BUSINESS PROMISSORY/CREDIT NOTE
(for loans in the principal amount greater than $250,000)
Borrower: Name: Tel-instrument Lender: [X] SUMMIT BANK [ ] SUMMIT BANK
Electronics Corp. ("Lender") ("Lender")
210 MAIN STREET ONE BETHLEHEM PLAZA
HACKENSACK, NJ BETHLEHEM, PA 18018
07602
(individually and collectively, jointly
and severally, the "Borrower")
Address: 728 Garden Street
Carlstadt, N.J. 07072
Name:
(individually and collectively, jointly
and severally, the "Borrower")
Address:
Principal Amount: $ 350,000.00 Date of Note: July 22, 1998
FOR VALUE RECEIVED, Borrower unconditionally promises to pay to the order of
Lender the above principal amount in U.S. Dollars or, if a line of credit, such
lesser amount of advances made but not repaid (including the face amount of any
letter of credit issued and such other financial accommodations as may have been
made), together with interest at the rate and on the terms provided in this
Business Promissory/Credit Note (including all renewals, extensions and/or
modifications, this "Note"). Any advance(s) shall be conclusively presumed to
have been made at the request of Borrower when (1) deposited or credited to an
account of Borrower with Lender, or (2) made in accordance with the oral or
written instructions of Borrower, or of anyone on behalf of Borrower. Any such
sums borrowed or reborrowed must be in multiples of 5% of the Principal Amount.
This Note and all documents executed in connection with this Note are referred
to herein as the "Loan Documents."
[ ] Borrower authorizes Lender to effect payment of sums due hereunder by
debiting Borrower's bank accounts maintained at Lender. If this line is
not checked, Borrower shall pay Lender at Lender's address shown above or
at such other place as Lender may designate in writing.
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INTEREST RATE. Interest will be calculated on the basis of the actual number of
days elapsed over a year of 360 days, unless prohibited by law. Interest shall
accrue on the unpaid principal balance of this Note from the date hereof at
[ ] Fixed Rate. The rate of ________ percent per annum.
[X] Lender's Prevailing Base Rate. Lender's Prevailing Base Rate plus 1.00
percent. Lender's Prevailing Base Rate is the rate announced by Lender
from time to time and is subject to change without prior notice to
Borrower. Lender lends at rates both above and below Lender's Prevailing
Base Rate, and Borrower acknowledges that Lender's Prevailing Base Rate is
not represented or intended to be the lowest or most favorable rate of
interest offered by Lender.
[ ] The rate of __________.
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PAYMENT SCHEDULE. All payments received hereunder will be applied first to the
payment of accrued interest, any expenses or charges payable hereunder and the
balance only applied to principal. Borrower shall pay in accordance with the
following payment schedule:
OPTION 1: Principal and Interest shall be paid:
[ ] Principal shall be paid on demand.
[X] Principal shall be paid in a single payment on July l5, 1999.
[ ] Principal shall be paid in equal [ ] monthly [ ] quarterly installments of
$ each, commencing on ___, _____, and continuing on the same day of each
successive month quarter thereafter, with a final payment of all unpaid
principal, interest and all other amounts recoverable under the Loan
Documents on ________, _____.
[ ] Interest shall be paid in [X] monthly [ ] quarterly installments
commencing on August 15, 1998, and continuing on the same day of each
successive [X] month [ ] quarter thereafter with a final payment of all
unpaid interest and all other amounts recoverable under the Loan Documents
at the time of final payment of unpaid principal.
OPTION 2: Principal and interest shall be paid:
[ ] [ ] monthly [ ] quarterly in installments of $ each, commencing on
_______, ______,and continuing on the same day of each successive [ ]
month [ ] quarter thereafter, with a final payment of all unpaid
principal, interest and all other amounts recoverable under the Loan
Documents on _______, _______.
LATE CHARGES. If any payment is not received by Lender within TEN (10) days
after its due date, Borrower shall, to the extent permitted by law, pay Lender a
late charge of 5% of the overdue payment (in no event to be less than $25.00 nor
more than $2,500.00). Any such late charge assessed is immediately due and
payable.
REPRESENTATIONS AND WARRANTIES. Borrower continually represents and warrants to
Lender that the execution, delivery, and performance of the Loan Documents by
Borrower and any other parties thereto do not require the consent or approval of
any other party; and do not conflict with, result in a violation of, or
constitute a default under any agreement or other instrument binding upon such
parties or any law, regulation, court decree, or order applicable to such
parties. The Loan Documents constitute legal, valid and binding obligations of
the parties thereto enforceable in accordance with their respective terms.
Borrower shall use all loan proceeds solely for business or commercial purposes.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, at all
times any amounts owing to Lender exist, Borrower shall (i) furnish such
information (including, without limitation, tax returns and financial
information) with respect to Borrower's financial condition and business
operations as Lender may request from time to time and cooperate and join with
Lender in taking all such further actions as Lender deems necessary to
effectuate the provisions of the Loan Documents; and (ii) permit employees or
agents of Lender full and complete access to any or all of Borrower's properties
and financial records, to make extracts from and/or audit such records and to
examine and discuss Borrower's properties, business, finances and affairs with
Borrower's officers and outside accountants, all at Borrower's expense.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that, at all times
any amounts owing to Lender exist, Borrower shall not, without the prior written
consent of Lender: (a) engage in any business activities substantially different
than those in which Borrower is presently engaged; (b) cease operations,
liquidate, merge, transfer, acquire or consolidate with any other entity, change
ownership, change name, dissolve or transfer or sell Lender's collateral outside
of the ordinary course of business; or (c) loan, invest in or advance money or
assets to any other person or entity, or purchase, create or acquire any
interest in any other enterprise or entity-
EVENTS OF DEFAULT AND EFFECT THEREOF. Each of the following shall constitute an
event of default ("Event of Default") under this Note: (a) failure of Borrower
to make any payment when due hereunder; (b) failure of Borrower to comply with
or to perform any term or condition contained in the Loan Documents; (c) default
by Borrower under any other loan agreement with any other creditor; (d) any
warranty, representation or statement made to Lender by or on behalf of Borrower
is false or misleading; (e) the dissolution or termination of Borrower's
existence as a going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Borrower; (f) the filing,
entry or issuance of any judgment, execution, garnishment, attachment,
distraint, or lien against Borrower or any of Borrower's property, or the entry
of any order enjoining or restraining Borrower and/or restraining or seizing any
property of Borrower; (g) failure of Borrower to furnish any information
requested by Lender or to permit Lender to inspect Borrower's books and records
or property; (h) a material adverse change in Borrower's financial condition; or
(i) any of the preceding events occurs with respect to any guarantor of any of
the amounts owed to Lender, or any guarantor dies or becomes incompetent, or
revokes or disputes the validity of, or liability under, any guaranty of the
amounts owed to Lender. Upon the occurrence of an Event of Default, all
commitments and obligations of Lender under
the Loan Documents immediately will terminate and, at Lender's option, all
amounts owing to Lender will become due and payable immediately, all without
notice of any kind to Borrower. In addition, Lender shall have all the rights
and remedies provided in the Loan Documents or available at law, in equity, or
otherwise. All of Lender's rights and remedies shall be cumulative and may be
exercised singularly or concurrently. Election by Lender to pursue any remedy
shall not exclude pursuit of any other remedy, and an election to make
expenditures or take action to perform any obligation of Borrower or of any
guarantor shall not affect Lender's right to declare an Event of Default and to
exercise its rights and remedies.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all of Borrower's right, title and interest in and to, Borrower's present
and future bank accounts. Borrower authorizes Lender to charge or set off all
sums owing to Lender against any and all such accounts and, at Lender's option,
to administratively freeze all such accounts to allow Lender to protect Lender's
charge and setoff rights provided in this paragraph.
EXPENSES. Borrower agrees to pay to Lender, at closing and otherwise upon
demand, all reasonable costs and expenses incurred by Lender (including the fees
and expenses of in-house and outside counsel) in connection with (1) the
preparation, negotiation, execution, delivery and administration of this Note
and the other related loan documents and instruments, and any modifications
thereto, and (2) collection of amounts due Lender under the Note or any other
related loan documents and instruments, or the enforcement or preservation of
Lender's rights under this Note and other related loan document and instruments,
whether by judicial proceeding or otherwise, including, without limitation, any
court proceeding, bankruptcy or insolvency case, appeal, or post-judgment
collection services. In the absence of proof by Lender of actual fees and
expenses of a greater amount, Borrower agrees that for any enforcement of
Lender's rights under the Note and other related loan documents and instruments,
25% of the outstanding balance of the Note is a reasonable amount for Lender's
fees and expenses.
GENERAL PROVISIONS. Borrower waives presentment, demand for payment, protest,
notice of dishonor, and notice of default. Upon any change in the terms of this
Note, and unless otherwise expressly stated in writing, Borrower shall not be
released from liability- Borrower agrees that Lender may renew or extend this
Note, or release any party, guarantor or collateral; or impair, fail to realize
upon or perfect Lender's security interest in any collateral; and take any other
action deemed necessary by Lender without the consent of or notice to anyone-
MISCELLANEOUS PROVISIONS.
Severability. If any provision of the Loan Documents is found to be
invalid or unenforceable, such provision shall be stricken and all
remaining provisions of the Loan Documents shall remain valid and
enforceable.
Waiver; Amendments. No amendment of the Loan Documents, and no waiver of
any one or more of the provisions hereof and thereof, shall be effective
unless set forth in writing prepared by Borrower and signed by Lender;
provided, however, that any such waiver shall be restricted to the matters
specified in such writing.
Entire Agreement- The Loan Documents constitute the sole agreement of the
parties regarding the subject matter hereof and thereof and supersede all
oral negotiations and prior writings regarding the subject matter hereof
and thereof.
Waiver Of Jury Trial. Borrower and Lender acknowledge and agree that each
party knowingly, voluntarily and intentionally waives the right to trial
by jury with respect to any matter relating to, arising from or in
connection with the Loan Documents.
Further Assurances. Borrower agrees to cooperate and take all necessary
steps as reasonably requested by Lender to carry out the spirit and intent
of the Loan Documents, including, without limitation, executing or
reexecuting any of the Loan Documents.
Successors and Assigns. The Loan Documents shall be binding upon Borrower
and its successors and assigns and shall inure to the benefit of Lender,
its successors and assigns. Borrower may not assign or transfer Borrower's
rights under the Loan Documents without the prior written consent of
Lender.
In witness whereof, Borrower, intending to be legally bound, has executed this
Note as of the date above.
BORROWER: Tel-instrument Electronics Corp. ATTEST:
By: Name: Harold K. Fletcher Name: Donald S. Bab
Title: President Title: Secretary
BORROWER: ATTEST:
By: Name: Name:
Title: Title
DOLORES McGUIRE
NOTARY PUBLIC OF NEW JERSEY
MY COMMISSION EXPIRES SEPT. 20, 1998
BUSINESS COMMERCIAL SECURITY AGREEMENT
Debtor: Name: Tel-instrument Lender: [X] SUMMIT BANK [ ] SUMMIT BANK
Electronics Corp. ("Lender") ("Lender")
210 MAIN STREET ONE BETHLEHEM PLAZA
HACKENSACK, NJ BETHLEHEM, PA 18018
07602
(individually and collectively, jointly
and severally, the "Borrower")
Address: 728 Garden Street
Carlstadt, N.J. 07072
Name: If Debtor is
not the Borrower,
the Borrower is:
(individually and collectively, jointly
and severally, the "Debtor")
Address:
DATE OF AGREEMENT: July 22, 1998
DEFINITIONS. Capitalized terms not otherwise defined in this Agreement shall
have the meanings attributed to such terms in the Business Promissory/Credit
Note or BLOC Credit Note, whichever is executed in connection with this
Agreement (the "Note") and if not define - d in the Note, then the Uniform
Commercial Code in effect from time to time in the state or states in which the
Collateral is located. The word "Indebtedness" shall mean all amounts owed by
Debtor (as primary obligor or guarantor) to Lender, including any outstanding
principal, accrued and unpaid interest thereon, Lender's expenses and any other
sums recoverable by Lender. The word "Collateral" means the following described
property of Debtor (and as more fully described in the attachments to the UCC-1
financing statements executed in connection herewith), whether now owned or
hereafter acquired, whether now existing or hereafter arising, and wherever
located, together with all Proceeds thereof and all insurance proceeds
pertaining thereto:
[X] Inventory [X] Equipment
[X] Accounts [X] General Intangibles
GRANT OF SECURITY INTEREST. In order to secure the payment of the Indebtedness
and performance of Debtor's obligations to Lender, Debtor hereby grants to
Lender a continuing security interest in and lien upon its right, title, and
interest in the Collateral. If Debtor has granted any security interest(s) to
Lender in any or all of the Collateral prior to the date of this Agreement, this
Agreement shall be deemed to be a reaffirmation of the previously granted
security interest(s).
REPRESENTATIONS AND COVENANTS. Debtor warrants and covenants to Lender as
follows:
Perfection of Security Interest. Debtor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
evidence, perfect and continue Lender's security interest in the
Collateral. Debtor hereby appoints Lender as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue the security interest granted in this Agreement or
otherwise carry out the terms of this Agreement. Lender may at any time,
and without further authorization from Debtor, file a carbon, photographic
or other reproduction of any financing statement or of this Agreement for
use as a financing statement. Debtor will reimburse Lender for all
expenses for the perfection and the continuation of the perfection of
Lender's security interest in the Collateral. Debtor will promptly notify
Lender before any change in Debtor's name or use of fictitious or trade
names not otherwise disclosed in writing to Lender.
Location of and Transactions Involving the Collateral. All Collateral is
located at Debtor's address shown above. Debtor shall not remove the
Collateral from its existing locations without the prior written consent
of Lender. Except for inventory sold or accounts collected in the ordinary
course of Debtor's business, Debtor shall not sell, offer to sell, or
otherwise transfer or dispose of the Collateral. Debtor shall not pledge,
mortgage, encumber or otherwise permit the Collateral to be subject to any
lien, security interest, encumbrance, or charge, other than the security
interest provided for in this Agreement, without the prior written consent
of Lender. Unless waived by Lender, all proceeds from any disposition of
the Collateral shall be held in trust for Lender, shall not be commingled
with any other funds, and shall immediately be delivered to Lender. This
requirement, however, does not constitute consent by Lender to any such
disposition.
Collateral Schedules and Locations. At Lender's request, Debtor shall
deliver to Lender (i) schedules of accounts and general intangibles, in
form and substance satisfactory to Lender, and (ii) such lists,
descriptions, and designations of inventory and equipment as Lender may
request. Such information shall be submitted for Debtor and each of its
subsidiaries or related companies.
Maintenance and Inspection of Collateral. Debtor shall maintain all
tangible Collateral in good-condition and repair. Debtor will not commit
or permit damage to or destruction of any part of the Collateral. Lender
and its designated representatives and agents shall have the right at all
reasonable times to examine, inspect, and audit the collateral wherever
located. Debtor shall immediately notify Lender of all cases involving the
return, rejection, repossession, loss or damage of or to any Collateral;
of any request for credit or adjustment or of any other dispute arising
with respect to the Collateral; and generally of all happenings or events
affecting the Collateral or the value or the amount of the Collateral.
Taxes, Assessments and Liens. Debtor will complete and file all necessary
federal, state and local tax returns and will pay when due all taxes,
assessments, levies and liens upon the Collateral and provide evidence of
such payments to Lender upon request.
Insurance. Debtor shall procure and maintain such insurance as Lender may
require with respect to the Collateral, in form, amounts and coverages
reasonably acceptable to Lender and issued by a company reasonably
acceptable to Lender. Debtor, upon request of Lender, will deliver to
Lender from time to time the policies or certificates of insurance, which
shall contain provisions that the coverages will not be canceled or
diminished without at least thirty (30) days' prior written notice to
Lender. Each insurance policy shall also include an endorsement providing
that coverage in favor of Lender will not be impaired in any way by any
act, omission or default of Debtor or any other person. Each such policy
shall also name Lender as loss payee. If Debtor at any time fails to
obtain or maintain any insurance as required under this Agreement, Lender
may obtain such insurance as Lender deems appropriate and the costs
incurred by Lender shall be added to the Indebtedness. Debtor shall
promptly notify Lender of any loss or damage to the Collateral.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Debtor under this Agreement, including without limitation
all taxes, liens, security interests, encumbrances, and other claims, at any
time levied or placed on the Collateral. Lender also may (but shall not be
obligated to) pay all costs for insuring, maintaining and preserving the
Collateral. All such expenditures incurred or paid by Lender for such purposes
will then bear interest at the rate charged under the Loan Documents from the
date incurred or paid by Lender to the date of repayment by Debtor. This
Agreement also will secure the payment of these amounts. This right shall be in
addition to all other rights and remedies to which Lender may be entitled upon
the occurrence of an Event of Default.
RIGHTS AND REMEDIES. Upon the occurrence of an Event of Default, Lender shall
have the following rights and remedies, in addition to the rights and remedies
available to Lender under the other Loan Documents:
Assemble Collateral. Lender may require Debtor to assemble the Collateral
and make it available to Lender at a place to be designated by Lender.
Lender also shall have full power to enter upon the property of Debtor to
take possession of and remove the Collateral. If the Collateral contains
other goods not covered by this Agreement at any time of repossession,
Debtor agrees that Lender may take such other goods, provided that Lender
makes reasonable efforts to return them to Debtor after repossession.
Sell the Collateral- Lender shall have full power to sell, lease,
transfer, or otherwise deal with the Collateral or proceeds thereof in its
own name or in the name of Debtor. Lender may sell the Collateral at
public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market,
Lender may give Debtor five (5) business days' prior notice of the time
after which any private sale or any other intended disposition of the
Collateral is to be made, which Debtor agrees is commercially reasonable.
All expenses relating to the disposition of the Collateral, including,
without limitation, the expenses of retaking, holding, insuring, preparing
for sale and selling the Collateral, shall become a part of the
Indebtedness and secured hereby.
Collection of Accounts. Lender may exercise its rights to collect the
Accounts and to notify account debtors to make payments directly to Lender
for application to the Indebtedness.
Power of Attorney. Debtor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution, to do the
following: (a) to demand, collect, receive, receipt for, sue and recover
all sums of money or other property which may now or hereafter become due,
owing or payable from the Collateral; (b) to execute, sign endorse any and
all claims, instruments, receipts, checks, drafts or warrants issued in
payment for the Collateral; (c) to settle or compromise any and all claims
arising under the Collateral, and, in the place and stead of Debtor, to
execute and deliver its release and settlement for such claims; and (d) to
file any claim or to take any action or institute or take part in any
proceedings, either in its own name or in the name of Debtor, or
otherwise, which in the discretion of Lender may seem to be necessary or
advisable. This power is given as security for the payment and performance
obligations of Debtor to Lender, and is irrevocable and shall remain in
full force and effect until renounced by Lender.
IN WITNESS WHEREOF, DEBTOR AND LENDER, INTENDING TO BE LEGALLY BOUND, HAVE
EXECUTED THIS AGREEMENT AS OF THE DAY AND YEAR FIRST ABOVE WRITTEN.
DEBTOR: Tel-instrument Electronics Corp. ATTEST:
By:
Name: Harold K. Fetcher Name: Donald S. Bab
Title: President Title: Secretary
By:
Name: Name:
Title: Title:
LENDER: Summit Bank
BY:
Authorized Representative Jaclynn Da Costa, Assistant Vice President