such types as are customarily carried by
companies similar in size and nature to that of debtor, and in the event of
acquisition of additional property, real or personal, or of incurring additional
risks of any nature, increase such insurance coverage in such manner and to
such extent as prudent business judgment and present practice dictate. In the
case of all policies of insurance covering property mortgaged or pledged to
secured party or property in which secured party shall have a security interest
of any kind whatsoever, other than those policies of insurance protecting
against casualty liabilities to strangers, all such policies of insurance shall
provide that the loss payable thereunder shall be payable to secured party and
debtor as their respective interests may appear. All such policies of insurance
or copies thereof, including all indorsements thereon and those required
hereunder, shall be deposited with secured party.
4.7.
Permit secured party through its authorized attorneys, accountants and
representatives, to examine the books, accounts, records, ledgers and assets of
every kind and description of debtor at all reasonable times on oral or written
request of secured party.
4.8.
Promptly notify secured party of any condition or event that constitutes, or
with the running of time or the giving of notice will constitute, a default
under this agreement, and promptly inform secured party of any material adverse
changes in the financial condition of debtor.
4.9.
Pay to secured party for application on the indebtedness hereunder, in
accordance with the provisions of SECTION ONE of this agreement, any payment
received from __________ (designate)
in payment of indebtedness to debtor.
4.10.
Maintain in good standing all licenses required by _______________ (state) or any agency thereof, or other
governmental authority that may be necessary or required for debtor to carry on
its general business objects and purposes.
4.11.
At any time on the request of secured party to execute and deliver to secured
party, in form satisfactory to secured party, such additional documentation in
respect of the indebtedness and liability of debtor to secured party
contemplated under the terms of this agreement as secured party shall deem
necessary or desirable to comply with the provisions or requirements of
__________ (cite local enactment of UCC
Article 9), including, without limiting the generality of the
foregoing, appropriate security agreements and financing statements.
4.12.
Furnish secured party, on request by and in form satisfactory to it, __________
(specify security instruments, such as:
pledges, assignments, mortgages, lien instruments or other security agreements)
pertaining to __________ (designate coverage, such as: any or all of the real
or personal property of debtor of every nature and description, whether now
owned or hereafter acquired,) to the extent that secured party may
in its sole discretion require.
SECTION
FIVE: Negative Covenants of Debtor
Debtor
covenants and agrees that so long as any indebtedness remains outstanding under
this agreement that debtor will not, without the prior written consent of
secured party:
5.1.
Make any material change in the general business objects or purpose of debtor
__________ (if corporate debtor, add: or in
its corporate structure or purchase, acquire, or redeem any of its capital
stock).
5.2.
Sell, lease, transfer or dispose of all, substantially all, or any material
part of the assets of debtor __________ (if
corporate debtor, add: or enter into any merger or consolidation)
except in the ordinary course of business, and except for the sale of real
estate referred to in SECTION ONE, subject to payment to secured party as
required by such section.
5.3.
Guarantee, indorse or otherwise become secondarily liable for or on the
obligations of others, except by indorsement for deposit in the ordinary course
of business.
5.4.
Become or remain obligated for any indebtedness for money loaned, or for any
indebtedness incurred in connection with the acquisition of any property, real
or personal, tangible or intangible, except:
(a) Indebtedness to secured party.
(b) Current trade, utility or non
extraordinary accounts payable arising in the ordinary course of the business
of debtor.
5.5.
Purchase or become obligated for the purchase of any fixed assets in excess of
__________ Dollars in aggregate for any fiscal year.
5.6.
Purchase or otherwise acquire, or become obligated for the purchase of all or
substantially all of the assets or business interests of any person, firm or
corporation, or any shares of stock of any corporation, trust or association,
or in any other manner effectuate or attempt to effectuate an expansion of
present business by acquisition.
5.7.
__________ (If corporate debtor, provide:
Declare or pay any dividends in excess of __________ Dollars annually, except
dividends payable in capital stock of debtor.)
5.8.
Make or allow to remain outstanding any investment in, or any loans or advances
to, any person, firm, corporation or other entity or association, except:
(a) Advances to the officers of debtor not to
exceed in aggregate at any one time the sum of __________ Dollars.
(b) The currently outstanding __________
Dollars loaned to, and against the note or notes of
_____________________________________________________ (designate), provided that any and all
payments thereon shall be paid over to secured party as set forth in SECTION
ONE.
(c) Indebtedness required to be subordinated
hereunder.
5.9.
Make or allow to be made any changes increasing or adding to the salary or
remuneration of any kind of the officers of debtor ____________________________
(if corporate debtor, add: or directors),
by which such salaries or remuneration shall be or become in excess of an
aggregate annual amount of __________ Dollars.
5.10.
Affirmatively pledge or mortgage any of the assets of debtor, whether now owned
or hereafter acquired, or create or permit to exist any lien or encumbrance
thereon or security interest therein, except to secured party.
5.11.
Lease any real, personal or mixed property for a term longer than __________
years or providing for payments in excess of an aggregate of __________ Dollars
in any year.
5.12.
Sell or assign any account, note or trade acceptance receivable except to
secured party.
1SECTION SIX: Default
6.1.
On nonpayment, when due in accordance with the terms thereof, of any
installment of the principal or interest on the note provided for in this
agreement and continuance of such default for a period of __________ days, the
note shall automatically become immediately due and payable.
6.2.
On occurrence of any of the following events of default, or at any time
thereafter unless such default is remedied, secured party may give notice to
debtor declaring all outstanding indebtedness hereunder to be due and payable,
whereupon all indebtedness then outstanding hereunder shall immediately become
due and payable:
(a) Default in observing or performing any of
the covenants or agreements of debtor set forth in SECTIONS FOUR and FIVE.
(b) Default in the observing or performing
any of the other covenants or agreements of debtor in this agreement set forth,
and continuance thereof for __________ days after notice to debtor of such
default by secured party.
(c) Falsity of any representation or warranty
made by debtor in this agreement, or in any instrument submitted pursuant to
this agreement, in any material respect.
(d) Default in observing or performing any of
the covenants or agreements of debtor set forth in any collateral document of
security given to secure indebtedness hereunder, and the continuation of such
default beyond any period of grace specified in any such document.
(e) Default in the payment of any other
obligation of debtor for money loaned, or in observing or performing any
covenants or agreements given with respect thereto.
(f) Any change, for any reason whatsoever, in
the management, ownership or control of debtor that shall in the sole judgment
of secured party adversely affect future prospects for the successful operation
of debtor.
(g) If a committee of creditors is appointed
for the business of debtor; debtor makes a general assignment for the benefit
of creditors, is adjudicated bankrupt, or files a voluntary petition in
bankruptcy or for reorganization or to effect a plan or arrangement with
creditors; debtor files an answer to a petition by creditors or other petition
filed against debtor, admitting the material allegations thereof for an
adjudication in bankruptcy or for a reorganization; debtor applies for or
permits the appointment of a receiver or trustee or custodian for any of the
property or assets of debtor; such receiver, trustee or custodian is appointed
for any of the property or assets of debtor, otherwise than on application or
consent of debtor, and such receiver, trustee or custodian so appointed is not
discharged within __________ days after the date of appointment; or an order is
entered, and is not dismissed or stayed within __________ days from entry,
approving any petition for reorganization of debtor.
SECTION
SEVEN: Remedies
On
any default hereunder, and at any time thereafter, secured party shall have the
rights and remedies of a secured party under _______________ (cite local enactment of UCC Article 9) in
addition to the rights and remedies provided in this agreement or in any other
instrument or paper executed by debtor.
SECTION
EIGHT: Waiver; Rights of Secured Party Cumulative
No
delay or failure of secured party in exercising any right, power or privilege
hereunder shall affect such right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise thereof or the exercise
of any other power, right or privilege. The rights of secured party under this
agreement are cumulative and not exclusive of any right or remedy that secured
party would otherwise have.
SECTION
NINE: Notice
All
notices to secured party with respect to this agreement shall be deemed to be
completed on mailing ____________________ (by
certified mail) to offices of debtor at
__________________________________________________________ (address).
SECTION
TEN: Effect of Agreement
This
agreement shall become effective on the execution hereof by secured party and
debtor and shall be binding on and shall inure to the benefit of secured party
and debtor and their respective successors and assigns.
SECTION
ELEVEN: Governing Law
This
agreement shall be construed in accordance with _________________ (cite local enactment of UCC Article 9)
and other applicable laws of _________________ (state).
In
witness whereof, the parties have executed this agreement at
___________________ (designate place of
execution) the day and year first above written.
__________________________ ______________
Signature Date
__________________________ ______________
Signature Date
