UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. --------)*
INTERFACE SYSTEMS, INC.
(Name of Issuer)
Common Stock, $.10 par value
(Title of Class of Securities)
458667 10 2
(CUSIP Number)
Carl L. Bixby 5855 Interface Drive
Ann Arbor, Michigan 48103
(313) 769-5900
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
November 16, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box [ ].
Check the following box if a fee is being paid with the statement [X].
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7.)
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
SCHEDULE 13D
CUSIP No. 458667-10-21
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Carl L. Bixby
2 Check The Appropriate Box If A Member Of A Group* (a)
(b)[X]
3 SEC Use Only
4 Source of Funds*
PF, BK & SC
5 Check Box If Disclosure Of Legal Proceedings Is
Required Pursuant To Items 2(d) or 2(e)
6 Citizenship Or Place of Organization
U.S.A.
7 Sole Voting Power
Number Of 333,500
Shares 8 Shared Voting Power
Beneficially
Owned By 0
Each 9 Sole Dispositive Power
Reporting
Person 333,500
With 10 Shared Dispositive Power
0
11 Aggregate Amount of Beneficially Owned By Each Reporting Person
333,500
12 Check Box If The Aggregate Amount In Row (11) Excludes [X]
Certain Shares*
13 Percent Of Class Represented By Amount In Row (11)
7.7%
14 Type Of Reporting Person*
IN
Item 1. Security and Issuer.
This Statement relates to the common stock, par value $.10 per share
(the "Common Stock"), of Interface Systems, Inc. (the "Issuer"). The
address of the principal executive office of the Issuer is 5855 Interface
Drive, Ann Arbor, Michigan 48103.
Item 2. Identity and Background.
This Statement is filed on behalf of Carl L. Bixby ("Mr. Bixby"), a
citizen of the United States of America. Mr. Bixby's principal occupation
is that of President, Chief Executive Officer and a Director of the Issuer.
The Issuer, which is located at 5855 Interface Drive, Ann Arbor, Michigan
48103, is a diversified manufacturer of high-technology products. Mr.
Bixby's business address is 5855 Interface Drive, Ann Arbor, Michigan 48103.
During the last five years, Mr. Bixby has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
nor has he been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, become subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The sources of the funds used by Mr. Bixby to acquire the shares of
Common Stock listed below were personal funds, bank financing and a loan
from the Issuer. Mr. Bixby borrowed $300,000 from NBD Bank pursuant to a
one-year unsecured promissory note bearing an annual interest rate of nine
percent (9%). Mr. Bixby obtained a loan from the Issuer in the amount of
$650,000. Mr. Bixby intends to repay the principal amount of this loan
within a 2 year period plus interest at the greater of the Federal
Applicable Rate or the interest rate which the Issuer is obligated to pay
on its borrowings. This loan will be secured by, among other things, a
pledge of shares of Common Stock held by Mr. Bixby.
Item 4. Purpose of Transaction.
The primary purpose for Mr. Bixby's acquisition of shares of Common
Stock is for investment. Mr. Bixby may consult with other shareholders of
the Issuer, other members of management of the Issuer or other persons about
the Issuer and its business from time to time. In addition, Mr. Bixby may
acquire or seek to acquire beneficial ownership of additional shares of
Common Stock from time to time in the open market, in privately negotiated
transactions, through proxies, consents, or other agreements or otherwise
or may dispose of or seek to dispose of the shares of Common Stock he holds.
Mr. Bixby has no present plans or proposals with respect to the Issuer of
the kind set forth under Item 4 of the Schedule 13D Instructions. Mr. Bixby
may develop such plans or proposals in the future, and his possible
activities are subject to change at any time.
Through his position as an officer and director of the Issuer, Mr.
Bixby will play an active role in the affairs of the Issuer and will
continue to be involved in the formulation and implementation of present and
future policies for the Issuer, including policies which could involve plans
or proposals relating to the Issuer of the kind set forth under Item 4 of
the Schedule 13D Instructions. To the extent Mr. Bixby participates in the
formulation and implementation of such policies for the Issuer as an officer
or director of the Issuer, he disclaims any obligation to amend this
Statement on Schedule 13D to describe such policies.
Item 5. Interest in Securities of the Issuer.
(a) Mr. Bixby beneficially owns 333,500 shares of Common Stock,
constituting approximately 7.7% of the issued and outstanding shares of
Common Stock. Included in this number are 96,000 shares which may be
acquired upon exercise of stock options which are exercisable currently or
within the next 60 days. Not included in this number are 8,500 shares which
may be acquired upon exercise of stock options held by Mr. Bixby's wife as
to which shares Mr. Bixby disclaims beneficial ownership. Certain other
family members of Mr. Bixby who are not members of his household own a total
of approximately 50,000 shares of Common Stock. Mr. Bixby has no voting or
dispositive power with respect to such shares and disclaims any beneficial
ownership of such shares.
(b) Mr. Bixby has, or will have, the sole power to vote and dispose
of the shares beneficially owned by him listed in 5(a) above.
(c) The only transactions in the Common Stock by Mr. Bixby during
the past 60 days are described in the table below. Mr. Bixby acquired his
shares of Common Stock for cash in open market purchases which occurred on
the following dates and involved consideration as shown:
Number of Price
Date Shares Per Share Consideration
11/13/95 56,000 5.25 $ 294,000
11/16/95 68,000 6.25 $ 425,000
11/17/95 17,500 6.375 $ 111,562
11/20/95 70,000 6.75 $ 472,500
11/21/95 22,000 6.75 $ 148,500
11/22/95 4,000 6.50 $ 26,000
------ -------
TOTAL 237,500 $1,477,562
======= =========
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
Mr. Bixby presently holds options to acquire 116,000 shares of Common
Stock issued to him under the Issuer's 1992 Stock Option Plan ("1992 Plan").
Of these options, 96,000 are exercisable within sixty (60) days from the
date hereof.
The 1992 Plan provides for the grant of incentive stock options
("ISOs") under Section 422 of the Internal Revenue Code of 1986, as amended,
and options that do not meet the ISO requirements. The exercise price for
each option granted under the 1992 Plan cannot be less than the fair market
value of the Common Stock on the date of the grant. Options are exercisable
only within 10 years from the date of grant, but ISOs granted to a
participant who owns more than 10% of the outstanding Common Stock may not
be exercisable more than 5 years after the date of grant. No optionee may
be eligible to first exercise, in any calendar year, ISOs for shares of
Common Stock with a fair market value at the date of grant in excess of
$100,000.
See Item 3 for a description of the loan arrangements with NBD Bank
and the Issuer.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 Interface Systems, Inc. 1992 Stock Option
Plan, effective May 6, 1992, incorporated by
reference to Exhibit A-19 to the Issuer's
Form 10-Q for the Quarter ended March 31,
1992.
Exhibit 2 Credit Authorization Agreement, dated
November 9, 1995, among Carl L. Bixby,
Kimberly Bixby and NBD Bank.
Exhibit 3 Master Demand Business Loan Note, dated
November 9, 1995, among Carl L. Bixby,
Kimberly Bixby and NBD Bank.
SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief,
the undersigned certifies that the information set forth in this statement
is true, complete and correct.
Dated: November 27, 1995
/s/Carl L. Bixby
- --------------------
Carl L. Bixby
Exhibit 2
CREDIT AUTHORIZATION AGREEMENT
NBD Bank (the "Bank"), 611 Woodward Avenue, Detroit, Michigan 48226-3947,
has approved the credit facilities listed below (collectively, the "Credit
Facilities," and, individually, as designated below) to: CARL L. BIXBY and
KIMBERLY BIXBY (the "Borrower"), 20675 Hidden Lake Drive, Gregory, MI 48137,
subject to the terms and conditions set forth in this agreement.
1.0 Credit Facilities. (Check and complete applicable sections)
1.1 Uncommitted Credit Authorizations. The Bank has approved the
uncommitted credit authorizations listed below (collectively, the "Credit
Authorizations," and, individually, as designated below) subject to the
terms and conditions of this agreement and the Bank's continuing
satisfaction with the Borrower's financial status. Disbursements under the
Credit Authorizations are solely at the Bank's discretion. Any disbursement
on one or more occasions shall not commit the Bank to make any subsequent
disbursements.
[ ] A. Facility A. The Bank has approved an uncommitted
Credit Authorization to the Borrower in the principal sum not
to exceed $300,000.00 in the aggregate at any one time
outstanding ("Facility A."). Credit under Facility A shall be
in the form of disbursements evidenced by credits to the
Borrower's account and shall be repayable as set forth in a
Master Demand Note executed concurrently (referred to in this
agreement both singularly and together with any other
promissory notes referenced in this Section 1 as the "Notes").
The proceeds of Facility A shall be used for the following
purposes: financial investments. Facility A shall expire on
November 30, 1995 unless earlier withdrawn.
[ ] B. Facility B. (Including Letters of Credit). The
Bank has approved an uncommitted Credit Authorization to the
Borrower in the principal sum not to exceed $--------- in the
aggregate at any one time outstanding ("Facility B"). Facility
B shall include the issuance of [commercial/standby] letters of
credit not exceeding $------------- in the aggregate at any one
time outstanding, expiring not later than ----------, 199
[which shall include the time drafts expiring not later than
-------, 199-] (the "Letters of Credit"). (Strike bracketed
words if inapplicable.) Each Letter of Credit shall be in form
acceptable to the Bank and shall bear a fee of ----% per year
of the face amount of each standby Letter of Credit plus an
issuance fee of $--------- upon issuance of each Letter of
Credit. (If no fee is listed, the Letters of Credit shall bear
a fee to be agreed upon by the Bank and the Borrower). Credit
under Facility B shall be in the form of disbursements
evidenced by credits to the Borrower's account and shall be
repayable as set forth in a Master Demand Note executed
concurrently (referred to in this agreement both singularly and
together with any other promissory notes referenced in this
Section 1 as the "Notes") or by issuance of a Letter of Credit
upon completion of an application acceptable to the Bank. The
proceeds of Facility B shall be used for the following
purposes:
---------------------------------------------------------------
------------------------------------ Facility B shall expires
on---------------------, 199- unless earlier withdrawn.
[ ] C. Facility C. (Purchase Money Term Loans). The Bank has
approved an uncommitted credit authorization to the Borrower in
the principal sum not to exceed $--------- in the aggregate at
any one time outstanding (Facility C). Facility C shall be in
the form of loans evidenced by the Borrower's notes on the
Bank's form (referred to in this agreement both singularly and
together with any other promissory notes referenced in this
Section 1 as the "Notes"), the proceeds of which shall be used
to purchase the following equipment ---------------------------
---------------------------------------------------------------
Interest on each loan shall accrue at a rate to be agreed upon
by the Bank and the Borrower at the time the loan is made. The
maturity of each note shall not exceed------- months from the
note date. Notwithstanding the aggregate amount of Facility C
stated above, the original principal amount of each loan shall
not exceed the lessor of ---% of the cost of the equipment
purchased with loan proceeds or $--------------. Facility C
shall expire on ------------------, 199- unless earlier
withdrawn.
[ ] 1.2 Term Loans. The Bank agrees to extend credit to the Borrower
in the form of term loan(s) (whether one or more,the "Term Loans") in
the principal sum(s) of respectively, bearing interest
and payable as set forth in the Term Note(s) executed concurrently
(referred to in this agreement both singularly and together with any
other promissory notes referenced in this Section 1 as the "Notes").
The proceeds of the Term Loans shall be used for the following
purpose:
.
2.0 Conditions Precedent.
2.1 Conditions Precedent to Initial Extension of Credit. Before the
first extension of credit under this agreement, whether by disbursement of
a loan, issuance of a letter of credit, or otherwise, the Borrower shall
deliver to the Bank, in form and substance satisfactory to the Bank:
A. Loan Documents. The Notes; the letter of credit applications
required by Section 1.2; the security agreements, financing statements,
mortgages and other documents required by Section 5.1; the guaranties
required by Section 6.0; the subordination agreements required by Section
7.0; and any other loan documents which the Bank may reasonably require to
give effect to the transactions contemplated by this agreement;
B. Evidence of Due Organization and Good Standing. Evidence
satisfactory to the Bank of the due organization and good standing of the
Borrower and every other business entity that is a party to this agreement
or any other loan document required by this agreement; and
C. Evidence of Authority to Enter into Loan Documents. Evidence
satisfactory to the Bank that (i) each party to this agreement or any other
loan document required by this agreement is authorized to enter into the
transactions contemplated by this agreement and the other loan documents,
and (ii) the person signing on behalf of each such party is authorized to
do so.
2.2 Conditions Precedent to Each Extension of Credit. Before any
extension of credit under this agreement, whether by disbursement of a loan,
issuance of a letter of credit, or otherwise, the following conditions shall
have been satisfied.
A. Representations. The representations contained in Section 10
shall be true on and as of the date of the extension of credit;
B. No Event of Acceleration. No event of acceleration shall have
occurred and be continuing or would result from the extension of credit.
C. Continued Satisfaction. The Bank shall have re- mained
satisfied with the Borrower's managerial and financial status;
D. Additional Approvals, Opinions, and Documents. The Bank shall
have received such other approvals, opinions and documents as it may
reasonably request; and
E. Other Conditions.
.
3.0 Borrowing Base/Annual Pay Down.
3.1 Borrowing Base. (complete if applicable) Notwithstanding any
other provision of this agreement, the aggregate principal amount
outstanding at any one time under (check applicable clauses)
[ ] Facility A
[ ] Facility B
shall not exceed the lessor of the Borrowing Base or $---------,
Borrowing Base Means: (check applicable clauses)
[ ] A. % of the Borrower's trade accounts receivable in which the
Bank has a perfected, first priority, security interest, including
accounts more than 90 days past due from the date of invoice,
accounts subject to offset or defense, government, bonded, affiliate
and foreign accounts from trade debtors of which more than % of
the aggregate amount owing from the trade debtor to the Borrower is
more than days past due, and accounts otherwise unacceptable to
the Bank, plus
[ ] B. Inventory of the Borrower in which the Bank has a perfected,
first priority, security interest, valued at the lower of cost or
market, but not exceeding $ aggregate, as follows:
[ ] (1) % of aggregate inventory; or
[ ] (1) % of raw material inventory; and
[ ] (2) % of work-in-process inventory; and
[ ] (3) % of finished goods inventory; plus
[ ] C. % of the value of the Borrower's
machinery and equipment in which the Bank has a perfected,
first priority, security interest, but not exceeding $
, plus
[ ] D. Additional Borrowing Base provisions are contained in the
attached addendum.
3.2 Annual Pay Down. (complete if applicable) Notwithstanding any
other provision of this agreement, there shall be no debt outstanding under
- --------------------------------- for a period of -----------
(facility A. Facility B, etc.)
consecutive months during each fiscal year of the Borrower.
4.0 Fees and Expenses. (complete if applicable)
4.1 Fees. Upon execution of this agreement, the Borrower shall pay
the Bank the following fees, all of which the Borrower acknowledges have
been earned by the Bank $1,000,000 closing fee.
4.2 Out-of Pocket Expenses. In addition to any fee set forth in
Section 4.1 above, the Borrower shall reimburse the Bank for its
out-of-pocket expenses and reasonable attorney's fees (including the fees
of in-house counsel) allocated to the Credit Facilities.
5.0 Security.
5.1 Payment of all amounts owing under the Credit Facilities shall
be secured by the Borrower's grant of a continuing first security interest
and/or real estate mortgage, as the case may be, covering its interest in
the following property and all its additions, substitutions, increments,
proceeds and products, present and future, whether now owned or later
acquired, (the "Collateral"):
(check and complete applicable clauses)
[ ] A. Accounts Receivable. All of the Borrower's accounts, chattel
paper, general intangibles, instruments, and documents (as those
terms are defined in the Uniform Commercial Code), rights to refunds
of taxes paid at any time to any governmental entity, and any letters
of credit and drafts under them given in support of the foregoing,
wherever located. The Borrower shall deliver to the Bank executed
security agreements and financing statements in form and substance
satisfactory to the Bank.
[ ] B. Inventory. All of the Borrower's inventory, wherever
located. The Borrower shall deliver to the Bank executed security
agreements and financing statements in form and substance
satisfactory to the Bank.
[ ] C. Equipment. All of the Borrower's equipment, wherever
located. The Borrower shall deliver to the Bank executed security
agreements and financing statements in form and substance
satisfactory to the Bank.
[ ] D. Real Estate. The real property, including improve-
ments, located at
. The Borrower
shall deliver to the Bank an executed mortgage ALTA mortgage title
insurance policy without exceptions with mortgage survey certified to
the Bank and the title company, and, where applicable, an assignment
of rents, subordinations of leases and assignments of land contracts,
all in form and substance satisfactory to the Bank.
[ ] E.
.
5.2 No forbearance or extension of time granted any subsequent owner
of the Collateral shall release the Borrower from liability.
5.3 Additional Collateral/Setoff. To further secure payment of all
amounts owing under the Credit Facilities and all of the Borrower's other
liabilities to the Bank, the Borrower grants to the Bank a continuing
security interest in: (i) all securities and other property of the Borrower
in the custody, possession or control of the Bank (other than property held
by the Bank solely in a fiduciary capacity), and (ii) all balances of
deposit accounts of the Borrower with the Bank. The Bank shall have the
right at any time to apply its own debt or liability to the Borrower, or to
any other party liable for payment of the Credit Facilities, in whole or
partial payment of the Credit Facilities or other present or future
liabilities, without any requirement of mutual maturity.
5.4 Cross Lien. Any of the Borrower's other property in which the
Bank has a security interest to secure payment of any other debt, whether
absolute, contingent, direct or indirect, including the Borrower's
guaranties of the debts of others, shall also secure payment of and be part
of the Collateral for the Credit facilities.
6.0 Guaranties. (complete if applicable)
Payment of the Borrower's liabilities under the Credit Facilities
shall be guaranteed by
, by execution of the Bank's
form of guaranty agreement. The liability of the guarantors, if more than
one, shall be joint and several.
7.0Subordination. (complete if applicable)
The Credit Facilities shall be supported by the subordination of debt
owing from the Borrower to
, including without limitation debt currently owing
in the amount of $ in manner and by agreement satisfactory to the
Bank.
8.0 Affirmative Covenants. So long as any debt remains outstanding
under the Credit Facilities, the Borrower, and each of its subsidiaries, if
any, shall:
8.1 Insurance. Maintain insurance with financially sound and
reputable insurers covering its properties and business against those
casualties and contingencies and in the types and amounts as shall be in
accordance with sound business and industry practices.
8.2 Existence. Maintain its existence and business operations as
presently in effect in accordance with all applicable laws and regulations,
pay its debts and obligations when due under normal terms, and pay on or
before their due date all taxes, assessments, fees and other governmental
monetary obligations, except as they may be contented in good faith if they
have been property reflected on its books and, at the Bank's request,
adequate funds or security has been pledged to insure payment.
8.3 Financial Records. Maintain proper books and records of
account, in accordance with generally accepted accounting principles where
applicable, and consistent with financial statements previously submitted
to the Bank.
8.4 Notice. Given prompt notice to the Bank of the occurrence of
(i) any event of acceleration, and (ii) any other development, financial or
otherwise, which would affect the Borrower's business, properties or affairs
in a materially adverse manner.
8.5 Collateral Audits. (complete if applicable) Permit the Bank
or its agents to perform
(monthly, annual, etc.)
audits of the Collateral. The Borrower shall compensate the Bank for those
audits in accordance with the Bank's schedule of fees as may be amended from
time to time. Whether or not this section has been completed, the Bank
shall retain the right to inspect the Collateral and business records
related to it at such times and at such intervals as the Bank may reasonably
require.
8.6 Management. (complete if applicable) Maintain
as
.
8.7 Financial Reports. Furnish to the Bank whatever information,
books and records the Bank may reasonably request, including at a minimum:
(Check and complete applicable clauses. If the Borrower has subsidiaries,
all financial statements required will be provided on a consolidated and on
a separate basis.)
[ ] A. Within days after each period, a
balance sheet as of the end of that period and statements of income,
retained earnings, and cash flows from the beginning of that fiscal
year to the end of that period, certified as correct by one of its
authorized agents.
[ ] B. Within days after and as of each of its
fiscal years, as detailed ,
(audit/financial statement)
including a balance sheet and statements of income, retained
earnings, and cash flows
(reviewed/complied/certified)
by an independent certified public accountant of recognized standing.
[ ] C. Within days after and as of the end of each
calendar month, the following lists, each certified as correct by one
of its authorized agents: (check applicable clauses)
[ ] (1) a list of accounts receivable, aged from date of invoice;
[ ] (2) a list of accounts payable, aged from date of recepit;
[ ] (3) a list of inventory, valued at the lower of cost of
market.
[ ] D. Within days after and as of the end of each
calendar year, the signed personal financial state- ments of
.
(Borrower/Guarantor/other)
[ ] E. Within 5 days after filing, a signed copy of the annual tax
return, with exhibits, of .
(Borrower/Guarantor/other)
[ ] F. An Environmental Certificate on the Bank's form on and as of
the date of this agreement, and thereafter as required by the
Environmental Certificate.
[ ] G.
.
9.0 Negative Covenants.
9.1 Definitions. As used in this agreement, the following terms
have the following respective meanings:
A. "Subordinated Debt" means debt subordinated to the Bank in
manner and by agreement satisfactory to the Bank.
B. "Tangible Net Worth" means total assets less intangible assets
and total liabilities. Intangible assets include goodwill, patents,
copyrights, mailing lists, catalogs, trademarks, bond discount and
underwriting expenses, organized expenses, and all other intangibles.
9.2 Unless otherwise noted, the financial requirements set forth in
this section shall be computed in accordance with generally accepted
accounting principles applied on a basis consistent with financial
statements previously submitted by the Borrower to the Bank.
9.3 Without the written consent of the Bank, so long as any debt
remains outstanding under the Credit Facilities, the Borrower shall not:
(where appropriate, covenants shall apply on a consolidated basis - clauses
H-O apply only if completed.)
A. Dividends. Acquire or retire any of its shares of capital stock
or declare or pay dividends or make any other distributions upon any of its
shares of capital stock, except dividends payable in its capital stock, and
dividends payable to "Subchapter S" corporation shareholders, in amounts
sufficient to pay the shareholder(s) income tax obligations related to the
Borrower's taxable income.
B. Sale of Shares. Issue, sell or otherwise dispose of any shares
of its capital stock or other securities, or rights, warrants or options to
purchase or acquire any such shares or securities.
C. Debt. Incur, or permit to remain outstanding, debt for borrowed
money or installment obligations, except debt reflected in the latest
financial statement of the Borrower furnished to the Bank prior to execution
of this agreement and not to be paid with proceeds of borrowings under the
Credit Facilities. For purposes of this covenant, the sale of any accounts
receivable shall be deemed the incurring of debt for borrowed money.
D. Guaranties. Guarantee or otherwise become or remain secondarily
liable on the undertaking of another, except for endorsement of drafts for
deposit and collection in the ordinary course of business.
E. Liens. Create or permit to exist any lien on any of its
property, real or personal, except; existing liens known to the Bank; liens
to the Bank; liens incurred in the ordinary course of business securing
current nondelinquent liabilities for taxes, worker's compensation,
unemployment insurance, social security and pension liabilities; and liens
for taxes being contested in good faith.
F. Advances and Investments. Purchase or acquire any securities
of, or make any loans or advances to, or investments in, any person, firm
or corporation, except obligations of the United States Government, open
market commercial paper rated one of the top two ratings by a rating agency
of recognized standing, or certificates of deposit in insured financial
institutions.
G. Use of Proceeds. Use, or permit any proceeds of the Credit
Facilities to be used, directly or indirectly, for the purpose of
"purchasing or carrying any margin stock" within the meaning of Federal
Reserve Board Regulation U. At the Banks request, the Borrower shall
furnish to the Bank a completed Federal Reserve Board Form U-1.
H. Working Capital. Permit the difference between its current
assets [less all sums owing from stockholders, members or partners, as the
case may be, and from officers, managers and directors] and current
liabilities [plus all sums (other than Subordinated Debt) owing to
stockholders, members or partners, as the case may be, and officers managers
and directors] to be less than $ . (Strike
bracketed words if not applicable).
I. Tangible Net Worth [Plus Subordinated Debt]. Permit its
Tangible Net Worth [plus Subordinated Debt] to be less than $
. (Strike bracketed words if not applicable).
J. Current Ratio. Permit the ratio of its current assets to its
current liabilities to be less than to 1.00.
K. Leverage Ratio. Permit the ratio of its total liabilities to
its Tangible Net Worth [plus Subordinated Debt] to exceed to
1.00. (Strike bracketed words if not applicable).
L. Fixed Assets. Expend for, contract for, lease, rent, or
otherwise acquire fixed assets, if the expense to the Borrower, and all
subsidiaries, if any, shall exceed $ in the aggregate in any
one fiscal year.
M. Leases. Contract for or assume in any manner, lease obligations
if the aggregate of all payments shall exceed $ in any one
fiscal year.
N. Compensation. Pay, or aware compensation of any kind, in any
one fiscal year, to exceeding $
.
O.
.
.
10.0 Representations by Borrower. Each Borrower represents that: (a)
the execution and delivery of this agreement and the Notes and the
performance of the obligations they impose do not violate any law, conflict
with any agreements by which it is bound, or require the consent or approval
of any governmental authority or any third party; (b) this agreement and the
Notes are valid and binding agreements, enforceable according to their
terms; and (c) all balance sheets, income statements, and other financial
statements furnished to the Bank are accurate and fairly reflect the
financial condition of the organizations and persons to which they apply on
their effective dates, including contingent liabilities of every type, which
financial condition has not changed materially and adversely since those
dates. Each Borrower, if other than a natural person, further represents
that: (a) it is duly organized, existing and in good standing under the laws
of the jurisdiction under which it was organized; and (b) the execution and
delivery of this agreement and the Notes and the performance of the
obligations they impose (i) are within its powers; (ii) and have been duly
authorized by all necessary action of its governing body, and (iii) do not
contravene the terms of its articles of incorporation or organization, it
bylaws, or any partnership, operating or other agreements governing its
affairs.
11.0 Acceleration.
11.1 Events of Acceleration. If any of the following events occur,
the Credit Facilities shall terminate and all borrowings under them shall
become due immediately, without notice, at the Bank's option, whether or not
the Bank has made demand.
A. The Borrower or any guarantor of any of the Credit Facilities
("Guarantor") fails to pay when due any amount payable under the Credit
Facilities or under any agreement or instrument evidencing debt to any
creditor.
B. The Borrower or any Guarantor (a) fails to observe or perform
any other term of this agreement or the Notes; (b) makes any materially
incorrect or misleading representation, warranty or certificate to the Bank;
(c) makes any materially incorrect or misleading representation in any
financial statement or other information delivered to the Bank; or (d)
defaults under the terms of any agreement or instrument relating to any debt
for borrowed money (other than borrowings under the Credit Facilities) such
that the creditor declares the debt due before its maturity.
C. There is a default under the terms of any loan agreement,
mortgage, security agreement or any other document executed as part of the
Credit Facilities, or any guaranty of the liabilities under the Credit
Facilities becomes unenforceable in whole or in part, or any Guarantor fails
to promptly perform under its guaranty.
D. A "reportable event" (as defined in the Employee Retirement
Income Security Act of 1974 as amended) occurs that would permit the Pension
Benefit Guaranty Corporation to terminate any employee benefit plan of the
Borrower or any affiliate of the Borrower.
E. The Borrower or any Guarantor becomes insolvent or unable to pay
its debts as they come due.
F. The Borrower or any Guarantor (a) makes an assign- ment for the
benefit of creditors; (b) consents to the appoint- ment of a custodian,
receiver or trustee for it or for a substantial part of its assets; or (c)
commences any proceeding under any bankruptcy, reorganization, liquidation
or similar laws of any jurisdiction.
G. A custodian, receiver or trustee is appointed for the Borrower
or any Guarantor or for a substantial part of its assets without its consent
and not removed within 60 days after the appointment.
H. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and those proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement of
the proceedings.
I. Any judgment is entered against the Borrower or any Guarantor,
or any attachment, levy or garnishment is issued against any property of the
Borrower or any Guarantor.
J. The Borrower or any Guarantor dies.
K. The Borrower or any Guarantor, without the Bank's written
consent, (a) is dissolved, (b) merges or consolidates with any third party,
(c) leases, sells or otherwise conveys a material part of its assets or
business outside the ordinary course of business, (d) leases, purchases, or
otherwise acquires a material part of the assets of any other corporation
or business entity, except in the ordinary course of business, or (e) agrees
to do any of the foregoing (notwithstanding the foregoing, any subsidiary
may merge or consolidate with any other subsidiary, or with the Borrower,
so long as the Borrower is the survivor).
L. The loan-to-value ratio of any pledged securities at any time
exceeds %, and such excess continues for five (5) days after notice from
the Bank to the Borrower.
M. There is a substantial change in the existing or prospective
financial condition of the Borrower or any Guarantor which the Bank in good
faith determines to be materially adverse.
N. The Bank in good faith shall deem itself insecure.
11.2 Remedies. If the amounts owing under the Credit Facilities are
not paid at maturity, whether by demand, acceleration, or otherwise, the
Bank shall have all of the rights and remedies provided by any law or
agreement. Any requirement of reasonable notice shall be met if the Bank
sends the notice to the Borrower at least seven (7) days prior to the date
of sale, disposition or other event giving rise to the required notice. The
Bank is authorized to cause all or any part of the Collateral to be
transferred to or registered in its name or in the name of any other person,
firm or corporation, with or without designation of the capacity of such
nominee. The Borrower shall be liable for any deficiency remaining after
disposition of any Collateral. The Borrower is liable to the Bank for all
reasonable costs and expenses of every kind incurred in the making or
collection of the credit facilities, including, without limitation,
reasonable attorneys' fees and court costs (whether attributable to the
Bank's in-house or outside counsel.) These costs and expenses shall
include, without limitation, any costs or expenses incurred by the Bank in
any bankruptcy, reorganization, insolvency or other similar proceeding.
12.0 Miscellaneous.
12.1 Notice from one party to another relating to this agreement
shall be deemed effective if made in writing (including telecommunications)
and delivered to the recipient's address, telex number or fac number set
forth under its name below by any of the following means: (a) hand delivery,
(b) registered or certified mail, postage prepaid, with return receipt
requested, (c) first class or express mail, postage prepaid, (d) Federal
Express or like overnight courier service, or (e) fax, telex or other wire
transmission with request for assurance of receipt in a manner typical with
respect to communication of that type. Notice made in accordance with this
section shall be deemed delivered upon receipt if delivered by hand or wire
transmission, three (3) business days after mailing if mailed by first
class, registered or certified mail, or one business day after mailing or
deposit with an overnight courier service if delivered by express mail or
overnight courier.
12.2 No delay on the part of the Bank in the exercise of any right
or remedy shall operate as a waiver. No single or partial exercise by the
Bank of any right or remedy shall preclude any other future exercise of it
or the exercise of any other right or remedy. No waiver or indulgence by
the Bank of any default shall be effective unless in writing and signed by
the Bank, nor shall a waiver on one occasion be construed as a bar to or
waiver of that right on any future occasion.
12.3 This agreement, the Notes, and any related loan documents embody
the entire agreement and understanding between the Borrower and the Bank and
supersede all prior agreements and understandings relating to their subject
matter. If any one or more of the obligations of the Borrower under this
agreement or the Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
obligations of the Borrower shall not in any way be affected or impaired,
and such validity, illegality or unenforceability in one jurisdiction shall
not affect the validity, legality or enforceability of the obligations of
the Borrower under this agreement or the Notes in any other jurisdiction.
12.4 The Borrower, is more than one, shall be jointly and severally
liable.
12.5 This agreement is delivered in the State of Michigan and
governed by Michigan law. This agreement is binding on the Borrower and its
successors and shall inure to the benefit of the Bank, its successors and
assigns.
12.6 Section headings are for convenience of reference only and shall
not affect the interpretation of this agreement.
13.0 Waiver of Jury Trial. The Bank and the Borrower, after
consulting or having had the opportunity to consult with counsel, knowingly,
voluntarily and intentionally waive any right either of them may have to a
trial by jury in any litigation based upon or arising out of th is agreement
or any related instrument or agreement, or any of the transactions
contemplated by this agreement, or any course of conduct, dealing,
statements (whether oral or written), or actions of either of them. Neither
the Bank nor the Borrower shall seek to consolidate, by counterclaim or
otherwise, any action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived. These
provisions shall not be deemed to have been modified in any respect or
relinquished by either the Bank or the Borrower except by a written
instrument executed by both of them.
Executed by the parties on November 9, 1995.
"BANK"
NBD BANK
Address for notices: By:
125 South Main Street Thomas A. Couture,
Ann Arbor, MI 48104 Its: Second VP
Fax/Telex No. 313-995-8000
Address for notices: "BORROWER"
20675 Hidden Lakes Drive
Gregory, MI 48137
CARL L. BIXBY
KIMBERLY BIXBY
Exhibit 3
MASTER DEMAND BUSINESS LOAN NOTE
Due on Demand $300,000.00
No. Date: November 9, 1995
Promise to Pay: For value received, the undersigned (the "Borrower")
promises to pay On Demand to NBD Bank (the "Bank"), or order, at any office
of the Bank in the State of Michigan, the sum of Three Hundred Thousand and
no/100 Dollars ($300,000.00), or such lessor sum as is indicated on Bank
records, plus interest computed on the basis of the actual number of days
elapsed in a year of 360 days at the rate of:
% per annum until demand or maturity, whether by acceleration
or otherwise (the "Note Rate") and at the rate of 3% per annum above the
Note Rate on overdue principal from the date when due until paid; or
1% per annum above the rate announced from time to time by the
Bank as its "prime" rate (the "Note Rate"), which rate may not be the lowest
rate charged by the Bank to any of its customers, until maturity, whether
by demand, acceleration or otherwise, and at the rate of 3% per annum above
the Note Rate on overdue principal from the date when due until paid. Each
change in the "prime" rate will immediately change the Note Rate.
In no event shall the interest rate exceed the maximum rate allowed by law;
any interest payment which would for any reason be deemed unlawful under
applicable law shall be applied to principal.
Interest will be computed on the unpaid principal balance from the date of
each borrowing.
The Borrower will pay this sum on demand. Until demand, the Borrower will
pay consecutive monthly installments of interest only commencing November
30, 1995.
Master Demand Note: The Bank has authorized an uncommitted credit facility
to the Borrower in a principal amount not to exceed the face amount of this
note. The credit facility is in the form of loans made from time to time
by the Bank to the Borrower at the Bank's sole discretion. This note
evidences the Borrower's obligation to repay those loans. The aggregate
principal amount of debt evidenced by this note shall be the amount
reflected from time to time in the records of the Bank but shall not exceed
the face amount of this note. The Borrower acknowledges and agrees that no
provision of this note and no course of dealing by the Bank shall commit the
Bank to make loans to the Borrower and that notwithstanding any provision
of this note or any other information or document, all loans evidenced by
this note are due and payable on demand, which may be made by the Bank at
any time, whether or not any event of acceleration then exists.
Credit Agreement: This note evidences a debt under the terms of a Credit
Authorization Agreement between the Bank and the Borrower dated November 9,
1995 and any amendments.
Security: To secure the payment of this note and any other present or
future liability of the Borrower, whether several, joint, or joint and
several, the Borrower pledges and grants to the Bank a continuing security
interest in the following described property and all of its additions,
substitutions, increments, proceeds and products whether now owned or later
acquired ("Collateral"):
1. All securities and other property of the Borrower in the
custody, possession or control of the Bank (other than property held by the
Bank solely in a fiduciary capacity);
2. All property or securities declared or acknowledged to
constitute security for any past, present or future liability of the
Borrower to the Bank;
3. All balances of deposit accounts of the Borrower with the
Bank;
4. The following additional property: Unsecured
.
Bank's Right to Setoff: The Bank shall have the right at any time to apply
its own debt or liability to the Borrower or to any other party liable on
this note in while or partial payment of this note or other present or
future liabilities, without any requirement of mutual maturity.
Representations by Borrower: Each Borrower represents that: (a) the
execution and delivery of this note and the performance of the obligations
it imposes do not violate any law, conflict with any agreement by which it
is bound, or require the consent or approval of any governmental authority
or any third party; (b) this note is a valid and binding agreement,
enforceable according to its terms; and (c) all balance sheets, income
statements, and other financial statements furnished to the Bank are
accurate and fairly reflect the financial condition of the organizations and
persons to which they apply on their effective dates, including contingent
liabilities of every type, which financial condition has not changed
materially and adversely since those dates. Each Borrower, if other than
a natural person, further represents that: (a) it is duly organized,
existing and in good standing under the laws where it is organized; and (b)
the execution and delivery of this note and the performance of the
obligations it imposes (i) are within its powers; (ii) have been duly
authorized by all necessary action of its governing body; and (iii) do not
contravene the terms of its articles of incorporation or organization, its
bylaws, or any agreement governing its affairs.
Waiver of Jury Trial: The Bank and the Borrower, after consulting or having
had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right either of them may have to a trial by jury in
any litigation based upon or arising out of this note or any related
instrument or agreement or any of the transactions contemplated by this note
or any course of conduct, dealing, statements (whether oral or written), or
actions of either of them. Neither the Bank nor the Borrower shall seek to
consolidate, by counterclaim or otherwise, any action in which a jury trial
has been waived with pay other action in which a jury trial cannot be or has
not been waived. These provisions shall not be deemed to have been modified
in any respect or relinquished by either the Bank or the Borrower except by
a written instrument executed by both of them.
See reverse side for additional terms and conditions including events
of default.
"BORROWER"
CARL L. BIXBY
20675 Hidden Lakes Drive
Gregory, Michigan 48137
KIMBERLY BIXBY
Additional Terms and Conditions
Events of Default/Acceleration: If any of the following events occurs, this
note shall be due immediately without notice at the Bank's option, whether
or not the Bank has made demand.
1. The Borrower or any guarantor of this note ("Guarantor") fails to
pay when due any amount payable under this note or under any agreement or
instrument evidencing debt to any creditor;
2. The Borrower or any Guarantor (a) fails to observe or perform any
other term of this note; (b) makes any materially incorrect or misleading
representation, warranty, or certificate to the Bank; (c) makes any
materially incorrect or misleading representation in any financial statement
or other information delivered to the Bank; or (d) defaults under the terms
of any agreement or instrument relating to any debt for borrowed money
(other than the debt evidenced by this note) such that the creditor declares
the debt due before its maturity;
3. There is a default under the terms of any loan agreement, mortgage,
security agreement, or any other document executed as part of the loan
evidenced by this note, or any guaranty of the loan evidenced by this note
becomes unenforceable in whole or in part, or any Guarantor fails to
promptly perform under its guaranty;
4. A "reportable event" (as defined in the Employee Retirement Income
Security Act of 1974 as amended) occurs that would permit the Pension
Benefit Guaranty Corporation to terminate any employee benefit plan of the
Borrower or any affiliate of the Borrower;
5. The Borrower or any Guarantor becomes insolvent or unable to pay
its debts as they become due;
6. The Borrower or any Guarantor (a) makes an assignment for the
benefit of creditors; (b) consents to the appointment of a custodian,
receiver, or trustee for itself or for a substantial part of its assets; or
(c) commences any proceeding under any bankruptcy, reorganization,
liquidation, insolvency or similar laws of any jurisdiction;
7. A custodian, receiver, or trustee is appointed for the Borrower or
any Guarantor or for a substantial part of its assets without its consent
and is not removed within 60 days after such appointment;
8. Proceedings are commenced against the Borrower or any Guarantor
under any bankruptcy, reorganization, liquidation, or similar laws of any
jurisdiction, and such proceedings remain undismissed for 60 days after
commencement; or the Borrower or Guarantor consents to the commencement of
such proceedings;
9. Any judgment is entered against the Borrower or any Guarantor, or
any attachment, levy, or garnishment is issued against any property of the
Borrower or any Guarantor;
10. The Borrower or any Guarantor dies;
11. The Borrower or any Guarantor, without the Bank's written consent,
(a) is dissolved, (b) merges or consolidates with any third party, (c)
leases, sells or otherwise conveys a material part of its assets or business
outside the ordinary course of business, (d) leases, purchases or otherwise
acquires a material part of the assets of any other corporation or business
entity except in the ordinary course of business, or (e) agrees to do any
of the foregoing (notwithstanding the foregoing, any subsidiary may merge
or consolidate with any other subsidiary, or with the Borrower so long as
the Borrower is the survivor);
12. The loan-to-value ratio of any pledged securities at any time
exceeds %, and such excess continues for five (5) days after notice
from the Bank to the Borrower;
13. There is a substantial change in the existing or prospective
financial condition of the Borrower or any Guarantor which the Bank in good
faith determines to be materially adverse;
14. The Bank in good faith deems itself insecure.
Remedies: If this note is not paid at maturity, whether by demand,
acceleration or otherwise, the Bank shall have all of the rights and
remedies provided by any law or agreement. Any requirement of reasonable
notice shall be met if the Bank sends the notice to the Borrower at least
seven (7) days prior to the date of sale, disposition or other event giving
rise to the required notice. The Bank is authorized to cause all or any
part of the Collateral to be transferred to or registered in its name or in
the name of any other person, firm or corporation, with or without
designation of the capacity of such nominee. The Borrower shall be liable
for any deficiency remaining after disposition of any Collateral. The
Borrower is liable to the Bank for all reasonable costs and expenses of
every kind incurred in the making or collection of this note, including,
without limitation, reasonable attorneys' fees and court costs. These costs
and expenses shall include, without limitation, any costs or expenses
incurred by the Bank in any bankruptcy, reorganization, insolvency or other
similar proceeding.
Waiver: Each endorser and any other party liable on this note severally
waives demand, presentment, notice of dishonor and protest, and consents to
any extension or postponement of time of its payment without limit as to the
number or period, to any substitution, exchange or release of all or part
of the Collateral, to the addition of any party, and to the release or
discharge of, or suspension of any rights and remedies against, any person
who may be liable for the payment of this note. No delay on the part of the
Bank in the exercise of any right or remedy shall operate as a waiver. No
single or partial exercise by the Bank of any right or remedy shall preclude
any other future exercise of it or the exercise of any other right or
remedy. No waiver or indulgence by the Bank of any default shall be
effective unless in writing and signed by the Bank, nor shall a waiver on
the occasion be construed as a bar to or waiver of that right on any future
occasion.
Miscellaneous: The Borrower, if more than one, shall be jointly and
severally liable, and the term "Borrower" shall mean any one or more of
them. This note shall be binding on the Borrower and its successors, and
shall benefit the Bank, its successors and assigns. Any reference to the
Bank shall include any holder of this note.
Payment Guaranteed By:
(Signature) Address
(Signature) Address
(Signature) Address
