UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 1997
or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____ to ____
Commission file number: 811-3787
BANDO McGLOCKLIN CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
Wisconsin 39-1364345
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation) No.)
W239 N1700 Busse Road
P.O. Box 190 53072-0190
Pewaukee, Wisconsin (Zip Code)
(Address of principal executive
offices)
Registrant's telephone number, including area code: (414) 523-4300
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No ___
On May 14, 1997 there was 3,677,662 shares outstanding of the
Registrant's common stock, 6 2/3 cents par value.
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION
FORM 10-Q INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of March 31, 1997 and
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . 3-4
Consolidated Statement of Operations - For the Three
Months Ended March 31, 1997 and 1996 . . . . . . . . . . . . 5
Consolidated Statement of Cash Flows - For the Three
Months Ended March 31, 1997 and 1996 . . . . . . . . . . . 6-7
Notes to the Consolidated Financial Statements . . . . . . 8-21
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . 22-24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 25
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . 25
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . 25
Item 4. Submission of Matters to a Vote of Security Holders . . . . . 25
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . 25
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 25
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 26
Exhibit Index . . . . . . . . . . . . . . . . . . . . . . . . 27
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 1997 December 31, 1996
(Unaudited) (Unaudited)
ASSETS
Loans $105,424,218 $69,468,291
Loan-backed certificates 1,497,499 1,988,056
Land 295,002 369,577
Less: reserve for loan losses (450,000) (450,000)
Less: retained loan discount (706,652) (1,482,657)
----------- -----------
Investments 106,060,067 69,893,267
Excess servicing asset 710,499 1,555,231
Short-term securities 525,000 -
Investment in swap contracts at
market value 311,201 444,257
Accounts receivable (net of
allowance of $12,162 and $16,245,
respectively) 1,246,418 1,176,025
Inventory 1,657,287 1,827,170
Interest receivable 1,086,266 1,348,860
Cash 549,663 1,337,556
Fixed assets (net of accumulated
depreciation of $578,910 and
$541,791, respectively) 1,575,205 1,419,930
Other assets 1,129,527 727,001
------------ -----------
Total Assets $114,851,133 $79,729,297
============ ===========
<PAGE>
March 31, 1997 December 31, 1996
(Unaudited) (Unaudited)
LIABILITIES, MINORITY INTEREST,
PREFERRED STOCK AND SHAREHOLDERS'
EQUITY
Commercial Paper $20,043,397 $21,768,394
Notes payable to banks 7,500,000 9,700,000
----------- -----------
Short-term borrowings 27,543,397 31,468,394
State of Wisconsin Investment
Board note payable 6,500,000 6,666,667
Loan participations with 42,754,216 5,348,619
repurchase options
Accounts payable 618,961 565,803
Other notes payable 26,967 29,469
Other liabilities 3,471,065 2,286,050
---------- ----------
Total Liabilities 80,914,606 46,365,002
---------- ----------
Minority interest in subsidiaries 770,677 598,211
Preferred stock, 1 cent par 16,908,025 16,908,025
value, 3,000,000
shares authorized, 674,791
shares issued and outstanding
after deducting 15,209 shares
in treasury
Common Stock and Other
Shareholders' Equity
Common Stock, 6 2/3 cents par 265,035 263,716
value,
3,000,000 shares authorized,
3,975,540 and 3,955,744
shares issued and outstanding,
before deducting shares in
treasury, respectively
Additional paid-in capital 19,625,680 19,498,326
Retained earnings/(deficit) 103,154 (641,370)
Treasury stock, at cost (303,648
and 266,650 shares, respectively) (3,736,044) (3,262,613)
----------- -----------
Total Common Stock and Other 16,257,825 15,858,059
Shareholders' Equity ---------- ----------
Total Liabilities, Minority $114,851,133 $79,729,297
Interest, Preferred ============ ===========
Stock, Common Stock and Other
Shareholders' Equity
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended
March 31,1997 March 31,1996
(Unaudited) (Unaudited)
Revenues:
Interest on loans $2,432,587 $1,974,713
Net sales of manufacturing 3,029,640 271,927
subsidiaries
Interest on short-term 13,276 15,850
securities
Premium (expense) income (68,727) 5,678
Other income 35,638 85,227
--------- ---------
Total Revenues 5,442,414 2,353,395
--------- ---------
Expenses:
Interest expense 1,264,316 702,731
Cost of goods sold of 1,637,134 217,269
manufacturing subsidiaries
Salaries and employee benefits 466,439 326,974
Change in appreciation on 133,056 25,067
investment swaps
Realized losses - 16,066
Other operating expenses 792,406 356,968
--------- ---------
Total Expenses 4,293,351 1,645,075
--------- ---------
Net operating income before 1,149,063 708,320
income taxes and --------- ---------
minority interest
Provision for income taxes (232,073) -
Minority interest in earnings of (172,466) -
subsidiaries --------- ---------
Net Income $744,524 $708,320
========= ==========
Net Income Per Common Share $0.20 $0.19
Weighted Average Shares 3,717,625 3,792,735
Outstanding
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended
March 31, 1997 March 31, 1996
(Unaudited) (Unaudited)
Cash Flows from Operating
Activities
Net income $744,524 $708,320
Loans made (13,274,823) (11,230,700)
Principal collected on loans 10,197,537 3,904,574
Loans sold - 12,004,722
Premium expense (income) - net 68,727 (5,678)
Loans purchased (32,388,084) -
Change in minority interest in 172,466 -
subsidiaries
Other adjustments to reconcile
net income to net cash (used)
provided by operating activities:
Change in appreciation on 133,056 25,067
investment swaps
24,320 19,971
Amortization
Depreciation 37,119 20,093
Increase (decrease) in cash due
to changes in:
Accounts receivable (70,393) (61,539)
Inventory 169,883 18,115
Interest receivable 262,594 (620,796)
Other assets (426,846) (250,446)
Accounts payable 53,158 157,631
Other liabilities 1,185,015 (54,220)
--------- ---------
Net Cash (Used) Provided by
Operations (33,111,747) 4,635,114
----------- ---------
Cash Flows from Investing Activities:
Purchase of fixed assets (192,394) (40,658)
Land sold 74,575 149,150
Purchase of short-term (525,000) -
securities
Proceeds from maturity of
securities - 1,063,778
---------- -----------
Net Cash (Used) Provided by (642,819) 1,172,270
Investing Activities ---------- -----------
Cash Flows from Financing
Activities:
(Decrease) increase in short-term ($3,924,997) $1,051,963
borrowings
Proceeds from loan participations 37,405,597 2,096,644
with repurchase options - net
Repayment of SWIB note (166,667) (6,500,000)
Decrease in other notes payable
(2,502) -
Dividends paid - (915,551)
Proceeds from exercise of
stock options 128,673 -
Repurchase of common stock (473,431) (1,313,250)
---------- ----------
Net Cash Provided (Used) in
Financing Activities 32,966,673 (5,580,194)
---------- ----------
Net (decrease) increase in cash (787,893) 227,190
Cash, beginning of period 1,337,556 1,008,847
---------- ----------
Cash, end of period $549,663 $1,236,037
========== ==========
<PAGE>
BANDO McGLOCKLIN CAPITAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS - Bando McGlocklin Capital Corporation (the "Company"),
was incorporated in February 1980 and provides long-term secured loans to
finance the growth, expansion and modernization of small businesses.
On March 26, 1993, the Company completed the formation of a holding
company structure by transferring substantially all of its assets and
liabilities to Bando McGlocklin Small Business Lending Corporation
("BMSBLC"), a wholly owned subsidiary of the Company. At the close of the
day on December 31, 1996, BMSLBC surrendered its Small Business
Administration ("SBA") license. BMSBLC will continue to provide secured
loans to small business concerns. Prior to January 1, 1997, BMSBLC was
known as Bando McGlocklin Small Business Investment Corporation.
On May 5, 1993, the Company formed Bando McGlocklin Investment Company
("BMIC"), a subsidiary of the Company. In May 1993, a partially developed
real estate parcel was transferred to BMIC. In December 1996 one percent
of the economic interest in BMIC was sold to an unrelated third party.
In January 1997, this one percent interest was sold to an officer of the
Company and was given 100% of the voting stock of BMIC by the Company. In
1997, BMSBLC contributed it's ownership interest in Lee Middleton Original
Dolls, Inc. ("Middleton Doll") and License Products, Inc. ("License
Products"), both 51% owned subsidiaries engaged in the manufacturing
business to BMIC. The consolidated accounts of the Company reflect the
consolidated financial position and results of operations of BMIC,
Middleton Doll and License Products.
Prior to January 2, 1997, the Company and BMSBLC were registered as
investment companies under the Investment Company Act of 1940 ("1940
Act"). Effective January 2, 1997, the Company and BMSBLC deregistered as
investment companies under the 1940 Act. The Company continues to operate
as a registrant under the Securities Act of 1933, but now reports under
the Securities Exchange Act of 1934 ("1934 Act"). The financial position
as of December 31, 1996 and the results of operations and cash flows for
the three months ended March 31, 1996 have been restated as if the Company
had always reported under the 1934 Act. Under the 1940 Act, the
investments in BMIC, Middleton Doll and License Products were accounted
for as common stock investments and stated at "fair value" as determined
in good faith by the Board of Directors. Under the 1934 Act, these three
subsidiaries are consolidated.
During 1996 the Company changed its year-end from June 30 to December 31.
In 1997, the Company intends to capitalize a bank holding company and then
spin-off the bank holding company in a common share distribution to
Company shareholders.
BASIS OF PRESENTATION - These financial statements are prepared in
accordance with generally accepted accounting principles. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The accompanying unaudited consolidated financial statements of the
Company have been prepared in accordance with the instructions to Form 10-
Q and do not include all of the other information and disclosures required
by generally accepted accounting principles.
The accompanying consolidated financial statements have not been audited
by independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements
include all adjustments, consisting only of normal recurring accruals,
necessary to summarize fairly the Company's financial position and results
of operations. The results of operations for the three months ended March
31, 1997 may not be indicative of the results that may be expected for the
year ending December 31, 1997.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements as of
March 31, 1997 and December 31, 1996 and for the period ended March 31,
1997 include the accounts of the Company, BMSBLC, BMIC, Middleton Doll
and License Products. During the three months ended March 31, 1996, the
Company owned only 49% of Middleton Doll and as a result during this
period the investment is accounted for on the equity method and is not
consolidated. Management previously expressed an intention to dispose of
BMCC's investment in Middleton Doll and License Products. Management now
intends to retain these investments. All significant intercompany
accounts and transactions have been eliminated in consolidation.
TREASURY STOCK - Preferred stock has been reduced by the cost of shares
acquired for treasury. The common treasury stock is shown as a reduction
in shareholders' equity at cost.
INVESTMENT VALUATION -Short-term securities and the Company's investment
swap contracts are valued at current market value. Loans and loan-backed
certificates are stated at unpaid principal balance unless loss reserves
are considered necessary. Land owned is stated at the lower of cost or
net realizable value.
When a portion of a loan is sold, the basis of the retained portion of the
loan is discounted by the differential between the face amount of the sold
portion of the loan and the relative market value of the sold portion of
the loan. This difference is referred to as the retained loan discount.
The relative market value is determined by the expected cash flows
discounted with assumptions made on prepayments and rate of return. At
the time of sale, premium income is reduced by the retained loan discount.
The retained loan discount is amortized over the life of the underlying
loan. When a loan is prepaid, the remaining retained loan discount is
recognized as an increase to interest income. When a loan is sold, the
remaining retained loan discount is included as a reduction to the basis
of the underlying loan.
EXCESS SERVICING ASSET - The excess servicing asset represents the
unamortized balance of the present valued cash flows of the interest rate
differential resulting from the sale of a loan with servicing rights
retained. For transactions entered into prior to January 1, 1997, the
interest rate differential is the difference between the interest rate on
the underlying loan and the interest rate paid to the purchaser on the
sold portion after considering normal servicing fees and transaction fees.
This amount is amortized over the life of the underlying loan, subject to
periodic review of prepayment speeds.
INTEREST RATE SWAP AGREEMENTS - The Company enters into interest rate swap
agreements as a means of managing its interest rate exposure. The
differential to be paid or received on all interest rate swap agreements
is accrued as interest rates change and is recognized over the life of the
agreements. Those agreements which are considered to be investments are
accounted for at market value in the financial statements.
ACCOUNTS RECEIVABLE - Accounts receivable represents sales on credit made
by Middleton Doll and License Products, net of an allowance for doubtful
accounts.
INVENTORY - Inventories of Middleton Doll and License Products are valued
at the lower of cost or market. Middleton Doll and License Products
utilize the average cost method to determine cost.
FIXED ASSETS - Fixed assets primarily represent manufacturing property,
plant and equipment of Middleton Doll and License Products. Fixed assets
are stated at cost and are depreciated using the straight-line method for
financial statement purposes and accelerated methods for income tax
purposes.
RECOGNITION OF INTEREST INCOME - Interest income is recorded on the
accrual basis to the extent that management anticipates that such amounts
will be collected. In all other cases, no entry is made to accrue
interest, but the unpaid interest is monitored, and interest is recorded
upon receipt.
PREMIUM (EXPENSE) INCOME - Premium (expense) income represents the
differential at the time a portion of a loan is sold between the present
valued excess servicing income on the sold portion and the retained loan
discount, and subsequent to sale, amortization of the retained loan
discount and excess servicing asset.
INCOME TAXES - The Company intends to qualify as a real estate investment
trust ("REIT") under the Code. Under REIT status, the Company, together
with its qualified REIT subsidiary (BMSBLC), will generally not be
subject to income tax on that portion of its taxable income which is
distributed to shareholders. The Company must also meet certain other
annual income and quarterly asset diversification tests.
For the non-qualified REIT subsidiaries of the Company, taxes are provided
using the liability approach which generally requires that deferred income
taxes be recognized when assets and liabilities have different values for
financial statement and tax reporting purposes.
During the year ended June 30, 1995, the Company made payments to modify
the terms of certain investment swap contracts which resulted in a
$2,031,928 realized loss for financial statement purposes. For tax
purposes, the realized loss will be amortized through 1997. As a result,
ordinary taxable income was reduced by $88,057 and $206,456 for the three
months ended March 31, 1997 and 1996 respectively. During the year ending
December 31, 1997, ordinary taxable income will be reduced by $223,911.
NOTE 2 - LOANS
The Company's exposure to loss in the event of nonperformance by the
borrower is represented by the outstanding principal amount of the loans.
Substantially all loans are fully secured by first or second mortgages on
owner-occupied real estate. Approximately 95% of the Company's loan
portfolio at March 31, 1997 is comprised of loans to borrowers located
within the State of Wisconsin.
The Company routinely monitors its loan portfolio for evidence of loan
impairment. A loan is considered impaired when, based on current
information and events, it is probable that the Company will be unable to
collect all amounts due according to the contractual terms of the loan.
Historically impairment has not been an indicator of loss. As of March
31, 1997 and December 31, 1996 loans with balances aggregating $1,176,737
and $1,022,434, respectively, were considered impaired. In determining
the need for a loss reserve on the impaired loans, management looks to the
underlying collateral. A loss reserve is established if the estimated
value of the underlying collateral is insufficient to cover the impaired
loan. At March 31, 1997, a loss reserve of $450,000 was recorded on
impaired loans totaling $1,176,737. At December 31, 1996, a loss reserve
of $450,000 was recorded on impaired loans totaling $1,022,434. The
accrued interest on the impaired loans totals $58,493 at March 31, 1997
and is considered fully collectible.
The Company's loan portfolio consists primarily of variable-rate loans
with terms of five to fifteen years. The Company writes interest rate
caps for terms not exceeding five years on certain variable rate loans to
meet the financing needs of its borrowers. Interest rate caps written by
the Company enable borrowers to modify or reduce their interest rate risk.
The Company is exposed to interest rate risk to the extent that its cost
of funds exceeds the interest rate caps. Interest rate caps do not
represent exposure to credit loss for the Company in that they do not
affect the outstanding principal amounts of the loans.
The Company has made loans which have outstanding balances at March 31,
1997 of $4,465,253 to Bando McGlocklin Real Estate Investment Corporation,
a related party. The Company has a loan outstanding in the amount of
$1,533,664 as of March 31, 1997 to the contractor that built an office
building for Bando McGlocklin Real Estate Investment Corporation from
which the Company leases space.
At March 31, 1997, the Company had loans outstanding to its largest
borrower totalling $12,812,897. Undisbursed construction loan commitments
and lines of credit totaled $6,508,366 at March 31, 1997.
NOTE 3 - LOANS SOLD
Since 1994, the Company has sold loans to third parties. The following
table summarizes the sales and the outstanding balance of loans sold.
Principal Principal
Balance Sold Percentage Balance Sold at Recourse
at Date of Sale Sold March 31, 1997 Provision
During the six months ended December 31, 1996:
$550,000 58% $544,900 None
97,795 75% 196,977 None
$647,795 $741,877
During the year ended June 30, 1996:
$1,671,644 68%- $1,589,263 None
85%
1,757,275 100% 1,723,027 None
$3,428,919 $3,312,290
During the year ended June 30, 1995:
$13,222,580 85% $9,189,813 100%
2,837,677 75%- 1,929,486 None
80%
1,455,000 75% --- None
1,605,175 100% --- None
$19,120,432 $11,119,299
During the year ended June 30, 1994:
$10,397,410 75% $2,995,085 None
During the three months ended March 31, 1997, the Company repurchased
certain loans which had been sold to third parties, at unpaid principal
balances totalling $32,388,084. As a result of these transactions, the
excess servicing asset and retained loan discount related to the original
sale were reduced $642,319 and $615,763, respectively. Premium expense of
$26,556 was also recognized due to these transactions.
The Company also sells loans with the option to repurchase them at a later
date. As of March 31, 1997, the balance of loan participations with
repurchase options was $42,754,216. During the three months ended March
31, 1997, the Company resold, with an option to repurchase, the loans
referred to in the preceding paragraph at unpaid principal balances
totalling $32,388,084. These sales have been accounted for as secured
financings.
For the loans sold with no recourse, the Company is susceptible to loss on
the loans up to the percentage of the retained interest to the extent the
underlying collateral is insufficient in the event of nonperformance by
the borrower. The Company's retained interest is subordinated to the
portion sold. For the loans sold with full recourse, the Company is
susceptible to loss equal to the total principal balance of the loan to
the extent the underlying collateral is insufficient in the event of
nonperformance. No associated loss reserve has been established as of
March 31, 1997 for loans which have been sold.
Under the terms of the agreements, the Company retains servicing rights
for the entire loan. (See Note 5.) As servicer and provider of recourse,
certain agreements require the Company to comply with various covenants,
including the maintenance of net worth. As of March 31, 1997, the Company
was in compliance with these covenants.
NOTE 4 - LOAN BACKED CERTIFICATES
During the years ended June 30, 1996 and June 30, 1995, the Company sold
loans to a trust, which issued two classes of certificates as noted in the
table below:
Principal A Certificate
Balance A Certificate B Certificate Balance at
Sold at Date Sold to A Certificate Sold to March 31,
of Sale Third Party Interest Rate Company 1997
For year ended June 30, 1996:
$8,666,538 $7,453,223 6.938% (1) $1,213,315 $5,959,464
For year ended June 30, 1995:
$6,540,358 $5,246,160 8.00% (2) $1,294,198 $2,138,097
(1) The interest rate will be reset monthly based upon the 30 day
London Interbank Offered Rate (LIBOR) plus one and one-half
percent.
(2) The interest rate will be reset every three years based upon the
three-year U.S. Treasury Bond yield plus one and one-half percent.
The B Certificates purchased by the Company are subordinated to the A
Certificates. The B Certificates receive all excess interest after
expenses. The Company has risk equal to the B Certificates' principal
balances to the extent the underlying collateral is insufficient in the
event of nonperformance by the borrowers. At March 31, 1997, no associated
loss reserve has been established. Under the terms of the Pooling and
Servicing Agreements the Company retains servicing rights for all the
loans sold. (See Note 5).
NOTE 5 - EXCESS SERVICING ASSET
The Company has retained the servicing rights on each of the loans it has
sold to third parties. By retaining the right to service the loan, the
Company earns an interest rate spread equal to the difference between the
interest rate on the loan and the interest rate paid to the purchaser on
the sold portion (this difference is referred to as the "Servicing
Spread").
For transactions entered into prior to January 1, 1997, the value of this
excess servicing asset has been estimated based upon the present valued
cash flow of the Servicing Spread after considering the effects of
estimated prepayments, normal servicing fees and transaction fees. The
value of the excess servicing asset is recognized as premium income at the
time of the sale and is concurrently capitalized on the consolidated
balance sheet. It is then amortized over the life of the loan. If actual
cash flows exceed the excess servicing asset, the Company will recognize
additional income in excess of the value of the excess servicing asset. A
shorter loan life than that estimated at the time the excess servicing
asset was established, will result in the carrying value of the excess
servicing asset being written down through a charge to earnings.
The carrying value of the excess servicing asset is analyzed quarterly by
the Company to determine whether prepayment and default experience has any
impact on this carrying value.
NOTE 6 - SHORT-TERM SECURITIES
Short-term securities are used to invest idle cash. Short-term securities
having a maturity of less than 90 days are stated at market value (which
approximates cost). At March 31, 1997, the Company held two securities
with maturities ranging from one to seven days and bearing interest at
5.25% to 5.75%.
NOTE 7 - SHORT-TERM BORROWINGS
Commercial paper is issued for working capital purposes with maturities of
up to 90 days. The average yield on commercial paper outstanding at March
31, 1997 was 5.67%.
BMSBLC has entered into three loan agreements with certain banks. The
current loan agreements provide for a maximum of $32,500,000 less the
outstanding principal amount of commercial paper. Two facilities bear
interest at the prime rate while the other facility bears interest at the
30-,60- or 90-day LIBOR plus one and three-eighths percent. Interest is
payable monthly, and the loan agreements expire on October 31, 1997.
BMSBLC is also required to pay an availability fee to the two facilities
that bear interest at the prime rate for the use of those facilities. The
banks are party to an Intercreditor Agreement which grants each party a
proportionate security interest in substantially all of BMSBLC's assets
which are not securing long-term debt. (See Note 8.) At March 31, 1997,
under these agreements, the outstanding principal balance was $7,500,000.
NOTE 8 - LONG-TERM DEBT
On November 7, 1991, BMSBLC borrowed $10,000,000 from The State of
Wisconsin Investment Board ("SWIB") pursuant to a term note which bears
interest at a fixed rate of 9.05% per year through its maturity. The note
is payable in equal quarterly installments of $166,667 with a final
payment of unpaid principal due on November 7, 2006, and is secured by
specific loans. At March 31, 1997, the outstanding principal balance was
$6,500,000.
The SWIB agreement and the loan agreements described in Note 7 contain
restrictions on BMSBLC's new indebtedness, acquisition of its common
stock, return of capital dividends, past due loans, and realized losses on
loans, and require maintenance of collateral, minimum equity and loan to
debt ratios, among others. As of March 31, 1997, BMSBLC is in compliance
with all such requirements.
Future annual maturities of long-term debt as of March 31, 1997 are as
follows:
March 31, 1998 $ 666,667
March 31, 1999 666,666
March 31, 2000 666,667
March 31, 2001 666,666
March 31, 2002 666,667
Later Years 3,166,667
__________
$6,500,000
==========
Based on the borrowing rates currently available to BMSBLC for loans with
similar maturities, the estimated fair market value of the long-term debt
at March 31, 1997 was approximately $6.6 million.
NOTE 9 - INTEREST RATE SWAPS
The Company enters into interest rate swap agreements primarily as a means
of managing interest rate risk. To the extent that the Company's
variable-rate loans are funded with fixed-rate debt, the Company is
subject to interest rate risk. To reduce interest rate risk, the Company
enters into certain interest rate swaps designed to convert variable-rate
loans into fixed-rate loans. Although these swaps reduce interest rate
risk, the potential for profit or loss on interest rate swaps still exists
depending upon fluctuations in interest rates. In addition, the Company
enters into interest rate swaps in an attempt to further manage interest
rate risk resulting from interest rate movements.
In accordance with applicable accounting principles, the Company's
interest rate swap agreements are held for purposes other than trading and
are further classified as either hedges or as investment contracts. Both
hedges and investment contracts have the potential for profit and loss.
Hedges are accounted for using the designation method, which matches the
swaps with the assets that are being hedged. When the designated asset
matures, or is sold, extinguished or terminated, the hedge would be
reclassified as an investment. Accounting principles dictate that those
contracts not meeting hedge criteria be classified as investments and
marked-to-market with any associated unrealized gain or loss recorded in
the financial statements, whereas those contracts meeting hedge criteria
are not to be classified as investments or marked-to-market in the
financial statements. On March 31, 1997 and March 31, 1996, the
investment contracts at market resulted in an unrealized gain of $311,201
and $1,072,223, respectively. The difference in the unrealized gain at
March 31, 1997 and March 31, 1996 as compared to December 31, 1996 and
December 31, 1995, a decrease of $133,056 and $25,067 respectively, was
recorded in the consolidated statement of operations.
The average notional amount of investment swaps outstanding during the
three months ended March 31, 1997 and March 31, 1996 was $62,750,000 and
$142,750,000, respectively.
Based on quoted market valuations, the estimated market value of the hedge
swaps at March 31, 1997 and December 31, 1996 was approximately $0.3
million and $1.9 million, respectively.
The following table summarizes the interest rate swap agreements in effect
at March 31, 1997. No funds were borrowed or are to be repaid under these
arrangements.
<TABLE>
<CAPTION> Original
Company Bank Current Interest Rates Paid Notional Amount Expiration
Bank Payment Payment By Company By Bank Date
<S> <C> <C> <C> <C> <C> <C>
Firstar Bank Milwaukee, N.A Floating Fixed 5.65625% (3) 8.77000% $10,000,000(6) 06/30/97
Milwaukee, Wisconsin
Firstar Bank Milwaukee, N.A Floating Fixed 5.56250% (3) 6.53000% $17,500,000 07/07/97
Milwaukee, Wisconsin
Firstar Bank Milwaukee, N.A Floating Fixed 5.56250% (3) 6.84700% $1,500,000 07/07/97
Milwaukee, Wisconsin
Firstar Bank Milwaukee, N.A Floating Floating 5.56250% (3) 6.17144% (4) $25,000,000 09/16/97
Milwaukee, Wisconsin (1)
First Bank National Association Floating Fixed 5.85156% (2) 10.20000% $12,600,000 09/23/97
Minneapolis, Minnesota
Firstar Bank Milwaukee, N.A
Milwaukee, Wisconsin (1) Floating Floating 5.56250% (3) 6.12950% (5) $35,000,000 10/06/97
Firstar Bank Milwaukee, N.A Floating Fixed 5.59375% (2) 8.50270% $5,000,000 12/11/97
Milwaukee, Wisconsin
Norwest Bank Minnesota, N.A. Floating Fixed 5.56250% (3) 5.29000% $15,000,000 09/16/98
Minneapolis, Minnesota
First Bank National Association Floating Fixed 5.47656% (7) 9.20000% $8,000,00 (8) 06/16/99
Minneapolis, Minnesota (1)
LaSalle National Bank Floating Fixed 5.62500% (3) 6.34000% $5,400,000 03/21/01
Chicago, Illinois
Firstar Bank Milwaukee, N.A Floating Fixed 5.78125% (3) 7.43500% $10,325,000 (9) 09/28/01
Milwaukee, Wisconsin
LaSalle National Bank Floating Fixed 5.56250% (3) 7.60000% $5,000,000 03/10/05
Chicago, Illinois
LaSalle National Bank Floating Fixed 5.47266% (3) 6.66000% $5,250,000(10) 05/23/05
Chicago, Illinois
LaSalle National Bank Floating Fixed 5.75000% (3) 6.50000% $5,000,000(11) 09/29/05
Chicago, Illinois
LaSalle National Bank Floating Fixed 5.53906% (3) 7.09000% $12,500,000 09/05/06
Chicago, Illinois
(1) Investment Swap
(2) Adjusted every six months to the six-month London Interbank Offered Rate (LIBOR) then in effect..
(3) Adjusted every three months to the three-month LIBOR then in effect.
(4) Adjusted every three months to the three-month LIBOR then in effect plus a premium, currently at .60894%, subject to a
25 basis point maximum increase at each adjustment period.
(5) Adjusted every three months to the three-month LIBOR then in effect plus a premium, currently at .567%, subject to a 25
basis point maximum increase at each adjustment period.
(6) The notional amount decreases by $166,667 each quarter and was $5,499,991 at March 31, 1997.
(7) Adjusted every month to the one-month LIBOR then in effect.
(8) The notional amount decreases by $83,333 each quarter and was $5,333,344 at March 31, 1997. $2,583,344 of this
contract was designated as a hedge; $2,750,000 was accounted for as an investment.
(9) The notional amount decreases by $166,667 each quarter and was $6,658,333 at March 31, 1997.
(10) The notional amount decreases by $100,000 each quarter and was $4,550,000 at March 31, 1997.
(11) The notional amount decreases by $75,000 each quarter and was $4,550,000 at March 31, 1997.
</TABLE>
As a result of hedge arrangements, the Company recognized a $408,728 and
$442,861 reduction in interest expense for the three months ended March
31, 1997 and March 31, 1996, respectively. In addition, the Company
recognized a $112,858 and $127,773 reduction in interest expense for the
three months ended March 31, 1997 and March 31, 1996, respectively, as a
result of the investment swap contracts.
The Company may be susceptible to risk with respect to interest rate swap
agreements to the extent of nonperformance by the financial institutions
participating in the interest rate swap agreements. However, the Company
does not anticipate nonperformance by these counterparties.
NOTE 10 -MANDATORILY REDEEMABLE PREFERRED STOCK
On October 20, 1993, the Company issued 690,000 shares of Adjustable Rate
Cumulative Preferred Stock, Series A in a public offering at $25.00 per
share less an underwriting discount of $1.0625 per share and other
issuance costs amounting to $295,221. The preferred stock is redeemable,
in whole or in part at the option of the Company, on any dividend payment
date during the period from July 1, 2001 to June 30, 2003 and from July 1,
2006 to June 30, 2008 at $25 per share plus accrued and unpaid dividends.
Any shares of preferred stock not redeemed prior to July 1, 2008 are
subject to mandatory redemption on that date by the Company at a price of
$25 plus accrued dividends. Dividends on the preferred stock are paid
quarterly at the annual rate of 7.625% which is subject to adjustment
effective for the five year periods commencing July 1, 1998 and July 1,
2003. Through March 31, 1997, the Company purchased 15,209 shares for
treasury.
Based on quoted market prices, the estimated fair market value of the
preferred stock outstanding as of March 31, 1997 was approximately $16.5
million.
NOTE 11 - RETIREMENT PLANS
The Company maintains a profit sharing plan in accordance with Section
401(k) of the Internal Revenue Code ("the Code") and a money purchase plan
covering all of its employees to provide for their retirement.
Participants in the 401(k) plan may elect to have the Company make
contributions to their accounts through payroll deductions ranging from 2%
to 10% of the participant's total cash compensation up to the maximum
amounts permitted by the Code. Contributions by the Company to the 401(k)
plan are dependent both upon the Company's earnings and upon decisions
made by the Compensation Committee of the Board of Directors. The Company
is obligated to make contributions to its money purchase plan in amounts
equal to 5% of each participant's total cash compensation. All
contributions are funded annually. Expense for Company contributions to
the 401(k) or money purchase plans for the three months ended March 31,
1997 and March 31, 1996 were $15,000 and $14,550, respectively.
The Company provides additional supplemental retirement benefits for two
executive officers. Expense of $18,000 and $58,720 was recorded for the
three months ended March 31, 1997 and March 31, 1996, respectively.
NOTE 12 - STOCK OPTION PLANS
The Company has four stock option plans, the 1987 Stock Option Plan, the
1990 Stock Option Plan, the 1993 Stock Option Plan and the 1997 Stock
Option Plan (the "Plans"). In accordance with the Plans' provisions, the
exercise prices for stock options may not be less than the fair market
value of the optioned stock at the date of grant. The exercise price of
all options granted was equal to the market value of the stock on the date
of grant. All of the options, except for the options granted under the
1997 Stock Option Plan, are "incentive stock options" as defined under
Section 422 of the Code. Options granted under the 1997 Stock Option Plan
are considered "non-qualified stock options" as defined by the Code. All
options must be exercised within ten years of the date of grant.
Additional information relating to the Plans is shown below:
For the three months
Stock Option Plans ended
March 31, 1997
Number Average
of Option
Options Price
Options outstanding at January 1, 1997 169,424 $10.45
Options granted 113,302 12.50
Options exercised (19,796) 6.50
Options terminated unexercised ---- ----
Options outstanding at March 31, 1997 262,930 $11.62
Options available for grant at
March 31, 1997 142,128 ----
Total reserved shares 405,058 ----
Options exercisable at March 31. 1997 154,118 $11.80
Options Outstanding Options Exercisable
Remaining Average
Average Exercise Exercise
Exercise Shares Life Price Shares price
Price Range (years)
$6.50-8.50 54,080 3.7 $8.00 26,000 $8.00
$11.00-14.50 208,850 9.0 $12.57 128,118 $12.58
Total 262,930 7.9 $11.62 154,118 $11.80
The Company adopted the disclosure only option under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation. If the accounting provisions of the new statement had been
adopted as of the beginning of fiscal 1996, the effect on net income would
have been immaterial.
NOTE 13 - INCOME TAXES
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" requires the use of the liability method of acounting for
income taxes. The liability method measures the expected tax impact of
future taxable income or deductions implicit in the consolidated balance
sheet.
Deferred tax assets, included in other assets, consist of benefits for net
operating loss carryforwards generated by the Company's non-REIT
subsidiaries. These deferred tax assets are primarily offset by a
valuation allowance due to the questionable use of these net operating
loss carryforwards. Deferred tax liabilities, included in other
liabilities, principally relate to accelerated depreciation for income tax
purposes.
NOTE 14 - SHAREHOLDERS' EQUITY RECLASSIFICATIONS
The Shareholders' Equity section of the consolidated balance sheet as of
December 31, 1996 reflects certain reclassifications from those amounts
reported in the Company's Annual Report to Shareholders for the six months
ended December 31, 1996. These reclassifications were as a result of the
restatement of the financial position and results of operations and cash
flows as if the Company had always reported under the 1934 Act. (See Note
1).
<TABLE>
NOTE 15 - SEGMENT INFORMATION
<CAPTION>
Lending Manufacturing Eliminations Consolidated
Operations Operations
TOTAL REVENUES
<S> <C> <C> <C> <C>
Three months ended March 31, $2,455,879 $3,062,076 ($75,541) $5,442,414
1997
Three months ended March 31, 2,081,345 302,170 (30,120) 2,353,395
1996
NET OPERATING INCOME BEFORE
INCOME TAXES AND MINORITY
INTEREST
Three months ended March 31, $528,102 $620,961 - $1,149,063
1997
Three months ended March 31. 868,337 (160,017) - 708,320
1996
NET INCOME
Three months ended March 31, $525,979 $218,545 - $744,524
1997
Three months ended March 31, 868,337 (160,017) - 708,320
1996
ASSETS
March 31, 1997 $111,613,913 $6,086,130 ($2,848,910) $114,851,133
December 31, 1996 77,201,949 6,242,571 (3,715,223) 79,729,297
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
General
Amounts presented for the 1997 reporting period and at December 31, 1996
include the consolidation of the operations of the following companies:
Bando McGlocklin Capital Corporation (the "Company"); Bando McGlocklin
Small Business Lending Corporation ("BMSBLC"), a 100% owned subsidiary of
the Company; Bando McGlocklin Investment Corporation ("BMIC"), a 99%-owned
subsidiary of the Company; Lee Middleton Original Dolls, Inc. ("Middleton
Doll") and License Products, Inc. ("License Products"), 51%-owned
subsidiaries of BMIC. Amounts presented for the March 31, 1996 reporting
period include the consolidation of the operations of the following
companies: the Company; BMSBLC and BMIC, 100%-owned subsidiaries of the
Company; and License Products, a 51%-owned subsidiary of the Company.
The Company only owned 49% of Middleton Doll prior to June 14, 1996 and as
such is not consolidated in the March 31, 1996 statement of operations or
statement of cash flows.
The 1996 reporting period reflects the Company's financial statements on a
restated basis. Prior to January 2, 1997 the Company and BMSBLC were
registered investment companies therefore they did not consolidate BMIC,
Middleton Doll and License Products, which are non-registered investment
companies. The 1997 and 1996 consolidated financial position and results
of operations and cash flows include the accounts of the Company and its
51% or greater owned subsidiaries and are offset by the minority interest
in BMIC's, Middleton Doll's and License Products's ownership.
For the Three Months Ended March 31, 1997 and 1996
The Company's net income after income taxes and minority interest
increased 4% to $0.74 million for the quarter ended March 31, 1997
compared to $0.71 million for the same period of last year.
Total revenues for the quarter ended March 31, 1997 increased 135% to $5.4
million from $2.3 million over the corresponding prior year period. This
increase is primarily due to the consolidation of Middleton Doll's sales
of $2.8 million for the quarter ended March 31, 1997. The prior year
period does not include any sales for Middleton Doll because it was
accounted for on the equity method and was not consolidated in the
financial statements. Interest on loans increased $0.4 million as a
result of the Company repurchasing loans that were previously sold to a
third party. This increase in interest income is offset by increased
interest expense. The average loans under management increased $6.6
million to $139.4 million for the quarter ended March 31, 1997 from $132.8
million for the quarter ended March 31, 1996. The increase in interest
income as a result of the increase in loans was completely offset by the
decreasing yield on the portfolio of loans due to the market's competitive
pricing. The remaining $0.1 million decrease in total revenues was a
result of the decrease in other income.
Total operating expenses for the quarter ended March 31, 1997 increased
169% to $4.3 million from $1.6 million over the corresponding prior
period. $2.1 million of the increase is the result of consolidating
Middleton Doll's operations. The prior period does not include operating
expenses for Middleton Doll. Interest expense increased 86% to $1.2
million from $0.7 million for the quarters ended March 31, 1997 and 1996,
respectively. Interest expense increased by $0.4 million as a result of
the repurchase of loans by BMSBLC that had been previously sold. Those
repurchased loans were funded with new debt. This repurchase had no
impact on net operating income as both interest income and interest
expense increased the same amount. Interest expense increased by $0.1
million because the Company continues to grow its investments in mortgage
loans by utilizing leverage. Average loans increased $6.6 million in the
current year quarter over the corresponding prior period. Lastly, the
expense resulting from the decline in unrealized appreciation on
investment swaps, which are marked-to-market, increased $0.1 million for
the quarter ending March 31, 1997.
The Company's consolidated net income has been reduced by the minority
interest ownership in the net earnings of Middleton Doll and License
Products, which have been consolidated by the Company. The minority
interest in earnings of subsidiaries equaled $0.2 million for the quarter
ended March 31, 1997. Also the Company's March 31, 1997 consolidated net
income has been reduced by $0.2 million as a provision of income taxes for
Middleton Doll.
LIQUIDITY AND CAPITAL RESOURCES
Total investment in loans and loan-backed certificates on the balance
sheet increased by $35.5 million, or 50% to $106.9 at March 31, 1997 from
$71.4 at December 31, 1996. During the first quarter of 1997 the Company
repurchased $32.4 million of loans previously sold to a third party and
made new loans of $13.3 million. The Company also collected $10.2 million
of principal payments on loans on the balance sheet and collected $10.5
million of principal payments on loans that were sold to third parties.
The Company's loans under management decreased to $135.2 as of March 31,
1997 from $142.6 as of December 31, 1996. The increase in loans on the
balance sheet was primarily financed through secured borrowings.
Cash and short-term securities decreased to $1.1 million at March 31, 1997
from $1.3 million at December 31, 1996.
The Company's total consolidated indebtedness at March 31, 1997 increased
77% to $76.8 million from $43.5 million as of December 31, 1996. The
Company, as of March 31, 1997, had $49.3 million outstanding in long-term
debt and $27.5 million outstanding in short-term borrowings and as of
December 31, 1996, had $12.0 million outstanding in long-term debt and
$31.5 million outstanding in short-term borrowings. The increase of $33.3
million is the result of funding loans on the balance sheet rather than
selling the loans to third parties.
The Company's board of directors has approved capitalizing
InvestorsBancorp, Inc., a bank holding company with approximately $6.2
million and distributing to the Company's shareholders all of its
outstanding shares of InvestorsBancorp. InvestorsBancorp is a proposed
bank holding company organized to own all of the capital stock of
InvestorsBank (the "Bank"), a Wisconsin-chartered bank. It is
management's belief that the Company has enough capital to invest
approximately $6.2 million in InvestorsBancorp and continue to operate the
Company.
The Company began exploring the idea of opening a bank in 1994 when
management noticed that banks and other traditional financial institutions
were beginning to enter the Company's markets, by providing commercial
real estate loans to small businesses. This competition for commercial
real estate loans has had an adverse effect on the Company's margins. It
was decided a bank could compete more effectively based upon its lower
cost of funds.
After the Company distributes its shares in InvestorsBancorp to
shareholders, the principal business of the Company will be to manage its
loan portfolio and participate in new loans with third party loan
originators, including the Bank and possibly other banks. The Company is
also exploring the expansion of its real estate lending business into
ownership of real property including related buildings and improvements
for lease to small businesses. The Company anticipates that adequate cash
will be available to fund loans and new investments.
All employees of the Company will terminate their employment with the
Company to become employees of the Bank, except for certain executive
officers who will be employees of both the Company and the Bank. The
Company and the Bank will enter into a Management Services and Allocation
of Operating Expenses Agreement (the "Agreement"). The effect of such
agreement will be to reduce the level of operating expenses in the
Company. The investment of approximately $6.2 million in capital is
expected to lower the Company's operating income. Management is unable to
measure the net impact of the Agreement and the capitalization of
InvestorsBancorp on net operating income.
Statements included in this filing concerning the Company's future
prospects are "forward looking statements" under the Federal securities
laws. There can be no assurance that future results will be achieved and
actual results could differ materially from forecasts and estimates.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not a defendant in any material pending legal
proceeding and no such material proceedings are known to be
contemplated.
Item 2. CHANGES IN SECURITIES
No material changes have occurred in the securities of the
Registrant.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) List of Exhibits
The Exhibits to this Quarterly Report on Form 10-Q are
identified on the Exhibit Index hereto.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1997.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunder duly authorized.
BANDO McGLOCKLIN CAPITAL CORPORATION
(Registrant)
Date: May 13, 1997 /s/ George R. Schonath
Chairman of the Board, Chief Executive Officer
and Chief Financial Officer
<PAGE>
BANDO MCGLOCKLIN CAPITAL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Exhibit
3.1 Articles of Incorporation, as amended
3.2 By-laws
4.1 Amended and Restated Loan Agreement dated as of
June 28, 1996 between First Bank (N.A.) and Bando
McGlocklin Small Business Investment Corporation
4.2 Modification Agreement dated as of October 31,
1996 between First Bank (N.A.) and Bando
McGlocklin Small Business Investment Corporation
4.3 Loan Agreement dated as of June 28, 1996 between
LaSalle National Bank and Bando McGlocklin Small
Business Investment Corporation
4.4 First Amendment to Loan Documents dated as of
December 2, 1996 by LaSalle National Bank and
Bando McGlocklin Small Business Investment
Corporation
4.5 Amended and Restated Loan Agreement dated as of
June 28, 1996 between First Bank Milwaukee, N.A.
and Bando McGlocklin Small Business Investment
Corporation
4.6 First Amendment to Amended and Restated Loan
Agreement dated as of October 31, 1996 between
Firstar Bank Milwaukee, N.A. and Bando McGlocklin
Small Business Investment Corporation
4.7 Second Amendment to Amended and Restated Loan
Agreement dated as of May 14, 1997 between
Firstar Bank Milwaukee, N.A. and Bando McGlocklin
Small Business Investment Corporation
4.8 Master Note Purchase Agreement dated as of
January 1, 1997 between the State of Wisconsin
Investment Board, Bando McGlocklin Small Business
Lending Corporation and Bando McGlocklin Capital
Corporation
10.1 Bando McGlocklin Capital Corporation 1987
Incentive Stock Option Plan (incorporated by
reference to Exhibit 7.3 to the Company's Form N-
5 Registration Statement, Registration No. 33-
12939)
10.2 Bando McGlocklin Capital Corporation 1990
Incentive Stock Option Plan (incorporated by
reference to Exhibit 7.4 to the Company's Form N-
5 Registration Statement, Registration No. 33-
51406)
10.3 Bando McGlocklin Capital Corporation 1993
Incentive Stock Option Plan (incorporated by
reference to Exhibit (i)(6) to the Company's Pre-
Effective Amendment No. 1 to Form N-2
Registration Statement, Registration No. 33-
66258)
10.4 Bando McGlocklin Capital Corporation 1997 Stock
Option Plan
11 Statement Regarding Computation of Per Share
Earnings
27 Financial Data Schedule [EDGAR version only]
Exhibit 3.1
COMPOSITE ARTICLES OF INCORPORATION, AS AMENDED
OF
BANDO McGLOCKLIN CAPITAL CORPORATION
ARTICLE I
NAME
The name of the corporation shall be BANDO McGLOCKLIN CAPITAL CORPORATION.
ARTICLE II
EXISTENCE
The period of existence of the corporation shall be perpetual.
ARTICLE III
PURPOSE
The purpose or purposes for which the corporation is organized
is to carry on and engage in any lawful activity within the purposes for
which corporations may be operated under the Wisconsin Business
Corporation Law.
ARTICLE IV
DIRECTORS
The number of initial directors shall be three (3). Thereafter,
the number of directors shall be as provided in the by-laws of the
corporation.
The name of the initial director is:
Salvatore Bando
Jon McGlocklin
Richard VanEerden
ARTICLE V
REGISTERED AGENT AND OFFICE
The name of the initial registered agent of the corporation and
the address of its initial registered office are:
Salvatore Bando
13325 Bishops Court, #225
Brookfield, Wisconsin 53005
ARTICLE VI
INCORPORATOR
The name and address of the incorporator is:
Patrick J. O'Neil
111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
ARTICLE VII
AMENDMENT
These Articles may be amended in the manner authorized by law at
the time of amendment.
ARTICLE VIII
AUTHORIZED SHARES
The aggregate number of shares which the corporation shall have
authority to issue shall be eighteen million (18,000,000), consisting of:
(i) fifteen million (15,000,000) shares of a class designated as "Common
Stock," with a par value of 6-2/3 cents per share; and (ii) three million
(3,000,000) shares of a class designated as "Preferred Stock," with a par
value of $.01 per share.
The designation, relative rights, preferences and limitations of
each class and the authority of the Board of Directors of the corporation
to establish and to designate series of Preferred Stock and to fix
variations in the relative rights, preferences and limitations as between
such series, shall be as set forth herein.
A. Preferred Stock
(1) Series Variations Between Series. The Board of
Directors of the corporation is authorized to the full extent permitted
under the Wisconsin Business Corporation Law to provide for the issuance
of Preferred Stock in series, each of such series to be distinctively
designed, and to have such redemption rights, dividend rights, rights on
dissolution or distribution of assets, conversion or exchange rights,
voting powers, designations, preferences and relative participating,
optional or other special rights, if any, and such qualifications,
limitations or restrictions thereof as shall be provided by the Board of
Directors of the corporation consistent with the provisions of this
Article VIII.
(2) Dividends. Before any dividends shall be paid or set
apart for payment upon shares of Common Stock, the holders of each series
of Preferred Stock shall be entitled to receive dividends at the rate
(which may be fixed or variable) and at such times as specified in the
particular series. The holders of shares of Preferred Stock shall have no
rights to participate with the holders of shares of Common Stock in any
distribution of dividends in excess of the preferential dividends, if any,
fixed for such Preferred Stock.
(3) Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation, the
holders of shares of each series of Preferred Stock shall be entitled to
receive out of the assets of the corporation in money or money's worth the
preferential amount, if any, specified in the particular series for each
share at the time outstanding together with all accrued but unpaid
dividends thereon, before any of such assets shall be paid or distributed
to the holders of shares of Common Stock. The holders of shares of
Preferred Stock shall have no rights to participate with the holders of
shares of Common Stock in the assets of the corporation available for
distribution to shareholders in excess of the preferential amount, if any,
fixed for such Preferred Stock.
(4) Voting Rights. The holders of Preferred Stock shall
have only such voting rights as are fixed for shares of each such series
by the Board of Directors pursuant to this paragraph A or are provided, to
the extent applicable, by the Wisconsin Business Corporation Law.
(5) Series A Preferred Stock.
(a) Designation. The corporation is authorized to
issue a series of Preferred Stock which is hereby designated Adjustable
Rate Cumulative Preferred Stock, Series A (the "Series A Preferred
Stock"). The number of Series A Preferred Stock shall be limited to
690,000. The stated value and liquidation preference (the "Liquidation
Preference") of the Series A Preferred Stock shall be $25.00 per share.
(b) Dividends.
1. With respect to each dividend period,
holders of Series A Preferred Stock shall be entitled to receive
when, as and if declared by the corporation's Board of Directors, out
of funds legally available therefor, cumulative dividends payable on
shares of Series A Preferred Stock at the Applicable Rate (as defined
in paragraph (b)2. below) in respect of the Liquidation Preference.
All dividends described in this paragraph (b)1. shall be payable
quarterly in cash on the January 1, April 1, July 1 and October 1 of
each year (each of such dates being a "Dividend Payment Date"),
commencing January 1, 1994, except that if the day that otherwise
would be the Dividend Payment Date is not a Business Day (as defined
below), then the Dividend Payment Date shall be the next succeeding
Business Day, Such dividends shall be paid to the holders of record
at the close of business on the December 15, March 15, June 15 and
September 15 next preceding the applicable Dividend Payment Date.
Each of such quarterly dividends shall be fully cumulative and shall
accrue (whether or not declared), without interest, from the first
day of each quarterly dividend period (hereinafter referred to as a
"Quarterly Dividend Period"), except that with respect to the initial
Quarterly Dividend Period (the "Initial Quarterly Dividend Period"),
such dividend shall accrue from the date of the original issuance of
the shares of Series A Preferred Stock. The amount of dividends
payable on shares of Series A Preferred Stock for each full Quarterly
Dividend Period shall be computed by dividing by four (and rounding
to the nearest penny) the product of the Applicable Rate (as defined
in paragraph (b)2. below) for such Quarterly Dividend Period and the
Liquidation Preference. Dividends payable on the Series A Preferred
Stock for the Initial Quarterly Dividend Period and any period less
than a full quarterly period shall be computed on the basis of a 360-
day year of twelve 30-day months and the actual number of days
elapsed in the period for which the dividend is payable. As used
herein, "Business Day" means a day which is not a Saturday, Sunday or
other day on which national banks chartered under the laws of the
United States are authorized or obligated by law to close. Dividends
in arrears for any past Quarterly Dividend Period may be declared and
paid at any time, without reference to the regular Dividend Payment
Date, to the holders of record at the close of business on a date,
not exceeding 15 days prior to the payment date therefor, as may be
fixed by the Board of Directors of the corporation. No interest, or
sum of money in lieu of interest, shall be payable in respect of any
dividend payment on the Series A Preferred Stock that may be in
arrears.
2. The "Applicable Rate" for any Quarterly
Dividend Period, which Quarterly Dividend Periods shall commence on
the January 1, April 1, July 1 and October 1 of each year (except for
the Initial Quarterly Dividend Period which shall commence on the
date that shares of Series A Preferred Stock are first issued and
shall end on and include December 31, 1993), shall be determined as
follows: (A) for the Initial Quarterly Dividend Period and for each
Quarterly Dividend Period thereafter, through the Quarterly Dividend
Period ending June 30, 1998, the Applicable Rate per annum shall be
equal to 7 5/8%; (B) for the Quarterly Dividend Periods commencing on
July 1, 1998 and ending on June 30, 2003, the Applicable Rate per
annum shall be equal to the Five Year Treasury Rate (as defined
herein) as of June 1, 1998 plus 300 basis points; and (C) for the
Quarterly Dividend Periods commencing on July 1, 2003 and ending June
30, 2008, the Applicable Rate per annum shall be equal to the Five
Year Treasury Rate as of June 1, 2003 plus 300 basis points. In the
event that June 1, 1998 or June 1, 2003 is not a Business Day, then
the Five Year Treasury Rate shall be determined as of the next
succeeding Business Day. For purposes of determining the Applicable
Rate, the "Five Year Treasury Rate" shall mean: the Treasury
constant maturity rate as of the applicable date on five-year U.S.
government securities as published by the Federal Reserve Board. If
the Federal Reserve Board does not publish such a rate for the
applicable date, then the Five Year Treasury Rate shall mean the
Treasury constant maturity rate as of the applicable date on five-
year U.S. government securities as published by any Federal Reserve
Bank or by any U.S. government department or agency selected by the
corporation. If the corporation determines in good faith that such
rate is not published by the Federal Reserve Board or by any Federal
Reserve Bank or by any U.S. government department or agency, the Five
Year Treasury Rate shall mean the arithmetic average (rounded as a
percentage to two decimal points) of the per annum average yields to
maturity based upon the closing bids on the applicable date for each
of the issues of actively traded marketable U.S. Treasury fixed
interest rate securities with a final maturity date not less than
three years nor more than seven years from the date of each quotation
as quoted by each of three U.S. government securities dealers of
recognized national standing selected by the corporation.
3. The mathematical accuracy of each
calculation of the Applicable Rate, as adjusted, shall be confirmed
in writing by the corporation's independent public accountants. The
corporation will cause notice of the Applicable Rate, as adjusted, to
be mailed to the holders of shares of the Series A Preferred Stock as
soon as is practicable following the confirmation of such adjustment.
4. In the event that the amount legally
available for the payment of dividends by the corporation shall be
insufficient for the payment of the entire amount of dividends
payable in any Quarterly Dividend Period with respect to the Series A
Preferred Stock, the amount legally available therefor (after taking
into account dividends payable on any other series of Preferred Stock
of the corporation which may then be outstanding) shall be allocated
for the payment of dividends with respect to Series A Preferred Stock
pro rata based upon the Liquidation Preference of the outstanding
shares.
5. a. Holders of shares of Series A Preferred
Stock shall be entitled to receive the dividends provided for in
paragraph (b)1. hereof in preference to and in priority over any
dividends upon any shares of Common Stock. Holders of shares of
Series A Preferred Stock shall not be entitled to any dividends,
whether payable in cash, property or stock, in excess of full
cumulative dividends, as provided herein, on the Series A Preferred
Stock.
b. No fractional shares of Series A
Preferred Stock shall be issued.
(c) Liquidation Preference.
1. In the event of any voluntary liquidation,
dissolution or winding up on the affairs of the corporation, the
holders of shares of Series A Preferred Stock then outstanding shall
be entitled to be paid out of the assets of the corporation available
for distribution to its shareholders an amount in cash equal to the
Liquidation Preference, plus an amount in cash equal to all accrued
but unpaid dividends thereon to the date fixed for liquidation,
dissolution or winding up before any payment shall be made or any
assets distributed to the holders of any shares of Common Stock.
After such payment, the holders of Series A Preferred Stock will be
entitled to no other payments in respect of their shares of Series A
Preferred Stock. If the assets of the corporation are not sufficient
to pay in full the liquidation payments payable to the holders of
outstanding shares of Series A Preferred Stock, then the holders of
all such shares (along with the holders of any other series of
Preferred Stock of the corporation that may then be outstanding and
entitled to a preferential amount upon liquidation) shall share
ratably in such distribution of assets in proportion to the amount
which would be payable on such distribution if the amounts to which
the holders of outstanding shares of Series A Preferred Stock are
entitled were paid in full.
2. For the purposes of this paragraph (c), a
consolidation or merger of the corporation with or into any other
corporation or corporations or a sale, lease or conveyance, whether
for cash, shares of stock, securities or properties, of all or
substantially all or any part of the assets of the corporation shall
not be deemed or construed to be a liquidation or winding up of the
corporation.
(d) Redemption.
1. Mandatory Redemption. On July 1, 2008, to
the extent the corporation shall have legally available funds
therefor and to the extent otherwise permitted under the Wisconsin
Business Corporation Law, the corporation shall redeem the remaining
outstanding shares of Series A Preferred Stock, at a redemption price
of $25.00 per share, together with accrued and unpaid dividends
thereon to June 30, 2008, in cash without interest. If, for any
reason, the corporation shall fail to discharge its mandatory
redemption obligation pursuant to this paragraph (d)1., such
mandatory redemption obligation shall be discharged as soon as
corporation is able to discharge such obligation. Dividends shall
continue to accrue and be payable at the Applicable Rate in effect on
June 30, 2008 on any mandatory redemption obligation that has not
been discharged by the corporation pursuant to this paragraph (d)1.
2. Optional Redemption. The Series A Preferred
Stock is not redeemable on or before June 30, 2001. Thereafter, to
the extent permitted under the Wisconsin Business Corporation Law,
the Series A Preferred Stock is redeemable at the option of the
corporation on any Dividend Payment Date with respect to the optional
redemption periods set forth below, in whole or in part, at a
redemption price of $25.00 per share, together with accrued and
unpaid dividends thereon to the date fixed for redemption:
Optional Redemption Periods
July 1, 2001 - June 30, 2003
July 1, 2006 - June 30, 2008
The redemption price, including any accrued and unpaid dividends, shall be
payable in cash without interest out of legally available funds therefor.
3. Procedures for Redemption. The following
procedures shall govern the mandatory and optional redemption of
shares of Series A Preferred Stock:
a. Notice of a mandatory or optional
redemption of shares of Series A Preferred Stock shall be given by
first class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the redemption date, to each holder of
record of the shares to be redeemed at such holder's address as the
same appears on the stock register of the corporation; provided
however, that no failure to give such notice nor any defect therein
shall affect the validity of the proceeding for the redemption of any
shares of Series A Preferred Stock to be redeemed, except as to the
holder to whom the corporation has failed to give said notice or
except as to the holder whose notice was defective. Each such notice
shall state: (i) the redemption date, (ii) with respect to an
optional redemption, the total number of shares of Series A Preferred
Stock to be redeemed and the number of shares of Series A Preferred
Stock to be redeemed from such holder; (iii) the redemption price;
(iv) the place or places where certificates for such shares are to be
surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue upon such
redemption. With respect to any redemption of fewer than all the
outstanding shares of Series A Preferred Stock in connection with an
optional redemption, the number of shares to be redeemed shall be
determined by the Board of Directors of the corporation and the
shares to be redeemed shall be selected either by lot, on a pro rata
basis or by such other method as the Board of Directors of the
corporation shall deem fair and equitable.
b. Notice having been mailed as aforesaid,
from and after the redemption date (unless default shall be made by
the corporation in providing money for the payment of the redemption
price of the shares called for redemption) dividends on the shares of
Series A Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed outstanding and
shall have the status of authorized but unissued shares of Series A
Preferred Stock and all right of the holders thereof as shareholders
of the corporation (except the right to receive from the corporation
the redemption price) shall cease. Upon surrender in accordance with
said notice of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors of the
corporation shall so require and the notice shall so state), such
shares shall be redeemed by the corporation at the redemption price
as aforesaid. If fewer than all the shares represented by any such
certificate are redeemed in connection with an optional redemption, a
new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(e) Voting Rights.
1. General. Except as otherwise provided by
law or by the Articles of Incorporation of the corporation, each
holder of Series A Preferred Stock shall be entitled to one vote for
each share held on each matter submitted to a vote of shareholders of
the corporation, and the holders of outstanding shares of Series A
Preferred Stock shall vote together with the holders of outstanding
shares of capital stock of the corporation as a single class.
Notwithstanding the preceding sentence, at the first annual meeting
of shareholders of the corporation following the issuance of the
Series A Preferred Stock and for so long as any shares of Series A
Preferred Stock remain outstanding, the holders of outstanding shares
of Preferred Stock, including shares of Series A Preferred Stock,
represented in person or by proxy, shall be entitled as a class, and
to the exclusion of the holders of all other securities and classes
of capital stock of the corporation, to elect two directors and shall
thereafter be so entitled to elect any successors from time to time
to the two directors so elected at any meeting of shareholders at
which successors to such directors are elected. Subject to this
paragraph (e)1., the holders of outstanding shares of capital stock
of the corporation (including holders of outstanding shares of
Preferred Stock), voting as a single class, shall elect the balance
of the directors. At any time that the right of the holders of
Preferred Stock (including the Series A Preferred Stock) to elect two
directors as provided in paragraph (e)1. shall cease (including any
time that there are no longer any shares of Preferred Stock
outstanding), the terms of said two directors then in office will
expire and terminate.
2. Right to Elect Majority of Board of
Directors. During any period in which the condition described below
shall exist (such period being referred to herein as a "Voting
Period"), the number of directors constituting the Board of Directors
of the corporation shall be automatically increased by the smallest
number that, when added to the two directors elected exclusively by
the holders of shares of Preferred Stock (including shares of Series
A Preferred Stock), would constitute a majority of the Board of
Directors as so increased by such smallest number; and the holders of
shares of Preferred Stock (including shares of Series A Preferred
Stock) shall be entitled, voting as a class (to the exclusion of the
holders of all other classes of capital stock of the corporation), to
elect such smallest number of additional directors, together with the
two directors that such holders are in any event entitled to elect.
A Voting Period shall commence if at any time accumulated dividends
(whether or not earned or declared, and whether or not funds are then
legally available in an amount sufficient therefor) on any
outstanding shares of Preferred Stock, including shares of Series A
Preferred Stock, equal to at least two full years' dividends shall be
due and unpaid and sufficient cash or specified securities shall not
have been deposited with the dividend disbursement agent for the
payment of such accumulated dividends. Upon the termination of a
Voting Period, the voting rights described in this paragraph (e)2.
shall cease, subject always, however, to the revesting of such voting
rights in the holders of shares of Preferred Stock (including shares
of Series A Preferred Stock) upon the further occurrence of any of
the events described in this paragraph (e)2. Upon cessation of the
Voting Period, the terms of the additional directors then in office
and elected by the holders of shares of Preferred Stock (including
shares of Series A Preferred Stock) as a result of such Voting Period
(exclusive of the two directors elected pursuant to paragraph (e)1.
hereof) will expire and terminate. Thereafter, the remaining
directors shall constitute the directors of the corporation.
(f) Except as expressly set forth herein, the holders
of the Series A Preferred Stock shall have no other rights other than
those provided by law.
B. Common Stock
(1) Dividends. Subject to the provision of this Article
VIII, the Board of Directors of the corporation may, in its sole
discretion, out of funds legally available for the payment of dividends
and at such times and in such manner as determined by the Board of
Directors, declare and pay dividends on the Common Stock.
(2) Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the corporation,
after there shall have been paid to or set aside for the holders of shares
of Preferred Stock the full preferential amounts, if any, to which they
are entitled, the holders of outstanding shares of Common Stock shall be
entitled to receive pro rata, according to the number of shares held by
each, the remaining assets of other corporation available for
distribution.
(3) Voting Rights. Except as otherwise provided by the
Wisconsin Business Corporation Law and except as may be determined by the
Board of Directors with respect to the Preferred Stock pursuant to
paragraph A of this Article VIII, only the holders of Common Stock shall
be entitled to vote for the election of directors of the corporation and
for all other corporate purposes. Upon any such vote the holders of
Common Stock shall, except as otherwise provided by law, be entitled to
one vote for each share of Common Stock held by them respectively.
ARTICLE IX
ACQUISITION OF SHARES
Subject to applicable limitations under the Wisconsin Business
Corporation Law, the corporation may, upon authorization of the Board of
Directors, purchase or otherwise acquire outstanding shares of its capital
stock.
ARTICLE X
STOCK RIGHTS
No holder of any capital stock of this corporation shall have
any preemptive or other subscription or conversion rights of any kind,
nature or description whatsoever to any part of the unissued stock of this
corporation or any additional stock which may be issued by reason of any
increase of the authorized capital stock of this corporation.
Exhibit 3.2
BY-LAWS
OF
BANDO McGLOCKLIN CAPITAL CORPORATION
<PAGE>
ARTICLE I. OFFICES
1.1. PRINCIPAL AND BUSINESS OFFICES. The corporation may have
such principal and other business offices, either within or without the
State of Wisconsin, as the Board of Directors may designate or as the
business of the corporation may require from time to time.
1.2. REGISTERED OFFICE. The registered office of the
corporation required by the Wisconsin Statutes to be maintained in the
State of Wisconsin may be, but need not be, identical with the principal
office in the State of Wisconsin, and the address of the registered office
may be changed from time to time by the Board of Directors. The business
office of the registered agent of the corporation shall be identical to
such registered office.
ARTICLE II. SHAREHOLDERS
2.1. ANNUAL MEETING. The annual meeting of the shareholders
shall be held at 2:00 o'clock p.m. on Monday of the first week in the
month of June commencing in 1981, or at such other time and date within
thirty days before or after said date as may be fixed by or under the
authority of the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may come before the
meeting. If the day fixed for the annual meeting shall be a legal holiday
in the State of Wisconsin, such meeting shall be held on the next
succeeding business day. If the election of directors shall not be held
on the day designated herein, or fixed as herein provided, for any annual
meeting of the shareholders, or at any adjournment thereof, the Board of
Directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as conveniently may be.
2.2. SPECIAL MEETING. Special meetings of the shareholders for
any purpose or purposes, unless otherwise prescribed by statute, may be
called by the President or the Board of Directors or by the person
designated in the written request of the holders of not less than one-
tenth of all shares of the corporation entitled to vote at the meeting.
2.3. PLACE OF MEETING. The Board of Directors may designate any
place, either within or without the State of Wisconsin, as the place of
meeting for any annual meeting or for any special meeting called by the
Board of Directors. A waiver of notice signed by all shareholders
entitled to vote at a meeting may designate any place, either within or
without the State of Wisconsin, as the place for the holding of such
meeting. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal business office of the
corporation in the State of Wisconsin or such other suitable place in the
county of such principal office as may be designated by the person calling
such meeting, but any meeting may be adjourned to reconvene at any place
designated by vote of a majority of the shares represented thereat.
2.4. NOTICE OF MEETING. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than
ten (10) days (unless a longer period is required by law or the articles
of incorporation) nor more than fifty days before the date of the meeting,
either personally or by mail, by or at the direction of the President, or
the Secretary, or other officer or persons calling the meeting, to each
shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States
mail, addressed to the shareholder at his address as it appears on the
stock record books of the corporation, with postage thereon prepaid.
2.5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For
the purpose of determining shareholders entitled to notice of or to vote
at any meeting of shareholders or any adjournment thereof, or shareholders
entitled to receive payment of any dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may provide that the stock transfer books shall be closed for a
stated period but not to exceed, in any case, fifty days. If the stock
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may
fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than fifty and, in case
of a meeting of shareholders, not less than ten days prior to the date on
which the particular actions, requiring such determination of shareholders
is to be taken. If the stock transfer books are not closed and no record
date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, or shareholders entitled to
receive payment of a dividend, the close of business on the date on which
the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made as provided
in this section, such determination shall be applied to any adjournment
thereof except where the determination has been made through the closing
of the stock transfer books and the stated period of closing has expired.
2.6. VOTING RECORDS. The officer or agent having charge of the
stock transfer books for shares of the corporation shall, before each
meeting of the shareholders, make a complete list of the shareholders
entitled to vote at such meeting, or any adjournment thereof, with the
address of and the number of shares held by each, which list shall be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder during the whole time of the
meeting for the purposes of the meeting. The original stock transfer
books shall be prima facie evidence as to who are the shareholders
entitled to examine such list or transfer books or to vote at any meeting
of the shareholders. Failure to comply with the requirements of this
section shall not affect the validity of any action taken at such meeting.
2.7. QUORUM. Except as otherwise provided in the articles of
incorporation, a majority of the shares entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of
shareholders. If a quorum is present the affirmative vote of the majority
of the shares represented at the meeting and entitled to vote on the
subject matter shall be the act of the shareholders unless the vote of a
greater number or voting by classes is required by law or the articles of
incorporation. Though less than a quorum of the outstanding shares are
represented at a meeting, a majority of the shares so represented may
adjourn the meeting from time to time without further notice. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting
as originally notified.
2.8. CONDUCT OF MEETINGS. The President, and in his absence, a
Vice President in the order provided under Section 4.06, and in their
absence, any person chosen by the shareholders present shall call the
meeting of the shareholders to order and shall act as chairman of the
meeting, and the Secretary of the corporation shall act as secretary of
all meetings of the shareholders, but, in the absence of the Secretary,
the presiding officer may appoint any other person to act as secretary of
the meeting.
2.9. PROXIES. At all meetings of shareholders, a shareholder
entitled to vote may vote in person or by proxy appointed by the
shareholder or by his duly authorized attorney in fact. Such proxy shall
be filed with the Secretary of the corporation before or at the time of
the meeting. Unless otherwise provided in the proxy, a proxy may be
revoked at any time before it is voted, either by written notice filed
with the Secretary or the acting secretary of the meeting or by oral
notice given by the shareholder to the presiding officer during the
meeting. The presence of a shareholder who has filed his proxy shall not
of itself constitute a revocation. No proxy shall be valid after eleven
months from the date of its execution, unless otherwise provided in the
proxy. The Board of Directors shall have the power and authority to make
rules establishing presumptions as to the validity and sufficiency of
proxies.
2.10. VOTING OF SHARES. Each outstanding share shall be
entitled to one vote upon each matter submitted to a vote at a meeting of
shareholders, except to the extent that the voting rights of the shares or
any class or classes are enlarged, limited or denied by the articles of
incorporation.
2.11. VOTING OF SHARES BY CERTAIN HOLDERS.
(a) OTHER CORPORATIONS. Shares standing the name of another
corporation may be voted either in person or by proxy, by the President of
such corporation or any other officer appointed by such President. A
proxy executed by any principal officer of such other corporation or
assistant thereto shall be conclusive evidence of the signer's authority
to act, in the absence of express notice to this corporation, given in
writing to the Secretary of this corporation, of the designation of some
other person by the Board of Directors or the by-laws of such other
corporation.
(b) LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by an
administrator, executor, guardian, conservator, trustee in bankruptcy,
receiver, or assignee for creditors may be voted by him, either in person
or by proxy, without a transfer of such shares into his name, provided
that there is filed with the Secretary before or at the time of meeting
proper evidence of his incumbency and the number of shares held. Shares
standing in the name of a fiduciary may be voted by him, either in person
or by proxy. A proxy executed by a fiduciary, shall be conclusive
evidence of the signer's authority to act, in the absence of express
notice to this corporation, given in writing to the Secretary of the
corporation, that such manner of voting is expressly prohibited or
otherwise directed by the document creating the fiduciary relationship.
(c) PLEDGEES. A shareholder whose shares are pledged shall be
entitled to vote such shares until the shares have been transferred into
the name of the pledgee, and thereafter the pledgee shall be entitled to
vote the shares so transferred.
(d) TREASURY STOCK AND SUBSIDIARIES. Neither treasury shares,
nor shares held by another corporation if a majority of the shares
entitled to vote for the election of directors of such other corporation
is held by this corporation, shall be voted at any meeting or counted in
determining the total number of outstanding shares entitled to vote, but
shares of its own issue held by this corporation in a fiduciary capacity,
or held by such other corporation in a fiduciary capacity, may be voted
and shall be counted in determining the total number of outstanding shares
entitled to vote.
(e) MINORS. Shares held by a minor may be voted by such minor
in person or by proxy and no such vote shall be subject to disaffirmance
or avoidance, unless prior to such vote the Secretary or the corporation
has received written notice or has actual knowledge that such shareholder
is a minor. Upon receipt of said written notice or actual knowledge by
the Secretary of the corporation shares held by a minor shall thereafter
be voted by the guardian of said beneficiary
(f) INCOMPETENTS. Shares held by an incompetent may be voted
by such incompetent in person or by proxy and no such vote shall be
subject to disaffirmance or avoidance unless prior to such vote the
Secretary of the corporation has actual knowledge that such shareholder
has been adjudicated an incompetent or actual knowledge of filing a
judicial proceedings for appointment of a guardian. Upon receipt by the
Secretary of the corporation of actual knowledge of said adjudication or
filing, shares held by an incompetent shall thereafter be voted by the
guardian of said incompetent, provided said guardian otherwise qualifies
to vote said shares pursuant to the by-laws.
(g) JOINT TENANTS. Shares registered in the names of two or
more individuals may be voted in person or by proxy signed by any one or
more of such individuals if either (i) no other such individual or his
legal representative is present and claims the right to participate in the
voting of such shares or prior to the vote files with the Secretary of the
corporation a contrary written voting authorization or direction or
written denial of authority of the individual present or signing the proxy
proposed to be voted or (ii) all such other individuals are deceased and
the Secretary of the corporation has no actual knowledge that the survivor
has been adjudicated not to be the successor to the interests of those
deceased.
(h) TRUSTEE OF VOTING TRUST. Any number of shareholders of the
corporation may create a voting trust for the purpose of conferring upon a
trustee or trustees the right to vote or otherwise represent their shares
by entering into a written voting trust agreement specifying the terms and
conditions of the voting trust, depositing a counterpart of the agreement
with the corporation at its registered office and transferring their
shares to such trustee or trustees for the purpose of the agreement. The
trustee or trustees shall be entitled to vote and otherwise represent the
shares which are subject to the trust provided that such trustee or
trustees shall keep a record of the holders voting trust certificates
evidencing a beneficial interest in the voting trust, giving the names and
addresses of all such holders and the number and class of shares in
respect of which the voting trust certificates held by each are issued and
shall deposit a copy of such record with the corporation at its registered
office, and provided further that the counterpart of the voting trust
agreement and the copy of such record so deposited with the corporation
are subject to the same right of examination by a shareholder of the
corporation, in person or by agent or attorney as are the books and
records of the corporation, and are subject to examination by any holder
of a beneficial interest in the voting trust, either in person or by agent
or attorney, at any reasonable time for any proper purpose.
2.12. WAIVER OF NOTICE BY SHAREHOLDERS. Whenever any notice
whatever is required to be given to any shareholder of the corporation
under the articles of incorporation or by-laws or any provision of law, a
waiver thereof in writing, signed at any time, whether before or after the
time of meeting, by the shareholder entitled to such notice, shall be
deemed equivalent to the giving of such notice; provided that such waiver
in respect to any matter of which notice is required under any provision
of the Wisconsin Business Corporation Law, shall contain the same
information as would have been required to be included in such notice,
except the time and place of meeting.
2.13. UNANIMOUS CONSENT WITHOUT MEETING. Any action
required or permitted by the articles of incorporation or by-laws or any
provision of law to be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the shareholders entitled to vote with
respect to the subject matter thereof.
2.14. TELEPHONE MEETINGS. Shareholders may participate in
and hold meetings by means of a conference telephone or similar
communications arrangement by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting shall
constitute presence in person at the meeting, except where a person
participates in the meeting for the sole and express purpose of objecting
to the transaction of any business on the ground that the meeting is not
lawfully called or convened.
ARTICLE III. BOARD OF DIRECTORS
3.1. GENERAL POWERS AND NUMBER. The business and affairs of the
corporation shall be managed by its Board of Directors except as otherwise
provided in the articles of incorporation. The number of directors of the
corporation shall be seven (7).
3.2. TENURE AND QUALIFICATIONS. Each director shall hold office
until the next annual meeting of shareholders and until his successor
shall have been elected, or until his prior death, resignation or removal.
A director may be removed from office by affirmative vote of a majority of
the outstanding shares entitled to vote for the election of such director,
taken at a meeting of shareholders called for that purpose. A director
may resign at any time by filing his written resignation with the
Secretary or the corporation. Directors need not be residents of the
State of Wisconsin or shareholders of the corporation.
3.3. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held without other notice than this by-law immediately
after the annual meeting of shareholders, and each adjourned session
thereof. The place of such regular meeting shall be the same as the place
of the meeting of shareholders which precedes it, or such other suitable
place as may be announced at such meeting of shareholders. The Board of
Directors may provide, by resolution, the time and place, either within or
without the State of Wisconsin, for the holding of additional regular
meetings without other notice than such resolution.
3.4. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President, Secretary
or any two directors. The President or Secretary calling any special
meeting of the Board of Directors may fix any place, either within or
without the State of Wisconsin, as the place for holding any special
meeting of the Board of Directors called by them, and if no other place is
fixed the place of meeting shall be the principal business office of the
corporation in the State of Wisconsin.
3.5. NOTICE; WAIVER. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.3) shall
be given by written notice delivered personally or mailed or given by
telegram to each director at his business address or at such other address
as such director shall have designated in writing filed with the
Secretary, not less than ten (10) days if by mail and not less than ten
(10) days if by telegram or personal delivery. If mailed, such notice
shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice is given by
telegram, such notice shall be deemed to be delivered when the telegram is
delivered to the telegraph company. Whenever any notice whatever is
required to be given to any director of the corporation under the articles
of incorporation or by-laws or any provision of law, a waiver thereof in
writing, signed at any time, whether before or after the time of meeting,
by the director entitled to such notice, shall be deemed equivalent to the
giving of such notice. The attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director
attends a meeting and objects thereat to the transaction of any business
because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of any regular or special
meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
3.6. QUORUM. Except as otherwise provided by law or by the
articles of incorporation or these by-laws, a majority of the number of
directors set forth in Section 3.1 shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors, but a
majority of the directors present (though less than such quorum) may
adjourn the meeting from time to time without further notice.
3.7. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors, unless the act of a greater number is required by law
or by the articles of incorporation, or these by-laws.
3.8. OF MEETINGS. The President, and in his absence, a Vice
President in the order provided under Section 4.06, and in their absence,
any director chosen by the directors present, shall call meetings of the
Board of Directors to order and shall act as chairman of the meeting. The
Secretary of the corporation shall act as secretary of all meetings of the
Board of Directors, but in the absence of the Secretary, the presiding
officer may appoint any Assistant Secretary or any director or other
person present to act as Secretary of the meeting.
3.9. VACANCIES. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, may be filled until the next succeeding annual election by the
affirmative vote of a majority of the directors then in office, though
less than a quorum of the Board of Directors; providing, that in case of a
vacancy created by the removal of a director by vote of the shareholders,
the shareholders shall have the right to fill such vacancy at the same
meeting or any adjournment thereof.
3.10. COMPENSATION. The Board of Directors, by affirmative
vote of a majority of the directors then in office, and irrespective of
any personal interest of any of its members, may establish reasonable
compensation of all directors for services to the corporation as
directors, officers or otherwise, or may delegate such authority to an
appropriate committee. The Board of Directors also shall have authority
to provide for reasonable pensions, disability or death benefits, and
other benefits or payments, to directors, officers and employees and to
their estates, families, dependents or beneficiaries on account of prior
services rendered by such directors, officers, and employees to the
corporation.
3.11. PRESUMPTION OF ASSENT. A director of the corporation
who is present at a meeting of the Board of Directors or a committee
thereof of which he is a member at which action on any corporate matter is
taken shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof or shall forward
such dissent by registered mail to the Secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a director who voted in favor of such action.
3.12. COMMITTEES. The Board of Directors by resolution
adopted by the affirmative vote of a majority of the number of directors
set forth in Section 3.1 may designate one or more committees, each
committee to consist of three or more directors elected by the Board of
Directors, which to the extent provided in said resolution as initially
adopted, and as thereafter supplemented or amended by further resolution
adopted by a like vote, shall have and may exercise, when the Board of
Directors is not in session, the powers of the Board of Directors in the
management of the business and affairs of the corporation, except action
in respect to dividends to shareholders, election of the principal
officers or the filling of vacancies in the Board of Directors or
committees created pursuant to this section. The Board of Directors may
elect one or more of its members as alternate members of any such
committee who may take the place of any absent member or members at any
meeting of such committee, upon request by the President or upon request
by the chairman of such meeting. Each such committee shall fix its own
rules governing the conduct of its activities and shall make reports to
the Board of Directors of its activities as the Board of Directors may
request.
3.13. UNANIMOUS CONSENT WITHOUT MEETING. Any action
required or permitted by the Articles of Incorporation or by-laws or any
provision of law to be taken by the Board of Directors at a meeting or by
resolution may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by all of the directors then in
office.
3.14. TELEPHONE MEETINGS. Directors may participate in and
hold meeting by means of a conference telephone or similar communications
arrangement by means of which all persons participating in the meeting can
hear each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in
the meeting for the sole and express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE IV. OFFICERS
4.1. NUMBER. The principal officer of the corporation shall be
a Chairman of the Board, a President, one (1) Vice President, a Secretary
and a Treasurer, each of whom shall be elected by the Board of Directors.
Such other officers and assistant officers as may be deemed necessary may
be elected or appointed by the Board of Directors. Any two or more
offices may be held by the same person, except the offices of President
and Secretary and the offices of President and Vice President.
4.2. ELECTION AND TERM OF OFFICE. The officers of the
corporation to be elected by the Board of Directors shall be elected
annually by the Board of Directors at the first meeting of the Board of
Directors held after each annual meeting of the shareholders. If the
election of officers shall not be held at such meeting, such election
shall be held as soon thereafter as conveniently may be. Each officer may
hold office until his successor shall have been duly elected or until his
prior death, resignation or removal.
4.3. REMOVAL. Any officer or agent may be removed by the Board
of Directors whenever in its judgment the best interests of the
corporation will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed.
Election or appointment shall not of itself create contract rights.
4.4. VACANCIES. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, may be filled
by the Board of Directors for the unexpired portion of the term.
4.5. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the principal and chief executive officer of the corporation, and subject
to the control of the Board of Directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, in
the absence of the President, preside at all meetings of the shareholders
and of the Board of Directors. He shall have authority, subject to such
rules as may be prescribed by the Board of Directors, to appoint such
agents and employees of the corporation as he shall deem necessary, to
prescribe their powers, duties and compensation, and to delegate authority
to them. Such agents and employees shall hold office at the discretion of
the Chairman of the Board. He shall have authority to sign, execute and
acknowledge, on behalf of the corporation, all deeds, mortgages, bonds,
stock certificates, contracts, leases, reports and all other documents or
instruments necessary or proper to be executed in the course of the
corporation's regular business, or which shall be authorized by resolution
of the Board of Directors; and, except as otherwise provided by law or the
Board of Directors, he may authorize any Vice President or other officer
or agent of the corporation to sign, execute and acknowledge such
documents or instruments in his place and stead. In general, he shall
perform all duties incident to the office of Chairman of the Board and
such other duties as may be prescribed by the Board of Directors from time
to time.
4.6. PRESIDENT. The President shall be the principal executive
officer of the corporation and, subject to the control of the Board of
Directors, shall in general supervise and control all of the business and
affairs of the corporation. He shall, when present, preside at all
meetings of the shareholders and of the Board of Directors. He shall have
authority, subject to such rules as may be prescribed by the Board of
Directors, to appoint such agents and employees of the corporation as he
shall deem necessary, to prescribe their powers, duties and compensation,
and to delegate authority to them. Such agents and employees shall hold
office at the discretion of the President. He shall have authority to
sign, execute and acknowledge, on behalf of the corporation, all deeds,
mortgages, bonds, stock certificates, contracts, leases, reports and all
other documents or instruments necessary or proper to be executed in the
course of the corporation's regular business, or which shall be authorized
by resolution of the Board of Directors; and except as otherwise provided
by law or the Board of Directors, he may authorize any Vice President or
other officer or agent of the corporation to sign, execute and acknowledge
such documents or instruments in his place and stead. In general, he
shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to
time.
4.7. THE VICE PRESIDENTS. In the absence of the President or in
the event of his death, inability or refusal to act, or in the event for
any reason it shall be impracticable for the President to act personally,
the Vice President (or in the event there be more than one Vice President,
the Vice Presidents in the order designated by the Board of Directors, or
in the absence of any designation, then in the order of their election)
shall perform the duties of the President, and when so acting shall have
all the powers of and be subject to all the restrictions upon the
President. Any Vice President may sign, with the Secretary or Assistant
Secretary, certificates for shares of the corporation; and shall perform
such other duties and have such authority as from time to time may be
delegated or assigned to him by the President or by the Board of
Directors. The execution of any instrument of the corporation by any Vice
President shall be conclusive evidence, as to third parties, of his
authority to act in the stead of the President.
4.8. THE SECRETARY. The Secretary shall: (a) keep the minutes
of the meetings of the shareholders and of the Board of Directors in one
or more books provided for that purpose; (b) see that all notices are duly
given in accordance with the provisions of these by-laws or as required by
law; (c) be custodian of the corporate records and of the seal of the
corporation and see that the seal of the corporation is affixed to all
documents the execution of which on behalf of the corporation under its
seal is duly authorized; (d) keep or arrange for the keeping of a register
of the post office address of each shareholder which shall be furnished to
the Secretary by such shareholder; (e) sign with the President, or a Vice
President, certificates for shares of the corporation, the issuance of
which shall have been authorized by resolution of the Board of Directors;
(f) have general charge of the stock transfer books of the corporation;
and (g) in general perform all duties incident to the office of Secretary
and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him by the President or by the Board
of Directors.
4.9. THE TREASURER. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the
corporation; (b) receive and give receipts for moneys due and payable to
the corporation from any source whatsoever, and deposit all such moneys in
the name of the corporation in such banks, trust companies or other
depositaries as shall be selected in accordance with the provisions of
Section 5.4; and (c) in general perform all of the duties incident to the
office of Treasurer and have such other duties and exercise such other
authority as from time to time may be delegated or assigned to him by the
President or by the Board of Directors. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful discharge of
his duties in such sum and with such surety or sureties as the Board of
Directors shall determine.
4.10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. There
shall be such number of Assistant Secretaries and Assistant Treasurers as
the Board of Directors may from time to time authorize. The Assistant
Secretaries may sign with the President or a Vice President certificates
for shares of the corporation, the issuance of which shall have been
authorized by a resolution of the Board of Directors. The Assistant
Treasurers shall respectively, if required by the Board of Directors, give
bonds for the faithful discharge of their duties in such sums and with
such sureties as the Board of Directors shall determine. The Assistant
Secretaries and Assistant Treasurers, in general, shall perform such
duties and have such authority as shall from time to time be delegated or
assigned to them by the Secretary or the Treasurer, respectively, or by
the President or the Board of Directors.
4.11. OTHER ASSISTANTS AND ACTING OFFICERS. The Board of
Directors shall have the power to appoint any person to act as assistant
to any officer, or as agent for the corporation in his stead, or to
perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or
acting officer or other agent so appointed by the Board of Directors shall
have the power to perform all the duties of the office to which he is so
appointed to be assistant, or as to which he is so appointed to act,
except as such power may be otherwise defined or restricted by the Board
of Directors.
4.12. SALARIES. The salaries of the principal officers
shall be fixed from time to time by the Board of Directors or by a duly
authorized committee thereof, and no officer shall be prevented from
receiving such salary by reason of the fact that he is also a director of
the corporation.
ARTICLE V. CONTRACT, LOANS, CHECKS
AND DEPOSITS: SPECIAL CORPORATE ACTS
5.1. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or
execute or deliver any instrument in the name of and on behalf of the
corporation, and such authorization may be general or confined to special
instance. In the absence of other designation, all deeds, mortgages and
instruments of assignment or pledge made by the corporation shall be
executed in the name of the corporation by the Chairman of the Board,
President or one of the Vice Presidents and by the Secretary, an Assistant
Secretary, the Treasurer or an Assistant Treasurer; the Secretary or an
Assistant Secretary, when necessary or required, shall affix the corporate
seal thereto; and when so executed no other party to such instrument or
any third party shall be required to make an inquiry into the authority of
the signing officer or officers.
5.2. LOANS. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidence of indebtedness
shall be issued in its name unless authorized by or under the authority of
a resolution of the Board of Directors. Such authorization may be general
or confined to specific instances.
5.3. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for payment of money,notes or other evidence of indebtedness issued in the
name of the corporation, shall be signed by two or more officers except
that checks in the amounts of $1,000 or less may be signed by one officer
in a manner as shall from time to time be determined by or under the
authority of a resolution of the Board of Directors.
5.4. DEPOSITS. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries as may be
selected by or under the authority of a resolution of the Board of
Directors.
5.5. VOTING OF SECURITIES OWNED BY THIS CORPORATION. Subject
always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned or
controlled by this corporation may be voted at any meeting of security
holders of such other corporation by the Chairman of the Board, President
of this corporation if he be present, or in his absence by any Vice
President of this corporation who may be present and (b) whenever, in the
judgment of the Chairman of the Board, President or in his absence, of any
Vice President, it is desirable for this corporation to execute a proxy or
written consent in respect to any shares or other securities issued by any
other corporation and owned by this corporation, such proxy or consent
shall be executed in the name of this corporation by the Chairman of the
board, President or one of the Vice Presidents of this corporation without
necessity of any authorization by the Board of Directors, affixation of
corporate seal or countersignature or attestation by another officer. Any
person or persons designated in the manner above stated as the proxy or
proxies of this corporation shall have full right, power and authority to
vote the shares or other securities issued by such other corporation and
owned by this corporation the same as such shares or other securities
might be voted by this corporation.
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1. CERTIFICATES FOR SHARES. Certificates representing shares
of the corporation shall be in such form, consistent with law, as shall be
determined by the Board of Directors. Such certificates shall be signed
by the President or a Vice President and by the Secretary or an Assistant
Secretary. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the
shares represented thereby are issued, with the number of shares and date
of issue, shall be entered on the stock transfer books of the corporation.
All certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
cancelled, except as provided in Section 6.6.
6.2. FACSIMILE SIGNATURES AND SEAL. The seal of the corporation
on any certificates for shares may be a facsimile. The signature of the
President or Vice President and the Secretary or Assistant Secretary upon
a certificate may be facsimiles if the certificate is countersigned by a
transfer agent, or registered by a registrar, other than the corporation
itself or an employee of the corporation.
6.3. SIGNATURE BY FORMER OFFICERS. In case any officer, who has
signed or whose facsimile signature has been placed upon any certificate
for shares, shall have ceased to be such officer before such certificate
is issued, it may be issued by the corporation with the same effect as if
he were such officer at the date of its issue.
6.4. TRANSFER OF SHARES. Prior to due presentment of a
certificate for shares for registration of transfer the corporation may
treat the registered owner of such shares as the person exclusively
entitled to vote, to receive notifications and otherwise to exercise all
the rights and powers of an owner. Where a certificate for shares is
presented to the corporation with a request to register for transfer, the
corporation shall not be liable to the owner or any other person suffering
loss as a result of such registration of transfer if (a) there were on or
with the certificate the necessary endorsements, and (b) the corporation
has no duty to inquire into adverse claims or has discharged any such
duty. The corporation may require reasonable assurance that said
endorsements are genuine and effective and in compliance with such other
regulations as may be prescribed under the authority of the Board of
Directors.
6.5. RESTRICTION ON TRANSFER. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.6. LOST, DESTROYED OR STOLEN CERTIFICATES. Where the owner
claims that his certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if
the owner (a) so requests before the corporation has notice that such
shares have been acquired by a bona fide purchaser, and (b) files with the
corporation a sufficient indemnity bond, and (c) satisfies such other
reasonable requirements as the Board of Directors may prescribe.
6.7. CONSIDERATION FOR SHARES. The shares of the corporation
may be issued for such consideration as shall be fixed from time to time
by the Board of Directors, provides that any shares having a par value
shall not be issued for a consideration less than the par value thereof.
The consideration to be paid for shares may be paid in whole or in part,
in money, in other property, tangible or intangible, or in labor or
services actually performed for the corporation. When payment of the
consideration for which shares are to be issued shall have been received
by the corporation, such shares shall be deemed to be fully paid and
nonassessable by the corporation. No certificate shall be issued for any
share until such share is fully paid.
6.8. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such further rules and regulations not
inconsistent with the statutes of the State of Wisconsin as it may deem
expedient concerning the issue, transfer and registration of certificates
representing shares of the corporation.
ARTICLE VII. SEAL
7.1. The Board of Directors shall provide a corporate seal which
shall be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words "Corporate Seal".
ARTICLE VIII. AMENDMENTS
8.1. BY SHAREHOLDERS. These by-laws may be altered, amended or
repealed and new by-laws may be adopted by the shareholders by affirmative
vote of not less than a majority of the shares present or represented at
any annual or special meeting of the shareholders at which a quorum is in
attendance.
8.2. BY DIRECTORS. These by-laws may also be altered, amended
or repealed and new by-laws may be adopted by the Board of Directors by
affirmative vote of a majority of the number of directors present at any
time at which a quorum is in attendance; but no by-law adopted by the
shareholders shall be amended or repealed by the Board of Directors if the
by-law so adopted so provides.
8.3. IMPLIED AMENDMENTS. Any action taken or authorized by the
shareholders or by the Board of Directors, which would be inconsistent
with the by-laws then in effect but is taken or authorized by affirmative
vote of note less than the number of shares or the number of Directors
required to amend the by-laws so that the by-laws would be consistent with
such action, shall be given the same effect as though the by-laws had been
temporarily amended or suspended so far, but only so far, as is necessary
to permit the specific action so taken or authorized.
ARTICLE IX. OFFICERS AND DIRECTORS; LIABILITY
AND INDEMNITY; TRANSACTIONS WITH CORPORATION
9.1. LIABILITY OF DIRECTORS AND OFFICERS. No person shall be
liable to the corporation for any loss or damage suffered by it on account
of any action taken or omitted to be taken by him as a director or officer
of the corporation, or of any other corporation which he serves as a
director or officer at the request of the corporation, in good faith, if
such person (a) exercised and used the same degree of care and skill as a
prudent man would have exercised or used under the circumstances in the
conduct of his own affairs, of (b) took or omitted to take such action in
reliance upon advice of counsel for the corporation or upon statements
made or information furnished by officers or employees of the corporation
which he had reasonable grounds to believe to be true. The foregoing
shall not be exclusive of other rights and defenses to which he may be
entitled as a matter of law.
9.2. INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS: INSURANCE.
(a) The corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of no contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) The corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and only to the extent that the court
in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem proper.
(c) To the extent that a director, officer, employee or agent
of a corporation has been successful on the merits or otherwise in
defenses of any action, suit or proceeding referred to in subsections (a)
and (b), or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection herewith.
(d) Any indemnification under subsections (a) and (b) of this
section (unless ordered by a court) shall be made by the corporation only
as authorized in this specific case upon a determination that
indemnification of the directors, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct
set forth in subsections (a) and (b) of this section. Such determination
shall be made (1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or
proceeding, or (2) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the board
of directors in the specific case upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this section.
(f) The indemnification provided by this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(g) The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability
under the provisions of this section.
(h) For the purpose of this section, references to "the
corporation" include all constituent corporations absorbed in a
consolidation of merger as well as the resulting or surviving corporation
so that any person who is or was a director, officer, employee or agent of
such a constituent corporation or is or was serving at the request of such
constituent corporation as a director, officer,employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
shall stand in the same position under the provisions of this section with
respect to the resulting or surviving corporation as he would if he had
served the resulting or surviving corporation in the same capacity.
Exhibit 4.1
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") made
as of the 28th day of June, 1996, by and between FIRST BANK (N.A.), a
national banking association ("Bank") and BANDO McGLOCKLIN SMALL BUSINESS
INVESTMENT CORPORATION, a Wisconsin corporation ("Borrower").
W I T N E S S E T H :
WHEREAS, Bank and Borrower entered into a Loan Agreement dated
October 12, 1988 (the "Revolving Loan Agreement") pursuant to which the
Bank agreed to extend credit to the Company on the terms and subject to
the conditions set forth therein; and
WHEREAS, the Revolving Loan Agreement has previously been
amended several times and Bank and Borrower now desire to amend and
restate the Revolving Loan Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
A G R E E M E N T S
1. DEFINITIONS. As used in this Agreement, the listed terms
are defined as follows:
Adjusted Tangible Assets shall mean all assets except: (a)
trademarks, tradenames, franchises, goodwill, and other similar
intangibles; (b) assets located and notes and receivables due
from obligors domiciled outside the United States of America,
Puerto Rico, or Canada; and (c) accounts, notes, and other
receivables due from Affiliates or employees.
Adjusted Tangible Net Worth shall mean the remainder of (a)
net book value (after deducting related depreciation,
obsolescence, amortization and other proper reserves) at which
the Adjusted Tangible Assets of Borrower would be shown on a
balance sheet at such date, but excluding any amounts arising
from write-ups of assets, minus (b) the amount at which its
liabilities (other than preferred stock, capital stock, surplus,
and retained earnings) would be shown on such balance sheet, and
including as liabilities all reserves for contingencies and
other potential liabilities.
Advance shall mean the proceeds of the Credit Facility
advanced from time to time by Bank to Borrower in accordance
with the terms of this Agreement.
Affiliate shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common
control with any other Person. A Person shall be deemed to
control another Person if the controlling Person owns ten
percent (10%) or more of any class of voting securities of the
controlled Person or possesses, directly or indirectly, the
power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of
stock, by contract or otherwise.
Bank's Expenses shall mean and shall include:
(i) all expenses incurred by Bank in the
negotiation, documentation, administration of this
Agreement, the other Loan Documents and the Loan,
including, but not limited to, accounting and
attorney's fees and expenses of any kind and mailing
costs;
(ii) all expenses incurred by Bank in connection
with any verification and inspection of the Collateral
and/or any audit and inspection of any Borrower's
books, accounts, records, correspondence and other
papers;
(iii) all taxes levied against or paid by
Bank (other than taxes on, or measured by, the income
of Bank) and all filing and recording fees, costs and
expenses which may be incurred by Bank in respect to
the filing and/or recording of any document or
instrument relating to the transactions described in
this Agreement;
(iv) all costs and expenses (including all
allocated costs of staff counsel which are employees
of Bank) incurred by Bank to collect the collateral
(with or without suit), correct any Default or Event
of Default, or enforce any provision of this
Agreement; and
(v) all costs, outlays, attorney's fees and
expenses of any kind (including all allocated costs of
staff counsel) incurred in the enforcement of this
Agreement or the other Loan Documents or the defense
of legal proceedings involving any claim made against
Bank arising out of this Agreement, the other Loan
Documents or the protection of the Collateral.
Business Day shall mean a day, other than a Saturday,
Sunday or holiday, on which banks are open for business in
Milwaukee, Wisconsin.
Collateral Agent shall mean Firstar Trust Company or any
successor Collateral Agent appointed pursuant to the terms of
the Intercreditor Agreement.
Credit Facility shall mean the revolving credit facility
established pursuant to section 2 of this Agreement and as
further defined therein.
Default shall mean an event or condition the occurrence of
which would, with a lapse of time or the giving of notice or
both, become an Event of Default.
Default Rate shall mean, with respect to any Advance, the
sum of the Reference Rate plus 2.0% per annum, and such rate
shall change on each date that such Reference Rate changes.
Event of Default shall have the meaning set forth in
section 10 herein.
Funding Date shall mean the date of each Advance made
hereunder.
Intercreditor Agreement shall mean that certain
Intercreditor Agreement dated as of October 12, 1988, as amended
from time to time, among the financial institutions that are or
may become parties thereto.
Loan shall mean all indebtedness owed by Borrower to Bank
arising under this Agreement or the Note.
Loan Documents shall mean this Agreement, the Note and all
other agreements and documents previously, now or hereafter
delivered to Bank pursuant to or in connection with the
transactions contemplated hereby or in connection with the
Revolving Loan Agreement, and any amendments, supplements,
modifications, renewals, replacements, consolidations,
substitutions and extensions of any of the foregoing.
Maturity Date shall mean October 31, 1996 or such earlier
date on which Bank declares the Note to be immediately due and
payable pursuant to section 10 of this Agreement.
Note shall mean the Revolving Note executed and delivered
by Borrower to Bank pursuant to the terms of this Agreement, in
the form of Exhibit A attached hereto.
Obligations shall mean any and all debts, obligations and
liabilities of Borrower to Bank arising out of the this
Agreement, the Note and the other Loan Documents, as amended
from time to time, and all transactions thereunder, whether
heretofore, now or hereafter made, incurred or created, whether
due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined, whether for principal
interest or other debts, obligations or liabilities thereunder,
and whether or not any or all such debts, obligations and
liabilities are or become bared by any statute of limitations or
otherwise unenforceable.
Person means an individual, corporation, partnership, joint
venture, trust or unincorporated organization, or a government
or any agency or political subdivision thereof.
Reference Rate shall mean at any time, and from time to
time, the rate of interest then most recently established by
Bank as its "reference rate", which is not necessarily Bank's
lowest or most favorable rate of interest at any time.
SWIB Documents shall mean (i) the Second Amended and
Restated Agreement dated November 11, 1991, by and between the
State of Wisconsin Investment Board ("SWIB"), as lender, and
Borrower, as amended, (ii) the Master Purchase Agreement dated
March 3, 1995, as amended on April 14, 1995, by and between SWIB
and Borrower, and (iii) all documents and instruments executed
and/or delivered by Borrower and/or SWIB which evidences,
services, modifies or amends the transactions contemplated by
the documents described in clauses (i) and (ii) above.
2. REVOLVING CREDIT FACILITY. Subject to the terms and
conditions hereinafter set forth in this Agreement, Bank agrees to make
available to Borrower a revolving credit facility (the "Credit Facility"),
pursuant to which Borrower may obtain Advances from Bank, repay such
Advances and reborrow, provided, however, the aggregate principal balance
of Advances outstanding at any time shall not exceed $12,500,000 less the
aggregate outstanding principal amount of all commercial paper created by
Borrower pursuant to section 5. Except for Advances to retire commercial
paper outstanding pursuant only to the commercial paper facility made
available to Borrower by Bank, in no event shall Borrower be entitled to
receive any Advance if the making of such Advance would cause the
aggregate amount of all loans made to Borrower by Bank and the Additional
Lenders to exceed 80% of the value of the collateral then held by the
Collateral Agent.
A. Advances under the Credit Facility shall be evidenced
by the Note in the maximum amount of the Credit Facility.
Although the Note shall be expressed to be payable in the full
amount of Credit Facility specified above, Borrower shall be
obligated to pay only the amount actually disbursed to or for
the account of Borrower, together with interest on the unpaid
balance of the sums so disbursed, which remain outstanding from
time to time as shown on the records of Bank. The Note shall be
dated as of the date of this Agreement and shall be payable in
full on or before the Maturity Date.
B. The outstanding principal balance under the Note shall
bear interest at a fluctuating rate per annum equal to the
Reference Rate and such rate shall change on each date that such
Reference Rate changes. During the continuance of an Event of
Default, the outstanding principal balance under the Note shall
bear interest at the Default Rate. All interest shall be
calculated for actual days elapsed on the basis of a 360-day
year. Interest accrued on each Advance shall be payable in
arrears on (i) the first day of each calendar month, commencing
with the first such date to occur after the date hereof, (ii) on
any date on which the Advance is prepaid, whether due to
acceleration or otherwise, and (iii) on the Maturity Date.
Interest shall not be payable for the day of any payment on the
amount paid if payment is received by Bank prior to noon
(Milwaukee time). If any payment of principal or interest under
the Note shall become due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day
and, in the case of a payment of principal, such extension of
time shall be included in computing interest due in connection
with such payment; provided that for purposes of section 10
hereof, any payments of principal described in this sentence
shall be considered to be "due" on such next succeeding Business
Day.
C. All disbursements made to Borrower under the Credit
Facility shall be entered as debits on Bank's records. Bank
shall also record as credits all payments made by Borrower on
the indebtedness under the Credit Facility. At least once a
month, Bank shall render a statement of account showing as of
its date the indebtedness owed on the Credit Facility debited
and credited as set forth above. Unless within thirty (30) days
of the date of said statement of account Borrower notifies Bank
in writing of an objection to said statement, there shall be a
rebuttable presumption that said statement is correct.
D. All disbursements to Borrower under the Credit
Facility shall be made only in whole multiples of $10,000. All
payments by Borrower to Bank with respect to repayment of the
Credit Facility shall be made only in whole multiples of
$10,000.
E. Duly authorized officers or employees of Borrower as
designated by Borrower to Bank by telephone notice, confirmed in
writing, if requested by Bank, may from time to time contact a
designated officer or employee of Bank, requesting that Bank
increase or decrease the total principal amount of the Credit
Facility then outstanding not to exceed the amount stated above.
Bank shall immediately increase or decrease the principal
balance then outstanding under the Note. All such requests must
be received by Bank no later than 3:00 p.m. All requests
received after that time may be processed as if received the
following Business Day.
(1) Each such request for an increase or
decrease of the principal amount outstanding under the
Note shall be confirmed immediately in writing by the
authorized person making the request and mailed to the
attention of the person to whom the request was made.
(2) In the event such a request by Borrower
results in an increase in the total principal amount
then outstanding, Bank shall credit the amount of said
increase to Borrower's checking account maintained
with the Bank. In the event that such request results
in a decrease to the total principal amount then
outstanding, Bank shall debit Borrower's checking
account maintained with Bank and the reduction shall
be made to the total principal amount then outstanding
on the Note.
F. All payments of the Obligations hereunder shall be
made, without set-off, deduction, or counterclaim, in
immediately available funds to Bank at Bank's address specified
herein, by noon (local time) on the date when due. All of
Bank's Expenses, fees, commissions, costs, expenses, and other
charges under or pursuant to the Loan Documents, and all
payments made and out-of-pocket charges under or pursuant to the
Loan Documents will be charged as Advances to the Loan as of the
date due from Borrower or the date paid or incurred by Bank, as
the case may be.
G. If the adoption of or change in any law or any
governmental or quasi-governmental rule, regulation, policy,
guidelines or directive (whether or not having the force of
law), or any interpretation thereof, or the compliance of Bank
therewith,
(i) subjects Bank to any tax, duty, charge or
withholding on or from payments due from Borrower
(excluding federal and state taxation of the overall
net income of Bank), or changes the basis of such
taxation of payments to Bank in respect of its
Advances or other amounts due it hereunder, or
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit
or similar requirement against assets of, deposits
with or for the account of, or credit extended by,
Bank, or
(iii) imposes any other condition, and the
result is to increase the costs of Bank of making,
funding or maintaining loans or reduces any amount
receivable by Bank in connection with loans, or
requires Bank to make any payment calculated by
reference to the amount of loans held or participated
in or interest received by it, by an amount deemed
material by Bank,
then, within fifteen (15) days of demand by Bank, Borrower shall
pay Bank that portion of such increased expenses incurred or
reduction in an amount received which Bank determines is
attributable to making, funding and maintaining the Advances and
the revolving credit facility.
H. If Bank determines the amount of capital required or
expected to be maintained by Bank or any corporate entity
controlling Bank is increased as a result of a Change (as
defined below), then, within fifteen (15) days of demand by
Bank, Borrower shall pay Bank the amount necessary to compensate
for any shortfall in the rate of return on the portion of such
increased capital which Bank determines is attributable to this
Agreement, its Advances, or its obligation to make Advances
hereunder (after taking into account Bank's policies as to
capital adequacy). "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines (as
defined below) or (ii) any adoption of or change in any other
law, governmental or quasi-governmental rule, regulation,
policy, guideline, interpretation, or directive (whether or not
having the force of law) after the date of this Agreement which
affects the amount of capital required or expected to be
maintained by Bank or any corporation controlling any Bank.
"Risk-Based Capital Guidelines" means (i) the risk-based capital
guidelines in effect in the United States on the date of this
Agreement, including transition rules, and (ii) the
corresponding capital regulations promulgated by regulatory
authorities outside the United State implementing the July 1988
report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards", including
transition rules, and any amendment to such regulations adopted
prior to the date of this Agreement.
I. Bank shall deliver a written statement of Bank as to
the amount due, if any, under sections 2.G. or 2.H. hereof.
Such written statement shall set forth in reasonable detail the
calculations upon which Bank determined such amount and shall be
final, conclusive and binding on Borrower in the absence of
manifest error. Unless otherwise provided herein, the amount
specified in the written statement shall be payable on demand
after receipt, by Borrower of the written statement. The
obligations of Borrower under sections 2.G. and 2.H. hereof
shall survive payment of the Obligations and termination of this
Agreement.
J. Bank's obligations to make Advances under this
Agreement shall terminate at 5:00 p.m. (Milwaukee time) on the
Maturity Date. Notwithstanding the foregoing, (i) upon the
occurrence of an Event of Default, Bank may immediately
terminate its obligations to make Advances under this Agreement
without notice or demand, and (ii) so long as any Default shall
have occurred and remains uncured, the Bank shall have no
obligation to make any Advance under the Credit Facility. On
the Maturity Date, the Loan, the Note, and all other Obligations
of Borrower to Bank shall be immediately due and payable in
full, without notice or demand and shall be repaid to Bank by a
wire transfer of immediately available federal funds.
3. USE OF CREDIT FACILITY. Borrower shall be entitled to
Advances under the Credit Facility solely for the following purposes:
(i) funding for any proper corporate purposes not prohibited by the rules
and regulations of the United States Small Business Administration (the
"SBA"), except that such disbursements may not be used for investments in
securities, cash, cash equivalents or investment instruments, provided,
however, that nothing herein shall prohibit the use of such funds for
investing in "small business concerns", as defined in SBA regulations;
(ii) funding payment obligations of Borrower with respect to reverse
repurchase agreements with financial institutions; (iii) funding payments
of dividends (to the extent permitted by this Agreement); (iv) funding
loans by Borrower to third parties ("Third Party Loans"); (v) funding
Borrower's repurchase of participation interests in Third Party Loans;
(vi) funding payment obligations of Borrower to Limited Lenders (as
defined in section 8.A. hereof); (vii) except as provided in the following
clause (viii), funding Borrower's retirement of commercial paper
outstanding pursuant to a facility made available to Borrower by any Bank;
or (viii) after the occurrence and during the continuance of a Default or
Event of Default, funding Borrower's retirement of commercial paper
outstanding pursuant only to the commercial paper facility made available
to Borrower by Bank (other than when acting as a Limited Lender) pursuant
to section 5.A. of this Agreement.
A. Upon the occurrence and during the continuance of a
Default or Event of Default, Borrower authorizes Bank to make an
Advance under the Credit Facility in an amount necessary to
retire any commercial paper outstanding under the commercial
paper facility made available by Bank to Borrower pursuant to
section 5.A. of this Agreement. Such Advance may be made by Bank
in its sole discretion, and may be made by Bank directly to the
holders of the commercial paper which is to be so retired.
4. AVAILABILITY FEE. As additional compensation to Bank for
its agreement to make the Credit Facility available to Borrower, Borrower
agrees to pay to Bank an Availability Fee to be calculated and paid as
follows:
A. The Availability Fee shall be payable monthly in
advance on the last day of each calendar month for the
succeeding month, commencing on the first such date to occur
after the date hereof.
B. The Availability Fee to be paid on each of the
aforesaid monthly payment dates shall be one-twelfth of five-
eighths percent of $12,500,000.00. The Availability Fee to be
paid on the first payment date shall include the accrued but
unpaid portion of the Availability Fee as defined in and payable
pursuant to the Revolving Loan Agreement.
C. Borrower may terminate this Agreement upon (i) written
notice to Bank, stating that Borrower irrevocably terminates its
right to receive any new Advances under the Credit Facility and
its Commercial Paper Relationship, and (ii) payment of the
entire outstanding balance of the Credit Facility and Commercial
Paper Relationship, together with all interest accrued and
unpaid thereon, and any and all other fees and amounts which are
then due to Bank pursuant to this Agreement. After such
termination, Borrower shall have no further obligation to pay
the monthly Availability Fee for calendar months succeeding the
month in which the said termination occurs.
5. COMMERCIAL PAPER.
A. Bank has agreed to provide to Borrower a commercial paper
facility (the "Commercial Paper Relationship" or the "Relationship"), and
Bank may continue to provide the Commercial Paper Relationship to Borrower
during the term of this Agreement. This Relationship shall be evidenced
by documents and agreements substantially in the form as are presently
used between Bank and Borrower except to the extent such documents may be
modified from time to time as changes are made by Bank to the documents
and agreements customarily used by Bank for non-rated commercial paper and
shall be subject to such terms and conditions as are customarily imposed
by Bank. Subject to section 5.B. below, Borrower agrees that the
principal amount of the commercial paper issued through Bank (other than
when acting as a Limited Lender) pursuant to such Relationship shall not
exceed the maximum principal amount of the Credit Facility authorized
hereunder less the principal amount outstanding under the Note.
B. In the event Bank elects to act as a Limited Lender from
time to time, Borrower may, if Bank agrees, issue through Bank commercial
paper in an aggregate principal amount exceeding the amount described in
section 5.A. above, if separate lending agreements are entered into
between Borrower and Bank.
6. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants by its execution of this Agreement on the date hereof, and by its
request of each Advance shall be deemed to remake on each Funding Date,
the following matters set forth in this section 6. Each representation
and warranty shall be deemed to be material and shall be conclusively
presumed to have been relied upon by Bank regardless of any information
possessed or any investigation made by Bank. The following
representations, warranties and covenants shall be cumulative and in
addition to all other representations, warranties and agreements which
Borrower shall give or cause to be given to Bank, either now or hereafter.
A. Borrower is a corporation duly organized and existing
under the laws of the State of Wisconsin and is duly authorized
under all applicable provisions of law to carry on its business
as presently conducted. Borrower has the corporate power to
enter into this Agreement and to borrow hereunder.
B. The making of this Agreement and compliance with the
terms hereof by Borrower have been duly authorized by all
necessary corporate action and do not conflict with and are not
in contravention of (1) any provision of the Articles of
Incorporation and By-Laws of Borrower, (2) any indenture,
contract or agreement to which Borrower is a party or to which
it is subject, or (3) any law, ordinance, statute, rule or
regulation binding upon Borrower.
C. Borrower is not a party to any litigation or
administrative proceedings, nor so far as it is known by
Borrower is any litigation or administrative proceeding
threatened against it which would, if adversely determined,
cause any material adverse change in Borrower's financial
condition or in the conduct of its business, except as
previously disclosed to and approved by the Bank in writing
prior to the date hereof.
D. All copies of documents, contracts, agreements and
assignments which Borrower has furnished to Bank are true and
correct copies. All financial statements heretofore furnished
to Bank are true and correct in all material respects subject to
customary year end adjustments. There has been no material
adverse change in the property or business operations of
Borrower since the date of the last financial statement, except
pursuant to the conduct of its ordinary business, and except as
shall have been disclosed in writing by Borrower to Bank prior
to the date of execution of this Agreement.
E. Borrower has paid, and will pay when due, all federal,
state and local taxes, and will promptly prepare and file
returns for accrued taxes.
F. Borrower has filed all statements, if any, which it
may be required to file under the provisions of any applicable
state or federal securities laws or regulations or if any such
statements have not been filed such failure shall not have any
material adverse effect upon the Borrower. Borrower is not
engaged in the business of carrying margin stock within the
meaning of Regulation U of the Board of Governors of the Federal
Reserve System.
G. This Agreement is legal, valid, binding upon, and
enforceable against Borrower in accordance with its terms,
except to the extent enforcement is limited by laws relating to
bankruptcy or insolvency.
H. Borrower owns all of its assets free and clear of any
liens or security interests, except liens and security interests
permitted pursuant to section 8.B. of this Agreement.
I. Borrower has all licenses (including all licenses
required by the SBA in order for Borrower to operate as a "Small
Business Investment Company"), registrations, permits, and
franchises necessary for the conduct of its business which
violation or failure to obtain would materially and adversely
affects its business or condition (financially or otherwise).
J. Borrower is not in violation of any laws, ordinances,
or governmental rules or regulations to which it or its business
is subject (including, without limitation, the provisions of 13
C.F.R. Section 107.210 (1995) relating to small business
investment companies).
7. AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and
agrees as follows:
A. Borrower shall furnish Bank monthly financial
statements (i.e., consolidated balance sheets and consolidated
income statements) no later than thirty (30) days subsequent to
each month's end for such month. Together with the monthly
financial statements, Borrower shall provide a report
identifying all the banks through which the Borrower is then
issuing commercial paper, and the principal amount of commercial
paper then outstanding issued through each bank. Within ninety
(90) days after the end of each fiscal year of Borrower, Bank
shall be provided with an audited income statement for such year
and an audited balance sheet as of the end of such year. All
statements are to be prepared in accordance with generally
accepted principles of auditing and accounting applied on a
basis consistent with the accounting practices of Borrower
reflected in the audited financial statements for the preceding
fiscal year, and year end statements are to be certified without
material qualification by Price Waterhouse, by any other "big
six" national accounting firm, or by any independent certified
public accountants of recognized standing selected by Borrower
and acceptable to Bank. Borrower shall also furnish to Bank all
other financial statements reasonably requested by Bank.
Borrower shall also furnish to Bank copies of (i) all
financial statements, reports and returns as it shall send to
its stockholders, (ii) all regular, periodic, or special reports
(including but not limited to semi-annual reports on Form N-SAR
and amendments to its registration statements on Form N-5) which
it is or may be required to file with the Securities & Exchange
Commission or any governmental department, bureau, commission or
agency succeeding to the functions of the Securities & Exchange
Commission, and (iii) all examination reports of its affairs
which it shall receive from the SBA; all of which documents
shall be delivered to Bank forthwith as and when sent, filed, or
received by Borrower.
Bank may at any time, and without notice to or consent of
Borrower, deliver to any participant in the Advances which are
the subject of this Agreement, copies of all financial
statements, reports, or any other documents delivered to Bank
hereunder.
B. Borrower shall keep proper books of record and
accounts and, upon application, give any representative of Bank
access during normal business hours to, and permit him or her to
examine, any and all books, records and documents in Borrower's
possession relating to the financial affairs of Borrower and to
inspect any of its properties.
C. Together with each of the monthly financial statements
and the year-end audited financial statements to be provided
pursuant to section 7.A. above, Borrower shall also furnish to
Bank a certificate signed by its President or Chief Financial
Officer stating that he or she has no knowledge of any events of
default which have occurred under this Agreement or of any
matters which would with the passage of time constitute an event
of default hereunder, or if he or she shall have obtained
knowledge of any such default or potential default he or she
shall disclose in such statement the default or potential
default and the nature thereof. Each such certificate shall be
dated as of the last day of the month or year for which it is
submitted.
D. Borrower shall maintain all insurable property, real
and personal, owned by it insured at all times against loss or
damage by fire or other normally insured hazards through a
responsible insurance carrier selected by it in such amounts and
to the extent of the coverage as is customary for companies
engaged in similar businesses and in similar locations, but in
no event shall said insurance be less than that which Bank, in
good faith, believes is sufficient and adequate to protect the
operating value of the property of Borrower. Borrower shall
also carry insurance to cover its interest as mortgagee in the
property securing the Third Party Loans to be effective in the
event of any failure of the owner of such property to carry
property insurance with respect thereto. The Collateral Agent
(used herein as defined in the Intercreditor Agreement) shall be
named as secured party loss payee in all such policies. Copies
of all such insurance policies shall be delivered to Bank.
E. Borrower shall keep the properties that are material
to the operation of its business, whether owned or leased, in
good condition, repair and working order.
F. Borrower shall duly pay and discharge all lawful
taxes, assessments and governmental charges upon it or against
its properties prior to the date on which penalties are attached
thereto, unless and to the extent only that the same shall be
contested in good faith and by appropriate proceedings by the
Borrower and provided Borrower has established appropriate
reserves for the payment of said taxes in accordance with
generally accepted accounting practices.
G. Borrower shall do all things necessary to maintain its
corporate existence, to preserve and keep in full force and
effect its rights and franchises necessary to continue its
businesses, and to comply with all applicable laws, regulations
and ordinances (including without limitation any applicable
state or federal securities laws) with respect to which the
failure to comply would have a material adverse effect on the
Borrower.
H. Borrower shall pay to Bank, upon demand, all
reasonable charges and expenses incurred by Bank for attorney's
fees and expenses of litigation, in seeking relief from the
automatic stay or any other bankruptcy proceedings, or in
connection with or in any way related to Bank's relationship
with Borrower, with respect to the transactions contemplated by
this Agreement, whether hereunder or otherwise, including
without limitation those incurred or expended in connection with
the preparation of this Agreement or any amendment hereto,
extension of the Credit Facility hereunder, and the protection
or enforcement of Bank's rights hereunder.
In addition thereto, Borrower shall pay to Bank all
reasonable charges and expenses incurred by Bank, of every kind
or description, arising subsequent to the occurrence of any
Event of Default, including but not limited to reasonable
attorneys fees and expenses of litigation.
I. With respect to each of its Plans, if any, under the
Employee Retirement Income Security Act ("ERISA") and the
Internal Revenue Code (the "Code"), Borrower represents and
warrants that:
1. all funding requirements have been met and
will continue to be met on an annual basis;
2. no "prohibited transactions" have occurred
and that none of the transactions which are the
subject of this Agreement constitute prohibited
transactions under the rulings or regulations of ERISA
or the Code;
3. all such Plans are and will continue to be
qualified Plans; and
4. the Borrower has complied with, and will
continue to comply with, all reporting and disclosure
requirements under ERISA, the Code, and the applicable
rulings and regulations with respect to which the
failure to so comply would have a material adverse
effect on the Borrower.
J. Borrower shall maintain an operating account at the
Bank, and Bank is hereby authorized to charge such account for
all amounts due from Borrower to Bank pursuant to this Agreement
as and when due.
K. Borrower shall indemnify, defend and hold Bank, and
its officers, directors, employees, and agents, harmless from
and against all claims, injury, damage, loss, costs (including
attorneys' fees and costs) and liability of any and every kind
to any persons or property by reason of (i) the breach of any
representation or warranty herein or in any other Loan Document,
(ii) the failure to fulfill any obligation under this Agreement
or under any other Loan Document, or (iii) any other matter
relating to, or action taken by Bank in connection with, the
Credit Facility, unless caused by the gross negligence or
willful misconduct of Bank.
8. NEGATIVE COVENANTS OF BORROWER: Borrower covenants and
agrees as follows:
A. Borrower shall not, without the prior written consent
of Bank, create, incur, assume or have outstanding, any
indebtedness for money except:
(1) the Loan under this Agreement or any
renewals thereof;
(2) indebtedness for other borrowings payable to
Bank;
(3) other indebtedness as shown on the financial
statements presented to Bank prior to the closing of
the transactions contemplated hereunder;
(4) unsecured current liabilities incurred in
the ordinary course of business;
(5) debentures issued by Borrower which are
guaranteed by the SBA;
(6) revolving credit facilities (the "Permitted
Credit Facilities") extended by Firstar Bank
Milwaukee, N.A., LaSalle National Bank and other
lenders pursuant to the Intercreditor Agreement
(collectively the "Additional Lenders");
(7) subject to the limitations in 8.B. below,
indebtedness for loans from the State of Wisconsin
Investment Board and/or other institutional lenders
(which lenders may include without limitation Bank or
any one or more of the Additional Lenders, but may not
include other financial institutions of which the
deposits are insured by the FDIC or FSLIC)
(collectively, the "Limited Lenders") which are
secured only by specific Third Party Loans (the
"Limited Lenders' Collateral");
(8) indebtedness incurred for the purchase of
capital assets provided said indebtedness is unsecured
or is secured only by purchase money security
interests in the assets so purchased;
(9) indebtedness for commercial paper issued
pursuant to facilities made available to Borrower by
Bank and Firstar Bank Milwaukee, N.A.; and
(10) indebtedness under reverse repurchase
agreements with Bank or an Additional Lender, if such
agreements are secured by United States Treasury
securities the Borrower owns on the date hereof.
B. Borrower shall not, without prior written consent of
Bank, create, suffer, or permit to be created any mortgage,
pledge, security interest, assignment, encumbrance or other lien
upon any real property, equipment, fixtures, accounts, contract
rights, chattel paper, instruments, documents, general
intangibles, inventory, or any other property now owned or
hereafter acquired by it, except (i) the Limited Lenders'
security interests in the Limited Lenders' Collateral as
described in the next paragraph; (ii) the purchase money
security interests permitted in Section 8.A above; (iii)
existing liens, charges or encumbrances specifically indicated
on the financial statements previously delivered to Bank by
Borrower; (iv) liens for taxes, assessments or governmental
charges not delinquent or being contested in good faith by
Borrower; (v) construction lien claims not delinquent; (vi)
liens or deposits in connection with workmen's compensation or
other insurance or to secure the performance of bids, trade
contracts, leases, public or statutory obligations of like
nature incurred in the ordinary course of business; (vii)
security interests in favor of Bank, the Collateral Agent, and
the Additional Lenders; and (viii) security interests, if any,
in United States Treasury securities now owned and presently
subject to reverse repurchase agreements with Bank or an Addi-
tional Lender, to the extent such investments are permitted
under section 8.K. below.
A lender can only provide loans as a Limited Lender if, at
the time the Limited Lender makes a loan to Borrower, the Third
Party Loans pledged to the Limited Lender to secure the loan do
not have outstanding principal balances exceeding 110% of all
obligations of Borrower to the Limited Lender plus commercial
paper issued through the Limited Lender in its capacity as a
Limited Lender.
C. Borrower shall not merge with or into or consolidate
with or into any other corporation or entity, or sell, lease,
transfer or otherwise dispose of all or any substantial part of
its property, assets or business (other than by sales made in
the ordinary course of business and sales of participation
interests in Third Party Loans).
D. Borrower shall not, without prior written consent of
Bank, enter into any agreement providing for the leasing by it
of property which has been, or is to be, sold or transferred by
it to the lessor thereof.
E. Borrower shall not redeem, purchase, or otherwise
acquire directly or indirectly any shares of any class of its
capital stock without the prior written consent of Bank.
F. Borrower shall not permit the ratio, calculated as of
the last day of each month, of (a) the aggregate amount of all
of Borrower's indebtedness and liabilities (including
liabilities under guaranties and contingent liabilities),
including all Obligations (numerator), to (b) Borrower's
Adjusted Tangible Net Worth (denominator), to be more than 7:1.
G. Borrower's aggregate total realized losses on Third
Party Loans during the term of this Agreement shall not exceed
the greater of $1,000,000 or two and one-half per cent (2.5%) of
the total principal amount of all outstanding Third Party Loans,
as determined from the then most recent annual audited financial
statements to be provided by Borrower to Bank pursuant to this
Agreement. For the purposes of this section, a loss on a Third
Party Loan is "realized" when the loss is so identified on
Borrower's financial statements.
H. Borrower shall, at all times, maintain an Adjusted
Tangible Net Worth of not less than $19,500,000.
I. Borrower shall not in any of its fiscal years pay or
declare any dividend or make any other distribution on account
of any class of its stock that would be treated as a
return-of-capital dividend for income tax purposes.
J. Borrower may not make, have or acquire any
investments, except (i) investments in "small business
concerns", as defined in the SBA regulations, and (ii)
investments that are permitted by 13 CFR Section 107.708, or
otherwise permitted by the SBA, and are held by or subject to a
security interest in favor of Bank or an Additional Lender.
K. The ratio of (i) the sum of the aggregate outstanding
principal balances of all Third Party Loans evidenced by
promissory notes or other agreements held by Bank or the
Collateral Agent pursuant to section 9 of this Agreement and
securing Borrower's obligations only to Bank and the Additional
Lenders pursuant to the Intercreditor Agreement minus the sum of
(w) the aggregate dollar amount of all Participated Third Party
Loans (as defined below), if any, plus (x) if there is more than
one Third Party Loan to a Person or an Affiliate thereof (each,
an "Affiliated Third Party Loan", and collectively, "Affiliated
Third Party Loans") and if any one of such Affiliated Third
Party Loans is (1) a Participated Third Party Loan, and (2) not
separately identifiable (e.g., by means of a loan identification
number) and Borrower does not have collateral as security for
such loan which is separate and distinct from the collateral
pledged to Borrower for any other applicable Affiliated Third
Party Loan, then the aggregate dollar amount of all such
Affiliated Third Party Loans (excluding Participated Third Party
Loans which are included in such aggregate dollar amount of
Affiliated Third Party Loans), to (ii) the sum of (y) the
outstanding principal balances of Borrower's obligations to Bank
hereunder and the Additional Lenders (in their capacity as
Additional Lenders, and not when acting as Limited Lenders),
plus (z) the total principal amount of all of Borrower's
outstanding commercial paper issued pursuant to facilities made
available to Borrower by Bank and any Additional Lenders (in
their capacity as Additional Lenders, and not when acting as
Limited Lenders) shall not at any time be less than 1.25 to 1.0.
As used herein, the term "Participated Third Party Loan" shall
mean a Third Party Loan in which Borrower has sold a
participation interest or made an assignment (in whole or in
part) to any third party.
Within thirty (30) days after the end of each calendar
month and at such other times as requested by Bank, Borrower
shall deliver to Bank a certificate with a schedule of all of
its Third Party Loans and stating which Third Party Loans are
held by the Collateral Agent pursuant to the Intercreditor
Agreement and which are held by the Limited Lenders, the amount
of each participation sold by Borrower in each Third Party Loan,
and the amounts of each such participation interests sold on a
"first-out" or "with recourse" basis. The aforesaid certificate
shall also set forth the ratio referred to in the previous
paragraph calculated as of the end of the month for which the
certificate is submitted and shall separately state the amount
of each component required to be used in calculating that ratio.
L. Borrower shall not permit the average monthly
percentage for the preceding three calendar months of the
aggregate unpaid principal balance of all Third Party Loans
contractually delinquent for a period of more than 30 days to
exceed ten percent (10%) of the aggregate unpaid principal
balance of all Third Party Loans.
M. Except as provided in the following sentence, Borrower
shall not make (or enter into any agreement to make) any Third
Party Loan, the terms of which would allow for the maximum
aggregate principal advances of such Third Party Loan to exceed
eighty percent (80%) of the fair market value of the property
(as such value is set forth in an appraisal of such property in
form and substance satisfactory to Bank) which is included in
Borrower's security for the repayment of such Third Party Loan.
Notwithstanding the foregoing, Borrower shall be permitted to
make Third Party Loans where the maximum aggregate advances of
such loans can equal a maximum of 100% of the value of the
property (as such value is set forth in an appraisal of such
property in form and substance satisfactory to Bank) which is
included in Borrower's security for the repayment of such Third
Party Loans (such Third Party Loans are referred to herein as
"Maximum LTV Third Party Loans"); provided, however, that the
aggregate amount of all such Maximum LTV Third Party Loans
permitted by the preceding clause shall not at any time exceed
2.5% of the aggregate amount of all Third Party Loans which
constitute collateral for the Obligations.
N. Borrower shall comply (or cause the compliance) with
all of the covenants set forth in the SWIB Documents on the date
of this Agreement, which covenants (to the extent not
inconsistent with the covenants contained in this Agreement) are
hereby incorporated into and made a part of this Agreement.
Borrower's covenant contained in the preceding sentence shall
survive the termination, satisfaction, cancellation or
modification of the SWIB Documents or any of the covenants
contained therein.
O. Borrower shall not make advances to its customers to
permit its customers to meet their debt service obligations owed
to Borrower, nor shall Borrower capitalize any interest payments
owed to Borrower from its customer.
9. SECURITY: As security for the repayment of the Credit
Facility, and any and all other loans to or Obligations of Borrower
hereunder (other than obligations to Bank acting in its capacity as a
Limited Lender), including any and all extensions and renewals of the
foregoing:
A. Borrower has granted to Bank a security interest in
all of Borrower's general intangibles, accounts, contract
rights, chattel paper and instruments, and Borrower's books and
records pertaining to any of the foregoing, whether now owned or
hereafter acquired, and all proceeds and products of the
foregoing. The aforesaid security interest shall be a first and
paramount lien on the foregoing collateral, subject to, and, on
the terms set forth in the Intercreditor Agreement, on an equal
priority with, the security interest of the Additional Lenders,
all as provided in the General Security Agreement between
Borrower and Bank dated as of March 26, 1993, as the same has
and may be amended from time to time (the "Security Agreement");
provided, however, the aforesaid security interest in Third
Party Loans constituting the Limited Lenders' Collateral shall
be subordinate to the security interests of the Limited Lenders.
Bank's rights with respect to its security interest in the
aforesaid property will be subject to the terms and conditions
of the Security Agreement. Borrower specifically acknowledges
and agrees that the payment of the Obligations is secured by all
security interests, mortgages, pledges and hypothecations
previously or hereafter granted by Borrower in favor of Bank or
in favor of the Collateral Agent for the benefit of Bank,
including without limitation, the Security Agreement.
B. Borrower shall execute and deliver to the Collateral
Agent on behalf of Bank and the Additional Lenders, at any time
or times at the request of Bank or the Collateral Agent, all
financing statements, security agreements, assignments, letters
of authority, pledges, notices and other agreements, instruments
and documents which Bank may request in a form satisfactory to
it, to further evidence, perfect and maintain the security
interests and liens granted or to be granted to Bank in
aforesaid collateral and to fully consummate all of the
transactions contemplated hereunder and under any other
agreement, instrument or documents hereafter executed by
Borrower and delivered to Bank.
Without limiting the obligations of Borrower pursuant to
the foregoing provisions and except as to Third Party Loans
constituting Limited Lenders' Collateral, Borrower shall
immediately endorse to the order of and deliver to the
Collateral Agent all promissory notes or other instruments
evidencing Third Party Loans heretofore or hereafter made by
Borrower and shall assign and deliver to such Collateral Agent
any and all mortgages, security agreements, and other documents
evidencing or securing such Third Party Loans.
10. DEFAULT: Bank may, at its option, upon the occurrence of
any of the following events (each an "Event of Default"), without prior
notice to Borrower, immediately terminate Borrower's right to receive
Advances under this Agreement and immediately declare the outstanding
balance of the Note, together with all interest accrued thereon, to be
immediately due and payable, without notice of any kind and
notwithstanding anything to the contrary herein contained. The following
are Events of Default:
A. Any representation or warranty made by Borrower in
this Agreement, or in any certificate of Borrower furnished to
Bank hereunder, shall prove to have been incorrect in any
material respect as of the time when made;
B. If Borrower shall fail to pay any interest or
principal under the Credit Facility when due hereunder, or fail
to pay when due any principal or interest on any of its other
indebtedness, if any, to Bank, whether at maturity or by
acceleration or otherwise, and such failure shall continue
uncured for a period of five (5) days after the applicable due
date;
C. Borrower shall default in the performance or
observance of any covenant or agreement contained in this
Agreement or in any other agreement between Borrower and Bank,
provided, however, that a breach in the performance or
observance of an affirmative covenant or agreement contained in
section 7 of this Agreement shall only constitute a default if
the breach remains uncured for a period of twenty (20) days
after written notice thereof from Bank to Borrower;
D. Borrower shall:
(1) Apply for or consent to the appointment of a
receiver, trustee or liquidator of Borrower or of all
or substantial part of the assets of Borrower,
(2) Be unable to, or admit in writing its
inability to, pay its debts as they mature,
(3) Make a general assignment for the benefit of
creditors,
(4) Be adjudicated a bankrupt or insolvent,
(5) File a voluntary petition in bankruptcy or a
petition or an answer seeking reorganization or an
arrangement with creditors or to take advantage of any
insolvency law, or an answer admitting the material
allegations of a petition filed against Borrower in
any bankruptcy, reorganization or insolvency
proceeding, or
(6) Corporate action shall be taken by Borrower
for the purpose of effecting any of the foregoing;
E. A petition for an order, judgment or decree shall be
filed, without the application, approval or consent of Borrower,
with any court of competent jurisdiction, seeking reorganization
of Borrower, or the appointment of a receiver, trustee or
liquidator of Borrower or of all or a substantial part of the
assets of Borrower, and such petition shall remain undismissed
for any period of sixty (60) days;
F. Borrower shall default in the payment of principal or
interest on any obligation (other than the Credit Facility) for
borrowed money beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term or
condition contained therein or in any agreement or security
interest relating to any such obligation beyond any period of
grace provided with respect thereto, if the effect of such
default is to cause or permit the holder or holders of such
obligation (or a trustee or agent on behalf of such holder or
holders) to cause such obligation to become due prior to its
stated maturity;
G. A final judgment which, together with other
outstanding final judgments against it, exceeds an aggregate of
Fifty Thousand Dollars ($50,000.00) shall be entered against
Borrower and remain outstanding and unsatisfied or unstayed
after sixty (60) days from the date of entry thereof, unless an
appeal has been taken and perfected within the time provided by
law and suitable bond has been provided to stay execution of
such judgment; or
H. Borrower shall cease to be a Small Business Investment
Company licensed pursuant to the rules and regulations of the
SBA, or the SBA shall have instituted formal proceedings to
revoke or cancel Borrower's license (either of such events to be
hereinafter referred to as an "SBA Termination Event");
provided, however, that if the Borrower shall give notice to the
Bank of the occurrence of an SBA Termination Event within ten
(10) days after the occurrence thereof, then such SBA
Termination Event shall constitute an event of default hereunder
only upon the expiration of ninety (90) days after the
occurrence of such SBA Termination Event. The Bank shall have
no obligation to make any advances to Borrower under the Credit
Facility after the occurrence of an SBA Termination Event; or
I. Either of the following shall occur:
(1) Bando McGlocklin Capital Corporation
("BMCC") shall transfer, sell, pledge or hypothecate
all or any portion of the issued and outstanding stock
of Borrower (of any class or type) owned by BMCC from
time to time; or
(2) Except for the issued and outstanding stock
of Borrower owned by BMCC, if at any time more than
thirty percent (30%) of the issued and outstanding
stock of Borrower, of any class or type, shall be
owned by any one person or entity or Affiliate
thereof.
In the event of any occurrence of any event of default, Borrower
shall pay all Bank's Expenses which may be incurred by Bank with
respect thereto, including reasonable attorneys' fees, and all
such sums shall be and become part of the Obligations pursuant
to this Agreement. In addition to and not in lieu of any other
right or remedy it may have at any time, Bank at any time and
from time to time at its election, may (but it shall not be
required to) do or perform or comply with or cause to be done or
performed or complied with anything which Borrower may be
required to do or comply with under this Agreement if Borrower
shall fail to do so; Borrower shall reimburse Bank upon demand
for any cost or expense Bank may pay or incur in such respect,
together with interest thereon at the Default Rate of interest
set forth herein for the Credit Facility from the date of such
demand until paid. The failure of Bank at any time or from time
to time to exercise any right or remedy, whether arising from or
by virtue of any event of default or otherwise, shall not
constitute a waiver of any such right or remedy and shall not
impair the right of Bank to exercise such right or remedy or any
other right or remedy thereafter or to insist upon strict
performance. No waiver of any right or remedy by Bank shall be
valid or effective unless made in writing and signed by an
officer of Bank. Any effective waiver of any right or remedy
shall not be deemed to constitute a waiver of any other right or
remedy then existing or which may thereafter arise or accrue.
Upon the occurrence of any Event of Default, and pursuant to the
provisions of this paragraph, Bank may sue to enforce the
obligations of Borrower pursuant to this Agreement.
Presentment, demand, protest and notice of every kind are hereby
expressly waived.
11. CONDITIONS OF DISBURSEMENT: Bank shall be under no
obligation to make any Advances under the Credit Facility pursuant to this
Agreement unless the following conditions shall have been fulfilled:
A. The representations and warranties of Borrower
contained herein shall be true at the time of the initial
Advance and at the time of each subsequent Advance under this
Agreement as though such representations and warranties were
made at such time.
B. Borrower shall have performed and complied with all
agreements and conditions required by this Agreement to be
performed or complied with by it.
C. Prior to the initial advance under this Agreement
Borrower shall have delivered to Bank an opinion in writing of
Borrower's legal counsel, Foley & Lardner, dated on or after the
date of this Agreement, to the effect that (i) Borrower is a
corporation validly existing under the laws of the State of
Wisconsin, and has the corporate power and authority to enter
into this Agreement and to make borrowings and execute and
deliver the notes as provided for herein; (ii) the making of
this Agreement and compliance with the terms hereof by Borrower
and the execution and delivery of the Note pursuant hereto do
not conflict with or contravene any provision of the Articles of
Incorporation, or By-Laws of Borrower, or any material
indenture, contract or agreement of which such counsel has
knowledge, to which Borrower is a party or to which it is
subject (or that any such contravention has been appropriately
waived), or, to the extent of the business of the Borrower of
which such counsel has knowledge, any statute, rule or
regulation binding upon Borrower; (iii) all corporate action
necessary to authorize Borrower to enter into this Agreement, to
perform its obligations hereunder, and to execute and deliver
any and all documents necessary to comply with the provisions of
this Agreement has been taken; (iv) the obtaining of the Credit
Facility hereunder has been authorized and approved by all
necessary corporate action; (v) this Agreement and Note have
been duly executed by the Borrower; (vi) this Agreement, the
Note, and the Security Agreement referred to in this Agreement,
constitute the legal, valid and binding obligations of Borrower
and are enforceable against Borrower in accordance with their
terms, subject to customary bankruptcy exceptions; (vii) no
consent of any public body, agency, commission or board is
necessary to the making and assumption of obligations hereunder
by Borrower; and (viii) so far as it is known to such counsel
there is no material litigation, and there are no proceedings by
any public body, agency, or authority, pending or threatened
against Borrower.
D. Borrower shall deliver to Bank, Firstar Trust
Company's acknowledgment of all collateral in Firstar Trust
Company's possession providing security for Borrower's
obligations to Bank.
E. Prior to the initial Advance under this Agreement,
Borrower shall furnish Bank with certified resolutions of its
Board of Directors authorizing its (i) entry into this Agreement
and performance of the covenants contained herein, (ii) the
issuance of the Note and (iii) the execution and delivery of any
and all other documents, agreements or instruments reasonably
requested by Bank.
F. Borrower shall furnish Bank with a certificate of
incumbency with respect to the persons authorized to execute
this Agreement, the Note, and all other documents to be executed
in connection with the transactions which are the subject of
this Agreement.
G. Prior to the initial Advance under this Agreement,
Borrower shall deliver to Bank copies of all agreements between
Borrower and the SBA relating to the SBA's guarantee of
obligations of Borrower, together with copies of all outstanding
debentures or other evidence of debt issued by Borrower and
guaranteed by the SBA.
H. Prior to the initial Advance hereunder, the Bank and
the parties to the Intercreditor Agreement shall have executed
an amendment to the Intercreditor Agreement in form and
substance satisfactory to the Bank, and copies of all such
agreements, in form and substance acceptable to Bank, shall have
been delivered to Bank.
12. MISCELLANEOUS.
A. The provisions of this Agreement shall inure to the benefit
of and be binding upon any successor to any of the parties hereto and
shall extend and be available to any holder of the Note and renewals
thereof.
Borrower shall not assign or attempt to assign its rights under
this Agreement. Bank shall have the right to assign, transfer, sell,
negotiate, pledge or otherwise hypothecate this Agreement and any of its
rights and security hereunder, including the Note and any other Loan
Document to any affiliate of Bank or to any bank or other entity which in
Bank's good faith judgment has the capacity to perform Bank's obligations
hereunder. Borrower hereby agrees that all of the rights and remedies of
Bank in connection with the interest so assigned shall be enforceable
against Borrower by such assignee with the same force and effect and to
the same extent as the same would have been enforceable by Bank but for
such assignment. Borrower agrees that Bank shall have the right to sell
participations in the Credit Facility without the consent of Borrower.
Notwithstanding Bank's participation of any part of the Credit Facility,
Bank shall remain responsible for the performance of all its obligations
hereunder.
B. No failure on the part of Bank to exercise, and no delay in
exercising any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by Bank of any right hereunder
preclude any other or future exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
C. In the event that any date provided herein for any payment
by Borrower shall not be a Business Day, such payment date shall be deemed
to be the next following Business Day.
D. All representations and warranties made herein shall
survive the extension of any Advance under this Agreement and the
execution and the delivery of the Note or renewals thereof.
E. All notices, statements, requests and demands herein
provided for shall be deemed to have been given or made when deposited in
the mails, postage prepaid, or delivered to a telegraph company, charges
prepaid, in the case of Borrower, when addressed to Borrower, 13555
Bishops Court, Suite 205, Brookfield, Wisconsin 53005, Attention: George
R. Schonath, Chairman, and in the case of Bank, at 201 West Wisconsin
Avenue, Milwaukee, Wisconsin 53259, Attention: Dennis Bowgren, Vice
President; or in such other manner, as to any party hereto, as such shall
designate in a written notice to the other party hereto.
F. This Agreement shall be deemed to be a contract made under
the laws of the State of Wisconsin and shall be construed and enforced in
accordance with the laws of said State.
G. Section headings in this Agreement and the other Loan
Documents are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement and the other
Loan Documents.
H. This Agreement and all other agreements referred to herein
or delivered in connection herewith shall constitute the entire agreement
between the parties relating to the subject matter hereof, shall rescind
all prior agreements and understandings between the parties hereto
relating to the subject matter hereof, and shall not be changed or
terminated orally.
I. All representations, warranties, and covenants made by
Borrower under this Agreement or any other Loan Document shall be
considered to have been relied upon by Bank and shall survive the delivery
to Bank of the Note and the making of the Loan herein contemplated
regardless of any investigation made by Bank or on its behalf.
J. Any provision in this Agreement or any other Loan Document
that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in
that jurisdiction or the operation, enforceability, or validity of that
provision in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.
K. Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of any United States Federal or Wisconsin state court sitting
in Milwaukee County, Wisconsin, in any action or proceeding arising out of
or relating to this Agreement, the Note or any other Loan Document and
Borrower hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in any such court and
irrevocably waives any objection it may now or hereafter have as to the
venue of any such suit, action or proceeding brought in such a court or
that such court is an inconvenient forum. Nothing herein shall limit the
right of Bank to bring proceedings against Borrower in the courts of any
other jurisdiction. Any judicial proceeding by Borrower against Bank or
any affiliate of Bank involving, directly or indirectly, any matter in any
way arising out of, related to, or connected with this Agreement, the Note
or any other Loan Document shall be brought only in a court in Milwaukee
County, Wisconsin.
L. BORROWER AND BANK EACH HEREBY WAIVE TRIAL BY JURY IN ANY
JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE NOTE OR ANY OTHER LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
M. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and any of the parties hereto may execute this Agreement by signing any
such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BANDO McGLOCKLIN SMALL
BUSINESS INVESTMENT
CORPORATION
By: _________________________________
George R. Schonath,
Chairman of the Board and
Chief Executive Officer
By: _________________________________
Jon P. McGlocklin, President
FIRST BANK (N.A.)
By: _________________________________
Dennis Bowgren,
Vice President
Exhibit 4.2
MODIFICATION AGREEMENT
THIS AGREEMENT made as of the 31st day of October, 1996, by and
between FIRST BANK (N.A.) ("Bank") and BANDO McGLOCKLIN SMALL BUSINESS
INVESTMENT CORPORATION, a Wisconsin corporation ("Borrower").
R E C I T A L S :
i. Bank and Borrower are parties to a certain Amended and
Restated Loan Agreement dated as of the 28th day of June, 1996 (said
Amended and Restated Loan Agreement is hereinafter referred to as the
"Loan Agreement"). All capitalized terms not otherwise defined herein
shall have the meanings given them in the Loan Agreement.
ii. Pursuant to the Loan Agreement the Bank agreed to extend to
Borrower a revolving Credit Facility of up to $12,500,000.00.
iii. The availability of the Credit Facility terminates on
October 31, 1996, and Borrower has requested that the Bank extend the
availability of the Credit Facility to October 31, 1997.
iv. Bank is willing to agree to the foregoing request of
Borrower but only on the terms and conditions hereinafter set forth and in
reliance on the warranties and representations of Borrower contained
herein.
A G R E E M E N T S :
NOW, THEREFORE, in consideration of the matters stated in the
foregoing Recitals and the covenants hereinafter set forth, the parties
hereto agree as follows:
1. To induce Bank to enter into this Agreement, Borrower
warrants and represents to Bank as follows:
A. The Recitals set forth above are each true and
correct.
B. The Loan Agreement is, and as modified herein shall
be, valid, binding and enforceable.
C. Borrower has no defenses, set-offs, claims or rights
of recoupment against its obligations to pay to Bank the
outstanding balance of the Credit Facility pursuant to the Loan
Agreement.
D. All of the representations and warranties set forth in
section 6 of the Loan Agreement are true and correct as though
made on the date of this Agreement and as though applicable to
this Agreement in the same manner as they were applicable to the
Loan Agreement.
2. The definition of Maturity Date as set forth in section 1
of the Loan Agreement is amended and restated to read in its entirety as
follows:
"Maturity Date shall mean October 31, 1997, or such earlier
date on which Bank declares the Note to be immediately due and
payable pursuant to section 10 of this Agreement."
3. The Borrower shall promptly notify Bank upon Borrower's
obtaining all necessary Securities & Exchange Commission and shareholder
approvals relating to Borrower's desire to (1) deregister its status as a
"small business investment company" under the Investment Company Act of
1940, (2) surrender its U.S. Small Business Administration small business
investment company license and (3) conduct its operations as a real estate
investment trust under Section 856 of the Internal Revenue Code of 1986,
as amended, all of which are to be effective as of the close of Borrower's
business on December 31, 1996. Bank acknowledges that Borrower is
currently in the process of obtaining all such necessary approvals and
Bank acknowledges that upon satisfactory review by Bank of all
documentation relating to the deregistration of Borrower and the execution
of all documentation reasonably deemed necessary by Bank to preserve
Bank's rights against Borrower (including, without limitation,
documentation relating to any existing interest rate swap agreements),
Bank shall not unreasonably withhold its consent, which consent is
required under the Loan Agreement, to the transactions described in this
paragraph.
4. All references to the "Lending Agreement" in the Amended
and Restated General Security Agreement dated the 28th day of June, 1996,
between Borrower and Bank shall be deemed to mean the Loan Agreement as
modified and amended by this Agreement.
5. Except as expressly modified and amended herein, all terms
and provisions of the Loan Agreement shall be and remain in full force and
effect.
6. Borrower shall not be entitled to receive any advances
under the Credit Facility after October 31, 1996, and this Agreement shall
not be effective against or binding upon the Bank unless and until (a)
Firstar Bank Milwaukee N.A. and LaSalle National Bank shall have agreed in
writing to extend the maturity and availability of their respective
Permitted Credit Facilities to October 31, 1997, or a later date, and (b)
a copy of such agreement shall have been delivered to the Bank.
7. Borrower shall, upon demand by Bank, reimburse Bank for all
costs and expenses incurred by Bank in connection with this Agreement,
including, but not limited to, the reasonable fees of Bank's attorneys.
8. The provisions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors
and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
FIRST BANK (N.A.) BANDO McGLOCKLIN SMALL
BUSINESS INVESTMENT
CORPORATION
By: ___________________________ By: _________________________________
Dennis Bowgren George R. Schonath
Vice President Chairman of the Board and
Chief Executive Officer
By: _________________________________
Jon P. McGlocklin
President
EXHIBIT 4.3
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement")made as of the 28th day of
June, 1996, by and between LASALLE NATIONAL BANK, a national banking
association ("Bank") and BANDO McGLOCKLIN SMALL BUSINESS INVESTMENT
CORPORATION, a Wisconsin corporation ("Borrower").
WITNESSETH:
WHEREAS, Borrower has requested from Bank a revolving credit facility
(the "Credit Facility") of up to $7,500,000.00; and
WHEREAS, Bank is willing to make the revolving credit facility
available to Borrower, but only on the terms and conditions hereinafter
set forth and in reliance on the
representations and warranties of Borrower herein contained;
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENTS
1. DEFINITIONS. As used in this Agreement, the listed terms are
defined as follows:
Adjusted Tangible Assets shall means all assets except: (a)
trademarks, tradenames, franchises, goodwill, and other similar
intangibles; (b) assets located and notes and receivables due from
obligors domiciled outside the United States of America, Puerto Rico, or
Canada; and (c) accounts, notes, and other receivables due from Affiliates
or employees.
Adjusted Tangible Net Worth shall mean the remainder of (a) net book
value (after deducting related depreciation, obsolescence, amortization
and other proper reserves) at which the Adjusted Tangible Assets of
Borrower would be shown on a balance sheet at such date, but excluding any
amounts arising from write-ups of assets, minus (b) the amount at which
its liabilities (other than preferred stock, capital stock, surplus, and
retained earnings) would be shown on such balance sheet, and including as
liabilities all reserves for contingencies and other potential
liabilities.
Advance shall mean the proceeds of the Loan advanced from time to
time by Bank to Borrower in accordance with the terms of this Agreement.
Affiliate shall mean any Person directly or indirectly controlling,
controlled by or under direct or indirect common control with any other
Person. A Person shall be deemed to control another Person if the
controlling Person owns ten percent (10%) or more of any class of voting
securities of the controlled Person or possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies
of the controlled Person, whether through ownership of stock, by contract
or otherwise.
Bank's Expenses shall mean and shall include:
(i) all expenses incurred by Bank in the negotiation,
documentation, administration of this Agreement, the other
Loan Documents and the Loan, including, but not limited to,
accounting and attorney's fees and expenses of any kind and
mailing costs;
(ii) all expenses incurred by Bank in connection with any
verification and inspection of the Collateral and/or any
audit and inspection of any Borrower's books, accounts,
records, correspondence and other papers;
(iii) all taxes levied against or paid by Bank (other than
taxes on, or measured by, the income of Bank) and all
filing and recording fees, costs and expenses which
may be incurred by Bank in respect to the filing
and/or recording of any document or instrument
relating to the transactions described in this
Agreement;
(iv) all costs and expenses (including all allocated costs of
staff counsel which are employees of Bank) incurred by Bank
to collect the collateral (with or without suit), correct
any Default or Event of Default, or enforce any provision
of this Agreement; and
(v) all costs, outlays, attorney's fees and expenses of any
kind (including all allocated costs of staff counsel)
incurred in the enforcement of this Agreement or the other
Loan Documents or the defense of legal proceedings
involving any claim made against Bank arising out of this
Agreement, the other Loan Documents or the protection of
the Collateral.
Business Day shall means a day, other than a Saturday, Sunday or
holiday, on which banks are open for business in Chicago, Illinois and
London, England.
Collateral Agent shall mean Firstar Trust Company or any successor
Collateral Agent appointed pursuant to the terms of the Intercreditor
Agreement.
Default shall mean an event or condition the occurrence of which
would, with a lapse of time or the giving of notice or both, become an
Event of Default.
Default Rate shall mean, with respect to any Advance, the greater of
(i) the Prime Rate applicable to such Advance plus 2.0% per annum, and
(ii) the LIBOR Rate plus 2.0% per annum.
Event of Default shall have the meaning set forth in section 9
herein.
Funding Date shall mean the date of each Advance made hereunder.
Intercreditor Agreement shall have the meaning ascribed to such term
in the Security Agreement.
LIBOR Base Rate shall be determined based on the LIBOR Interest
Period(s) selected by Borrower from time to time and shall mean, with
respect to each such LIBOR Interest Period selected, the rate of interest
per annum determined as follows (such determination to be conclusive,
absent manifest error): on the second Business Day prior to the first day
of such LIBOR Interest Period (the "LIBOR Determination Date"), Bank shall
obtain the quoted offered rate for United States dollar deposits with
leading banks in the London interbank market that appears at 11:00 a.m.
London time on the display page designated as page 3750 on the Telerate
monitor (or such other page or service as industry practice generally
regards as an acceptable replacement for it for the purpose of displaying
London interbank offered rates for U.S. dollar deposits).
LIBOR Interest Period shall mean a period of one, two or three months
commencing on a Business Day selected by the Borrower. Such LIBOR
Interest Period shall end on (but exclude) the day which corresponds
numerically to such date one, two or three months thereafter, provided,
however, that if there is no such numerically corresponding day in such
month, such LIBOR Interest Period shall end on the last Business Day of
such month. If a LIBOR Interest Period would otherwise end on a day which
is not a Business Day, such LIBOR Interest Period shall end on the next
succeeding Business Day, provided, however, that if said next succeeding
Business Day falls in a new calendar month, such LIBOR Interest Period
shall end on the immediately preceding Business Day.
LIBOR Rate shall mean, for the relevant LIBOR Interest Period, the
sum of (i) the LIBOR Base Rate applicable to such LIBOR Interest Period,
plus (ii) 1.375% per annum. The LIBOR Rate shall be rounded to the next
higher multiple of 1/100 of 1% if the rate is not such a multiple.
LIBOR Rate Advance shall mean an Advance which bears interest at the
LIBOR Rate.
Loan shall mean all indebtedness owed by Borrower to Bank arising
under this Agreement or the Note.
Loan Documents shall mean this Agreement, the Note and all other
agreements and documents now or hereafter delivered to the Bank pursuant
to or in connection with the transactions contemplated hereby, and any
amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
Maturity Date shall have the meaning set forth in section 2.J.
herein.
Note shall mean the Secured Promissory Note executed and delivered by
Borrower to Bank pursuant to the terms of this Agreement.
Obligations shall have the meaning ascribed to such term in the
Security Agreement.
Person means an individual, corporation, partnership, joint venture,
trust or unincorporated organization, or a government or any agency or
political subdivision thereof.
Prime Rate shall mean at any time, and from time to time, the rate of
interest then most recently announced by Bank as its "prime rate", which
is not necessarily Bank's lowest or most favorable rate of interest at any
time.
Prime Rate Advance shall mean an Advance which bears interest at the
Prime Rate.
Rate Options shall mean the Prime Rate or the LIBOR Rate. The Rate
Option in effect on any date shall always be the LIBOR Rate (based on a
LIBOR Interest Period of one month) unless Borrower has properly selected
the Prime Rate or the LIBOR Rate (based on a LIBOR Interest Period of two
months or three months) pursuant to section 2.C. hereof.
Security Agreement shall have the meaning set forth in section 8.A.
hereof.
SWIB Documents shall mean (i) the Second Amended and Restated
Agreement dated November 11, 1991, by and between the State of Wisconsin
Investment Board ("SWIB"), as lender, and Borrower, as amended, (ii) the
Master Purchase Agreement dated March 3, 1995, as amended on April 14,
1995, by and between SWIB and Borrower, and (iii) all documents and
instruments executed and/or delivered by Borrower and/or SWIB which
evidences, services, modifies or amends the transactions contemplated by
the documents described in clauses (i) and (ii) above.
2. REVOLVING CREDIT FACILITY. Subject to the terms and conditions
hereinafter set forth in this Agreement, Bank agrees to make available to
the Borrower the Credit Facility pursuant to which the Borrower may
obtain Advances from the Bank, repay such Advances and reborrow, provided,
however, that the aggregate principal balance of the Credit Facility
outstanding at any time shall not exceed $7,500,000. In no event shall
Borrower be entitled to receive any Advance if the making of such Advance
would cause the aggregate amount of all loans made to Borrower by the Bank
and the Additional Lenders to exceed 80% of the value of the collateral
then held by the Collateral Agent.
Each Advance request shall be conclusively presumed to be made by a
person authorized by Borrower to do so and the crediting of the Loan to
Borrower's deposit account, or transmittal to such person as Borrower
shall direct, and shall conclusively establish the obligation of Borrower
to repay such Advance as provided herein. All of Bank's Expenses, fees,
commissions, costs, expenses, and other charges under or pursuant to the
Loan Documents, and all payments made and out-of-pocket charges under or
pursuant to the Loan Documents will be charged as Advances to the Loan as
of the date due from Borrower or the date paid or incurred by Bank, as the
case may be. Unless otherwise advised in writing by Borrower, all
Advances shall be wire transferred in connection with the wire transfer
instructions attached hereto as Exhibit A.
A. Advances under the Credit Facility shall be evidenced by
the Note in the maximum amount of the Credit Facility. The Note
shall be dated as of the date of this Agreement and shall be payable
in full on or before the Maturity Date.
B. (1) The outstanding principal balance under the Note shall
bear interest from time to time at a rate per annum equal to:
(i) the LIBOR Rate (based on a LIBOR Interest Period of
one month); or
(ii) at the election of Borrower with respect to all or
portions of the Obligations, the Prime Rate or the
LIBOR Rate (based on a LIBOR Interest Period of two
months or three months).
(2) All interest shall be calculated for actual days
elapsed on the basis of a 360-day year. Interest accrued on
each Advance shall be payable in arrears on (i) the first day of
each calendar month, commencing with the first such date to
occur after the date hereof, (ii) on any date on which the
Advance is prepaid, whether due to acceleration or otherwise,
and (iii) on the Maturity Date. Interest shall not be payable
for the day of any payment on the amount paid if payment is
received by Bank prior to noon (Chicago time). If any payment
of principal or interest under the Note shall become due on a
day that is not a Business Day, such payment shall be made on
the next succeeding Business Day and, in the case of a payment
of principal, such extension of time shall be included in
computing interest due in connection with such payment; provided
that for purposes of section 9 hereof, any payments of principal
described in this sentence shall be considered to be "due" on
such next succeeding Business Day.
C. (1) Borrower, from time to time, may select the Rate
Option and, in the case of each LIBOR Rate Advance, the
commencement date (which shall be a Business Day) and the length
of the LIBOR Interest Period applicable to each LIBOR Rate
Advance. Borrower shall give Bank a written draw request
specifying the type, date and amount of the Advance requested
and containing a certification (i) remaking and reaffirming all
of the representations and warranties of Borrower contained in
the Loan Documents, and (ii) stating that Borrower is in
compliance with all of the covenants, terms and conditions set
forth in the Loan Documents, not later than 11:00 a.m. (Chicago
time) (i) at least one Business Day prior to a Prime Rate
Advance, and (ii) at least three (3) Business Days prior to a
LIBOR Advance.
(2) Bank shall, as soon as practicable after receipt of a
draw request, determine the LIBOR Rate applicable to the
requested LIBOR Rate Advance and inform Borrower of the same.
Each determination of the LIBOR Rate by Bank shall be conclusive
and binding upon Borrower in the absence of manifest error.
(3) If Borrower shall fail to draw a LIBOR Rate Advance on
the date requested or shall prepay a LIBOR Rate Advance other
than on the last day of the LIBOR Interest Period applicable
thereto, Borrower shall be responsible to pay all amounts due to
Bank as required by section 2.H. hereof.
(4) As of the end of each LIBOR Interest Period selected
for a LIBOR Rate Advance, the interest rate on the LIBOR Rate
Advance will become the LIBOR Rate (based upon a LIBOR Interest
Period of one month), unless Borrower has once again selected a
different LIBOR Interest Period in accordance with the time and
procedures set forth in section 2.C.(7).
(5) The right of Borrower to select the LIBOR Rate for an
Advance pursuant to this Agreement is subject to the
availability to Bank to a similar option. If Bank determines
that (i) deposits of U.S. Dollars in an amount approximately
equal to the LIBOR Rate Advance for which the Borrower wishes to
select the LIBOR Rate are not generally available at such time
in the London interbank eurodollar market, or (ii) the rate of
which the deposits described in subsection (i) herein are being
offered will not adequately and fairly reflect the costs to Bank
of maintaining a LIBOR Rate on an Advance or of funding the same
in such market for such LIBOR Interest Period, or (iii)
reasonable means do not exist for determining a LIBOR Rate, or
(iv) the LIBOR Rate would be in excess of the maximum interest
rate which Borrower may by law pay, then in any of such events,
Bank shall so notify Borrower and such Advance shall bear
interest at the Prime Rate.
(6) In no event may Borrower elect a LIBOR Interest Period
which would extend beyond the Maturity Date. Unless Bank agrees
thereto, in no event may Borrower have more than three different
LIBOR Interest Periods for LIBOR Rate Advances outstanding at
any one time.
(7) Conversion and Continuation.
(i) Borrower may elect from time to time, subject to
the other provisions of this section 2.C., to convert all
or any part of an Advance into any other type of Advance;
provided that any conversion of any LIBOR Rate Advance
shall be made on, and only on, the last day of the LIBOR
Interest Period applicable thereto.
(ii) Prime Rate Advances shall continue as Prime Rate
Advances unless and until such Prime Rate Advances are
converted into LIBOR Rate Advances pursuant to a
Conversion/Continuation Notice (as defined below) from
Borrower in accordance with section 2.C.(7)(iv). LIBOR
Rate Advances shall continue until the end of the then
applicable LIBOR Interest Period therefor, at which time
each such Advance shall be automatically converted into a
LIBOR Rate Advance (based on a LIBOR Interest Period of one
month) unless Borrower shall have given Bank a
Conversion/Continuation Notice in accordance with section
2.C.(7)(iv) requesting that, at the end of such LIBOR
Interest Period, such Advance be converted to a Prime Rate
Advance or either continue as an Advance of such type for
the same or another LIBOR Interest Period.
(iii) Notwithstanding anything to the contrary
contained in sections 2.C.(7)(ii) or (7) (iv), no Advance
may be converted into a Prime Rate Advance or LIBOR Rate
Advance or continued as a LIBOR Rate Advance when any Event
of Default has occurred and is continuing.
(iv) Borrower shall give Bank irrevocable notice (a
"Conversion/Continuation Note") of each conversion of an
Advance or continuation of a LIBOR Rate Advance not later
than 11:00 a.m. (Chicago time) on the Business Day
immediately preceding the date of the requested conversion,
in the case of a conversion into a Prime Rate Advance, or
11:00 a.m. (Chicago time) at least three (3) Business Days
prior to the date of the requested conversion or
continuation, in the case of a conversion into or
continuation of a LIBOR Rate Advance, specifying: (1) the
requested date (which shall be a Business Day) of such
conversion or continuation; (2) the amount and type of the
Advance to be converted or continued; and (3) the amounts
and type(s) of Advance(s) into which such Advance is to be
converted or continued and, in the case of a conversion
into or continuation of a LIBOR Rate Advance, the duration
of the LIBOR Interest Period applicable thereto.
D. All payments of the Obligations hereunder shall be made,
without set-off, deduction, or counterclaim, in immediately available
funds to Bank at Bank's address specified herein, by noon (local
time) on the date when due.
E. During the continuance of an Event of Default outstanding
Advances shall bear interest at the applicable Default Rate until
such Event of Default is cured or the Obligations are paid in full.
F. If the adoption of or change in any law or any governmental
or quasi-governmental rule, regulation, policy, guidelines or
directive (whether or not having the force of law), or any
interpretation thereof, or the compliance of Bank therewith,
(i) subjects Bank to any tax, duty, charge or
withholding on or from payments due from Borrower
(excluding federal and state taxation of the overall net
income of Bank), or changes the basis of such taxation of
payments to Bank in respect of its Advances or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or
similar requirement against assets of, deposits with or for
the account of, or credit extended by, Bank (other than
reserves and assessments taken into account in determining
the interest rate applicable to LIBOR Rate Advances), or
(iii) imposes any other condition, and the result is
to increase the costs of Bank of making, funding or
maintaining loans or reduces any amount receivable by Bank
in connection with loans, or requires Bank to make any
payment calculated by reference to the amount of loans held
or participated in or interest received by it, by an amount
deemed material by Bank,
then, within fifteen (15) days of demand by Bank, Borrower shall pay
Bank that portion of such increased expenses incurred or reduction in
an amount received which Bank determines is attributable to making,
funding and maintaining the Advances and the Credit Facility.
G. If Bank determines the amount of capital required or
expected to be maintained by Bank or any corporate entity controlling
Bank is increased as a result of a Change (as defined below), then,
within fifteen (15) days of demand by Bank, Borrower shall pay Bank
the amount necessary to compensate for any shortfall in the rate of
return on the portion of such increased capital which Bank determines
is attributable to this Agreement, its Advances, or its obligation to
make Advances hereunder (after taking into account Bank's policies as
to capital adequacy). "Change" means (i) any change after the date
of this Agreement in the Risk-Based Capital Guidelines (as defined
below) or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy,
guideline, interpretation, or directive (whether or not having the
force of law) after the date of this Agreement which affects the
amount of capital required or expected to be maintained by Bank or
any corporation controlling any Bank. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in
the United States on the date of this Agreement, including transition
rules, and (ii) the corresponding capital regulations promulgated by
regulatory authorities outside the United State implementing the July
1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled "International Convergence of Capital
Measurements and Capital Standards", including transition rules, and
any amendment to such regulations adopted prior to the date of this
Agreement.
H. If any payment of a LIBOR Rate Advance occurs on a date
which is not the last day of the applicable LIBOR Interest Period,
whether because of acceleration, prepayment or otherwise, or a LIBOR
Rate Advance is not made on the date specified by Borrower for any
reason other than default by Bank, Borrower will indemnify Bank for
any loss or cost incurred by Bank resulting therefrom, including,
without limitation, any loss or cost in liquidating or employing
deposits acquired to fund or maintain the LIBOR Rate Advance.
I. Bank shall deliver a written statement of Bank as to the
amount due, if any, under sections 2.F., 2.G. or 2.H. hereof. Such
written statement shall set forth in reasonable detail the
calculations upon which Bank determined such amount and shall be
final, conclusive and binding on Borrower in the absence of manifest
error. Determination of amounts payable under such Sections in
connection with a LIBOR Rate Advance shall be calculated as though
Bank funded its LIBOR Rate Advance through the purchase of a deposit
of the type and maturity corresponding to the deposit used as a
reference in determining the LIBOR Rate applicable to such Advance,
whether in fact that is the case or not. Unless otherwise provided
herein, the amount specified in the written statement shall be
payable on demand after receipt, by Borrower of the written
statement. The obligations of Borrower under sections 2.F., 2.G. and
2.H. hereof shall survive payment of the Obligations and termination
of this Agreement.
J. This Agreement shall have a term commencing on the date
hereof and ending at 5:00 p.m. (Chicago time) on December 2, 1996
(the "Maturity Date"); provided, however, that if Borrower desires to
extend the Maturity Date of the Loan, then not later than August 15,
1996 Borrower shall furnish written notice to Bank of Borrower's
desire to extend the term of the Loan beyond the Maturity Date. Bank
shall notify Borrower in writing of Bank's decision on Borrower's
extension request not later than October 15, 1996. If Borrower fails
to request an extension of the Maturity Date or if Bank fails to
agree to Borrower's extension request within the respective time
frames set forth in this section, then in each such event the
Maturity Date shall not be extended and the Loan (and other
Obligations) shall be due and payable on the Maturity Date. In the
event the Maturity Date is extended as provided in this section,
Borrower and Bank agree to promptly confirm the new Maturity Date in
writing. On the new Maturity Date, the Loan, the Note, and all other
Obligations of Borrower to Bank shall be immediately due and payable
in full, without notice or demand and shall be repaid to Bank by a
wire transfer of immediately available federal funds.
3. USE OF CREDIT FACILITY. Borrower shall be entitled to
disbursements under the Credit Facility solely for the following purposes:
(i) funding for any proper corporate purposes not prohibited by the rules
and regulations of the United States Small Business Administration (the
"SBA"), except that such disbursements may not be used for investments in
securities, cash, cash equivalents or investment instruments, provided,
however, that nothing herein shall prohibit the use of such funds for
investing in "small business concerns", as defined in SBA regulations;
(ii) funding payment obligations of Borrower with respect to reverse
repurchase agreements with financial institutions; (iii) funding payments
of dividends (to the extent permitted by this Agreement); (iv) funding
loans by Borrower to third parties ("Third Party Loans"); (v) funding
Borrower's repurchase of participation interests in Third Party Loans;
(vi) funding payment obligations of Borrower to Limited Lenders (as
defined in section 7.A. hereof); or (vii) funding Borrower's retirement of
outstanding commercial paper or outstanding lines of credit pursuant to a
facility or facilities made available to Borrower by any Limited Lender or
Additional Lender.
4. AVAILABILITY FEE. As additional compensation to Bank for its
agreement to make the Credit Facility available to Borrower, Borrower
agrees to pay to Bank an Availability Fee to be calculated and paid as
follows:
(a) The Availability Fee for each quarter shall be one-fourth of
0.5% of $7,500,000, payable quarterly, in arrears, on the last
day of each calendar quarter hereafter beginning June 30, 1996,
and ending on the Maturity Date, unless sooner terminated.
Amounts applicable to periods less than a full quarter shall be
pro-rated.
(b) Borrower may terminate this Agreement upon (i) written notice to
Bank stating that Borrower irrevocably terminates its right to
receive any new Advances under the Credit Facility, and
(ii) payment of the entire outstanding balance of the Credit
Facility together with all interest accrued and unpaid thereon,
and any and all other fees and amounts which are then due to
Bank pursuant to this Agreement. After such termination,
Borrower shall have no further obligation to pay the quarterly
Availability Fee for any periods succeeding the date of
termination. The Availability Fee shall be prorated to the date
of termination if termination occurs during a calendar quarter.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants
by its execution of this Agreement on the date hereof, and by its request
of each Advance shall be deemed to remake on each Funding Date, the
following matters set forth in this section 5. Each representation and
warranty shall be deemed to be material and shall be conclusively presumed
to have been relied upon by Bank regardless of any information possessed
or any investigation made by Bank. The following representations,
warranties and covenants shall be cumulative and in addition to all other
representations, warranties and agreements which Borrower shall give or
cause to be given to Bank, either now or hereafter.
A. Borrower is a corporation duly organized and existing under
the laws of the State of Wisconsin and is duly authorized under all
applicable provisions of law to carry on its business as presently
conducted. Borrower has the corporate power to enter into this
Agreement and to borrow hereunder.
B. The making of this Agreement and compliance with the terms
hereof by Borrower have been duly authorized by all necessary
corporate action and do not conflict with and are not in
contravention of (1) any provision of the Articles of Incorporation
and By-Laws of Borrower, (2) any indenture, contract or agreement to
which Borrower is a party or to which it is subject, or (3) any law,
ordinance, statute, rule or regulation binding upon Borrower.
C. Borrower is not a party to any litigation or administrative
proceedings, nor so far as it is known by Borrower is any litigation
or administrative proceeding threatened against it which would, if
adversely determined, cause any material adverse change in Borrower's
financial condition or in the conduct of its business, except as
previously disclosed to and approved by the Bank in writing prior to
the date hereof.
D. All copies of documents, contracts, agreements and
assignments which Borrower has furnished to Bank are true and correct
copies. All financial statements heretofore furnished to Bank are
true and correct in all material respects subject to customary year
end adjustments. There has been no material adverse change in the
property or business operations of Borrower since the date of the
last financial statement, except pursuant to the conduct of its
ordinary business, and except as shall have been disclosed in writing
by Borrower to Bank prior to the date of execution of this Agreement.
E. Borrower has paid, and will pay when due, all federal, state
and local taxes, and will promptly prepare and file returns for
accrued taxes.
F. Borrower has filed all statements, if any, which it may be
required to file under the provisions of any applicable state or
federal securities laws or regulations or if any such statements have
not been filed such failure shall not have any material adverse
effect upon the Borrower. Borrower is not engaged in the business of
carrying margin stock within the meaning of Regulation U of the Board
of Governors of the Federal Reserve System.
G. This Agreement is legal, valid, binding upon, and
enforceable against Borrower in accordance with its terms, except to
the extent enforcement is limited by laws relating to bankruptcy or
insolvency.
H. Borrower owns all of its assets free and clear of any liens
or security interests, except liens and security interests permitted
pursuant to section 7.B. of this Agreement.
I. Borrower has all licenses (including all licenses required
by the SBA in order for Borrower to operate as a "Small Business
Investment Company"), registrations, permits, and franchises
necessary for the conduct of its business which violation or failure
to obtain would materially and adversely affects its business or
condition (financially or otherwise).
J. Borrower is not in violation of any laws, ordinances, or
governmental rules or regulations to which it or its business is
subject (including, without limitation, the provisions of 13 C.F.R.
Section 107.210 (1995) relating to small business investment
companies).
6. AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and
agrees as follows:
A. Borrower shall furnish Bank monthly financial statements
(i.e., consolidated balance sheets and consolidated income
statements) no later than thirty (30) days subsequent to each month's
end for such month. Together with the monthly financial statements,
Borrower shall provide a report identifying all the banks through
which the Borrower is then issuing commercial paper, and the
principal amount of commercial paper then outstanding issued through
each bank. Within ninety (90) days after the end of each fiscal year
of Borrower, Bank shall be provided with an audited income statement
for such year and an audited balance sheet as of the end of such
year. All statements are to be prepared in accordance with generally
accepted principles of auditing and accounting applied on a basis
consistent with the accounting practices of Borrower reflected in the
audited financial statements for the preceding fiscal year, and year
end statements are to be certified without material qualification by
Price Waterhouse, by any other "big six" national accounting firm, or
by any independent certified public accountants of recognized
standing selected by Borrower and acceptable to Bank. Borrower shall
also furnish to Bank all other financial statements reasonably
requested by Bank.
Borrower shall also furnish to Bank copies of (i) all financial
statements, reports and returns as it shall send to its stockholders,
(ii) all regular, periodic, or special reports (including but not
limited to semi-annual reports on Form N-SAR and amendments to its
registration statements on Form N-5) which it is or may be required
to file with the Securities & Exchange Commission or any governmental
department, bureau, commission or agency succeeding to the functions
of the Securities & Exchange Commission, and (iii) all examination
reports of its affairs which it shall receive from the SBA; all of
which documents shall be delivered to Bank forthwith as and when
sent, filed, or received by Borrower.
Bank may at any time, and without notice to or consent of
Borrower, deliver to any participant in the loans which are the
subject of this Agreement, copies of all financial statements,
reports, or any other documents delivered to Bank hereunder.
B. Borrower shall keep proper books of record and accounts
and, upon application, give any representative of Bank access during
normal business hours to, and permit him or her to examine, any and
all books, records and documents in Borrower's possession relating to
the financial affairs of Borrower and to inspect any of its
properties.
C. Together with each of the monthly financial statements and
the year-end audited financial statements to be provided pursuant to
section 6.A. above, Borrower shall also furnish to Bank a certificate
signed by its President or Chief Financial Officer stating that he or
she has no knowledge of any events of default which have occurred
under this Agreement or of any matters which would with the passage
of time constitute an event of default hereunder, or if he or she
shall have obtained knowledge of any such default or potential
default he or she shall disclose in such statement the default or
potential default and the nature thereof. Each such certificate
shall be dated as of the last day of the month or year for which it
is submitted.
D. Borrower shall maintain all insurable property, real and
personal, owned by it insured at all times against loss or damage by
fire or other normally insured hazards through a responsible
insurance carrier selected by it in such amounts and to the extent of
the coverage as is customary for companies engaged in similar
businesses and in similar locations, but in no event shall said
insurance be less than that which Bank, in good faith, believes is
sufficient and adequate to protect the operating value of the
property of Borrower. Borrower shall also carry insurance to cover
its interest as mortgagee in the property securing the Third Party
Loans to be effective in the event of any failure of the owner of
such property to carry property insurance with respect thereto. The
Collateral Agent (used herein as defined in the Intercreditor
Agreement) shall be named as secured party loss payee in all such
policies. Copies of all such insurance policies shall be delivered
to Bank.
E. Borrower shall keep the properties that are material to the
operation of its business, whether owned or leased, in good
condition, repair and working order.
F. Borrower shall duly pay and discharge all lawful taxes,
assessments and governmental charges upon it or against its
properties prior to the date on which penalties are attached thereto,
unless and to the extent only that the same shall be contested in
good faith and by appropriate proceedings by the Borrower and
provided Borrower has established appropriate reserves for the
payment of said taxes in accordance with generally accepted
accounting practices.
G. Borrower shall do all things necessary to maintain its
corporate existence, to preserve and keep in full force and effect
its rights and franchises necessary to continue its businesses, and
to comply with all applicable laws, regulations and ordinances
(including without limitation any applicable state or federal
securities laws) with respect to which the failure to comply would
have a material adverse effect on the Borrower.
H. Borrower shall pay to Bank, upon demand, all reasonable
charges and expenses incurred by Bank for attorney's fees and
expenses of litigation, in seeking relief from the automatic stay or
any other bankruptcy proceedings, or in connection with or in any way
related to Bank's relationship with Borrower, with respect to the
transactions contemplated by this Agreement, whether hereunder or
otherwise, including without limitation those incurred or expended in
connection with the preparation of this Agreement or any amendment
hereto, extension of the Credit Facility hereunder, and the
protection or enforcement of Bank's rights hereunder.
In addition thereto, Borrower shall pay to Bank all reasonable
charges and expenses incurred by Bank, of every kind or description,
arising subsequent to the occurrence of any event of default,
including but not limited to reasonable attorneys fees and expenses
of litigation.
I. With respect to each of its Plans, if any, under the
Employee Retirement Income Security Act ("ERISA") and the Internal
Revenue Code (the "Code"), Borrower represents and warrants that:
1. all funding requirements have been met and will
continue to be met on an annual basis;
2. no "prohibited transactions" have occurred and that
none of the transactions which are the subject of this Agreement
constitute prohibited transactions under the rulings or
regulations of ERISA or the Code;
3. all such Plans are and will continue to be qualified
Plans; and
4. the Borrower has complied with, and will continue to
comply with, all reporting and disclosure requirements under
ERISA, the Code, and the applicable rulings and regulations with
respect to which the failure to so comply would have a material
adverse effect on the Borrower.
J. Borrower shall maintain its primary operating account at the
Bank or with an Additional Lender.
K. Borrower shall indemnify, defend and hold Bank, and its
officers, directors, employees, and agents, harmless from and against
all claims, injury, damage, loss, costs (including attorneys' fees
and costs) and liability of any and every kind to any persons or
property by reason of (i) the breach by Borrower of any
representation or warranty herein or in any other Loan Document,
(ii) the failure by Borrower to fulfill any obligation under this
Agreement or under any other Loan Document, or (iii) any other matter
relating to, or action taken by Bank in connection with, the Credit
Facility, unless caused by the gross negligence or willful misconduct
of Bank.
7. NEGATIVE COVENANTS OF BORROWER: Borrower covenants and agrees as
follows:
A. Borrower shall not, without the prior written consent of
Bank, create, incur, assume or have outstanding, any indebtedness for
money except:
(1) the Loans under this Agreement or any renewals
thereof;
(2) indebtedness for other borrowings payable to Bank;
(3) other indebtedness as shown on the financial
statements presented to Bank prior to the closing of the
transactions contemplated hereunder;
(4) unsecured current liabilities incurred in the ordinary
course of business;
(5) debentures issued by Borrower which are guaranteed by
the SBA;
(6) revolving credit facilities (the "Permitted Credit
Facilities") extended by First Bank (N.A.), Firstar Bank
Milwaukee, N.A. and other lenders pursuant to the Intercreditor
Agreement (collectively the "Additional Lenders");
(7) subject to the limitations in 7.B. below, indebtedness
for loans from the State of Wisconsin Investment Board and/or
other institutional lenders (which lenders may include without
limitation the Bank or any one or more of the Additional
Lenders, but may not include other financial institutions of
which the deposits are insured by the FDIC or FSLIC)
(collectively, the "Limited Lenders") which are secured only by
specific Third Party Loans (the "Limited Lenders' Collateral");
(8) indebtedness incurred for the purchase of capital
assets provided said indebtedness is unsecured or is secured
only by purchase money security interests in the assets so
purchased;
(9) indebtedness for commercial paper issued pursuant to
facilities made available to Borrower by the Bank, the
Additional Lenders or the Limited Lenders, provided, however,
that the Borrower shall not permit the principal amount of
commercial paper issued through any of the Additional Lenders
(but excluding the principal amount of any commercial paper
issued through Additional Lenders acting as Limited Lenders and
with respect to which there are separate lending agreements
entered into between Borrower and Additional Lenders acting as
Limited Lenders) to exceed the maximum principal amount
authorized under such Additional Lenders' Permitted Credit
Facility less the principal amount of the loans outstanding
thereunder; and
(10) indebtedness under reverse repurchase agreements with
the Bank or an Additional Lender, if such agreements are secured
by United States Treasury securities the Borrower owns on the
date hereof.
B. Borrower shall not, without prior written consent of the
Bank, create, suffer, or permit to be created any mortgage, pledge,
security interest, assignment, encumbrance or other lien upon any
real property, equipment, fixtures, accounts, contract rights,
chattel paper, instruments, documents, general intangibles,
inventory, or any other property now owned or hereafter acquired by
it, except (i) the Limited Lenders' security interests in the Limited
Lenders' Collateral as described in the next paragraph; (ii) the
purchase money security interests permitted in Section 7.A above;
(iii) existing liens, charges or encumbrances specifically indicated
on the financial statements previously delivered to Bank by Borrower;
(iv) liens for taxes, assessments or governmental charges not
delinquent or being contested in good faith by the Borrower; (v)
construction lien claims not delinquent; (vi) liens or deposits in
connection with workmen's compensation or other insurance or to
secure the performance of bids, trade contracts, leases, public or
statutory obligations of like nature incurred in the ordinary course
of business; (vii) security interests in favor of the Bank, the
Collateral Agent and the Additional Lenders; and (viii) security
interests, if any, in United States Treasury securities now owned and
presently subject to reverse repurchase agreements with the Bank or
an Additional Lender, to the extent such investments are permitted
under section 7.K. below.
A lender can only provide loans as a Limited Lender if, at the
time the Limited Lender makes a loan to Borrower, the Third Party
Loans pledged to the Limited Lender to secure the loan do not have
outstanding principal balances exceeding 110% of all obligations of
Borrower to the Limited Lender plus commercial paper issued through
the Limited Lender.
C. Borrower shall not merge with or into or consolidate with or
into any other corporation or entity, or sell, lease, transfer or
otherwise dispose of all or any substantial part of its property,
assets or business (other than by sales made in the ordinary course
of business and sales of participation interests in Third Party
Loans).
D. Borrower shall not, without prior written consent of Bank,
enter into any agreement providing for the leasing by it of property
which has been, or is to be, sold or transferred by it to the lessor
thereof.
E. Borrower shall not redeem, purchase, or otherwise acquire
directly or indirectly any shares of any class of its capital stock
without the prior written consent of Bank.
F. Borrower shall not permit the ratio, calculated as of the
last day of each month, of (a) the aggregate amount of all of the
Borrower's consolidated indebtedness and liabilities (including
liabilities under guaranties and contingent liabilities), including
all Obligations (numerator), to (b) Adjusted Tangible Net Worth
(denominator), to be more than 7:1.
G. Borrower's aggregate total realized losses on Third Party
Loans during the term of this Agreement shall not exceed the greater
of $1,000,000.00 or two and one-half per cent (2.5%) of the total
principal amount of all outstanding Third Party Loans, as determined
from the then most recent annual audited financial statements to be
provided by Borrower to Bank pursuant to this Agreement. For the
purposes of this section, a loss on a Third Party Loan is "realized"
when the loss is so identified on the Borrower's financial
statements.
H. Borrower shall, at all times, maintain an Adjusted Tangible
Net Worth of not less than $19,500,000.
I. Borrower shall not in any of its fiscal years pay or declare
any dividend or make any other distribution on account of any class
of its stock that would be treated as a return-of-capital dividend
for income tax purposes.
J. The Borrower may not make, have or acquire any investments,
except (i) investments in "small business concerns", as defined in
the SBA regulations, and (ii) investments that are permitted by 13
CFR Section 107.708, or otherwise permitted by the SBA, and are held
by or subject to a security interest in favor of the Bank or an
Additional Lender.
K. The ratio of (i) the sum of the aggregate outstanding
principal balances of all Third Party Loans evidenced by promissory
notes or other agreements held by the Bank or held by the Collateral
Agent pursuant to section 8 this Lending Agreement and securing the
Borrower's obligations to the Bank and the Additional Lenders
pursuant to the Intercreditor Agreement minus the sum of (w) the
aggregate dollar amount of all Participated Third Party Loans (as
defined below), if any, plus (x) if there is more than one Third
Party Loan to a Person or an Affiliate thereof (each, an "Affiliated
Third Party Loan", and collectively, "Affiliated Third Party Loans")
and if any such Affiliated Third Party Loan is (1) a Participated
Third Party Loan, and (2) not separately identifiable (e.g., by means
of a loan identification number) and Borrower does not have
collateral as security for such loan which is separate and distinct
from the collateral pledged to Borrower for any other applicable
Affiliated Third Party Loan, then the aggregate dollar amount of all
such Affiliated Third Party Loans (excluding Participated Third Party
Loans which are included in such aggregate dollar amount), to (ii)
the sum of (y) the outstanding principal balances of the Borrower's
obligations to the Bank hereunder and the Additional Lenders (in
their capacity as Additional Lenders, and not when acting as Limited
Lenders), plus (z) the total principal amount of all of Borrower's
outstanding commercial paper issued pursuant to facilities made
available to Borrower by any Additional Lenders in their capacity as
Additional Lenders, and not when acting as Limited Lenders shall not
at any time be less than 1.25 to 1.0. As used herein, the term
"Participated Third Party Loan" shall mean a Third Party Loan in
which Borrower has sold a participation interest or made an
assignment (in whole or in part) to any third party.
Within thirty (30) days after the end of each calendar month and
at such other times as requested by Bank, Borrower shall deliver to
Bank a certificate with a schedule of all of its Third Party Loans
and stating which Third Party Loans are held by the Collateral Agent
pursuant to the Intercreditor Agreement and which are held by the
various Limited Lenders, the amount of each participation interest
sold by Borrower in each Third Party Loan, and the amounts of each
such participation interests sold on a "first-out" or "with recourse"
basis. The aforesaid certificate shall also set forth the ratio
referred to in the previous paragraph calculated as of the end of the
month for which the certificate is submitted and shall separately
state the amount of each component required to be used in calculating
that ratio.
L. Borrower shall not permit the average monthly percentage
for the preceding three calendar months of the aggregate unpaid
principal balance of all Third Party Loans contractually delinquent
for a period of more than 30 days to exceed ten percent (10%) of the
aggregate unpaid principal balance of all Third Party Loans.
M. Except as provided in the following sentence, Borrower
shall not make (or enter into any agreement to make) any Third Party
Loan, the terms of which would allow for the maximum aggregate
principal advances of such Third Party Loan to exceed eighty percent
(80%) of the fair market value of the property (as such value is set
forth in an appraisal of such property in form and substance
satisfactory to Bank) which is included in Borrower's security for
the repayment of such Third Party Loan. Notwithstanding the
foregoing, Borrower shall be permitted to make Third Party Loans
where the maximum aggregate advances of such loans can equal a
maximum of 100% of the value of the property (as such value is set
forth in an appraisal of such property in form and substance
satisfactory to Bank) which is included in Borrower's security for
the repayment of such Third Party Loans (such Third Party Loans are
referred to herein as "Maximum LTV Third Party Loans"); provided,
however, that the aggregate amount of all such Maximum LTV Third
Party Loans permitted by the preceding clause shall not at any time
exceed 2.5% of the aggregate amount of all Third Party Loans which
constitute collateral for the Loan.
N. At all times during the term of the Loan, Borrower shall
comply (or cause the compliance) with all of the covenants set forth
in the SWIB Documents on the date of this Agreement, which covenants
(to the extent not inconsistent with the covenants contained in this
Agreement) are hereby incorporated into and made a part of this
Agreement. Borrower's covenant contained in the preceding sentence
shall survive the termination, satisfaction, cancellation or
modification of the SWIB Documents or any of the covenants contained
therein.
8. SECURITY: As security for the repayment of the Credit Facility,
and any and all other loans to or obligations of Borrower hereunder (other
than obligations to the Bank acting in its capacity as a Limited Lender),
including any and all extensions and renewals of the foregoing:
A. Borrower has granted to the Bank a security interest in all
of Borrower's general intangibles, accounts, contract rights, chattel
paper and instruments, and Borrower's books and records pertaining to
any of the foregoing, whether now owned or hereafter acquired, and
all proceeds and products of the foregoing. The aforesaid security
interest shall be a first and paramount lien on the foregoing
collateral, subject to, and, on the terms set forth in the
Intercreditor Agreement, on an equal priority with, the security
interest of the Additional Lenders, all as provided in the General
Security Agreement ("Security Agreement") to be entered into by the
Borrower and the Bank; provided, however, the aforesaid security
interest in Third Party Loans constituting the Limited Lenders'
Collateral shall be subordinate to the security interests of the
Limited Lenders. The Bank's rights with respect to its security
interest in the aforesaid property will be subject to the terms and
conditions of the Security Agreement to be executed by Borrower
contemporaneously herewith.
B. Borrower shall execute and deliver to the Collateral Agent
on behalf of the Bank and the Additional Lenders, at any time or
times at the request of Bank or the Collateral Agent, all financing
statements, security agreements, assignments, letters of authority,
pledges, notices and other agreements, instruments and documents
which Bank may request in a form satisfactory to it, to further
evidence, perfect and maintain the security interests and liens
granted or to be granted to Bank in the aforesaid collateral and to
fully consummate all of the transactions contemplated hereunder and
under any other agreement, instrument or documents hereafter executed
by Borrower and delivered to Bank.
Without limiting the obligations of Borrower pursuant to the
foregoing provisions and except as to Third Party Loans constituting
Limited Lenders' Collateral, Borrower shall immediately endorse to
the order of and deliver to the Collateral Agent all promissory notes
or other instruments evidencing Third Party Loans heretofore or
hereafter made by Borrower and shall assign and deliver to such
Collateral Agent any and all mortgages, security agreements, and
other documents evidencing or securing such Third Party Loans.
9. DEFAULT: Bank may, at its option, upon the occurrence of any of
the following events (each an "Event of Default"), without prior notice to
Borrower, immediately terminate Borrower's right to receive Advances under
this Agreement and immediately declare the outstanding balance of the
Note, together with all interest accrued thereon, to be immediately due
and payable, without notice of any kind and notwithstanding anything to
the contrary herein contained. The following are Events of Default:
A. Any representation or warranty made by Borrower in this
Agreement, or in any certificate of Borrower furnished to Bank
hereunder, shall prove to have been incorrect in any material respect
as of the time when made;
B. If Borrower shall fail to pay any interest or principal
under the Credit Facility when due hereunder, or fail to pay when due
any principal or interest on any of its other indebtedness, if any,
to Bank, whether at maturity or by acceleration or otherwise, and
such failure shall continue uncured for a period of five (5) days
after the applicable due date;
C. Borrower shall default in the performance or observance of
any covenant or agreement contained in this Agreement or in any other
agreement between Borrower and Bank, provided, however, that a breach
in the performance or observance of an affirmative covenant or
agreement contained in section 6 of this Agreement shall only
constitute a default if the breach remains uncured for a period of
twenty (20) days after written notice thereof from Bank to Borrower;
D. Borrower shall:
(1) Apply for or consent to the appointment of a receiver,
trustee or liquidator of Borrower or of all or substantial part of
the assets of Borrower,
(2) Be unable to, or admit in writing its inability to,
pay its debts as they mature,
(3) Make a general assignment for the benefit of
creditors,
(4) Be adjudicated a bankrupt or insolvent,
(5) File a voluntary petition in bankruptcy or a petition
or an answer seeking reorganization or an arrangement with creditors
or to take advantage of any insolvency law, or an answer admitting
the material allegations of a petition filed against Borrower in any
bankruptcy, reorganization or insolvency proceeding, or
(6) Corporate action shall be taken by Borrower for the
purpose of effecting any of the foregoing;
E. A petition for an order, judgment or decree shall be filed,
without the application, approval or consent of Borrower, with any
court of competent jurisdiction, seeking reorganization of Borrower,
or the appointment of a receiver, trustee or liquidator of Borrower
or of all or a substantial part of the assets of Borrower, and such
petition shall remain undismissed for any period of sixty (60) days;
F. Borrower shall default in the payment of principal or
interest on any obligation (other than the Credit Facility) for
borrowed money beyond any period of grace provided with respect
thereto or in the performance of any other agreement, term or
condition contained therein or in any agreement or security interest
relating to any such obligation beyond any period of grace provided
with respect thereto, if the effect of such default is to cause or
permit the holder or holders of such obligation (or a trustee or
agent on behalf of such holder or holders) to cause such obligation
to become due prior to its stated maturity;
G. A final judgment which, together with other outstanding
final judgments against it, exceeds an aggregate of Fifty Thousand
Dollars ($50,000.00) shall be entered against Borrower and remain
outstanding and unsatisfied or unstayed after sixty (60) days from
the date of entry thereof, unless an appeal has been taken and
perfected within the time provided by law and suitable bond has been
provided to stay execution of such judgment; or
H. Borrower shall cease to be a Small Business Investment
Company licensed pursuant to the rules and regulations of the SBA, or
the SBA shall have instituted formal proceedings to revoke or cancel
Borrower's license (either of such events to be hereinafter referred
to as an "SBA Termination Event"); provided, however, that if the
Borrower shall give notice to the Bank of the occurrence of an SBA
Termination Event within ten (10) days after the occurrence thereof,
then such SBA Termination Event shall constitute an event of default
hereunder only upon the expiration of ninety (90) days after the
occurrence of such SBA Termination Event. The Bank shall have no
obligation to make any advances to Borrower under the Credit Facility
after the occurrence of an SBA Termination Event; or
I. Either of the following shall occur:
(1) Bando McGlocklin Capital Corporation ("BMCC") shall
transfer, sell, pledge or hypothecate all or any portion of the
issued and outstanding stock of Borrower (of any class or type) owned
by BMCC from time to time; or
(2) Except for the issued and outstanding stock of
Borrower owned by BMCC, if at any time more than thirty percent (30%)
of the issued and outstanding stock of Borrower, of any class or
type, shall be owned by any one person or entity or Affiliate
thereof.
In the event of any occurrence of any event of default, Borrower
shall pay all Bank's Expenses which may be incurred by Bank with
respect thereto, including reasonable attorneys' fees, and all such
sums shall be and become part of the indebtedness pursuant to this
Agreement. In addition to and not in lieu of any other right or
remedy it may have at any time, Bank at any time and from time to
time at its election, may (but it shall not be required to) do or
perform or comply with or cause to be done or performed or complied
with anything which Borrower may be required to do or comply with
under this Agreement if Borrower shall fail to do so; Borrower shall
reimburse Bank upon demand for any cost or expense Bank may pay or
incur in such respect, together with interest thereon at the Default
Rate of interest set forth herein for the Credit Facility from the
date of such demand until paid. The failure of Bank at any time or
from time to time to exercise any right or remedy, whether arising
from or by virtue of any Event of Default or otherwise, shall not
constitute a waiver of any such right or remedy and shall not impair
the right of Bank to exercise such right or remedy or any other right
or remedy thereafter or to insist upon strict performance. No waiver
of any right or remedy by Bank shall be valid or effective unless
made in writing and signed by an officer of Bank. Any effective
waiver of any right or remedy shall not be deemed to constitute a
waiver of any other right or remedy then existing or which may
thereafter arise or accrue. Upon the occurrence of any Event of
Default, and pursuant to the provisions of this paragraph, Bank may
sue to enforce the obligations of Borrower pursuant to this
Agreement. Presentment, demand, protest and notice of every kind are
hereby expressly waived.
10. CONDITIONS OF DISBURSEMENT: Bank shall be under no obligation
to make any Advances under the Credit Facility pursuant to this Agreement
unless the following conditions shall have been fulfilled:
A. The representations and warranties of Borrower contained
herein shall be true at the time of the initial Advance and at the
time of each subsequent Advance under this Agreement as though such
representations and warranties were made at such time.
B. Borrower shall have performed and complied with all
agreements and conditions required by this Agreement to be performed
or complied with by it.
C. Prior to the initial advance under this Agreement Borrower
shall have delivered to Bank an opinion in writing of Borrower's
legal counsel, Foley & Lardner, dated on or after the date of this
Agreement, to the effect that (i) Borrower is a corporation validly
existing under the laws of the State of Wisconsin, and has the
corporate power and authority to enter into this Agreement and to
make borrowings and execute and deliver the notes as provided for
herein; (ii) the making of this Agreement and compliance with the
terms hereof by Borrower and the execution and delivery of the Note
pursuant hereto do not conflict with or contravene any provision of
the Articles of Incorporation, or By-Laws of Borrower, or any
material indenture, contract or agreement of which such counsel has
knowledge, to which Borrower is a party or to which it is subject (or
that any such contravention has been appropriately waived), or, to
the extent of the business of the Borrower of which such counsel has
knowledge, any statute, rule or regulation binding upon Borrower;
(iii) all corporate action necessary to authorize Borrower to enter
into this Agreement, to perform its obligations hereunder, and to
execute and deliver any and all documents necessary to comply with
the provisions of this Agreement has been taken; (iv) the obtaining
of the Credit Facility hereunder has been authorized and approved by
all necessary corporate action; (v) this Agreement and Note have been
duly executed by the Borrower; (vi) this Agreement, the Note, and the
Security Agreement referred to in this Agreement, constitute the
legal, valid and binding obligations of Borrower and are enforceable
against Borrower in accordance with their terms, subject to customary
bankruptcy exceptions; (vii) no consent of any public body, agency,
commission or board is necessary to the making and assumption of
obligations hereunder by Borrower; and (viii) so far as it is known
to such counsel there is no material litigation, and there are no
proceedings by any public body, agency, or authority, pending or
threatened against Borrower.
D. Borrower shall furnish to Bank copies of its most recent
financial statements prepared in accordance with the provisions of
section 6.A. of this Agreement.
E. Prior to the initial Advance under this Agreement, Borrower
shall furnish Bank with certified resolutions of its Board of
Directors authorizing its entry into this Agreement and performance
of the covenants contained herein.
F. Borrower shall furnish Bank with a certificate of incumbency
with respect to the persons authorized to execute this Agreement, the
Note, and all other documents to be executed in connection with the
transactions which are the subject of this Agreement.
G. Prior to the initial Advance under this Agreement, Borrower
shall deliver to Bank copies of all agreements between Borrower and
the SBA relating to the SBA's guarantee of obligations of Borrower,
together with copies of all outstanding debentures or other evidence
of debt issued by Borrower and guaranteed by the SBA.
H. Prior to the initial Advance hereunder, the Bank and the
parties to the Intercreditor Agreement shall have executed an
amendment to the Intercreditor Agreement in form and substance
satisfactory to the Bank, and copies of all such loan agreements, in
form and substance acceptable to Bank, shall have been delivered to
Bank.
11. MISCELLANEOUS.
A. The provisions of this Agreement shall inure to the benefit
of and be binding upon any successor to any of the parties hereto and
shall extend and be available to any holder of the Note and renewals
thereof. Borrower may not assign or otherwise transfer its rights
under this Agreement except with the prior written consent of the
Bank.
Borrower shall not assign or attempt to assign its rights under
this Agreement. Bank shall have the right to assign, transfer, sell,
negotiate, pledge or otherwise hypothecate this Agreement and any of
its rights and security hereunder, including the Note and any other
Loan Document to any affiliate of Bank or to any bank or other entity
which in Bank's good faith judgment has the capacity to perform
Bank's obligations hereunder. Borrower hereby agrees that all of the
rights and remedies of Bank in connection with the interest so
assigned shall be enforceable against Borrower by such assignee with
the same force and effect and to the same extent as the same would
have been enforceable by Bank but for such assignment. Borrower
agrees that Bank shall have the right to sell participations in the
Loan without the consent of Borrower. Notwithstanding Bank's
participation of any part of the Loan, Bank shall remain responsible
for the performance of all its obligations hereunder.
B. No failure on the part of Bank to exercise, and no delay in
exercising any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by Bank of any right hereunder
preclude any other or future exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
C. In the event that any date provided herein for any payment
by Borrower shall not be a Business Day, such payment date shall be
deemed to be the next following Business Day.
D. All representations and warranties made herein shall survive
the extension of any Advance under this Agreement and the execution
and the delivery of the Note or renewals thereof.
E. All notices, statements, requests and demands herein
provided for shall be deemed to have been given or made when
deposited in the mails, postage prepaid, or delivered to a telegraph
company, charges prepaid, in the case of Borrower, when addressed to
Borrower, 13555 Bishops Court, Suite 205, Brookfield, Wisconsin
53005, Attention: George R. Schonath, Chairman of the Board, and in
the case of Bank, at 120 South LaSalle Street, Chicago, Illinois
60603, Attention: John R. Swift, Senior Vice President; or in such
other manner, as to any party hereto, as such shall designate in a
written notice to the other party hereto.
F. This Agreement shall be deemed to be a contract made under
the laws of the State of Illinois and shall be construed and enforced
in accordance with the laws of said State.
G. Section headings in this Agreement and the other Loan
Documents are for convenience of reference only, and shall not govern
the interpretation of any of the provisions of this Agreement and the
other Loan Documents.
H. This Agreement and all other agreements referred to herein
or delivered in connection herewith shall constitute the entire
agreement between the parties relating to the subject matter hereof,
shall rescind all prior agreements and understandings between the
parties hereto relating to the subject matter hereof, and shall not
be changed or terminated orally.
I. All representations, warranties, and covenants made by
Borrower under this Agreement or any other Loan Document shall be
considered to have been relied upon by Bank and shall survive the
delivery to Bank of the Note and the making of the Loan herein
contemplated regardless of any investigation made by Bank or on its
behalf.
J. Any provision in this Agreement or any other Loan Document
that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions
in that jurisdiction or the operation, enforceability, or validity of
that provision in any other jurisdiction, and to this end the
provisions of all Loan Documents are declared to be severable.
K. Borrower hereby irrevocably submits to the non-exclusive
jurisdiction of any United States federal or Illinois state court
sitting in Chicago in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document and Borrower
hereby irrevocably agrees that all claims in respect of such action
or proceeding may be heard and determined in any such court and
irrevocably waives any objection it may now or hereafter have as to
the venue of any such suit, action or proceeding brought in such a
court or that such court is an inconvenient forum. Nothing herein
shall limit the right of the Bank to bring proceedings against
Borrower in the courts of any other jurisdiction. Any judicial
proceeding by Borrower against the Bank or any affiliate of the Bank
involving, directly or indirectly, any matter in any way arising out
of, related to, or connected with this Agreement or any other Loan
Document shall be brought only in a court in Chicago, Illinois.
L. BORROWER AND THE BANK EACH HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING
OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT AND ANY OTHER
LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR
THEREUNDER.
M. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
BANDO McGLOCKLIN SMALL BUSINESS
INVESTMENT CORPORATION
By:
George R. Schonath,
Chairman of the Board and
Chief Executive Officer
LASALLE NATIONAL BANK
By:
Title:
EXHIBIT 4.4
FIRST AMENDMENT TO LOAN DOCUMENTS
This First Amendment to Loan Documents ("Amendment") is made as of
December 2, 1996, by and between LASALLE NATIONAL BANK, a national banking
association ("Bank"), and BANDO MCGLOCKLIN SMALL BUSINESS INVESTMENT
CORPORATION, a Wisconsin corporation ("Borrower").
PRELIMINARY STATEMENTS
A. Bank and Borrower previously entered into a Loan Agreement dated
as of June 28, 1996 ("Loan Agreement"), pursuant to the terms of which
Lender agreed to make available to Borrower a revolving credit facility of
up to $7,500,000 ("Loan"). The Credit Facility is (i) evidenced by a
Secured Promissory Note dated June 28, 1996, made by Borrower payable to
the order of Bank in the principal amount of $7,500,000 ("Note"), and (ii)
secured by, among other things, a General Security Agreement dated as of
June 28, 1996, by and between Bank, as secured party, and Borrower, as
debtor ("Security Agreement") and the other Loan Documents (as defined in
the Loan Agreement).
B. The Credit Facility currently has a Maturity Date of December 2,
1996. Pursuant to the provisions of Section 2.J. of the Loan Agreement
Borrower has requested, and Bank has agreed, to extend the Maturity Date
for the Loan to October 31, 1997, all on the terms and conditions
contained in this Amendment.
NOW, THEREFORE, in consideration of the foregoing Preliminary
Statements and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENTS
1. Incorporation of Preliminary Statements and Exhibits; Defined
Terms. The foregoing Preliminary Statements and all Exhibits attached
hereto are hereby incorporated into and made a part of this Amendment.
All capitalized terms used in this Amendment and not otherwise defined
herein shall have the meanings ascribed to such terms in the Loan
Agreement.
2. Change in Maturity Date. From and after the date of this
Amendment, all references in the Loan Documents to the "Maturity Date"
shall mean October 31, 1997.
3. Amendments to Loan Agreement. The Loan Agreement is hereby
amended as follows:
(a) The following definition of "Third Party Loans" is hereby added
to Section 1 of the Loan Agreement:
"Third Party Loans shall mean loans made by Borrower to third
parties, where (i) none of such loans or any amount owing to Borrower
with respect thereto, are not currently, or at any time have not
been, past due for more than 59 days; (ii) the terms of any such
loans do not allow interest payable on the principal balance thereof
to be "capitalized" (i.e., added to the principal balance of the
loan); and (iii) no portion of the amount of principal of, or
interest on, payable on any such loans has, at any time, been
forgiven or reduced by Borrower."
(b) Section 3(iv) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof: "funding
Third Party Loans;".
4. Amendment to Security Agreement. The first sentence of Section
3(b) of the Security Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:
"Debtor shall upon the creation thereof endorse to the order of and
deliver to the Collateral Agent (as defined in the Intercreditor
Agreement) all promissory notes or other agreements evidencing Third
Party Loans (as such term is defined in the Lending Agreement between
Secured Party and Debtor), and shall assign and deliver to the
Collateral Agent any and all mortgages, security agreements,
guarantees and other documents evidencing or securing such Third
Party Loans; provided, however, Debtor shall not be required to so
endorse and deliver to the Collateral Agent Third Party Loans
constituting the Limited Lenders' Collateral unless and until such
Third Party Loans shall cease to be part of the Limited Lenders'
Collateral."
5. References to Third Party Loans. All references to "Third Party
Loans" in the Loan Documents (including, without limitation, the
Intercreditor Agreement) shall mean Third Party Loans as defined in the
Loan Agreement.
6. Reaffirmation. The parties hereto agree that except as modified
by this Amendment the Loan Agreement and the other Loan Documents shall
remain unmodified and in full force and effect. All references in the
Loan Documents to "the Loan Documents" henceforth shall mean the Loan
Documents as modified by this Amendment, and the parties hereto reaffirm
their obligations under the Loan Documents as amended hereby.
7. Counterparts. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and any of the parties hereto may execute this Amendment by signing any
such counterpart.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first set forth above.
LASALLE NATIONAL BANK
By:
Title:
BANDO MCGLOCKLIN SMALL BUSINESS INVESTMENT
CORPORATION
By:
Title:
Exhibit 4.5
AMENDED AND RESTATED
LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (this "Agreement") made
as of the 28th day of June, 1996, by and between FIRSTAR BANK MILWAUKEE,
N.A., a national banking association ("Bank") and BANDO McGLOCKLIN SMALL
BUSINESS INVESTMENT CORPORATION, a Wisconsin corporation ("Borrower").
WITNESSETH:
WHEREAS, Bank and Borrower entered into a Loan Agreement dated
October 12, 1988 (the "Revolving Loan Agreement") pursuant to which the
Bank agreed to extend credit to the Company on the terms and subject to
the conditions set forth therein; and
WHEREAS, the Revolving Loan Agreement has previously been
amended several times and Bank and Borrower now desire to amend and
restate the Revolving Loan Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENTS
1. DEFINITIONS. As used in this Agreement, the listed terms
are defined as follows:
Adjusted Tangible Assets shall means all assets except:
(a) trademarks, tradenames, franchises, goodwill, and other similar
intangibles; (b) assets located and notes and receivables due from
obligors domiciled outside the United States of America, Puerto Rico, or
Canada; and (c) accounts, notes, and other receivables due from Affiliates
or employees.
Adjusted Tangible Net Worth shall mean the remainder of
(a) net book value (after deducting related depreciation, obsolescence,
amortization and other proper reserves) at which the Adjusted Tangible
Assets of Borrower would be shown on a balance sheet at such date, but
excluding any amounts arising from write-ups of assets, minus (b) the
amount at which its liabilities (other than preferred stock, capital
stock, surplus, and retained earnings) would be shown on such balance
sheet, and including as liabilities all reserves for contingencies and
other potential liabilities.
Advance shall mean the proceeds of the Credit Facility
advanced from time to time by Bank to Borrower in accordance with the
terms of this Agreement.
Affiliate shall mean any Person directly or indirectly
controlling, controlled by or under direct or indirect common control with
any other Person. A Person shall be deemed to control another Person if
the controlling Person owns ten percent (10%) or more of any class of
voting securities of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management
or policies of the controlled Person, whether through ownership of stock,
by contract or otherwise.
Bank's Expenses shall mean and shall include:
(i) all expenses incurred by Bank in the negotiation,
documentation, administration of this Agreement, the other Loan
Documents and the Loan, including, but not limited to, accounting and
attorney's fees and expenses of any kind and mailing costs;
(ii) all expenses incurred by Bank in connection with any
verification and inspection of the Collateral and/or any audit and
inspection of any Borrower's books, accounts, records, correspondence
and other papers;
(iii) all taxes levied against or paid by Bank (other
than taxes on, or measured by, the income of Bank) and all filing and
recording fees, costs and expenses which may be incurred by Bank in
respect to the filing and/or recording of any document or instrument
relating to the transactions described in this Agreement;
(iv) all costs and expenses (including all allocated costs
of staff counsel which are employees of Bank) incurred by Bank to
collect the collateral (with or without suit), correct any Default or
Event of Default, or enforce any provision of this Agreement; and
(v) all costs, outlays, attorney's fees and expenses of
any kind (including all allocated costs of staff counsel) incurred in
the enforcement of this Agreement or the other Loan Documents or the
defense of legal proceedings involving any claim made against Bank
arising out of this Agreement, the other Loan Documents or the
protection of the Collateral.
Business Day shall mean a day, other than a Saturday,
Sunday or holiday, on which banks are open for business in Milwaukee,
Wisconsin.
Collateral Agent shall mean Firstar Trust Company or any
successor Collateral Agent appointed pursuant to the terms of the
Intercreditor Agreement.
Credit Facility shall mean the revolving credit facility
established pursuant to section 2 of this Agreement and as further defined
therein.
Default shall mean an event or condition the occurrence of
which would, with a lapse of time or the giving of notice or both, become
an Event of Default.
Default Rate shall mean, with respect to any Advance, the
Prime Rate applicable to such Advance plus 2.0% per annum and such rate
shall change on each date that the Prime Rate changes.
Event of Default shall have the meaning set forth in
section 10 herein.
Funding Date shall mean the date of each Advance made
hereunder.
Intercreditor Agreement shall mean that certain
Intercreditor Agreement dated as of October 12, 1988, as amended from time
to time, among the financial institutions that are or may become parties
thereto.
Loan shall mean all indebtedness owed by Borrower to Bank
arising under this Agreement or the Note.
Loan Documents shall mean this Agreement, the Note and all
other agreements and documents previously, now or hereafter delivered to
Bank pursuant to or in connection with the transactions contemplated
hereby or in connection with the Revolving Loan Agreement, and any
amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
Maturity Date shall mean October 31, 1996 or such earlier
date on which Bank declares the Note to be immediately due and payable
pursuant to section 10 of this Agreement.
Note shall mean the Revolving Note executed and delivered
by Borrower to Bank pursuant to the terms of this Agreement, in the form
of Exhibit A attached hereto.
Obligations shall mean any and all debts, obligations and
liabilities of Borrower to Bank arising out of the this Agreement, the
Note and the other Loan Documents, as amended from time to time, and all
transactions thereunder, whether heretofore, now or hereafter made,
incurred or created, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, whether for
principal interest or other debts, obligations or liabilities thereunder,
and whether or not any or all such debts, obligations and liabilities are
or become bared by any statute of limitations or otherwise unenforceable.
Person means an individual, corporation, partnership, joint
venture, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.
Prime Rate shall mean at any time, and from time to time,
the rate of interest then most recently announced by Bank as its "prime
rate", which is not necessarily Bank's lowest or most favorable rate of
interest at any time.
SWIB Documents shall mean (i) the Second Amended and
Restated Agreement dated November 11, 1991, by and between the State of
Wisconsin Investment Board ("SWIB"), as lender, and Borrower, as amended,
(ii) the Master Purchase Agreement dated March 3, 1995, as amended on
April 14, 1995, by and between SWIB and Borrower, and (iii) all documents
and instruments executed and/or delivered by Borrower and/or SWIB which
evidences, services, modifies or amends the transactions contemplated by
the documents described in clauses (i) and (ii) above.
2. REVOLVING CREDIT FACILITY. Subject to the terms and
conditions hereinafter set forth in this Agreement, Bank agrees to make
available to Borrower a revolving credit facility (the "Credit Facility"),
pursuant to which Borrower may obtain Advances from Bank, repay such
Advances and reborrow, provided, however, the aggregate principal balance
of Advances outstanding at any time shall not exceed $12,500,000 less the
aggregate outstanding principal amount of all commercial paper created by
Borrower pursuant to section 5. Except for Advances to retire commercial
paper outstanding pursuant only to the commercial paper facility made
available to Borrower by Bank, in no event shall Borrower be entitled to
receive any Advance if the making of such Advance would cause the
aggregate amount of all loans made to Borrower by Bank and the Additional
Lenders to exceed 80% of the value of the collateral then held by the
Collateral Agent.
A. Advances under the Credit Facility shall be evidenced
by the Note in the maximum amount of the Credit Facility. Although the
Note shall be expressed to be payable in the full amount of Credit
Facility specified above, Borrower shall be obligated to pay only the
amount actually disbursed to or for the account of Borrower, together with
interest on the unpaid balance of the sums so disbursed, which remain
outstanding from time to time as shown on the records of Bank. The Note
shall be dated as of the date of this Agreement and shall be payable in
full on or before the Maturity Date.
B. The outstanding principal balance under the Note shall
bear interest from time to time at a fluctuating rate per annum equal to
the Prime Rate and such rate shall change on each date that such Prime
Rate changes. During the continuance of an Event of Default, the
outstanding principal balance under the Note shall bear interest at the
Default Rate. All interest shall be calculated for actual days elapsed on
the basis of a 360-day year. Interest accrued on each Advance shall be
payable in arrears on (i) the first day of each calendar month, commencing
with the first such date to occur after the date hereof, (ii) on any date
on which the Advance is prepaid, whether due to acceleration or otherwise,
and (iii) on the Maturity Date. Interest shall not be payable for the day
of any payment on the amount paid if payment is received by Bank prior to
noon (Milwaukee time). If any payment of principal or interest under the
Note shall become due on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day and, in the case of a
payment of principal, such extension of time shall be included in
computing interest due in connection with such payment; provided that for
purposes of section 10 hereof, any payments of principal described in this
sentence shall be considered to be "due" on such next succeeding Business
Day.
C. All disbursements made to Borrower under the Credit
Facility shall be entered as debits on Bank's records. Bank shall also
record as credits all payments made by Borrower on the indebtedness under
the Credit Facility. At least once a month, Bank shall render a statement
of account showing as of its date the indebtedness owed on the Credit
Facility debited and credited as set forth above. Unless within thirty
(30) days of the date of said statement of account Borrower notifies Bank
in writing of an objection to said statement, there shall be a rebuttable
presumption that said statement is correct.
D. All disbursements to Borrower under the Credit
Facility shall be made only in whole multiples of $10,000. All payments
by Borrower to Bank with respect to repayment of the Credit Facility shall
be made only in whole multiples of $10,000.
E. Duly authorized officers or employees of Borrower as
designated by Borrower to Bank by telephonic notice, confirmed in writing,
if requested by Bank, may from time to time contact a designated officer
or employee of Bank, requesting that Bank increase or decrease the total
principal amount of the Credit Facility then outstanding not to exceed the
amount stated above. Bank shall immediately increase or decrease the
principal balance then outstanding under the Note. All such requests must
be received by Bank no later than 3:00 p.m. All requests received after
that time may be processed as if received the following Business Day.
(1) Each such request for an increase or decrease of
the principal amount outstanding under the Note shall be confirmed
immediately in writing by the authorized person making the request and
mailed to the attention of the person to whom the request was made.
(2) In the event such a request by Borrower results
in an increase in the total principal amount then outstanding, Bank shall
credit the amount of said increase to Borrower's checking account
maintained with the Bank. In the event that such request results in a
decrease to the total principal amount then outstanding, Bank shall debit
Borrower's checking account maintained with Bank and the reduction shall
be made to the total principal amount then outstanding on the Note.
F. All payments of the Obligations hereunder shall be
made, without set-off, deduction, or counterclaim, in immediately
available funds to Bank at Bank's address specified herein, by noon (local
time) on the date when due. All of Bank's Expenses, fees, commissions,
costs, expenses, and other charges under or pursuant to the Loan
Documents, and all payments made and out-of-pocket charges under or
pursuant to the Loan Documents will be charged as Advances to the Loan as
of the date due from Borrower or the date paid or incurred by Bank, as the
case may be.
G. If the adoption of or change in any law or any
governmental or quasi-governmental rule, regulation, policy, guidelines or
directive (whether or not having the force of law), or any interpretation
thereof, or the compliance of Bank therewith,
(i) subjects Bank to any tax, duty, charge or
withholding on or from payments due from Borrower (excluding federal and
state taxation of the overall net income of Bank), or changes the basis of
such taxation of payments to Bank in respect of its Advances or other
amounts due it hereunder, or
(ii) imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar
requirement against assets of, deposits with or for the account of, or
credit extended by, Bank, or
(iii) imposes any other condition, and the result
is to increase the costs of Bank of making, funding or maintaining loans
or reduces any amount receivable by Bank in connection with loans, or
requires Bank to make any payment calculated by reference to the amount of
loans held or participated in or interest received by it, by an amount
deemed material by Bank,
then, within fifteen (15) days of demand by Bank, Borrower shall pay Bank
that portion of such increased expenses incurred or reduction in an amount
received which Bank determines is attributable to making, funding and
maintaining the Advances and the revolving credit facility.
H. If Bank determines the amount of capital required or
expected to be maintained by Bank or any corporate entity controlling Bank
is increased as a result of a Change (as defined below), then, within
fifteen (15) days of demand by Bank, Borrower shall pay Bank the amount
necessary to compensate for any shortfall in the rate of return on the
portion of such increased capital which Bank determines is attributable to
this Agreement, its Advances, or its obligation to make Advances hereunder
(after taking into account Bank's policies as to capital adequacy).
"Change" means (i) any change after the date of this Agreement in the
Risk-Based Capital Guidelines (as defined below) or (ii) any adoption of
or change in any other law, governmental or quasi-governmental rule,
regulation, policy, guideline, interpretation, or directive (whether or
not having the force of law) after the date of this Agreement which
affects the amount of capital required or expected to be maintained by
Bank or any corporation controlling any Bank. "Risk-Based Capital
Guidelines" means (i) the risk-based capital guidelines in effect in the
United States on the date of this Agreement, including transition rules,
and (ii) the corresponding capital regulations promulgated by regulatory
authorities outside the United State implementing the July 1988 report of
the Basle Committee on Banking Regulation and Supervisory Practices
Entitled "International Convergence of Capital Measurements and Capital
Standards", including transition rules, and any amendment to such
regulations adopted prior to the date of this Agreement.
I. Bank shall deliver a written statement of Bank as to
the amount due, if any, under sections 2.G. or 2.H. hereof. Such written
statement shall set forth in reasonable detail the calculations upon which
Bank determined such amount and shall be final, conclusive and binding on
Borrower in the absence of manifest error. Unless otherwise provided
herein, the amount specified in the written statement shall be payable on
demand after receipt, by Borrower of the written statement. The
obligations of Borrower under sections 2.G. and 2.H. hereof shall survive
payment of the Obligations and termination of this Agreement.
J. Bank's obligations to make Advances under this
Agreement shall terminate at 5:00 p.m. (Milwaukee time) on the Maturity
Date. Notwithstanding the foregoing, (i) upon the occurrence of an Event
of Default, Bank may immediately terminate its obligations to make
Advances under this Agreement without notice or demand and (ii) so long as
any Default shall have occurred and remains uncured, Bank shall have no
obligation to make any Advance under the Credit Facility. On the Maturity
Date, the Loan, the Note, and all other Obligations of Borrower to Bank
shall be immediately due and payable in full, without notice or demand and
shall be repaid to Bank by a wire transfer of immediately available
federal funds.
3. USE OF CREDIT FACILITY. Borrower shall be entitled to
Advances under the Credit Facility solely for the following purposes:
(i) funding for any proper corporate purposes not prohibited by the rules
and regulations of the United States Small Business Administration (the
"SBA"), except that such disbursements may not be used for investments in
securities, cash, cash equivalents or investment instruments, provided,
however, that nothing herein shall prohibit the use of such funds for
investing in "small business concerns", as defined in SBA regulations;
(ii) funding payment obligations of Borrower with respect to reverse
repurchase agreements with financial institutions; (iii) funding payments
of dividends (to the extent permitted by this Agreement); (iv) funding
loans by Borrower to third parties ("Third Party Loans"); (v) funding
Borrower's repurchase of participation interests in Third Party Loans;
(vi) funding payment obligations of Borrower to Limited Lenders (as
defined in section 8.A. hereof); (vii) except as provided in the following
clause (viii), funding Borrower's retirement of commercial paper
outstanding pursuant to a facility made available to Borrower by any Bank;
or (viii) after the occurrence and during the continuance of a Default or
Event of Default, funding Borrower's retirement of commercial paper
outstanding pursuant only to the commercial paper facility made available
to Borrower by Bank (other than when acting as a Limited Lender) pursuant
to section 5.A. of this Agreement.
A. Upon the occurrence and during the continuance of
a Default or Event of Default, Borrower authorizes Bank to make an Advance
under the Credit Facility in an amount necessary to retire any commercial
paper outstanding under the commercial paper facility made available by
Bank to Borrower pursuant to section 5.A. of this Agreement. Such Advance
may be made by Bank in its sole discretion, and may be made by Bank
directly to the holders of the commercial paper which is to be so retired.
4. AVAILABILITY FEE. As additional compensation to Bank
for its agreement to make the Credit Facility available to Borrower,
Borrower agrees to pay to Bank an Availability Fee to be calculated and
paid as follows:
A. The Availability Fee for each month shall be
1/12th of 1/2% of $12,500,000, payable in advance on the 27th day of the
preceding month.
B. Borrower may terminate this Agreement upon (i)
written notice to Bank, stating that Borrower irrevocably terminates its
right to receive any new advances under the Credit Facility and its
Commercial Paper Relationship, and (ii) payment of the entire outstanding
balance of the Credit Facility and Commercial Paper Relationship, together
with all interest accrued and unpaid thereon, and any and all other fees
and amounts which are then due to Bank pursuant to this Agreement. After
such termination, Borrower shall have no further obligation to pay the
monthly Availability Fee for calendar months succeeding the month in which
the said termination occurs.
5. COMMERCIAL PAPER.
A. Bank has agreed to provide to Borrower a commercial
paper facility (the "Commercial Paper Relationship" or the
"Relationship"), and Bank may continue to provide the Commercial Paper
Relationship to Borrower during the term of this Agreement. This
Relationship shall be evidenced by documents and agreements substantially
in the form as are presently used between Bank and Borrower except to the
extent such documents may be modified from time to time as changes are
made by Bank to the documents and agreements customarily used by Bank for
non-rated commercial paper and shall be subject to such terms and
conditions as are customarily imposed by Bank. Subject to section 5.B.
below, Borrower agrees that the principal amount of the commercial paper
issued through Bank (other than when acting as a Limited Lender) pursuant
to such Relationship shall not exceed the maximum principal amount of the
Credit Facility authorized hereunder less the principal amount outstanding
under the Note. Copies of the documents and agreements evidencing the
Commercial Paper Relationship currently provided by Bank are attached
hereto as Exhibit B.
B. In the event Bank elects to act as a Limited Lender
from time to time, Borrower may, if Bank agrees, issue through Bank
commercial paper in an aggregate principal amount exceeding the amount
described in section 5.A. above, if separate lending agreements are
entered into between Borrower and Bank.
6. REPRESENTATIONS AND WARRANTIES. Borrower represents and
warrants by its execution of this Agreement on the date hereof, and by its
request of each Advance shall be deemed to remake on each Funding Date,
the following matters set forth in this section 6. Each representation
and warranty shall be deemed to be material and shall be conclusively
presumed to have been relied upon by Bank regardless of any information
possessed or any investigation made by Bank. The following
representations, warranties and covenants shall be cumulative and in
addition to all other representations, warranties and agreements which
Borrower shall give or cause to be given to Bank, either now or hereafter.
A. Borrower is a corporation duly organized and existing
under the laws of the State of Wisconsin and is duly authorized under all
applicable provisions of law to carry on its business as presently
conducted. Borrower has the corporate power to enter into this Agreement
and to borrow hereunder.
B. The making of this Agreement and compliance with the
terms hereof by Borrower have been duly authorized by all necessary
corporate action and do not conflict with and are not in contravention of
(1) any provision of the Articles of Incorporation and By-Laws of
Borrower, (2) any indenture, contract or agreement to which Borrower is a
party or to which it is subject, or (3) any law, ordinance, statute, rule
or regulation binding upon Borrower.
C. Borrower is not a party to any litigation or
administrative proceedings, nor so far as it is known by Borrower is any
litigation or administrative proceeding threatened against it which would,
if adversely determined, cause any material adverse change in Borrower's
financial condition or in the conduct of its business, except as
previously disclosed to and approved by the Bank in writing prior to the
date hereof.
D. All copies of documents, contracts, agreements and
assignments which Borrower has furnished to Bank are true and correct
copies. All financial statements heretofore furnished to Bank are true
and correct in all material respects subject to customary year end
adjustments. There has been no material adverse change in the property or
business operations of Borrower since the date of the last financial
statement, except pursuant to the conduct of its ordinary business, and
except as shall have been disclosed in writing by Borrower to Bank prior
to the date of execution of this Agreement.
E. Borrower has paid, and will pay when due, all federal,
state and local taxes, and will promptly prepare and file returns for
accrued taxes.
F. Borrower has filed all statements, if any, which it
may be required to file under the provisions of any applicable state or
federal securities laws or regulations or if any such statements have not
been filed such failure shall not have any material adverse effect upon
the Borrower. Borrower is not engaged in the business of carrying margin
stock within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System.
G. This Agreement is legal, valid, binding upon, and
enforceable against Borrower in accordance with its terms, except to the
extent enforcement is limited by laws relating to bankruptcy or
insolvency.
H. Borrower owns all of its assets free and clear of any
liens or security interests, except liens and security interests permitted
pursuant to section 8.B. of this Agreement.
I. Borrower has all licenses (including all licenses
required by the SBA in order for Borrower to operate as a "Small Business
Investment Company"), registrations, permits, and franchises necessary for
the conduct of its business which violation or failure to obtain would
materially and adversely affects its business or condition (financially or
otherwise).
J. Borrower is not in violation of any laws, ordinances,
or governmental rules or regulations to which it or its business is
subject (including, without limitation, the provisions of 13 C.F.R.
Section 107.210 (1995) relating to small business investment companies).
7. AFFIRMATIVE COVENANTS OF BORROWER. Borrower covenants and
agrees as follows:
A. Borrower shall furnish Bank monthly financial
statements (i.e., consolidated balance sheets and consolidated income
statements) no later than thirty (30) days subsequent to each month's end
for such month. Together with the monthly financial statements, Borrower
shall provide a report identifying all the banks through which the
Borrower is then issuing commercial paper, and the principal amount of
commercial paper then outstanding issued through each bank. Within ninety
(90) days after the end of each fiscal year of Borrower, Bank shall be
provided with an audited income statement for such year and an audited
balance sheet as of the end of such year. All statements are to be
prepared in accordance with generally accepted principles of auditing and
accounting applied on a basis consistent with the accounting practices of
Borrower reflected in the audited financial statements for the preceding
fiscal year, and year end statements are to be certified without material
qualification by Price Waterhouse, by any other "big six" national
accounting firm, or by any independent certified public accountants of
recognized standing selected by Borrower and acceptable to Bank. Borrower
shall also furnish to Bank all other financial statements reasonably
requested by Bank.
Borrower shall also furnish to Bank copies of (i) all
financial statements, reports and returns as it shall send to its
stockholders, (ii) all regular, periodic, or special reports (including
but not limited to semi-annual reports on Form N-SAR and amendments to its
registration statements on Form N-5) which it is or may be required to
file with the Securities & Exchange Commission or any governmental
department, bureau, commission or agency succeeding to the functions of
the Securities & Exchange Commission, and (iii) all examination reports of
its affairs which it shall receive from the SBA; all of which documents
shall be delivered to Bank forthwith as and when sent, filed, or received
by Borrower.
Bank may at any time, and without notice to or consent
of Borrower, deliver to any participant in the Advances which are the
subject of this Agreement, copies of all financial statements, reports, or
any other documents delivered to Bank hereunder.
B. Borrower shall keep proper books of record and
accounts and, upon application, give any representative of Bank access
during normal business hours to, and permit him or her to examine, any and
all books, records and documents in Borrower's possession relating to the
financial affairs of Borrower and to inspect any of its properties.
C. Together with each of the monthly financial statements
and the year-end audited financial statements to be provided pursuant to
section 7.A. above, Borrower shall also furnish to Bank a certificate
signed by its President or Chief Financial Officer stating that he or she
has no knowledge of any events of default which have occurred under this
Agreement or of any matters which would with the passage of time
constitute an event of default hereunder, or if he or she shall have
obtained knowledge of any such default or potential default he or she
shall disclose in such statement the default or potential default and the
nature thereof. Each such certificate shall be dated as of the last day
of the month or year for which it is submitted.
D. Borrower shall maintain all insurable property, real
and personal, owned by it insured at all times against loss or damage by
fire or other normally insured hazards through a responsible insurance
carrier selected by it in such amounts and to the extent of the coverage
as is customary for companies engaged in similar businesses and in similar
locations, but in no event shall said insurance be less than that which
Bank, in good faith, believes is sufficient and adequate to protect the
operating value of the property of Borrower. Borrower shall also carry
insurance to cover its interest as mortgagee in the property securing the
Third Party Loans to be effective in the event of any failure of the owner
of such property to carry property insurance with respect thereto. The
Collateral Agent (used herein as defined in the Intercreditor Agreement)
shall be named as secured party loss payee in all such policies. Copies
of all such insurance policies shall be delivered to Bank.
E. Borrower shall keep the properties that are material
to the operation of its business, whether owned or leased, in good
condition, repair and working order.
F. Borrower shall duly pay and discharge all lawful
taxes, assessments and governmental charges upon it or against its
properties prior to the date on which penalties are attached thereto,
unless and to the extent only that the same shall be contested in good
faith and by appropriate proceedings by the Borrower and provided Borrower
has established appropriate reserves for the payment of said taxes in
accordance with generally accepted accounting practices.
G. Borrower shall do all things necessary to maintain its
corporate existence, to preserve and keep in full force and effect its
rights and franchises necessary to continue its businesses, and to comply
with all applicable laws, regulations and ordinances (including without
limitation any applicable state or federal securities laws) with respect
to which the failure to comply would have a material adverse effect on the
Borrower.
H. Borrower shall pay to Bank, upon demand, all
reasonable charges and expenses incurred by Bank for attorney's fees and
expenses of litigation, in seeking relief from the automatic stay or any
other bankruptcy proceedings, or in connection with or in any way related
to Bank's relationship with Borrower, with respect to the transactions
contemplated by this Agreement, whether hereunder or otherwise, including
without limitation those incurred or expended in connection with the
preparation of this Agreement or any amendment hereto, extension of the
Credit Facility hereunder, and the protection or enforcement of Bank's
rights hereunder.
In addition thereto, Borrower shall pay to Bank all
reasonable charges and expenses incurred by Bank, of every kind or
description, arising subsequent to the occurrence of any Event of Default,
including but not limited to reasonable attorneys fees and expenses of
litigation.
I. With respect to each of its Plans, if any, under the
Employee Retirement Income Security Act ("ERISA") and the Internal Revenue
Code (the "Code"), Borrower represents and warrants that:
1. all funding requirements have been met and will
continue to be met on an annual basis;
2. no "prohibited transactions" have occurred and
that none of the transactions which are the subject of this Agreement
constitute prohibited transactions under the rulings or regulations of
ERISA or the Code;
3. all such Plans are and will continue to be
qualified Plans; and
4. the Borrower has complied with, and will continue
to comply with, all reporting and disclosure requirements under ERISA, the
Code, and the applicable rulings and regulations with respect to which the
failure to so comply would have a material adverse effect on the Borrower.
J. Borrower shall maintain its primary operating account
at Bank.
K. Borrower shall indemnify, defend and hold Bank, and
its officers, directors, employees, and agents, harmless from and against
all claims, injury, damage, loss, costs (including attorneys' fees and
costs) and liability of any and every kind to any persons or property by
reason of (i) the breach of any representation or warranty herein or in
any other Loan Document, (ii) the failure to fulfill any obligation under
this Agreement or under any other Loan Document, or (iii) any other matter
relating to, or action taken by Bank in connection with, the Credit
Facility, unless caused by the gross negligence or willful misconduct of
Bank.
8. NEGATIVE COVENANTS OF BORROWER: Borrower covenants and
agrees as follows:
A. Borrower shall not, without the prior written consent
of Bank, create, incur, assume or have outstanding, any indebtedness for
money except:
(1) the Loan under this Agreement or any renewals
thereof;
(2) indebtedness for other borrowings payable to
Bank;
(3) other indebtedness as shown on the financial
statements presented to Bank prior to the closing of the transactions
contemplated hereunder;
(4) unsecured current liabilities incurred in the
ordinary course of business;
(5) debentures issued by Borrower which are
guaranteed by the SBA;
(6) revolving credit facilities (the "Permitted
Credit Facilities") extended by First Bank (N.A.), LaSalle National Bank
and other lenders pursuant to the Intercreditor Agreement (collectively
the "Additional Lenders");
(7) subject to the limitations in 8.B. below,
indebtedness for loans from the State of Wisconsin Investment Board and/or
other institutional lenders (which lenders may include without limitation
Bank or any one or more of the Additional Lenders, but may not include
other financial institutions of which the deposits are insured by the FDIC
or FSLIC) (collectively, the "Limited Lenders") which are secured only by
specific Third Party Loans (the "Limited Lenders' Collateral");
(8) indebtedness incurred for the purchase of capital
assets provided said indebtedness is unsecured or is secured only by
purchase money security interests in the assets so purchased;
(9) indebtedness for commercial paper issued pursuant
to facilities made available to Borrower by Bank and First Bank, (N.A.);
and
(10) indebtedness under reverse repurchase agreements
with Bank or an Additional Lender, if such agreements are secured by
United States Treasury securities the Borrower owns on the date hereof.
B. Borrower shall not, without prior written consent of
Bank, create, suffer, or permit to be created any mortgage, pledge,
security interest, assignment, encumbrance or other lien upon any real
property, equipment, fixtures, accounts, contract rights, chattel paper,
instruments, documents, general intangibles, inventory, or any other
property now owned or hereafter acquired by it, except (i) the Limited
Lenders' security interests in the Limited Lenders' Collateral as
described in the next paragraph; (ii) the purchase money security
interests permitted in Section 8.A above; (iii) existing liens, charges or
encumbrances specifically indicated on the financial statements previously
delivered to Bank by Borrower; (iv) liens for taxes, assessments or
governmental charges not delinquent or being contested in good faith by
Borrower; (v) construction lien claims not delinquent; (vi) liens or
deposits in connection with workmen's compensation or other insurance or
to secure the performance of bids, trade contracts, leases, public or
statutory obligations of like nature incurred in the ordinary course of
business; (vii) security interests in favor of Bank, the Collateral Agent
and the Additional Lenders; and (viii) security interests, if any, in
United States Treasury securities now owned and presently subject to
reverse repurchase agreements with Bank or an Additional Lender, to the
extent such investments are permitted under section 8.K. below.
A lender can only provide loans as a Limited Lender
if, at the time the Limited Lender makes a loan to Borrower, the Third
Party Loans pledged to the Limited Lender to secure the loan do not have
outstanding principal balances exceeding 110% of all obligations of
Borrower to the Limited Lender plus commercial paper issued through the
Limited Lender in its capacity as a Limited Lender.
C. Borrower shall not merge with or into or consolidate
with or into any other corporation or entity, or sell, lease, transfer or
otherwise dispose of all or any substantial part of its property, assets
or business (other than by sales made in the ordinary course of business
and sales of participation interests in Third Party Loans).
D. Borrower shall not, without prior written consent of
Bank, enter into any agreement providing for the leasing by it of property
which has been, or is to be, sold or transferred by it to the lessor
thereof.
E. Borrower shall not redeem, purchase, or otherwise
acquire directly or indirectly any shares of any class of its capital
stock without the prior written consent of Bank.
F. Borrower shall not permit the ratio, calculated as of
the last day of each month, of (a) the aggregate amount of all of
Borrower's indebtedness and liabilities (including liabilities under
guaranties and contingent liabilities), including all Obligations
(numerator), to (b) Borrower's Adjusted Tangible Net Worth (denominator),
to be more than 7:1.
G. Borrower's aggregate total realized losses on Third
Party Loans during the term of this Agreement shall not exceed the greater
of $1,000,000 or two and one-half per cent (2.5%) of the total principal
amount of all outstanding Third Party Loans, as determined from the then
most recent annual audited financial statements to be provided by Borrower
to Bank pursuant to this Agreement. For the purposes of this section, a
loss on a Third Party Loan is "realized" when the loss is so identified on
Borrower's financial statements.
H. Borrower shall, at all times, maintain an Adjusted
Tangible Net Worth of not less than $19,500,000.
I. Borrower shall not in any of its fiscal years pay or
declare any dividend or make any other distribution on account of any
class of its stock that would be treated as a return-of-capital dividend
for income tax purposes.
J. Borrower may not make, have or acquire any
investments, except (i) investments in "small business concerns", as
defined in the SBA regulations, and (ii) investments that are permitted by
13 CFR Section 107.708, or otherwise permitted by the SBA, and are held
by or subject to a security interest in favor of Bank or an Additional
Lender.
K. The ratio of (i) the sum of the aggregate outstanding
principal balances of all Third Party Loans evidenced by promissory notes
or other agreements held by Bank or the Collateral Agent pursuant to
section 9 of this Agreement and securing Borrower's obligations only to
Bank and the Additional Lenders pursuant to the Intercreditor Agreement
minus the sum of (w) the aggregate dollar amount of all Participated Third
Party Loans (as defined below), if any, plus (x) if there is more than one
Third Party Loan to a Person or an Affiliate thereof (each, an "Affiliated
Third Party Loan", and collectively, "Affiliated Third Party Loans") and
if any one of such Affiliated Third Party Loans is (1) a Participated
Third Party Loan, and (2) not separately identifiable (e.g., by means of a
loan identification number) and Borrower does not have collateral as
security for such loan which is separate and distinct from the collateral
pledged to Borrower for any other applicable Affiliated Third Party Loan,
then the aggregate dollar amount of all such Affiliated Third Party Loans
(excluding Participated Third Party Loans which are included in such
aggregate dollar amount of Affiliated Third Party Loans), to (ii) the sum
of (y) the outstanding principal balances of Borrower's obligations to
Bank hereunder and the Additional Lenders (in their capacity as Additional
Lenders, and not when acting as Limited Lenders), plus (z) the total
principal amount of all of Borrower's outstanding commercial paper issued
pursuant to facilities made available to Borrower by Bank and any
Additional Lenders (in their capacity as Additional Lenders, and not when
acting as Limited Lenders) shall not at any time be less than 1.25 to 1.0.
As used herein, the term "Participated Third Party Loan" shall mean a
Third Party Loan in which Borrower has sold a participation interest or
made an assignment (in whole or in part) to any third party.
Within thirty (30) days after the end of each calendar
month and at such other times as requested by Bank, Borrower shall deliver
to Bank a certificate with a schedule of all of its Third Party Loans and
stating which Third Party Loans are held by the Collateral Agent pursuant
to the Intercreditor Agreement and which are held by the Limited Lenders,
the amount of each participation sold by Borrower in each Third Party
Loan, and the amounts of each such participation interests sold on a
"first-out" or "with recourse" basis. The aforesaid certificate shall
also set forth the ratio referred to in the previous paragraph calculated
as of the end of the month for which the certificate is submitted and
shall separately state the amount of each component required to be used in
calculating that ratio.
L. Borrower shall not permit the average monthly
percentage for the preceding three calendar months of the aggregate unpaid
principal balance of all Third Party Loans contractually delinquent for a
period of more than 30 days to exceed ten percent (10%) of the aggregate
unpaid principal balance of all Third Party Loans.
M. Except as provided in the following sentence, Borrower
shall not make (or enter into any agreement to make) any Third Party Loan,
the terms of which would allow for the maximum aggregate principal
advances of such Third Party Loan to exceed eighty percent (80%) of the
fair market value of the property (as such value is set forth in an
appraisal of such property in form and substance satisfactory to Bank)
which is included in Borrower's security for the repayment of such Third
Party Loan. Notwithstanding the foregoing, Borrower shall be permitted to
make Third Party Loans where the maximum aggregate advances of such loans
can equal a maximum of 100% of the value of the property (as such value is
set forth in an appraisal of such property in form and substance
satisfactory to Bank) which is included in Borrower's security for the
repayment of such Third Party Loans (such Third Party Loans are referred
to herein as "Maximum LTV Third Party Loans"); provided, however, that the
aggregate amount of all such Maximum LTV Third Party Loans permitted by
the preceding clause shall not at any time exceed 2.5% of the aggregate
amount of all Third Party Loans which constitute collateral for the
Obligations.
N. Borrower shall comply (or cause the compliance) with
all of the covenants set forth in the SWIB Documents on the date of this
Agreement, which covenants (to the extent not inconsistent with the
covenants contained in this Agreement) are hereby incorporated into and
made a part of this Agreement. Borrower's covenant contained in the
preceding sentence shall survive the termination, satisfaction,
cancellation or modification of the SWIB Documents or any of the covenants
contained therein.
O. Borrower shall not make advances to its customers to
permit its customers to meet their debt service obligations owed to
Borrower, nor shall Borrower capitalize any interest payments owed to
Borrower from its customers.
9. SECURITY: As security for the repayment of the Credit
Facility, and any and all other loans to or Obligations of Borrower
hereunder (other than obligations to Bank acting in its capacity as a
Limited Lender), including any and all extensions and renewals of the
foregoing:
A. Borrower has granted to Bank a security interest in
all of Borrower's general intangibles, accounts, contract rights, chattel
paper and instruments, and Borrower's books and records pertaining to any
of the foregoing, whether now owned or hereafter acquired, and all
proceeds and products of the foregoing. The aforesaid security interest
shall be a first and paramount lien on the foregoing collateral, subject
to, and, on the terms set forth in the Intercreditor Agreement, on an
equal priority with, the security interest of the Additional Lenders, all
as provided in the General Security Agreement between Borrower and Bank
dated as of March 26, 1993, as the same has and may be amended from time
to time (the "Security Agreement"); provided, however, the aforesaid
security interest in Third Party Loans constituting the Limited Lenders'
Collateral shall be subordinate to the security interests of the Limited
Lenders. Bank's rights with respect to its security interest in the
aforesaid property will be subject to the terms and conditions of the
Security Agreement. Borrower specifically acknowledges and agrees that
the payment of the Obligations is secured by all security interests,
mortgages, pledges and hypothecations previously or hereafter granted by
Borrower in favor of Bank or in favor of the Collateral Agent for the
benefit of Bank, including without limitation, the Security Agreement.
B. Borrower shall execute and deliver to the Collateral
Agent on behalf of Bank and the Additional Lenders, at any time or times
at the request of Bank or the Collateral Agent, all financing statements,
security agreements, assignments, letters of authority, pledges, notices
and other agreements, instruments and documents which Bank may request in
a form satisfactory to it, to further evidence, perfect and maintain the
security interests and liens granted or to be granted to Bank in aforesaid
collateral and to fully consummate all of the transactions contemplated
hereunder and under any other agreement, instrument or documents hereafter
executed by Borrower and delivered to Bank.
Without limiting the obligations of Borrower pursuant
to the foregoing provisions and except as to Third Party Loans
constituting Limited Lenders' Collateral, Borrower shall immediately
endorse to the order of and deliver to the Collateral Agent all promissory
notes or other instruments evidencing Third Party Loans heretofore or
hereafter made by Borrower and shall assign and deliver to such Collateral
Agent any and all mortgages, security agreements, and other documents
evidencing or securing such Third Party Loans.
10. DEFAULT: Bank may, at its option, upon the occurrence of
any of the following events (each an "Event of Default), without prior
notice to Borrower, immediately terminate Borrower's right to receive
Advances under this Agreement and immediately declare the outstanding
balance of the Note, together with all interest accrued thereon, to be
immediately due and payable, without notice of any kind and
notwithstanding anything to the contrary herein contained. The following
are Events of Default:
A. Any representation or warranty made by Borrower in
this Agreement, or in any certificate of Borrower furnished to Bank
hereunder, shall prove to have been incorrect in any material respect as
of the time when made;
B. If Borrower shall fail to pay any interest or
principal under the Credit Facility when due hereunder, or fail to pay
when due any principal or interest on any of its other indebtedness, if
any, to Bank, whether at maturity or by acceleration or otherwise, and
such failure shall continue uncured for a period of five (5) days after
the applicable due date;
C. Borrower shall default in the performance or
observance of any covenant or agreement contained in this Agreement or in
any other agreement between Borrower and Bank, provided, however, that a
breach in the performance or observance of an affirmative covenant or
agreement contained in section 7 of this Agreement shall only constitute a
default if the breach remains uncured for a period of twenty (20) days
after written notice thereof from Bank to Borrower;
D. Borrower shall:
(1) Apply for or consent to the appointment of a
receiver, trustee or liquidator of Borrower or of all or substantial part
of the assets of Borrower,
(2) Be unable to, or admit in writing its inability
to, pay its debts as they mature,
(3) Make a general assignment for the benefit of
creditors,
(4) Be adjudicated a bankrupt or insolvent,
(5) File a voluntary petition in bankruptcy or a
petition or an answer seeking reorganization or an arrangement with
creditors or to take advantage of any insolvency law, or an answer
admitting the material allegations of a petition filed against Borrower in
any bankruptcy, reorganization or insolvency proceeding, or
(6) Corporate action shall be taken by Borrower for
the purpose of effecting any of the foregoing;
E. A petition for an order, judgment or decree shall be
filed, without the application, approval or consent of Borrower, with any
court of competent jurisdiction, seeking reorganization of Borrower, or
the appointment of a receiver, trustee or liquidator of Borrower or of all
or a substantial part of the assets of Borrower, and such petition shall
remain undismissed for any period of sixty (60) days;
F. Borrower shall default in the payment of principal or
interest on any obligation (other than the Credit Facility) for borrowed
money beyond any period of grace provided with respect thereto or in the
performance of any other agreement, term or condition contained therein or
in any agreement or security interest relating to any such obligation
beyond any period of grace provided with respect thereto, if the effect of
such default is to cause or permit the holder or holders of such
obligation (or a trustee or agent on behalf of such holder or holders) to
cause such obligation to become due prior to its stated maturity;
G. A final judgment which, together with other
outstanding final judgments against it, exceeds an aggregate of Fifty
Thousand Dollars ($50,000.00) shall be entered against Borrower and remain
outstanding and unsatisfied or unstayed after sixty (60) days from the
date of entry thereof, unless an appeal has been taken and perfected
within the time provided by law and suitable bond has been provided to
stay execution of such judgment; or
H. Borrower shall cease to be a Small Business Investment
Company licensed pursuant to the rules and regulations of the SBA, or the
SBA shall have instituted formal proceedings to revoke or cancel
Borrower's license (either of such events to be hereinafter referred to as
an "SBA Termination Event"); provided, however, that if the Borrower shall
give notice to the Bank of the occurrence of an SBA Termination Event
within ten (10) days after the occurrence thereof, then such SBA
Termination Event shall constitute an event of default hereunder only upon
the expiration of ninety (90) days after the occurrence of such SBA
Termination Event. The Bank shall have no obligation to make any advances
to Borrower under the Credit Facility after the occurrence of an SBA
Termination Event; or
I. Either of the following shall occur:
(1) Bando McGlocklin Capital Corporation ("BMCC")
shall transfer, sell, pledge or hypothecate all or any portion of the
issued and outstanding stock of Borrower (of any class or type) owned by
BMCC from time to time; or
(2) Except for the issued and outstanding stock of
Borrower owned by BMCC, if at any time more than thirty percent (30%) of
the issued and outstanding stock of Borrower, of any class or type, shall
be owned by any one person or entity or Affiliate thereof.
In the event of any occurrence of any event of
default, Borrower shall pay all Bank's Expenses which may be incurred by
Bank with respect thereto, including reasonable attorneys' fees, and all
such sums shall be and become part of the Obligations pursuant to this
Agreement. In addition to and not in lieu of any other right or remedy it
may have at any time, Bank at any time and from time to time at its
election, may (but it shall not be required to) do or perform or comply
with or cause to be done or performed or complied with anything which
Borrower may be required to do or comply with under this Agreement if
Borrower shall fail to do so; Borrower shall reimburse Bank upon demand
for any cost or expense Bank may pay or incur in such respect, together
with interest thereon at the Default Rate of interest set forth herein for
the Credit Facility from the date of such demand until paid. The failure
of Bank at any time or from time to time to exercise any right or remedy,
whether arising from or by virtue of any event of default or otherwise,
shall not constitute a waiver of any such right or remedy and shall not
impair the right of Bank to exercise such right or remedy or any other
right or remedy thereafter or to insist upon strict performance. No
waiver of any right or remedy by Bank shall be valid or effective unless
made in writing and signed by an officer of Bank. Any effective waiver of
any right or remedy shall not be deemed to constitute a waiver of any
other right or remedy then existing or which may thereafter arise or
accrue. Upon the occurrence of any Event of Default, and pursuant to the
provisions of this paragraph, Bank may sue to enforce the obligations of
Borrower pursuant to this Agreement. Presentment, demand, protest and
notice of every kind are hereby expressly waived.
11. CONDITIONS OF DISBURSEMENT: Bank shall be under no
obligation to make any Advances under the Credit Facility pursuant to this
Agreement unless the following conditions shall have been fulfilled:
A. The representations and warranties of Borrower
contained herein shall be true at the time of the initial Advance and at
the time of each subsequent Advance under this Agreement as though such
representations and warranties were made at such time.
B. Borrower shall have performed and complied with all
agreements and conditions required by this Agreement to be performed or
complied with by it.
C. Prior to the initial advance under this Agreement
Borrower shall have delivered to Bank an opinion in writing of Borrower's
legal counsel, Foley & Lardner, dated on or after the date of this
Agreement, to the effect that (i) Borrower is a corporation validly
existing under the laws of the State of Wisconsin, and has the corporate
power and authority to enter into this Agreement and to make borrowings
and execute and deliver the notes as provided for herein; (ii) the making
of this Agreement and compliance with the terms hereof by Borrower and the
execution and delivery of the Note pursuant hereto do not conflict with or
contravene any provision of the Articles of Incorporation, or By-Laws of
Borrower, or any material indenture, contract or agreement of which such
counsel has knowledge, to which Borrower is a party or to which it is
subject (or that any such contravention has been appropriately waived),
or, to the extent of the business of the Borrower of which such counsel
has knowledge, any statute, rule or regulation binding upon Borrower;
(iii) all corporate action necessary to authorize Borrower to enter into
this Agreement, to perform its obligations hereunder, and to execute and
deliver any and all documents necessary to comply with the provisions of
this Agreement has been taken; (iv) the obtaining of the Credit Facility
hereunder has been authorized and approved by all necessary corporate
action; (v) this Agreement and Note have been duly executed by the
Borrower; (vi) this Agreement, the Note, and the Security Agreement
referred to in this Agreement, constitute the legal, valid and binding
obligations of Borrower and are enforceable against Borrower in accordance
with their terms, subject to customary bankruptcy exceptions; (vii) no
consent of any public body, agency, commission or board is necessary to
the making and assumption of obligations hereunder by Borrower; and (viii)
so far as it is known to such counsel there is no material litigation, and
there are no proceedings by any public body, agency, or authority, pending
or threatened against Borrower.
D. Borrower shall deliver to Bank, Firstar Trust
Company's acknowledgment of all collateral in Firstar Trust Company's
possession providing security for Borrower's obligations to Bank.
E. Prior to the initial Advance under this Agreement,
Borrower shall furnish Bank with certified resolutions of its Board of
Directors authorizing its (i) entry into this Agreement and performance of
the covenants contained herein, (ii) the issuance of the Note and (iii)
the execution and delivery of any and all other documents, agreements or
instruments reasonably requested by Bank.
F. Borrower shall furnish Bank with a certificate of
incumbency with respect to the persons authorized to execute this
Agreement, the Note, and all other documents to be executed in connection
with the transactions which are the subject of this Agreement.
G. Prior to the initial Advance under this Agreement,
Borrower shall deliver to Bank copies of all agreements between Borrower
and the SBA relating to the SBA's guarantee of obligations of Borrower,
together with copies of all outstanding debentures or other evidence of
debt issued by Borrower and guaranteed by the SBA.
H. Prior to the initial Advance hereunder, the Bank and
the parties to the Intercreditor Agreement shall have executed an
amendment to the Intercreditor Agreement in form and substance
satisfactory to the Bank, and copies of all such loan agreements, in form
and substance acceptable to Bank, shall have been delivered to Bank.
12. MISCELLANEOUS.
A. The provisions of this Agreement shall inure to the
benefit of and be binding upon any successor to any of the parties hereto
and shall extend and be available to any holder of the Note and renewals
thereof.
Borrower shall not assign or attempt to assign its
rights under this Agreement. Bank shall have the right to assign,
transfer, sell, negotiate, pledge or otherwise hypothecate this Agreement
and any of its rights and security hereunder, including the Note and any
other Loan Document to any affiliate of Bank or to any bank or other
entity which in Bank's good faith judgment has the capacity to perform
Bank's obligations hereunder. Borrower hereby agrees that all of the
rights and remedies of Bank in connection with the interest so assigned
shall be enforceable against Borrower by such assignee with the same force
and effect and to the same extent as the same would have been enforceable
by Bank but for such assignment. Borrower agrees that Bank shall have the
right to sell participations in the Credit Facility without the consent of
Borrower. Notwithstanding Bank's participation of any part of the Credit
Facility, Bank shall remain responsible for the performance of all its
obligations hereunder.
B. No failure on the part of Bank to exercise, and no
delay in exercising any right hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise by Bank of any right hereunder
preclude any other or future exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
C. In the event that any date provided herein for any
payment by Borrower shall not be a Business Day, such payment date shall
be deemed to be the next following Business Day.
D. All representations and warranties made herein shall
survive the extension of any Advance under this Agreement and the
execution and the delivery of the Note or renewals thereof.
E. All notices, statements, requests and demands herein
provided for shall be deemed to have been given or made when deposited in
the mails, postage prepaid, or delivered to a telegraph company, charges
prepaid, in the case of Borrower, when addressed to Borrower, 13555
Bishops Court, Suite 205, Brookfield, Wisconsin 53005, Attn: George R.
Schonath, Chairman, and in the case of Bank, at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202, Attention: Jon B. Beggs, Vice President; or
in such other manner, as to any party hereto, as such shall designate in a
written notice to the other party hereto.
F. This Agreement shall be deemed to be a contract made
under the laws of the State of Wisconsin and shall be construed and
enforced in accordance with the laws of said State.
G. Section headings in this Agreement and the other Loan
Documents are for convenience of reference only, and shall not govern the
interpretation of any of the provisions of this Agreement and the other
Loan Documents.
H. This Agreement and all other agreements referred to
herein or delivered in connection herewith shall constitute the entire
agreement between the parties relating to the subject matter hereof, shall
rescind all prior agreements and understandings between the parties hereto
relating to the subject matter hereof, and shall not be changed or
terminated orally.
I. All representations, warranties, and covenants made by
Borrower under this Agreement or any other Loan Document shall be
considered to have been relied upon by Bank and shall survive the delivery
to Bank of the Note and the making of the Loan herein contemplated
regardless of any investigation made by Bank or on its behalf.
J. Any provision in this Agreement or any other Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in
that jurisdiction or the operation, enforceability, or validity of that
provision in any other jurisdiction, and to this end the provisions of all
Loan Documents are declared to be severable.
K. Borrower hereby irrevocably submits to the
non-exclusive jurisdiction of any United States Federal or Wisconsin state
court sitting in Milwaukee County, Wisconsin in any action or proceeding
arising out of or relating to this Agreement, the Note or any other Loan
Document and Borrower hereby irrevocably agrees that all claims in respect
of such action or proceeding may be heard and determined in any such court
and irrevocably waives any objection it may now or hereafter have as to
the venue of any such suit, action or proceeding brought in such a court
or that such court is an inconvenient forum. Nothing herein shall limit
the right of Bank to bring proceedings against Borrower in the courts of
any other jurisdiction. Any judicial proceeding by Borrower against Bank
or any affiliate of Bank involving, directly or indirectly, any matter in
any way arising out of, related to, or connected with this Agreement, the
Note or any other Loan Document shall be brought only in a court in
Milwaukee County, Wisconsin.
L. BORROWER AND BANK EACH HEREBY WAIVE TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT
OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT, THE NOTE OR ANY OTHER
LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
M. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and any of the parties hereto may execute this Agreement by signing any
such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
BANDO McGLOCKLIN SMALL BUSINESS
INVESTMENT CORPORATION
By: _________________________________
George R. Schonath,
Chairman of the Board and
Chief Executive Officer
By: _________________________________
Jon P. McGlocklin, President
FIRSTAR BANK MILWAUKEE, N.A.
By: _________________________________
Jon B. Beggs, Vice President
Exhibit 4.6
FIRST AMENDMENT TO AMENDED AND
RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT,
dated as of October 31, 1996, amends the Amended and Restated Loan
Agreement dated as of June 28, 1996,(the "Loan Agreement"), by and between
FIRSTAR BANK MILWAUKEE, N.A. ("Bank") and BANDO McGLOCKLIN SMALL BUSINESS
INVESTMENT CORPORATION ("Borrower").
RECITAL
Bank and Borrower desire to amend the Loan Agreement as provided
below.
AGREEMENTS
In consideration of the Recital and the agreements contained
herein and in the Loan Agreement, Bank and Borrower agree as follows:
1. Definitions and References. Capitalized terms used herein
shall have the meanings set forth in the Loan Agreement. All references
to the Loan Agreement contained in the Note or Loan Documents shall mean
the Loan Agreement as amended by this First Amendment.
2. Amendments. The Loan Agreement is amended as follows:
(a) The definition of "Maturity Date" contained in
section 1 thereof is amended by deleting the date "October 31, 1996"
contained therein and substituting the date "October 31, 1997" in its
place.
(b) Section 7.L. is created to read as follows:
L. Borrower shall promptly notify Bank upon
Borrower's obtaining all necessary Securities & Exchange
Commission and shareholder approvals relating to Borrower's
desire to (1) deregister its status as a "small business
investment company" under the Investment Company Act of 1940,
(2) surrender its U.S. Small Business Administration small
business investment company license and (3) conduct its
operations as a real estate investment trust under Section 856
of the Internal Revenue Code of 1986, as amended, all of which
are to be effective as of the close of Borrower's business on
December 31, 1996. Bank acknowledges that Borrower is currently
in the process of obtaining all such necessary approvals and
Bank acknowledges that upon satisfactory review by Bank of all
documentation relating to the deregistration of Borrower and the
execution of all documentation reasonably deemed necessary by
Bank to preserve Bank's rights against Borrower (including,
without limitation, documentation relating to existing interest
rate swap agreements), Bank shall not unreasonably withhold its
consent, which consent is required under the Loan Agreement, to
the transactions described in this paragraph.
3. Effectiveness of this Amendment. This Amendment shall
become effective upon execution and delivery hereof by Borrower and Bank
and receipt by Bank of evidence satisfactory to Bank that First Bank
(N.A.) and LaSalle National Bank have renewed and extended their
respective credit facilities to Borrower through at least October 31,
1997.
4. Representations and Warranties. Borrower represents and
warrants to Bank that:
(a) The execution and delivery of this First Amendment are
within its corporate power, have been duly authorized by all proper
corporate action on the part of Borrower, are not in violation of any
existing law, rule or regulation of any governmental agency or authority,
and order or decision of any Court, the Articles of Incorporation or By-
Laws of Borrower or the terms of any agreement, restriction of undertaking
to which Borrower is a party or by which it is bound, and do not require
the approval or consent of the shareholders of Borrower, any governmental
body, agency or authority or any other person or entity.
(b) The representations and warranties contained in the
Loan Agreement are correct and complete as of the date of this First
Amendment and no condition or event exists or act has occurred that, with
or without the giving of notice or the passage of time, would constitute
an Event of Default under the Loan Agreement.
5. Expenses and Fees. Borrower shall reimburse Bank for all
out-of-pocket expenses incurred by Bank and all reasonable legal fees and
expenses incurred by Bank in connection with the preparation, negotiation,
execution and administration of this First Amendment. Bank may debit any
account of Borrower maintained at Bank for the full amount of all such
fees and expenses.
6. Full Force and Effect. Except as amended hereby, the Loan
Agreement shall remain in full force and effect.
7. Counterparts. This First Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of parties hereto may execute this First Amendment by
signing any such counterpart.
FIRSTAR BANK MILWAUKEE, N.A.
BY _________________________________
Jon B. Beggs, Vice President
BANDO McGLOCKLIN SMALL BUSINESS
INVESTMENT CORPORATION
BY _________________________________
Its ___________________________
BY _________________________________
Its ___________________________
Exhibit 4.7
SECOND AMENDMENT TO AMENDED AND
RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT,
dated as of May 14, 1997, amends the Amended and Restated Loan Agreement
dated as of June 28, 1996, as amended to date (as so amended, the "Loan
Agreement"), by and between FIRSTAR BANK MILWAUKEE, N.A. ("Bank") and
BANDO McGLOCKLIN SMALL BUSINESS LENDING CORPORATION formerly known as
Bando McGlocklin Small Business Investment Corporation ("Borrower").
RECITAL
Bank and Borrower desire to amend the Loan Agreement as provided
below.
AGREEMENTS
In consideration of the Recital and the agreements contained
herein and in the Loan Agreement, Bank and Borrower agree as follows:
1. Definitions and References. Capitalized terms used herein
shall have the meanings set forth in the Loan Agreement. All references
to the Loan Agreement contained in the Note or Loan Documents shall mean
the Loan Agreement as amended by this Second Amendment.
2. Amendments. The Loan Agreement is amended as follows:
(a) The first paragraph of Section 2 thereof is amended by
deleting the date "$12,500,000" contained therein and substituting the
date "$15,000,000" in its place.
(b) Bank and Borrower agree that any provisions of the
Loan Agreement requiring Borrower to maintain its status as a "small
business investment corporation" or to comply with regulations of the
Small Business Administration relating thereto shall no longer be in
effect.
(c) Exhibit A attached hereto shall be deemed to be an
exhibit to the Loan Agreement and shall replace its predecessor attached
thereto.
3. Effectiveness of this Amendment. This Second Amendment
shall become effective upon execution and delivery hereof by Borrower and
Bank and satisfaction of the following conditions:
(a) Revolving Note. Bank shall have received a Revolving
Note in the form of Exhibit A attached hereto, duly executed by Borrower
(the "Note").
(b) Closing Certificate. Bank shall have received copies,
certified by the Secretary or Assistant Secretary of Borrower to be true
and correct and in full force and effect on the date of this Second
Amendment of (i) resolutions of the Board of Directors of Borrower
authorizing the execution and delivery of this Second Amendment and the
Note; (ii) the Articles of Incorporation and By-Laws of Borrower; and
(iii) a statement containing the names and titles of the officer or
officers of Borrower authorized to sign this Second Amendment and the
Note, together with true signatures of such officers.
(c) Amendment to Intercreditor Agreement. Bank shall have
entered into an amendment to the Intercreditor Agreement, in form and
content satisfactory to Bank, with First Bank (N.A.), LaSalle National
Bank, Borrower and Firstar Trust Company, pursuant to which Exhibit A to
the Intercreditor Agreement is amended to reflect Bank's increased credit
facility with Borrower.
4. Representations and Warranties. Borrower represents and
warrants to Bank that:
(a) The execution and delivery of this Second Amendment
and the Note are within its corporate power, have been duly authorized by
all proper corporate action on the part of Borrower, are not in violation
of any existing law, rule or regulation of any governmental agency or
authority, and order or decision of any Court, the Articles of
Incorporation or By-Laws of Borrower or the terms of any agreement,
restriction of undertaking to which Borrower is a party or by which it is
bound, and do not require the approval or consent of the shareholders of
Borrower, any governmental body, agency or authority or any other person
or entity.
(b) The representations and warranties contained in the
Loan Agreement are correct and complete as of the date of this Second
Amendment and no condition or event exists or act has occurred that, with
or without the giving of notice or the passage of time, would constitute
an Event of Default under the Loan Agreement.
5. Expenses and Fees. Borrower shall reimburse Bank for all
out-of-pocket expenses incurred by Bank and all reasonable legal fees and
expenses incurred by Bank in connection with the preparation, negotiation,
execution and administration of this Second Amendment. Bank may debit any
account of Borrower maintained at Bank for the full amount of all such
fees and expenses.
6. Full Force and Effect. Except as amended hereby, the Loan
Agreement shall remain in full force and effect.
7. Counterparts. This Second Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one
agreement, and any of parties hereto may execute this Second Amendment by
signing any such counterpart.
FIRSTAR BANK MILWAUKEE, N.A.
BY _________________________________
Jon B. Beggs, Vice President
BANDO McGLOCKLIN SMALL BUSINESS
LENDING CORPORATION
(formerly known as Bando McGlocklin
Small Business Investment Corporation)
BY _________________________________
Its ___________________________
BY _________________________________
Its ___________________________
Exhibit 4.8
MASTER NOTE PURCHASE AGREEMENT
Dated as of January 1, 1997
Between
STATE OF WISCONSIN INVESTMENT BOARD
AND
BANDO McGLOCKLIN SMALL BUSINESS LENDING CORPORATION
AND
BANDO McGLOCKLIN CAPITAL CORPORATION
<PAGE>
MASTER NOTE PURCHASE AGREEMENT
This Master Note Purchase Agreement is dated as of January 1, 1997,
between BANDO McGLOCKLIN SMALL BUSINESS LENDING CORPORATION, a Wisconsin
corporation (the "Company"), whose address is W239 N 1700 Busse Road &
Highway J, Pewaukee, Wisconsin 53072-0190, and BANDO McGLOCKLIN CAPITAL
CORPORATION, a Wisconsin corporation (the "Parent"), whose address is W239
N1700 Busse Road & Highway J, Pewaukee, Wisconsin 53072-0190, the STATE OF
WISCONSIN INVESTMENT BOARD (the "Board"), whose address is 121 East Wilson
Street, Post Office Box 7842, Madison, Wisconsin 53707.
PRELIMINARY STATEMENT
A. The Company and the Board executed a Master Purchase Agreement
dated as of March 3, 1995 (the "Master Purchase Agreement"), as amended,
pursuant to which the Board agreed to purchase from the Company a 90%
participation in certain loans (the "Loans") originated by the Company and
evidenced by promissory notes (the "Notes") and other loan documents (the
"Loan Documents").
B. Pursuant to the Master Purchase Agreement, the Company and the
Board executed (each of the following, the "Note Purchases"):
(i) a Loan Participation Certificate and Agreement dated as of
March 3, 1995, providing for the purchase by the Board of a
$5,131,113.85 participation interest in certain loans identified on
Exhibit A attached thereto;
(ii) a Loan Participation Certificate and Agreement dated as of
May 22, 1995, providing for the purchase by the Board of a
$5,212,817.87 participation interest in certain Loans, Notes and Loan
Documents identified on Exhibit A attached thereto;
(iii) a Loan Participation Certificate and Agreement dated as of
September 26, 1995, providing for the purchase by the Board of a
$5,062,308.36 participation interest in certain Loans, Notes and Loan
Documents identified on Exhibit A attached thereto;
(iv) a Loan Participation Certificate and Agreement dated as of
January 30, 1996, providing for the purchase by the Board of a
$10,929,272.69 participation interest in certain Loans, Notes and
Loan Documents identified on Exhibit A attached thereto; and
(v) a Loan Participation Certificate and Agreement dated as of
August 29, 1996, providing for the purchase by the Board of a
$9,809,709.33 participation interest in certain Loans, Notes and Loan
Documents identified on Exhibit A attached thereto.
C. Pursuant to a Bill of Sale dated as of January 1, 1997, the
Company has repurchased from the Board the 90% participation interest
acquired by the Board (the "Participation") pursuant to the Note Purchases
for a price (the "Purchase Price") equal to: (a) the outstanding principal
balance as of January 1, 1997 of the Participation; and (b) any interest
accrued on the Participation at the rate set forth in the applicable Loan
Participation Certificate and Agreement which remained unpaid as of
January 1, 1997.
D. The Board now wishes to agree with the Company that the Board
may, from time-to-time, purchase from the Company a 90% participation
interest in certain Loans, Notes, and Loan Documents, provided that the
Company retain at all times an option to repurchase any such Loans, Notes,
and Loan Documents from the Board, subject to the payment of a repurchase
premium, all as set forth in the Loan Participation Certificate and
Agreement attached hereto as Exhibit A.
E. This Master Note Purchase Agreement replaces and wholly
supersedes that certain Master Purchase Agreement between the Company and
the Board dated as of March 3, 1995.
ARTICLE 1
DEFINITIONS
1.01. "Affiliate" shall mean the Company and any Person (other than
the Company) which directly or indirectly through one or more
intermediaries control, or are controlled by, or are under common control
with the Company.
1.02. "Agreement" shall mean this Master Note Purchase Agreement, as
it may be amended from time to time.
1.03. "Banks" shall mean First Bank (N.A.), Security Bank SSB,
Firstar Bank Milwaukee, National Association, LaSalle National Bank and
such lenders who qualify as "Lenders" under the terms of the Intercreditor
Agreement (hereinafter defined). Any such lender which ceases to be
subject to the Intercreditor Agreement shall cease being considered one of
the "Banks" under the terms of this Agreement.
1.04. "Board" shall mean the State of Wisconsin Investment Board, an
independent agency of the State of Wisconsin, located at 121 East Wilson
Street, Post Office Box 7842, Madison, Wisconsin 53707.
1.05. "Borrower" or "Borrowers" shall mean the Persons to whom the
Company extends credit pursuant to the Commitment and Loan Agreements and
the makers of the Notes.
1.06. "Business Day" shall mean with respect to purchasing, payment,
prepayment and for all other purposes under the Note Purchase Documents a
day on which banks are not required or authorized to close in the State of
Wisconsin.
1.07. "Closing Date" shall mean any Business Day on or after January
1, 1997, with respect to a Note Purchase.
1.08. "Commitment and Loan Agreement" shall mean the form of
documents pursuant to which the Company makes a Loan to a Borrower.
1.09. "Company" shall mean Bando McGlocklin Small Business Lending
Corporation, a Wisconsin corporation, with its principal offices at W239 N
1700 Busse Road & Highway J, Pewaukee, Wisconsin 53072-0190.
1.10. "Contractual Obligations" shall mean, collectively, as to the
Company, any provision of any security issued by it or of any agreement,
instrument or undertaking to which the Company is a party or by which it
or any of its property is bound.
1.11. "Counsel to the Board" shall mean Michael, Best & Friedrich,
One South Pinckney Street, Post Office Box 1806, Madison, Wisconsin
53701-1806, as counsel to the Board.
1.12. "Debt" shall mean, with respect to the Company, all of its
respective debts, notes and liabilities of whatever nature or amount on a
consolidated basis, including, but not limited to: (a) obligations for
borrowed money; (b) obligations representing the deferred purchase price
of property including accounts payable arising in connection with the
purchase of inventory, supplies or services; (c) obligations, whether or
not assumed, secured by liens or payable out of the proceeds or production
from property now or hereafter owned or acquired by the Company; (d) the
total amount of all obligations (whether contingent or matured) created by
any Guaranty (hereinafter defined); and (e) lease obligations which are
capitalized.
1.13. "Default" shall mean the occurrence of an event described in
Article 7 herein.
1.14. "Document Custodian" shall mean Firstar Trust Company, 615
East Michigan Street, Milwaukee, Wisconsin 53202, acting under the terms
of that certain Document Custodian Agreement, dated as of January 1, 1997
by and among the Company, the Board and Firstar Trust Company.
1.15. "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
1.16. "Fiscal Year" shall mean a fiscal year of the Company ending
on June 30 of each year.
1.17. "Generally Accepted Accounting Principles" shall mean the
generally accepted accounting principles in effect from time to time in
the United States.
1.18. "Governmental Authority" shall mean any nation or government,
any state or other political subdivision thereof, whether foreign or
domestic, including, without limitation, any municipality, township and
county, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, the Internal Revenue Service and the
Securities and Exchange Commission, and any corporation or other entity
owned or controlled (through stock or capital ownership or otherwise) by
any of the foregoing.
1.19. "Guaranty" shall mean any agreement by which the Company
assumes, guaranties, endorses, contingently agrees to purchase or provide
funds for the payment of, or otherwise becomes liable upon, the obligation
of any other Person, or agrees to maintain the net worth or working
capital or other financial condition of any other Person or otherwise
assures any creditor of such other Person against loss and includes,
without limitation, the contingent liability of the Company in respect of
any letter of credit or similar document or instrument.
1.20. "Intercreditor Agreement" shall mean the Intercreditor
Agreement, dated as of the 12th day of October, 1988, as amended, by and
among the Banks with respect to the Revolving Credit Loans (hereinafter
defined) made by each of such Banks to the Company, as amended.
1.21. "Lien" shall mean any security interest, mortgage, pledge,
lien, claim, charge, encumbrance, title retention agreement or lessor's
interest under a financing lease or analogous instrument, in, of or on the
property or assets of the Company.
1.22. "Loan" or "Loans" shall mean the extension of credit by the
Company to Borrower(s).
1.23. "Loan Documents" shall mean, collectively, the Commit-ment and
Loan Agreement, the Note, any other document securing or guarantying the
Loan, and all UCC financing statements related thereto.
1.24. "Loan Participation Certificate and Agreement" shall mean the
Loan Participation Certificate and Agreement executed between the Company
and the Board with respect to each Note Purchase in substantially the form
set forth in Exhibit A.
1.25. "Note" or "Notes" shall mean the promissory note(s) of the
Borrower(s) payable to the order of the Company evidencing the Borrower's
obligation to repay the Loan(s).
1.26. "Note Purchase" shall mean the purchase of a participa-tion
interest in a Note pursuant to this Agreement and the Loan Participation
Certificate and Agreement.
1.27. "Note Purchase Documents" shall mean this Agreement and any
Loan Participation Certificate and Agreement.
1.28. "Officer's Certificate" shall mean a certificate signed under
oath in the name of the Company or the Parent, as the case may be, by its
Chairman of the Board and Chief Executive Officer.
1.29. "Parent" shall mean Bando McGlocklin Capital Corporation, a
Wisconsin corporation, with its principal offices at 13555 Bishops Court,
Suite 205, Brookfield, Wisconsin 53005.
1.30. "Person" shall mean an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture or other entity, the United States federal
government or the government of any other nation, any political
subdivision or agency thereof, the State of Wisconsin, any other state or
any political subdivision thereof, or any agency of any such state or
subdivision.
1.31. "Plan" shall mean a defined benefit pension plan under ERISA
under which plan the Company could be held liable for the Unfunded
Liabilities by the Pension Benefit Guaranty Corporation upon termination
of such plan.
1.32. "Potential Default" shall mean an event which, but for the
lapse of time or the giving of notice or both, would constitute a Default.
1.33. "Reportable Event" shall mean the occurrence of an event in
regard to any Plan which must be reported to the Pension Benefit Guaranty
Corporation under ERISA and the regulations promulgated pursuant thereto.
1.34. "Requirements of Law" shall mean, collectively, as to the
Company, its certificate of incorporation and bylaws or other
organizational or governing documents of the Company, and any law, treaty,
franchise, rule or regulation, or determination of any arbitrator or a
court or other Governmental Authority, in each case applicable to or
binding upon the Company or any of its property or to which the Company or
any of its properties are subject.
1.35. "Revolving Credit Loans" shall mean the revolving credit loans
made or to be made to the Company as borrower, and each of the Banks, and
such loans that may hereafter be made by lenders who qualify as "Lenders"
under the terms of the Intercreditor Agreement.
1.36. "Subsidiary" shall mean a corporation organized under the laws
of the United States of America or the District of Columbia of which more
than 50% of the outstanding capital stock ordinarily entitled to vote for
the election of directors of such corporation is owned by the Company,
directly or indirectly, or any Subsidiary (as hereby defined), and shall
include any such corporation which shall, after the date of this
Agreement, become a Subsidiary.
1.37. "Unfunded Liabilities" shall mean, with regard to any Plan,
the excess of the current value of such Plan's benefits guaranteed under
ERISA over the current value of such Plan's assets allocable to such
benefits.
ARTICLE 2
AMOUNTS AND TERMS OF NOTE PURCHASES
2.01. Note Purchases. The Board agrees to purchase and the Company
agrees to sell, transfer and assign, with recourse, an undivided ninety
percent (90%) interest in each Note pursuant to the Loan Participation
Certificate and Agreement. The Note Purchases shall be made, subject to
the satisfaction of conditions precedent set forth in Article 3 of this
Agreement, in an aggregate amount not to exceed Forty Million Dollars
($40,000,000) less the amount of any debt owed by the Company to the Board
pursuant to the $10,000,000 promissory note dated July 9, 1990 and the
$10,000,000 promissory note dated November 7, 1991, the maker of each of
which was the Parent and which have been assumed by the Company.
2.02. Interest Rate and Method of Computation. The amounts invested
under the Loan Participation Certificate and Agreements and remaining
unpaid from time to time shall bear interest at all times at the rate set
forth in the Loan Participation Certificate and Agreement, provided that
any amount of principal, interest or other charges that is not paid when
due (whether at the stated due date or maturity, by acceleration or
otherwise) shall bear interest at the rate set forth in the applicable
Loan Participation Certificate and Agreement, or the maximum rate
permitted by law, whichever is lower.
ARTICLE 3
CONDITIONS PRECEDENT TO NOTE PURCHASES
The Board shall not be obligated to purchase any Notes unless the
following actions shall have occurred, all the documents described herein
shall have been delivered to the Board, and all legal matters incident to
any such Note Purchase shall be satisfactory to the Board and Counsel to
the Board:
3.01. Conditions to Initial Note Purchase. Prior to the Board
making the initial Note Purchase, the Board shall have received from the
Company and the Parent, in a form and substance satisfactory to the Board
and Counsel to the Board, the following:
(a) The Loan Participation Certificate and Agreement, with respect
to the initial Note Purchase, duly executed and delivered by the Company
and the Parent;
(b) All of the Notes and Loan Documents that are subject to the Note
Purchase, together with an estoppel letter in substantially the form of
Exhibit B attached hereto executed by the Borrower under each such Loan,
and such other matters as the Board may reasonably require;
(c) A release in substantially the form of Exhibit C attached hereto
executed by the Banks and by any lender who has become a "Lender" under
the terms of the Intercreditor Agreement;
(d) An Officer's Certificate from the Company containing and
certifying as true and correct:
(i) Certified copies of the resolutions of the Board of
Directors of the Company approving and authorizing the execution and
delivery of the Note Purchase Documents;
(ii) The names and signatures of the officers of the Company
authorized to sign the Note Purchase Documents;
(iii) Copies of the Company's Articles of Incorporation and
Bylaws;
(iv) A statement that all representations and warranties
contained in Article 4 herein are true and correct and that such
representations and warranties will remain true and correct on the
Closing Date;
(v) A statement that all Loans conform to the Company's loan
policies and were underwritten in accordance with the Company's
underwriting standards, both of which are set forth in Exhibit D
hereto; and
(vi) A statement that all Loans meet the criteria set forth in
Section Section 4.08 and 4.09;
(e) an Officer's Certificate from the Parent containing and
certifying as true and correct:
(i) Certified copies of the resolutions of the Board of
Directors of the Company approving and authorizing the execution and
delivery of the Note Purchase Documents;
(ii) The names and signatures of the officers of the Company
authorized to sign the Note Purchase Documents;
(iii) Copies of the Company's Articles of Incorporation and
Bylaws; and
(iv) A statement that all representations and warranties
contained in Article 4 herein are true and correct and that such
representations and warranties will remain true and correct on the
Closing Date;
(f) An opinion of Counsel to the Company; and
(g) Certificates of each of the Company's and the Parent's (a) good
standing from the state of incorporation, and (b) good standing as a
foreign corporation in each state in which it is required to be licensed
and failure to be so qualified would have a material adverse effect on the
Company or the Parent, as the case may be, all certified no earlier than
30 days prior to the Closing Date.
3.02. Conditions to Subsequent Note Purchases. Prior to the Board
making subsequent Note Purchases, the Board shall have received from the
Company and the Parent, in a form and substance satisfactory to the Board
and Counsel to the Board, the following:
(a) The Loan Participation Certificate and Agreement with respect to
such Note Purchase duly executed and delivered by the Company and the
Parent;
(b) All of the Notes and Loan Documents that are the subject of the
Note Purchase, together with an estoppel letter in substantially the form
of Exhibit B attached hereto executed by the Borrower under each such
Loan, and such other matters as the Board may reasonably require;
(c) A release in substantially the form of Exhibit C attached hereto
executed by the Bank and by any lender who has become a "Lender" under the
terms of the Intercreditor Agreement;
(d) An Officer's certificate from both the Company and the Parent
containing and certifying as true and correct:
(i) A statement that all representations and warranties in this
Agreement are true and correct and that such representations and
warranties will remain true and correct on the Closing Date;
(ii) A statement that none of the Notes previously purchased by
the Board and in which the Board has a current participation interest
are in default more than ninety (90) days;
(iii) A statement that there has been no Default or Potential
Default under this Agreement;
(iv) A statement that all Loans conform to the Company's loan
policies and were underwritten in accordance with the standards set
forth in Exhibit D hereto; and
(v) A statement that all Loans meet the criteria set forth in
Section Section 4.08 and 4.09.
3.03. No Material Adverse Change. There shall not be in existence
any event, including any judicial or administrative proceeding, which, in
the opinion of the Board, would have a material adverse effect upon the
financial condition of the Company.
3.04. No Default. As of the date of any Note Purchase under this
Agreement, there shall be no Default or Potential Default under this
Agreement.
3.05. No Liens. The Notes will be free of any Lien.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
The Company and the Parent represent and warrant to the Board as
follows:
4.01. Corporate Existence and Standing. The Company and the Parent
each: (a) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; (b) has
the corporate power and authority and the legal right to own and operate
its business and property, to lease the property it occupies and to
conduct the business in which it is currently engaged; and (c) is duly
qualified as a foreign corporation and in good standing under the laws of
each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification.
4.02. Authorization and Validity. The execution, delivery and
performance by the Company and the Parent of the Note Purchase Documents
are within the Company's and the Parent's corporate powers, have been duly
authorized by all necessary corporate action and do not and will not (1)
require any consent or approval of the stockholders of the Company or the
Parent; (2) contravene or conflict with the Company's or the Parent's
Articles of Incorporation or Bylaws; (3) violate any provision of any law,
rule, regulation (including, without limitation, Regulation U of the Board
of Governors of the Federal Reserve System), order, writ, judgment,
injunction, decree, determination, award, or any license or certificate of
authority of or issued by a Governmental Authority, presently in effect
having applicability to the Company or the Parent; (4) result in a breach
of or constitute a default under any indenture, loan or credit agreement
or any other agreement, lease, instrument, license or certificate of
authority to which the Company or the Parent is a party or by which it or
its properties may be bound or affected; or (5) result in, or require, the
creation or imposition of any mortgage, deed of trust, pledge, lien,
security interest or other charge or encumbrance of any nature upon or
with respect to any of the properties now owned or hereafter acquired by
the Company or the Parent, including, without limitation, the Notes and
other Loan Documents; and neither the Company nor the Parent is in default
under any such law, rule, regulation, order, writ, judgment, injunction,
decree, determination, award, license or certificate of authority or any
such indenture, agreement, lease or instrument.
4.03. No Governmental Approvals. No authorization or approval or
other action by, and no notice to or filing with, any Governmental
Authority is required for the due execution, delivery and performance by
the Company of this Agreement or the Loan, excepting any of the foregoing
required to be made by the Board.
4.04. Enforceable Obligations. The Note Purchase Documents, when
delivered hereunder, will be legal, valid and binding obligations of the
Company and the Parent enforceable against the Company and the Parent in
accordance with their respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
4.05. Litigation. No litigation, investigation or proceeding of or
before any arbitrator or Governmental Authority is pending or, to the
knowledge of the Company or the Parent, threatened by or against the
Company or the Parent or against any of its respective properties or
revenues (a) with respect to this Agreement and the Note Purchases
contemplated hereby or (b) which would have a material adverse effect on
the ability of the Company or the Parent to (i) continue its business in a
manner consistent with its present business operation or (ii) perform its
obligations under the Loan Documents.
4.06. Compliance with Laws and Contractual Obligations.
(a) The Company is in compliance with all Contractual Obligations
and Requirements of Law, each Contractual Obligation is in full force and
effect and no default by the Company exists thereunder, except to the
extent such a default or failure by the Company to comply would not, in
the aggregate, have a material adverse effect on the business, operations,
property or financial or other condition of the Company, and would not
have a material adverse effect on the ability of the Company to perform
its obligations under the Note Purchase Documents.
(b) The execution and delivery of the Note Purchase Documents and
the performance of the obligations herein undertaken by the Company will
not violate, conflict with or constitute a default under any Requirement
of Law (including, without limitation, Regulations G, X or U of the Board
of Governors of the Federal Reserve System, the Securities Act of 1933 and
the Securities Exchange Act of 1934) or any Contractual Obligation.
4.07. Loan Policies and Underwriting Standards. A copy of the loan
policies and underwriting standards used by the Company in making Loans is
attached hereto as Exhibit D. Each of the Notes and Loan Documents that
are the subject of Note Purchases hereunder, when made complied with, and
as of this date comply with such loan policies and underwriting standards.
The credit quality of the Notes purchased hereunder is comparable to Notes
that are held by the Company for its own portfolio.
4.08. Form of Documents. The form of the Notes and other Loan
Documents that have heretofore been approved by the Board are attached
hereto as Exhibit E. All of the Loans made to Borrowers which have been
sold or are to be sold to the Board shall utilize the form of the Note and
other Loan Documents in substantially the form attached hereto as Exhibit
E or such forms that may be approved by the Board.
4.09. Characteristics of Loans. All of the Notes and other Loan
Documents purchased by the Board pursuant to the Note Purchase Documents:
(a) Are the legal, valid binding obligation of the Borrowers
enforceable according to their terms;
(b) Are secured by a perfected first or second mortgage against real
estate owned by the Borrower;
(c) Are secured by a perfected first security interest in the
personal property acquired with the proceeds of the Loan;
(d) No Loan or Loans to a single Borrower (including Affiliates of a
Borrower) are for an amount in excess of $4,000,000; and
(e) No Loan or Loans when combined consist of more than $8,000,000
in any one industry as classified by the Company consistent with its
existing industry classification practices which are set forth on Exhibit
F;
(f) Each Loan must mature on or before the 31st of December, 2009.
4.10. No Default on Notes. At the time of the Note Purchase, there
is no default by the Borrower under the Notes or Loan Documents and the
Borrower has not made any claim against the Company thereunder.
4.11. Notes Assigned Free of Liens. All Notes purchased by the
Board pursuant to the Note Purchase Documents will be free of any Liens,
except the participation interest of the Company pursuant to the Loan
Participation Certificate and Agreement therein.
4.12. Accuracy of Information. No information, exhibit or report
furnished by the Company to the Board in connection with the negotiation
of the Loans and while the Notes, or either of them, remain unpaid
contains any material misstatement of fact or omits to state a material
fact or any fact necessary to make the statements contained therein not
misleading.
4.13. Financial Condition. The financial statements of the Company
dated as of the end of the Fiscal Year prior to the Closing Date,
heretofore delivered to the Board, were prepared in accordance with
Generally Accepted Accounting Principles, are complete and correct and
fairly present the financial condition of the Company at such dates and
the results of its operations for the periods then ended. No material
adverse change in the condition of the Company as shown on said financial
statements has occurred since the date thereof.
4.14. Taxes. The Company has filed or caused to be filed all tax
returns which are required to be filed and has paid all taxes shown to be
due and payable on said returns or on any assessments made against it or
any of its property and all other taxes, fees or other charges imposed on
it or any of its property by any Governmental Authority and no tax liens
have been filed and no claims are being asserted with respect to any such
taxes, fees or other charges. No material claims are threatened, pending
or being asserted with respect to, or in connection with, the Company's
tax returns through the Fiscal Year ending prior to the Closing Date.
4.15. Ownership of Property and Liens. The Company has good and
marketable title to all of its owned assets, and none of such assets are
subject to any lien, except those Liens set forth in Section 6.04 herein.
4.16. Pension Reform Act of 1974. The Company has not incurred any
material accumulated Unfunded Deficiency within the meaning of ERISA nor
has it incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under ERISA (or any successor thereto
under ERISA) in connection with any Plan established or maintained by the
Company, and the Company is in full compliance in all material respects
with all provisions of ERISA.
4.17. Subsidiaries. The Parent has no Subsidiaries other than: the
Company, Bando McGlocklin Investment Corporation and Investors Bank. The
Company has no Subsidiaries.
4.18. REIT Status. The Company has elected, and is duly qualified,
to operate as a "Real Estate Investment Trust" ("REIT") pursuant to
Section 856 of the Internal Revenue Code and regulations applicable
thereto. The Company has no knowledge of any facts or circumstances that
would disqualify the Company as a REIT and has no knowledge of any pending
or threatened action by the Internal Revenue Service to revoke or
terminate the Company's election to operate, or status, as a REIT.
ARTICLE 5
AFFIRMATIVE COVENANTS
During the term of this Agreement and as long as the Company has any
obligation to the Board under the Loan Participation Certificates and
Agreements which remain unpaid, unless the Board shall otherwise consent
in writing, the Company will:
5.01. Reports.
(a) Financial Statements. Maintain a standard and modern system of
accounting in accordance with sound accounting practice, and furnish to
the Board such information respecting the business, assets and financial
condition of the Company and the Parent as the Board may reasonably
request and, without request furnish to the Board:
(i) as soon as available, and in any event within 45 days after
the end of each quarter of the Company's fiscal year, financial
statements including the balance sheet for the Company and the
consolidated balance sheet of the Parent and its Subsidiaries as of
the end of each such quarter and statements of income of the Company
and the consolidated statements of income of the Parent and its
Subsidiaries for each such quarter and for that part of the fiscal
year ending with such quarter, setting forth in each case, in
comparative form, figures for the corresponding periods in the
preceding fiscal year, all in reasonable detail and certified as
true, correct and complete, subject to review and normal year-end
adjustments, by the Chief Executive Officer of the Company;
(ii) as soon as available, and in any event within 90 days after
the close of each fiscal year, a copy of the detailed annual audit
report for such year and accompanying financial statements for the
Parent and its Subsidiaries as of the end of such year, containing
balance sheets and statements of income, retained earnings and cash
flows for such year and for the previous fiscal year and
consolidating balance sheets, statements of income and cash flows for
such year, as audited by independent certified public accountants of
recognized standing selected by the Company and satisfactory to the
Board, which report shall be accompanied by the unqualified opinion
of such accountants to the effect that the statements present fairly,
in all material respects, the financial position of the Parent and
its Subsidiaries as of the end of such year and the results of its
operations and its cash flows for the year then ended in conformity
with GAAP;
(iii) with the financial statements described in Section
5.01(a)(ii), the certificate of the Chairman and Chief Executive
Officer of the Company to the effect that (i) a review of the
activities of the Company during such period has been made under his
supervision to determine whether the Company has observed, performed
and fulfilled each and every covenant and condition in this
Agreement, including specifically certifying the Company is in
compliance with the Company's loan policies and underwriting
standards set forth on Exhibit A and the loan characteristics set
forth in Section 4.09 hereof (and in connection therewith such
certification shall provide loan balances for each Borrower and its
Affiliates and the totals of all Loans reported by Company's industry
classifications; (ii) no Default has occurred; and (iii) if a Default
has occurred, the certificate shall specify the nature thereof and
the period of existence thereof and the steps, if any, being
undertaken to correct the same;
(iv) with the financial statements described in Section
5.01(a)(ii), at the Company's option, either: (a) an audit by the
Company's independent certified public accountants of the
reconciliation report prepared by the Company for the fiscal year, as
required under Section 5.01(c), that such reconciliation accurately
presents in all material respects the information therein contained
and the year-end balances of the Notes as of the end of the fiscal
year then ending, individually and in the aggregate and confirms that
they have no knowledge of any Note being in payment default as of the
end of the fiscal year then ended; or, (b) an estoppel letter in
substantially the form of Exhibit B attached hereto executed by the
Borrower under each Note, dated as of the end of the fiscal year then
ending, together with a statement of the Company's independent
certified public accountants that they have no knowledge of any Note
being in payment default as of the end of the fiscal year then ended.
All financial statements referred to herein shall be complete and correct
in all material respects and shall be prepared in reasonable detail in
accordance with GAAP, applied consistently throughout all accounting
periods.
(b) Furnish to the Board copies of (i) all financial statements,
reports and returns as the Parent, the Company or any Affiliate shall send
to its stockholders, and (ii) all regular, periodic, or special reports
(including, but not limited to, annual reports on form 10-K, and
quarterly reports on form 10-Q) which the Parent, the Company or any
Affiliate is or may be required to file with the Securities and Exchange
Commission ("SEC") or any governmental department, bureau, commission or
agency succeeding to the functions of the SEC; all of which documents
shall be delivered to the Board forthwith as and when sent, filed, or
received by the Parent, the Company or any Affiliate.
(c) Furnish to the Board a report certified by the Chairman and
Chief Executive Officer prepared on a monthly basis reporting: (i) the
principal balances of all Notes as of the end of the preceding month,
individually and in the aggregate, purchased hereunder; (ii) all interest,
payments of principal and prepayments received, identifying the Note to
which such payment relates; (iii) the principal balances of all such Notes
as of the end of the month, individually and in the aggregate with
appropriate explanations of the character of each payment for all such
Notes individually and in aggregate; (iv) the payments to the Board during
the month (with appropriate explanation and detail as to amount and
character of such payments) for each Note individually and in the
aggregate; and (v) defaults under any Note or Loan Documents which remain
uncured, identifying the Loan pursuant to which such default occurred and
summarizing briefly the nature of such default. After the end of each
fiscal year and with the financial statements to be provided under Section
5.01(a)(ii), the Company will furnish a report prepared on an annual basis
containing all of the same information.
(d) Furnish to the Document Custodian annual financial statements of
each of the Borrowers in the form required to be provided to the Company
pursuant to the Loan Documents.
5.02. Notice of Default. As soon as the Company knows of the
occurrence of any Default or Potential Default and of any other
development, financial or otherwise, which may have a material adverse
effect on the business, property or affairs of the Company or the ability
of the Company to perform its obligations under the Note Purchase
Documents, give prompt notice thereof in writing to the Board.
5.03. Conduct of Business and Maintenance of Existence. Continue to
(a) engage in business of the same type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence,
and take all reasonable action to maintain all rights, privileges,
licenses and franchises necessary or desirable in the ordinary course of
its business; (b) comply with all Contractual Obligations and Requirements
of Law with respect to which a default or noncompliance would have a
material adverse effect on the Company; (c) adhere to its loan policies
and underwriting criteria set forth on Exhibit D in the making of Loans;
and (d) maintain all Notes in compliance with the loan characteristics set
forth in Section 4.09.
5.04. Notice of Litigation and Defaults. Promptly provide notice to
the Board of (a) the commencement or knowledge of the pending or
threatened commencement of all actions, suits and proceedings before any
court or Governmental Authority, affecting the Company taken as a whole
which, if determined adversely to the Company, could have a material
adverse effect on the financial condition, properties or operations of the
Company; and (b) any default continuing for more than ninety (90) days by
any Borrower under any Note that was purchased by the Board pursuant to
the Note Purchase Documents, whether or not the Company has declared a
default or accelerated such loan.
5.05. Information to Other Creditors. Promptly provide to the
Board, after the furnishing thereof, copies of any statement or report
furnished to any other party pursuant to the terms of any indenture, loan,
credit or similar agreement and not otherwise required to be furnished to
the Board pursuant to any other clause of this Article V.
5.06. Taxes. Pay, when due, all taxes, assessments and governmental
charges, fees and levies upon it and its income, profits, revenues or
property, unless any of the foregoing is being contested in good faith and
the Company has established adequate reserves for the payment of the
amounts being contested.
5.07. Maintenance of Property and Insurance. Keep all of its
property useful and necessary in its business in good working order and
condition and maintain, during the term of this Agreement and the Notes,
insurance of the types and amounts of coverages that would be reasonable
for companies in the same industry as the Company, with financially sound
and reputable insurance companies. The Company will furnish to the Board,
upon the Board's written request, full information as to the insurance
carried and, upon request of the Board, will provide an affirmative
endorsement that such insurance companies provide 30 days' prior written
notice to the Board of cancellation or nonrenewal of any insurance policy.
5.08. Books and Records and Inspection. Keep proper books of record
and account in which full, true and correct entries shall be made of all
dealings and transactions in relation to its business and activities in
conformity with Generally Accepted Accounting Principles and all
Requirements of Law, and permit representatives of the Board to (a) visit
and inspect any of its properties at any time during normal business hours
and as often as may reasonably be desired, and to discuss the business,
operations, properties and financial and other conditions of the Company
with officers and employees of the Company and with the Company's
independent certified public accountants, and (b) inspect any of the
corporate books and financial and other records of the Company and to make
copies thereof.
5.09. Notice of ERISA Reportable Event. Promptly provide to the
Board, after the filing or receipt thereof, copies of all reports,
including annual reports and notices which the Company files with or
receives from the PBGC or the United States Department of Labor under
ERISA; and as soon as possible and in any event within thirty (30) days
after the Company knows or has reason to know that any Reportable Event
has occurred with respect to any Plan or that the PBGC or the Company has
instituted or will institute proceedings under Title IV of ERISA to
terminate any Plan, a certificate of the chief financial officer of the
Company setting forth details as to such Reportable Event or Plan
termination and the action the Company proposes to take with respect
thereto.
5.10. Net Worth. Maintain a net worth at all times at least equal
to the sum of Nineteen Million Five Hundred Thousand Dollars ($19,500,000)
plus eighty-five percent (85%) of any increase in the Company's net worth
after March 3, 1995 which may result from, inter alia, the receipt of any
proceeds (cash or other property) from the issuance by the Company of any
shares of its capital stock, the receipt of any capital contributions
(cash or other property) from existing or future shareholders of the
Company, whether in the form of paid-in capital or otherwise, or the
retention of earnings by the Company. Notwithstanding the foregoing, the
Company may exercise its rights under Section 7.02 to cure its failure to
maintain net worth as required in this Section 5.10, by obtaining one or
more contributions to capital up to an aggregate amount of $2,000,000,
less the aggregate amount of contributions to capital obtained by the
Company during the period of March 3, 1995 to the Closing Date in order to
cure its failure to maintain net worth as required by Section 5.10 of that
certain Master Purchase Agreement by and between the Company and the Board
dated as of March 3, 1995, as amended, without having the minimum net
worth requirement increased by 85% of the amount contributed to effect the
cure. For purposes of this Section 5.10, the Company's net worth shall be
equal to the aggregate amount of assets less the aggregate amount of
liabilities and preferred stock (if any), all according to GAAP
definitions. (As presented on the Company's balance sheet, net worth
includes common stock, paid-in surplus, treasury stock, undistributed
realized earnings, unrealized gain or loss on loans and investments, and
realized gain or loss on loans and investments. Any realized or
unrealized gain or loss on interest rate swaps are, and shall continue to
be, accounted for, as the case may be, as realized or unrealized gain or
loss on loans and investments.)
ARTICLE 6
NEGATIVE COVENANTS
During the term of this Agreement and as long as the Company or the
Parent has any obligation to the Board under the Loan Participation
Certificates and Agreements which remain unpaid, unless the Board shall
otherwise consent in writing:
6.01. Purchase of Stock. The Company shall not acquire, directly or
indirectly, for value, any of its capital stock now or hereafter
outstanding.
6.02. Sale of Assets, Merger and Consolidation. The Company shall
not sell, transfer or assign all or substantially all of its assets; or
merge or consolidate with or amalgamate with or into any other Person.
6.03. Transactions With Affiliates. The Company shall not:
(a) Enter into or be a party to any transaction or arrangement,
including, without limitation, the purchase, sale, exchange or use of any
property or asset, or any interest therein, whether real, personal or
mixed, or tangible or intangible, or the rendering of any service, with
any Affiliate (including the Parent) or any director or officer of the
Company or any holder of 10% or more of the Company's outstanding stock,
except in the ordinary course of and pursuant to the reasonable
requirements of the Company's business and upon fair and reasonable terms
no less favorable to the Company than it would obtain in a comparable
arm's-length transaction with a Person not an Affiliate or a director or
officer of the Company, or a holder of 10% or more of the Company's
outstanding stock. Notwithstanding the above, the office facilities and
resources of the Company may be used to a limited extent in conducting the
business of a real estate investment trust of which certain officers of
the Company are officers.
(b) Make: (i) any payment to any Affiliate based upon the stock of
the Company; (ii) any purchases, redemptions or other acquisitions, direct
or indirect, of stock of the Company; (iii) any other distribution in
respect of stock of the Company, whether now or hereafter outstanding,
either directly or indirectly, whether in cash or property or otherwise;
or (iv) any transfers, whether in cash or property or otherwise, to the
Parent or any Affiliate without the receipt by the Company of reasonably
equivalent consideration therefor; provided, however, that, so long as no
Default has occurred and is continuing or will occur as a result of any of
the foregoing, the Company may: (a) subject to the provisions of the Loan
Participation Certificate and Agreement, and to any other conditions or
restrictions imposed by any other agreement between the Company and the
Board, sell Loans, at not less than one hundred percent (100%) of face
value and for cash consideration, to the Parent or an Affiliate, or a
third-party; and (b) pay dividends to the Parent in an aggregate amount
sufficient to allow the Company and/or the Parent to maintain its status,
and to otherwise maintain its qualification to operate, as a "real estate
investment trust" under Section 859 of the Internal Revenue Code.
6.04. Liens. The Company shall not:
(a) Assume or suffer to exist any Lien or other charge or
encumbrance, or any other type of preferential arrangement, upon or with
respect to any of its properties, including, but not limited to, all of
the Company's assets and real property, whether now owned or hereafter
acquired, or assign any right to receive income, in each case to secure
any Debt of any Person except:
(i) Liens in favor of the Board;
(ii) Liens created pursuant to the Revolving Credit Loans in
favor of the Banks and such liens hereafter created in favor of
lenders who qualify under the terms of the Intercreditor Agreement as
"Lenders" or "Limited Lenders" in connection with indebtedness
permitted under Section 6.05 herein;
(iii) Any Liens created after the Closing Date by purchase
money mortgages, capitalized leases, conditional sales contracts,
security interests, deeds of trust, realty mortgages or similar
instruments given to secure the payment of the purchase price
incurred in connection with the acquisition of fixed assets useful
and intended to be used in carrying out the business of the Company
provided that (aa) the Lien or charge shall attach solely to the
property purchased; and (bb) the aggregate principal amount with
respect to any single purchase shall not be in excess of the fair
market value of such property;
(iv) Liens created pursuant to the Company's reverse repurchase
agreements with the Banks in connection with Treasury Bond
obligations;
(v) Liens securing the payment of taxes, assessments or
governmental charges or levies, provided the same are not at the time
delinquent or are being contested in good faith and the Company has
established adequate resources for the payment of the amounts being
contested;
(vi) Liens imposed by law, such as claims or demands of
suppliers, mechanics, carriers, warehousers, landlords and other like
Persons which secure payment of obligations, provided the same are
not more than 120 days past due or are being contested in good faith
and the Company has established adequate resources for the payment of
the amounts being contested;
(vii) Liens incurred or deposits made in the ordinary course
of business in connection with worker's compensation, unemployment
insurance, social security and other like laws.
(b) The Parent shall not transfer, assign, convey, pledge, grant a
security interest in, or otherwise encumber its ownership interest in the
Company or in any other Subsidiary of the Parent.
6.05. Indebtedness. The Company shall not create, incur, assume or
suffer to exist any Debt except:
(a) The Revolving Credit Loans, made in accordance with and
subject to the terms of the Intercreditor Agreement;
(b) Loans from lenders who qualify under the terms of the
Intercreditor Agreement as "Lenders" or "Limited Lenders" as provided
for and subject to the maximum credit and other limitations contained
in the Intercreditor Agreement and the loan agreements in existence
on this date with respect to the Revolving Credit Loans, provided
that any such loans requiring any consent under, or amendment to, the
Intercreditor Agreement or the loan agreements shall also require the
prior written consent of the Board;
(c) Indebtedness under reverse repurchase agreements with the
Banks and any lenders who qualify under the terms of the
Intercreditor Agreement as "Lenders";
(d) Unsecured liabilities not aged more than 120 days from the
billing date which are incurred in the ordinary course of business
and paid within the specified time, subject to the Company's good
faith objection to any such liabilities provided the Company has
created adequate resources for the payment of the amounts being
contested;
(e) Commercial paper and interest rate swap obligations;
(f) Indebtedness incurred in the ordinary course of business
consisting of (i) amounts held in escrow for the payment of real
estate taxes, (ii) amounts held as security deposits, and (iii) loan
participations (including those with recourse against the Company and
those sold on a "first-out" basis); and
(g) All other indebtedness shown on the Company's financial
statements as of the date hereof.
6.06. Change in Loan Policies or Underwriting Standards. The
Company shall not change or amend the Company's loan policies or
underwriting standards which are attached hereto as Exhibit D.
ARTICLE 7
DEFAULTS AND REMEDIES
The occurrence of any one or more of the following events shall
constitute a Default:
7.01. Payment of Amounts Under the Loan Participation Certificate
and Agreements and Other Obligations. The failure by the Company or the
Parent to pay any principal or interest payment due under any Loan
Participation Certificate and Agreement within five (5) Business Days of
when such payment is due.
7.02. Covenants. The breach by the Company or the Parent, as the
case may be, of any of the terms or provisions of Articles 5 and 6 hereof,
and the Company's failure to cure said breach within thirty (30) days
after the occurrence thereof.
7.03. Representations and Warranties. Any representation or
warranty made or deemed made by the Company or the Parent, as the case may
be, to the Board hereunder or in connection with any Note Purchase
Documents or any certificate or information delivered in connection with
the Note Purchase Agreement shall be materially false or misleading as of
the date on which made.
7.04. Other Debt. The Company shall: (a) fail to pay when due or
within any applicable grace period any Debt owed by the Company to the
Board pursuant to the $10,000,000 promissory note dated July 9, 1990 or
the $10,000,000 promissory note dated November 7, 1991; or (b) fail to pay
when due or within any applicable grace period any Debt in excess of
$50,000 in the aggregate at any one time outstanding for the Company; or
(c) default in the performance of any other term, provision or condition
contained in any agreement, including, but not limited to, the Revolving
Credit Loans, under which any such Debt described in clause (a) or (b) was
created or is governed, the effect of which is to cause to come due prior
to its stated maturity, or to permit the holder or holders of the same to
call due prior to its stated maturity.
7.05. Bankruptcy or Insolvency. The Company or the Parent shall:
(a) have an order for relief entered with respect to it under the Federal
Bankruptcy Code; (b) not pay, or admit in writing its inability to pay,
its debts generally as they become due; (c) make an assignment for the
benefit of creditors; (d) apply for, seek, consent to, or acquiesce in the
appointment of a receiver, custodian, trustee, examiner, liquidator or
similar official for it or any substantial part of its property;
(e) institute any proceeding seeking to adjudicate it a bankrupt or
insolvent, or seeking dissolution, winding-up, liquidation,
reorganization, arrangement, adjustment or composition of it or its Debt
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors and fail to have such proceeding dismissed within sixty
(60) days of its filing or fail to file an answer or other pleading
denying the material allegations of any such proceeding filed against it;
(f) take any corporate action to authorize or effect any of the foregoing
actions set forth in this Section 7.05; or (g) fail to contest in good
faith any appointment or proceeding described in this Section 7.05.
7.06. Administrator or Receiver. Without the application, approval
or consent of the Company or the Parent, as the case may be, a receiver,
trustee, examiner, liquidator or similar official shall be appointed for
the Company or any substantial part of its property, or a proceeding
described in Section 7.05 hereof shall be instituted against the Company,
or the Parent, as the case may be, and such appointment continues
undischarged or such proceeding continues undismissed or unstayed for a
period of sixty (60) consecutive days.
7.07. Condemnation or Seizure. Any court or Governmental Authority
shall condemn, seize or otherwise appropriate, or take custody or control
of all or a substantial portion of the property or assets of the Company
or the Parent.
7.08. REIT Status. The Company or the Parent shall terminate its
election, or shall cease to be duly qualified, to operate as a "Real
Estate Investment Trust" ("REIT") pursuant to Section 856 of the Internal
Revenue Code, and regulations applicable thereto; or, the Internal Revenue
Service shall have revoked or terminated the Company's or the Parent's
election to operate, or status, as a REIT; or, the Internal Revenue
Service shall have notified the Company or the Parent that the Internal
Revenue Service will institute proceedings to revoke or terminate, the
Company's or the Parent's election to operate, or status, as a REIT unless
such proceedings to revoke or terminate the Company's or the Parent's REIT
election or status are dismissed within ninety days of the date of said
notification to the Company or the Parent, as the case may be.
7.09. Default Under Loan Participation Certificate and Agreement.
The breach by the Company of any term or covenant contained within the
Loan Participation Certificate and Agreement.
If a Default as specified in Section Section 7.01 through 7.09
inclusive occurs, the Board may, in addition to all other remedies
available to it under law or equity, terminate the Loan servicing and
administration duties of the Company under any one or all of the Loan
Participation Certificate and Agreements and enforce the Notes and Loan
Documents in the Board's own name exercising all of its rights hereunder
and as contained in the Loan Participation Certificate and Agreements.
The Company shall pay upon demand by the Board the amount, if any, that
remains uncollected and due and owing to the Board on its Participation
after the Board has liquidated the Notes. The Company shall assign to the
Board, at the Board's request, any third party loan servicing or
administration agreements which the Company has entered relating to any of
the Notes.
ARTICLE 8
GENERAL PROVISIONS
8.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement or the Loan Participation Certificate and Agreement, nor
consent to any departure by the Company therefrom, shall in any event be
effective unless the same shall be in writing and signed by the Board, and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. Unless
specifically stated, no amendment or restatement of this Agreement shall
constitute a rescission, substitution, or otherwise affect the validity
and enforceability of the original Agreement.
8.02. Notices. Any notice required or permitted to be delivered
under this Agreement or under any of the Loan Documents by any party to
the other shall be given as follows:
To the Company: Bando McGlocklin Small Business
Investment Corp.
Attn: Chief Executive Officer
13555 Bishops Court, Suite 205
Brookfield, WI 53005
To the Board: Director of Private Placements
Investment ID # 940501W01
State of Wisconsin Investment Board
121 East Wilson Street
P.O. Box 7842
Madison, WI 53707
Notices shall be deemed given (a) when deposited in the United States
Mail, postage prepaid; (b) upon delivery to the telegraph company for
transmission, charges prepaid; (c) in the case of telefax notice, when
sent, answer back received; or (d) when physically delivered by hand to
the addressee of such notice, request or demand by or on behalf of the
person initiating such notice. The Company and the Board may each change
the address for service of notice upon it by a notice in writing to the
other.
8.03. No Waivers; Remedies. No course of dealing between the
Company and the Board and no delay or omission by the Board to exercise
any right under the Note Purchase Documents shall impair such right or be
construed to be a waiver of any Default or Potential Default or an
acquiescence therein, and any single or partial exercise of any such right
shall not preclude other or further exercise thereof or the exercise of
any other right. All remedies contained in the Note Purchase Documents or
by law afforded shall be cumulative, and all shall be available to the
Board until the Board's Participation in the Notes has been paid in full.
The Board may exercise such remedies in any order of priority.
8.04. Cost, Expenses and Taxes. The Company agrees to pay on demand
all costs and expenses of the Board in connection with the preparation,
execution, delivery, enforcement and administration of the Note Purchase
Documents, and the other documents that may be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket
expenses of Counsel to the Board with respect thereto and with respect to
advising the Board as to its rights and responsibilities under the Note
Purchase Documents, and all costs and expenses, if any (including
reasonable counsel fees and expenses), of the Board in connection with the
enforcement of the Note Purchase Documents. In addition, the Company
shall pay any and all fees and other taxes payable or determined to be
payable in connection with the execution and delivery of the Note Purchase
Documents, and agrees to save the Board harmless from and against any and
all liabilities with respect to or resulting from any delay in paying or
omission to pay such fees and taxes.
8.05. Benefit of Agreement. The Board will accept the Loan
Participation Certificates and Agreements and will acquire the Notes for
its own account without any present intention of making any sale or
distribution of the Notes in any manner, provided that the disposition of
the Notes shall be in the control of the Board. The terms and provisions
of the Note Purchase Documents shall be binding upon and inure to the
benefit of the Company and the Board and their respective successors and
assigns, including, without limitation, all future holders of the Notes,
except the Company shall not have the right to assign its rights or
obligations under the Note Purchase Documents or any interest therein,
without the prior written consent of the Board.
8.06. Survival of Representations. All representations and
warranties of the Company contained in the Note Purchase Documents shall
survive delivery of the Loan Participation Certificates and Agreements and
the transfer of the Notes.
8.07. Choice of Law and Construction. The Note Purchase Documents
shall be construed in accordance with the laws of the State of Wisconsin.
Whenever possible, each provision of the Note Purchase Documents shall be
interpreted in such manner as to be effective and valid under such
applicable law, but if any provisions of any Note Purchase Document shall
be held to be prohibited or invalid under such applicable law, such
provisions shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of any such Note Purchase Document.
8.08. Section Headings and References. Section headings in the Note
Purchase Documents and the tables of contents thereof are for convenience
of reference only and shall not govern the interpretation of any of the
terms or provisions of the Note Purchase Documents. All references to
sections or articles in the Note Purchase Documents are to the section or
article of the Note Purchase Document in which such section or article
reference appears, unless a different Note Purchase Document is expressly
specified.
8.09. Exhibits. All exhibits and schedules referred to in the Note
Purchase Documents are hereby incorporated into each other Note Purchase
Document by this reference, and all terms as defined in the Note Purchase
Documents shall have the same meanings in such exhibits and schedules,
unless otherwise defined in such exhibits and schedules. All references
to exhibits and schedules in the Note Purchase Documents are to those
attached to the Note Purchase Document in which such reference appears,
unless a different Note Purchase Document is expressly specified.
8.10. Lawful Money. All references in the Note Purchase Documents
to payment of amounts of money shall be to lawful money of the United
States of America.
8.11. Entire Agreement. The Note Purchase Documents embody the
entire agreements and understandings between the Company and the Board and
supersede all prior agreements and understandings between the Company and
the Board relating to the subject matter thereof.
8.12. Term of Agreement. The Note Purchase Documents shall
terminate only when the obligations of the Company under the Loan
Participation Certificate and Agreement, all interest thereon and all
other fees or charges due under the Loan Participation Certificate and
Agreements and this Agreement have been paid in full.
8.13. Counterparts. This Agreement may be executed by the parties
hereto individually or in several separate counterparts, each of which
shall be an original and all of which taken together shall constitute one
and the same agreement.
8.14. Further Assurance. The Company agrees to do such further acts
and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as the Board may at any time
request in connection with the administration or enforcement of the Notes
and Loan Documents in order to better assure and confirm unto the Board
its rights, powers and remedies hereunder, including without limitation
assigning mortgages (in recordable form), security agreements, UCC
financing statements, guaranties and other documents providing collateral
security for the Notes purchased under the Note Purchase Documents, and
assigning the Company's rights under any third party loan servicing and
administration agreements.
8.15. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
8.16. Fiduciary. The Company acknowledges that it is acting as, and
will fulfill its duties and obligations hereunder as a fiduciary to the
Board.
IN WITNESS WHEREOF, the Company and the Board have executed this
Agreement as of the date first above written.
BANDO McGLOCKLIN SMALL BUSINESS
LENDING CORPORATION
(the "Company")
By:
George R. Schonath
Chairman of the Board and
Chief Executive Officer
BANDO McGLOCKLIN CAPITAL CORPORATION
(the "Parent")
By:
George R. Schonath
Chairman of the Board and
Chief Executive Officer
STATE OF WISCONSIN INVESTMENT BOARD
(the "Board")
By:
Robert L. Zobel
Investment Director
Exhibit 10.4
BANDO McGLOCKLIN CAPITAL CORPORATION
1997 STOCK OPTION PLAN
1. Purpose. The purpose of the Bando McGlocklin Capital
Corporation 1997 Stock Option Plan (the "Plan") is to induce key employees
to remain in the employ of Bando McGlocklin Capital Corporation (the
"Company") or of any subsidiary of the Company as hereinafter defined, and
to encourage such employees to secure or increase on reasonable terms
their stock ownership in the Company. The Board of Directors of the
Company (the "Board") believes that the Plan will promote continuity of
management and increased incentive and personal interest in the welfare of
the Company by those who are primarily responsible for shaping and
carrying out the long-range plans of the Company and securing its
continued growth and financial success. It is intended that only
nonqualified stock options may be issued pursuant to the Plan.
2. Effective Date of the Plan. The effective date of the Plan
is the date of its adoption by the Board, February 3, 1997, subject to the
approval and ratification of the Plan by the shareholders of the Company,
and any and all grants made under the Plan prior to such approval shall be
subject to such approval.
3. Stock Subject to Plan.
(a) Plan Limit. Subject to adjustment in accordance with the
provisions of Section 7, shares of the Company's common stock, 6-2/3 cents
par value per share, not to exceed 200,000 shares, may be issued pursuant
to the Plan. Such shares may be authorized and unissued or treasury
shares. If any options expire, are canceled, or terminate for any reason
without having been exercised in full, the shares subject to the
unexercised portion thereof shall again be available for the purposes of
the Plan.
(b) Employee Limit. No Employee shall receive in any single
fiscal year of the Company options for more than 160,000 shares of stock,
subject to adjustment in accordance with the provisions of Section 7.
Determinations under this Section shall be made in a manner that is
consistent with the exemption for performance-based compensation provided
by Section 162(m) of the Internal Revenue Code of 1986 (the "Code") and
any regulations promulgated thereunder.
4. Administration. The Plan shall be administered by the
Board and/or the Compensation Committee of the Board (the "Committee")
consisting of not less than two directors, each of whom shall qualify as a
"non-employee director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any
successor rule or regulation, and an "outside director" within the meaning
of Section 162(m) of the Code and any regulations promulgated thereunder.
If at any time the Committee shall not be in existence or not consist of
directors who are qualified as "non-employee directors" and "outside
directors" as defined above, the Board shall administer the Plan. To the
extent permitted by applicable law, the Board may, in its discretion,
delegate to another committee of the Board or to one or more senior
officers of the Company any or all of the authority and responsibility of
the Committee with respect to options to participants other than
participants who are subject to the provisions of Section 16 of the
Exchange Act. To the extent that the Board has delegated to such other
committee or one or more officers the authority and responsibility of the
Board and/or Committee, all references to the Committee herein shall
include such other committee or one or more officers.
Subject to the express provisions of the Plan, the Committee and
the Board each shall have authority to establish such rules and
regulations as they deem necessary or advisable for the proper
administration of the Plan, and, in their discretion, to determine those
key employees to whom and the price at which options will be granted, the
time or times at which options will be granted, the exercise periods,
limitations on exercise, the number of shares to be subject to each option
and any other terms, limitations, conditions and restrictions on options
as the Committee or the Board, in its discretion, deems appropriate. In
making such determinations, the Committee and the Board may take into
account the nature of the services rendered by the respective employees,
their present and potential contributions to the success of the Company or
its subsidiaries as defined in Section 424(f) of the Code ("Subsidiary" or
"Subsidiaries"), and such other factors as the Committee or the Board in
its discretion shall deem relevant. Subject to the express provisions of
the Plan, the Committee and the Board each shall also have authority to
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective
option agreements (which need not be identical), to waive any conditions
or restrictions with respect to any option and to make all other
determinations necessary or advisable for the administration of the Plan.
The Committee and Board determinations on the matters referred to in this
Section 4 shall be conclusive.
5. Eligibility. Options may be granted to any key employee
("Employee") of the Company and of any of its present and future
Subsidiaries including any such Employee who is also an officer or
director of the Company or any of its Subsidiaries.
6. Grants of Options.
(a) Grant. Subject to the provisions of the Plan, the
Committee and the Board each may grant stock options to Employees in such
amounts as they shall determine. The Committee and the Board each shall
have full discretion to determine the terms and conditions (including
vesting) of all options. More than one option may be granted to the same
Employee.
(b) Option Price. The per share option price, as determined by
the Committee or Board, shall be an amount not less than 100% of the fair
market value of the stock on the trading date immediately prior to the
date such option is granted, as such fair market value is determined by
such methods or procedures as shall be established from time to time by
the Committee or Board ("Fair Market Value").
(c) Option Period. The term of each option shall be as
determined by the Committee or Board.
(d) Exercise of Option. The Committee or Board shall prescribe
the manner in which an Employee may exercise an option which is not
inconsistent with the provisions of this Plan. An option may be
exercised, subject to limitations on its exercise and the provisions of
subparagraph (g), from time to time, only by (i) providing written notice
of intent to exercise the option with respect to a specified number of
shares, and (ii) payment in full to the Company of the option price at the
time of exercise. Payment of the option price may be made (i) by delivery
of cash and/or securities of the Company having a then Fair Market Value
equal to the option price, or (ii) by delivery (including by fax) to the
Company or its designated agent of an executed irrevocable option exercise
form together with irrevocable instructions to a broker-dealer to sell or
margin a sufficient portion of the shares and deliver the sale or margin
loan proceeds directly to the Company to pay for the option price.
(e) Transferability of Option. The options are not
transferable otherwise than by will or the laws of descent and
distribution, and may be exercised during the life of the Employee only by
the Employee, except that an Employee may, to the extent allowed by the
Committee or Board and in a manner specified by the Committee or Board,
(a) designate in writing a beneficiary to exercise the option after the
Employee's death, and (b) transfer any option.
(f) Termination of Employment. In the event an Employee leaves
the employ of the Company and/or its Subsidiaries whether voluntarily or
by reason of dismissal, disability or retirement, all rights to exercise
an option shall terminate immediately unless otherwise determined by the
Committee or Board or provided in the option agreement granted to such
Employee.
7. Capital Adjustment Provisions. In the event of any change
in the shares of common stock of the Company by reason of a declaration of
a stock dividend (other than a stock dividend declared in lieu of an
ordinary cash dividend), stock split, reorganization, merger,
consolidation, spin-off, recapitalization, split-up, combination or
exchange of shares, or otherwise, the aggregate number and class of shares
available under this Plan, the number and class of shares subject to each
outstanding option, and the exercise price for shares subject to each
outstanding option, shall be appropriately adjusted by the Committee or
Board, whose determination shall be conclusive. No such adjustment shall
change the aggregate option price for the shares covered by any option
agreement or require the Company to sell any fractional shares, and the
adjustment with respect to each option agreement shall be limited
accordingly.
8. Termination and Amendment of Plan. The Plan shall
terminate on February 3, 2007, unless sooner terminated as hereinafter
provided. The Board may at any time terminate the Plan, or amend the Plan
as it shall deem advisable including (without limiting the generality of
the foregoing) any amendments deemed by the Board to be necessary or
advisable to assure the Company's deduction under Section 162(m) of the
Code for all options granted under the Plan and to assure conformity with
any requirements of other state or federal laws or regulations; provided,
however, that shareholder approval of any amendment of the Plan shall also
be obtained if otherwise required by (i) the Code or any rules promulgated
thereunder (in order to enable the Company to comply with the provisions
of Section 162(m) of the Code), or (ii) the listing requirements of any
principal securities exchange or market on which the shares are then
traded (in order to maintain the listing or quotation of the shares
thereon). No termination or amendment of the Plan may, without the
consent of the Employee, adversely affect the rights of such Employee
under any option previously granted. Termination of the Plan shall not
affect the rights of Employees under options granted before termination
and all unexpired options shall continue in force and operation after
termination of the Plan except as they may lapse or be terminated by their
own terms and conditions.
9. Rights of Employees. Nothing in this Plan or in any
options shall interfere with or limit in any way the right of the Company
and any of its Subsidiaries to terminate any Employee's employment at any
time, nor confer upon any Employee any right to continue in the employ of
the Company or any of its subsidiaries.
10. Rights as a Shareholder. An Employee shall have no rights
as a shareholder with respect to shares covered by any option until the
date of issuance of the stock certificate to such Employee and only after
such shares are fully paid. No adjustment will be made for dividends or
other rights for which the record date is prior to the date such stock is
issued.
11. Tax Withholding. The Company may deduct and withhold from
any cash otherwise payable to an Employee such amount as may be required
for the purpose of satisfying the Company's obligation to withhold
Federal, state or local taxes in connection with any option. Further, in
the event the amount so withheld is insufficient for such purpose, the
Company may require that the Employee pay to the Company upon its demand
or otherwise make arrangements satisfactory to the Company for payment of
such amount as may be requested by the Company in order to satisfy its
obligation to withhold any such taxes.
An Employee may be permitted to satisfy the Company's
withholding tax requirements by electing to have the Company withhold
shares of stock otherwise issuable to the Employee. The election shall be
made in writing and shall be made according to such rules and in such form
as the Committee or Board may determine.
12. Miscellaneous. The grant of any option under the Plan may
also be subject to other provisions as the Committee or Board determines
appropriate, including, without limitation, provisions for (a) one or more
means to enable Employees to defer recognition of taxable income relating
to options, which means may provide for a return to an Employee on amounts
deferred as determined by the Committee or Board; (b) the purchase of
stock under options in installments; and (c) compliance with federal or
state securities laws and stock exchange or market requirements.
13. Agreements. Options granted pursuant to the Plan shall be
evidenced by written agreements in such form as the Committee or Board
shall from time to time adopt.
14. Powers of Company Not Affected. The existence of the Plan
shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of the
Company, or any issuance of bonds, debentures, preferred or prior
preference stock ahead of or affecting the stock or the rights thereof, or
dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
15. Requirements of Law. The granting of options and the
issuance of shares of stock upon the exercise of an option shall be
subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges or
markets as may be required.
16. Governing Law. The Plan and all determinations made and
actions taken pursuant thereto shall be governed by and construed in
accordance with the internal laws of the State of Wisconsin.
Exhibit 11
BANDO McGLOCKLIN CAPITAL CORPORATION
COMPUTATION OF NET INCOME PER COMMON SHARE
QUARTER ENDED MARCH 31,
1997 1996
PRIMARY:
Average number of common shares
outstanding 3,695,659 3,766,127
Incremental shares calculated
using the treasury stock method 21,966 26,607
--------- ---------
Weighted average shares
outstanding 3,717,625 3,792,734
========= =========
Net Income $744,524 $708,320
========= =========
Primary net income per common
share $0.20 $0.19
========= =========
FULLY DILUTED:
Average number of common shares 3,695,659 3,766,127
outstanding
Incremental shares calculated
using the treasury 61,486 26,607
stock method --------- ---------
Weighted average shares 3,757,145 3,792,734
outstanding ========= =========
Net Income $744,524 $708,320
========= ========
Fully diluted net income per $0.20 $0.19
share ========= ========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BANDO MCGLOCKLIN CAPITAL
CORPORATION AS OF AND FOR THE PERIOD ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 549,663
<SECURITIES> 106,060,067
<RECEIVABLES> 2,344,846
<ALLOWANCES> (12,162)
<INVENTORY> 1,657,287
<CURRENT-ASSETS> 2,676,227
<PP&E> 2,154,115
<DEPRECIATION> (578,910)
<TOTAL-ASSETS> 114,851,133
<CURRENT-LIABILITIES> 4,116,993
<BONDS> 76,979,613
265,035
16,908,025
<COMMON> 0
<OTHER-SE> 16,763,467
<TOTAL-LIABILITY-AND-EQUITY> 114,851,133
<SALES> 3,029,640
<TOTAL-REVENUES> 5,442,414
<CGS> 1,637,134
<TOTAL-COSTS> 1,637,134
<OTHER-EXPENSES> 1,564,367
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,264,316
<INCOME-PRETAX> 976,597
<INCOME-TAX> (232,073)
<INCOME-CONTINUING> 744,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 744,524
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
