STANDARD LOAN AGREEMENT

 

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                                                                 Exhibit 10 (jj)

 

                             STANDARD LOAN AGREEMENT

 

                                   ARTICLE I.

 

SECTION 1.01: PURPOSE OF LOAN FUND

 

         The purpose of the Revolving Loan Fund is to support business

activities for which credit is not otherwise available on terms and conditions

which would permit completion and/or the successful operation or accomplishment

of the project in the following eligible areas:

 

          Aurora, Bon Homme, Brule, Charles Mix, Davison, Douglas, Gregory,

Hanson, Hutchinson, Jerauld, Lyman, Sanborn, Tripp and Yankton Counties in South

Dakota. The Lender reserves the right to recall the loan if these requirements

are not met. Loan funds from this loan may be used for real property acquisition

or construction, machinery, equipment, inventory, and working capital. Any

equipment to be purchased with loan funds must be specifically identified on an

exhibit to this agreement, and Borrower shall comply with all reporting and

inventory requirements of Lender with respect to equipment purchased.

 

SECTION 1.02: PURPOSE OF LOAN

 

M-Tron Industries, Inc. (the Borrower) will utilize ABC funding, up to $100,000,

to assist with the expansion of their business in Yankton, South Dakota. The

description of the collateral is described in Exhibit A.

 

SECTION 1.03: TERMS AND CONDITIONS

 

         Upon the terms and conditions as hereinafter set forth, Lender shall

loan to, borrower the sum up to $100,000 (hereinafter "Loan") bearing interest

at the rate of five and one half percent (5,5%) per annum to be amortized over

120 periods, and paid in equal monthly installments with the first such

installment due on the 10th day of November, 2002, and a like monthly payment

due on the 10th day of each month thereafter until November 10, 2007 when the

entire remaining principal balance, together with accumulated interest, shall

become due and paid in full. Such loan shall be evidenced by a promissory note,

a true and correct copy of which is attached hereto as Exhibit "B," and shall be

secured by a mortgage, a true and correct copy of which is attached hereto as

Exhibit "D". Those documents, together with this Loan agreement, (the "Loan

Documents") shall be executed contemporaneously herewith and incorporated herein

by this reference. The parties agree that a default under the terms of any of

the agreements within said Loan documents shall constitute a default under all

the agreements incorporated within the said Loan Documents.

 

The Borrower will make payments to the Lender as follows:

 

           1.      The sum of $100,000 will be amortized over a 120 month period

                  with monthly installments that equally blend principal and

                  interest in the amount of $1,085.43 each. The first of such

                  installments shall be due on the 10th day of November, 2002

                  with a like installment due on the 10th day of each month

                  thereafter until November 10, 2007.

 

            2.      Payments are due on the tenth of the month, unless otherwise

                  agreed to by the Board of Areawide Business Council.

 

           3.      The borrower will be given ten (10) days grace to remit the

                  loan payments. After ten (10) days, the loan payment will be

                  considered delinquent.

 

           4.      Payments received after the twentieth of the month will be

                  subject to a late fee in an amount equaling ten percent of the

                   scheduled payment due that month or $50 whichever is greater.

 

           5.      If the Borrower does not include the late charge with their

                  next payment, the next payment will be applied to the late

                  charge first, interest next, and principal last.

 

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           6.      If the Borrower makes no further payments, interest will be

                  added to the late charges at the same rate as on the balance

                  of the loan.

 

           7.      Board of Directors of the Areawide Business Council may

                  forgive the late charges and interest on late charges if it is

                  deemed necessary or beneficial to ABC.

 

                                   ARTICLE II

 

                          REPRESENTATIONS AND WARRANTIES

 

         The Borrower represents and covenants the following:

 

SECTION 2.01: DULY ORGANIZED

 

         The Borrower is a corporation duly organized, validly existing, and in

good standing under the laws of the State of South Dakota and has the power to

enter into this Agreement and to borrow hereunder.

 

SECTION 2.02: DULY AUTHORIZED

 

         The making and performance by the Borrower of this Agreement, and the

execution and delivery of the Note, and any Security Agreements and Instruments

have been duly authorized by all necessary corporate actions and will not

violate any law, rule, regulation, order, writ, judgment, decree, determination,

or award presently in effect having applicability to the Borrower or any

provision of the Borrower's Certificate of Incorporation or by-laws, or result

in a breach of, or constitute a default under any indenture or bank loan or

credit agreement or any other agreement or instrument to which the Borrower is a

party or by which is or its property may be bound or affected.

 

SECTION 2.03: NO LEGAL SUITS

 

         There are no legal actions, suits or proceedings pending, or, to the

knowledge of the Borrower, threatened against the Borrower before any court or

administrative agency, which, if determined adversely to the Borrower, would

have a material adverse effect on the financial condition or business of the

Borrower.

 

SECTION 2.04: NOT IN DEFAULT

 

         The Borrower is not in default of any obligation, covenant, or

condition contained in any bond, debenture, note or other evidence of

indebtedness or any mortgage or collateral instrument securing the same.

 

SECTION 2.05: TAXES ARE PAID

 

         The Borrower has filed all tax returns which are required and has paid

all taxes which have or may become due pursuant to said returns or pursuant to

any assessments levied against the Borrower or its personal or real property by

any taxing agency, federal, state or local. No tax liability has been assessed

by the Internal Revenue Service or other taxing agency, federal, state or local

for taxes materially in excess of those already provided for and the Borrower

knows of no basis for such deficiency assessment. Borrower has paid in full all

personal and real property taxes by any taxing agency, federal, state or local

against the property which Borrower owns or is obligated to pay.

 

SECTION 2.06: NO ADVERSE CHANGE

 

         The Borrower certifies that there has been no adverse change since the

date of the loan application in the financial conditions, organizations,

operation, business prospects, fixed properties, or personnel of the Borrower.

 

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                                  ARTICLE III.

 

                              CONDITIONS OF LENDING

 

         The obligation of Areawide Business Council, Inc. (the "Lender") to

make the Loan shall be subject to the fulfillment at the time of closing of each

of the following conditions:

 

SECTION 3.01:

 

         Borrower agrees to indemnify and hold Areawide Business Council, the

Economic Development Administration, and the United States Department of

Commerce harmless from and against all liabilities that may be incurred as a

result of providing a loan, grant, or other award to assist, directly or

indirectly, in the preparation of the business site or construction, renovation,

or repair of any facility on the business site, to the extent that such

liabilities are incurred because of toxic or hazardous contamination of the

ground water, surface, soil or other conditions caused by operations of the

Borrower or any of its predecessors on the property.

 

SECTION 3.02:

 

         Borrower acknowledges that, when applying for this loan, Borrower

completed a Certificate of Hazardous Waste, wherein borrower represented and

warranted the absence of contamination from toxic or hazardous substances on the

premises of Borrower's facilities. Borrower continues to represent and warrant

that, to the Best of Borrower's knowledge, there exists not toxic or hazardous

substances upon borrower's premises, and borrower shall not store or bury such

toxic or hazardous substances on its premises during the term of this loan

agreement.

 

SECTION 3.03:

 

         The Borrower will document a REDI loan of at least $350,000 from the

Governor's Office of Economic Development and loan from YAPG in the amount of

$250,000. These can be documented by Standard Loan Agreements and Promissory

Notes.

 

SECTION 3.04:

 

         The Borrower will document a minimum equity injection of $800,000.

 

SECTION 3.05:

 

         Said loan shall be evidenced by a Promissory Note and shall be secured

by a Mortgage on real estate of the corporation according to the terms of the

Mortgage which in addition to this Loan Agreement (the "Loan Documents") is

executed contemporaneously herewith and incorporated by reference herein. The

parties agree a default under the terms of any of the agreements within said

Loan Documents shall constitute a default under all the agreements incorporated

within the said Loan Documents.

 

SECTION 3.06

 

         Loan disbursements shall be made on or after October 9, 2002 and shall

be based on evidence submitted by the Borrower and verified by ABC that the

Borrower has or will incur actual costs as permitted by the Loan Agreement for

the expansion of M-Tron Industries, Inc.. The Borrower will pay a loan

origination fee of 1% of the loan amount. This will be paid at or before the

time of the loan closing.

 

SECTION 3.07

 

         Disbursements of the Loan funds shall be made in accordance to Section

3.06 the Borrower represents and warrants that it shall not provide any

financing statements covering the collateral herein described to any other party

than ABC, and no financing statements covering all or any part of the

collateral, except any which may have been filed by ABC, is or shall be on file

at any public office. Upon disbursement of loan funds from time to time, ABC may

require, and the Borrower shall promptly and timely

 

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provide, such financing statement or statements covering any property and

equipment ABC shall deem necessary.

 

SECTION 3.08:

 

         This contract shall not be construed as creating between the parties or

by any third persons any relationship of third party beneficiary, principal and

agent, limited or general partnership, or joint venture.

 

SECTION 3.9:

 

         The Borrower warrants that it has obtained or has reasonable assurance

that it will obtain, all federal, state and local governmental approvals and

reviews required by law to be obtained for the establishment of the business.

 

                                    ARTICLE IV.

 

                     AFFIRMATIVE COVENANTS OF THE BORROWER

 

         The Borrower agrees to comply with the following covenants from the

date hereof until the Lender has been fully repaid with interest, unless the

Lender shall otherwise consent in writing.

 

SECTION 4.01: PAYMENT OF THE LOAN

 

         The Borrower agrees to pay punctually the principal and interest on the

Note according to its terms and conditions and as set forth in Section 6.04 of

this Agreement. Borrowers shall pay punctually any other amounts that may become

due and payable to the Lender under or pursuant to the terms of this Agreement

or Note. Loan payments delinquent for 10 days shall be assessed a late payment

fee of $50.00 or 10% of the scheduled payment, whichever is greater.

 

SECTION 4.02: PAYMENT OF OTHER INDEBTEDNESS

 

         The Borrower agrees to pay punctually the principal and interest due on

any other indebtedness now or hereafter at any time owing by the Borrower to any

Lender involved in this project Borrower shall, at Lender's request, provide

evidence of application of all other funds to project, and of payment on all

other obligations.

 

SECTION 4.03: MAINTAIN AND INSURE PROPERTY

 

         The Borrower agrees at all times to maintain the property provided as

security for this Loan in a condition equal to the condition of said property at

the time this Agreement is executed, normal wear and tear excepted, and in any

event in such condition and repair that the Lender's security will be adequately

protected. The Borrower also agrees to maintain, during the term of the Loan,

adequate hazard insurance policies covering fire and extended coverage and such

other hazards as may be deemed appropriate in amounts at least equal to the

unpaid balance of the note, and issued by companies satisfactory to the Lender

with acceptable loss payee clauses in favor of the Lender. The policy of

insurance shall include a proof of insurance provision requiring written notice

to Lender prior to cancellation. The Borrower further agrees if, at any time

during the life of the Loan the Borrower's property is declared to be within a

flood hazard area, to purchase Federal Flood Insurance if available. Such

insurance shall be in an amount equal to the lesser of: (i) the amount of the

loan; (ii) the insurable value of the property; or (iii) the maximum limit of

coverage available. If the property is not located in a flood hazard area at the

time of loan closing, the Borrower will provide satisfactory evidence thereof.

The Borrower further agrees to maintain adequate liability and workers'

compensation insurance in amounts and form satisfactory to the Lender.

 

SECTION 4.04: PAY ALL TAXES

 

         The Borrower agrees to duly pay and discharge all real and personal

property taxes, assessments, and governmental charges upon it or against its

properties prior to the date on which the penalties attached

 

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thereto, except that the Borrower shall not be required to pay any such tax,

assessment, or governmental charge which is being contested by it in good faith

and by appropriate proceedings.

 

SECTION 4.05: MAINTAIN EXISTENCE

 

         The Borrower agrees to maintain its existence, rights and privileges

within the State of South Dakota and qualify and remain qualified as a

Corporation in each jurisdiction in which its present or future operations or

its ownership of property requires such qualification.

 

SECTION 4.06: PROVIDE FINANCIAL AND JOB INFORMATION

 

         The Borrower agrees to maintain adequate records and books of account,

in which complete entries wilt be made reflecting all of its business and

financial transactions, such entries to be made in accordance with generally

accepted accounting principles and provided to the Lender on an annual basis.

 

         Borrower will keep accurate books, records and accounts with respect to

the collateral, and with respect to the general business of Borrower, including

annual financial statements prepared by an independent accountant and certified

by an authorized officer of the Borrower, and will make the same available to

the Lender at its request for examination and inspection until the indebtedness

hereby secured shall be paid in full; and Borrower will permit any authorized

representative of the Lender to examine and inspect, during normal business

hours, any and all premises where the collateral is or may be kept or located.

Borrower agrees that annual financial statements will be completed within a

reasonable time following the close of Borrower's fiscal year, and that any

records requested by Lender will be furnished within a reasonable time. The

Lender retains the right to request audited statements from the Borrower, to be

obtained at the Borrower's expense. Lender agrees to keep any information

disclosed pursuant to this paragraph confidential.

 

         The Borrower further agrees to provide job hiring or saving

documentation to the Lender annually for the period of the Loan. This job

documentation will be provided by ABC and will include new hires, or jobs saved

that directly relate to the Loan Commitment Letter.

 

         The Borrower further agrees to provide written notice to the Lender of

any public hearing or meeting before any administrative or other public agency

which may in any manner affect the chattel, personal property, or real estate

securing the Loan.

 

         The Borrower will create 25 permanent jobs or job opportunities at its

place of business within thirty-six (36) months of the date hereof. This loan

shall be callable by ABC, at ABC's sole and uncontrolled discretion, at any time

after 36 months if the above new employment positions have not been developed

and maintained by the business. If such loan is called by ABC, and a default

declared thereby, Borrower shall repay the outstanding principal loan amount

plus accumulated interest within 30-days of such notice to Borrower.

 

SECTION 4.07: RIGHT TO INSPECTION

 

         The Borrower agrees to grant the Lender, until the Note has been fully

repaid with interest, the right at all reasonable hours to inspect the property

used to secure the Loan; and the Borrower further agrees to provide the Lender

free access to the Borrower's premises for the purpose of such inspection to

determine the condition of the personal property and real estate.

 

SECTION 4.08: NULL AND VOID COVENANTS

 

         The Borrower agrees that, in the event that any provision of this Loan

Agreement or any other instrument executed at closing or the application thereof

to any person or circumstances shall be declared null and void, invalid, or held

for any reason to be unenforceable by a Court of competent jurisdiction, the

remainder of such agreement shall nevertheless remain in full force and effect,

and to this end, the provisions of all covenants, conditions, and agreements

described herein are deemed separate.

 

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SECTION 4.09: EXPENSES AND CLOSING COSTS

 

         All loans are subject to a loan origination fee equal to one and a half

percent of the amount of the loan. The Borrower agrees to pay all fees, expenses

and charges in respect to the Loan, or its making or transfer to the Lender in

any way connected therewith including but not limited to, the fees and

out-of-pocket expenses of legal counsel employed by the Lender, title insurance

and survey costs, recording and filing fees, any other taxes, fees and expenses

payable in connection with this transaction and with the enforcement of this

Loan Agreement and Note.

 

SECTION 4.10: NOTICE OF DEFAULT

 

         The Borrower agrees to give written notice to the Lender of any event,

within thirty (30) days of the event, which constitutes an Event of Default

under this Loan Agreement as described in Article V herein or that would, with

notice or lapse of time or both, constitute an Event of Default under this Loan

Agreement.

 

SECTION 4.11: EXPENSE OF COLLECTION OR ENFORCEMENT

 

         The Borrower agrees if, at any time, the Borrower defaults on any

provision of this Loan Agreement, to pay the Lender in addition to any other

amounts that may be due from the Borrower, an amount equal to the costs and

expenses of collection, enforcement, or correction or waiver of the default

incurred by the Lender's rights under the Note and this Agreement, the

prevailing party shall pay reasonable Attorney's fees including Attorney's fees

on appeal.

 

                                    ARTICLE V.

 

                               EVENTS OF DEFAULT

 

          The entire unpaid principal of the Note, and the interest then accrued

thereon, shall become and be immediately due and payable upon the written demand

of the Lender without any other notice or demand of any kind or any presentment

or protest, if any one of the following events (hereafter an "Event of Default")

shall occur and be continuing at the time of such demand, whether voluntarily or

involuntarily, or without limitation, occurring or brought about by operation of

law or pursuant to or in compliance with any judgment, decree or order of any

court or any order, rules, or regulations of any administrative or governmental

body. Provided, however, that such sum shall not be then payable if Borrower's

payments have been waived or the time for making the Borrower's payments has

been extended by the Lender.

 

SECTION 5.01 NONPAYMENT OF LOAN

 

         If the Borrower shall fail to make payment when due of any installment

of principal on the Note or interest accrued thereon, and if the default shall

remain unremedied for fifteen (15) days.

 

SECTION 5.02: NONPAYMENT OF OTHER INDEBTEDNESS

 

         If default shall be made in the payment when due of any installment of

principal or of interest on any of the Borrower's other indebtedness as

described in Paragraph 4.02 hereof, and if such default shall remain unremedied

for fifteen (15) days.

 

SECTION 5.03: INCORRECT REPRESENTATION OR WARRANTY

 

         Any representation or warranty contained in, or made in connection