EXHIBIT 4.4
Conformed Signature Copy
February 18, 1997
(Closing Date)
Harmony Brook, Inc.
0000 Xxxx Xxx Xxxx
Xxxxx, Xxxxxxxxx 00000
Re: Second Amended and Restated Letter Loan Agreement
Dear Xx. Xxxxxx:
Reference is made to that Amended and Restated Letter Loan Agreement
dated November 9, 1995 between First Bank National Association (the "Bank") and
Harmony Brook, Inc., a Minnesota corporation (the "Borrower")(the "Prior Letter
Agreement"). This Second Amended and Restated Letter Loan Agreement (the
"Agreement") amends and restates the Prior Letter Agreement.
1. (a) TERM NOTE. Upon the terms and subject to the conditions hereof,
on the Closing Date, the outstanding principal balance of the Facility A Term
Note and the Facility B Term Note (as such terms, the Facility A Term Note and
Facility B Term Note are defined in the Prior Letter Agreement) shall be
consolidated into one term loan (the "Term Loan"). The Term Loan shall be
evidenced by the Term Note substantially in the form of Exhibit A attached
hereto (the "Term Note"). On the Closing Date the Borrower shall pay all
accrued and outstanding interest on the Facility A Term Note and the Facility B
Term Note. The Term Note is issued in substitution and replacement, but not in
payment, of the Facility A Term Note and the Facility B Term Note. Interest on
the Term Note shall accrue at the rate and shall be payable at the times set
forth therein. Principal on the Term Note shall be payable in equal consecutive
monthly installments of $37,865 commencing March 1, 1997 and continuing on the
first day of each month thereafter through January 1, 2000, and one final
payment of the entire outstanding principal balance on February 1, 2000. Upon
the occurrence and during the continuation of any Event of Default all amounts
outstanding under the Term Note shall bear interest at the rate otherwise
applicable thereto, plus 2% per annum.
(b) FACILITY A RESTRUCTURING FEE. The Borrower shall pay to the Bank
a Restructuring Fee of $15,000 in three installments of $5000 each due and
payable on March 1, 1997, June 1, 1997 and September 1, 1997.
2. DOCUMENTATION. The Bank shall have no obligation to enter into the
restructuring as provided regarding Facility A and Facility B herein until the
Bank has received all of the following, in form and substance satisfactory to
the Bank.
(i) The Agreement executed by the Borrower.
(ii) The Term Note, in the form of Exhibit A attached
hereto, executed by the Borrower.
(iii) Current searches of the records in appropriate
offices, in Minnesota only, indicating that no
financing statements or tax liens are on file
against the Borrower or any of the Borrower's
assets, except financing statements in favor of
the Bank and prior financing statements in favor
of Sunrise Leasing Corporation and Sunrise
Financial Resources, Inc., and a subsequent
financing statement in favor of Citicorp Dealer
Finance.
(iv) Certified resolutions of the Borrower's board of
directors authorizing the Borrower to enter into
this Agreement and to sign the Term Note, and all
other instruments and agreements provided for in
this Agreement, together with a certificate of
incumbency identifying the officer or officers
authorized to execute this Agreement and the
documents related hereto, including a specimen
signature of each officer so authorized.
(v) Copies of the Borrower's articles of incorporation
and all amendments thereto certified by the
Minnesota Secretary of State and a copy of the
Borrower's bylaws and all amendments thereto,
certified as current and complete as of the
Closing Date by the Secretary or an Assistant
Secretary of the Borrower or, in the alternative,
a certificate of an officer of the Borrower
certifying there has been no change in the
Articles and Bylaws of the Borrower since the same
were last certified to the Bank.
(vi) A Certificate of Good Standing issued by the
Minnesota Secretary of State certifying that the
Borrower is in good standing under the laws of the
State of Minnesota, dated within 15 days of the
Closing Date.
(vii) The Restructuring Fee as set forth in paragraph
1(b) hereof.
(viii) Such other documents or requirements as the Bank
may reasonably require.
3. SECURITY. The Borrower acknowledges and agrees that the obligations
and indebtedness of the Borrower under the Term Note are secured by the Security
Agreement dated October 17, 1994 from the Borrower to the Bank as well as any
prior security agreement from the Borrower to the Bank, a Collateral Assignment
of Trademarks dated April 26, 1995, and a Borrower's Pledge Agreement dated
April 26, 1995.
4. REPRESENTATIONS The Borrower represents and warrants to the Bank
as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Minnesota.
(b) The Borrower's execution, delivery and performance of
this Agreement, the Term Note and all other instruments
and agreements executed in connection with the Agreement
(the "Loan Documents") have been properly authorized by
all necessary corporate action and do not require
governmental approval.
(c) The Loan Documents have been properly executed and
constitute the Borrower's legal, valid and binding
obligations, enforceable against the Borrower in
accordance with their terms, subject to limitations as
to enforceability which might result from bankruptcy,
insolvency, moratorium and other similar laws affecting
creditors' rights generally and subject to limitations
on the availability of equitable remedies.
(d) The financial statements that the Borrower has furnished
to the Bank fairly represent the financial condition of
the Borrower on the date of those statements and the
results of the Borrower's operations for the periods
referred to in those statements. The Borrower's
statements were prepared in accordance with generally
accepted accounting principles. There have been no
material adverse changes in the properties or financial
condition of the Borrower since the date of the latest
statements furnished to the Bank.
(e) There are no actions, suits or proceedings pending or
threatened against or affecting the Borrower or the
Borrower's properties before any court or governmental
agency, which if determined adversely to the Borrower
would have a material adverse effect on the financial
condition of the Borrower and its subsidiaries taken as
a whole.
(f) The Borrower has filed all required tax returns and has
paid all taxes due (including payroll and withholding
taxes).
(g) There are no mortgages or security interests on any of
the Borrower's assets, except for the security interests
in favor of the Bank and except with respect to assets
being acquired under a capitalized lease or installment
sales contract and except for the security interests as
currently
in effect in favor of Sunrise Leasing Corporation,
Sunrise Financial Resources, Inc. and Citicorp Dealer
Finance.
(h) The Borrower does not maintain any defined benefit
employee retirement benefit plans for any of the
Borrowers' employees.
5. REPORTING. The Borrower will deliver to the Bank the following
financial statements in a form acceptable to the Bank:
(a) As soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower,
audited financial statements of the Borrower consisting
of at least statements of income, cash flow and
stockholders' equity, and a balance sheet as at the end
of such year, setting forth in each case in comparative
form corresponding figures from the previous annual
financial statements, audited by independent certified
public accountants selected by the Borrower and
acceptable to the Bank; and a Compliance Certificate,
including a statement signed by the chief financial
officer of the Borrower stating that as at the end of
such fiscal year there did not exist any Default or
Event of Default or, if such Default or Event of Default
existed, specifying the nature and period of existence
thereof and what action the Borrower proposes to take
with respect thereto.
(b) As soon as available and in any event within 30 days
after the end of each fiscal month, internally prepared
financial and operating statements, substantially
similar to the annual audited statements, signed by the
chief financial officer or controller of the Borrower;
together with a Compliance Certificate, including a
statement signed by the chief financial officer or
controller of the Borrower stating that as at the end of
such month there did not exist any Default or Event of
Default or, if such Default or Event of Default existed,
specifying the nature and period of existence thereof
and what action the Borrower proposes to take with
respect thereto.
(c) Immediately upon any officer of the Borrower becoming
aware of any Default or Event of Default, a notice
describing the nature thereof and what action the
Borrower proposes to take with respect thereto.
(d) As soon as available and in any event within 180 days
after the end of each fiscal year of the Borrower, a
copy of the auditor's management letter prepared by the
auditor of the statements provided in 6(a) above.
The Borrower will also notify the Bank in writing within 30 days after any
lawsuit or other legal proceeding in which the damages sought exceed $25,000 has
been commenced against the Borrower.
6. OTHER AFFIRMATIVE COVENANTS. The Borrower will:
(a) Pay the Borrower's taxes (including payroll and
withholding taxes) when due, and pay all charges when
due that may become a lien on any of the Borrower's
assets, provided that the Borrower may contest taxes in
good faith by proceedings diligently pursued, so long as
the Borrower maintains a cash reserve sufficient to pay
such taxes and any penalties, interest or other charges
assessed in respect thereto.
(b) Keep adequate financial records, and permit the Bank,
upon reasonable notice, to examine those records and
inspect and audit the Borrower's inventory and other
assets and discuss the Borrower's affairs with any of
the Borrower's officers at any reasonable time, and
permit the Bank or its representative to perform
collateral audits twice a year at the Borrower's
expense.
(c) Maintain the Borrower's properties in good condition,
repair and working order, keep the Borrower's properties
and business adequately insured, and maintain the
insurance required under any security agreement or
mortgage, against such loss and damage and in such
amount as is customarily insured against by persons
operating similar properties and/or engaged in similar
businesses to, the Borrower, with loss payee
endorsements in favor of the Bank.
(d) Comply in all material respects with all applicable
laws, rules and regulations to which the Borrower may be
subject.
(e) Maintain the Borrower's existence as a corporation in
good standing under the laws of the State of Minnesota.
(f) Maintain a minimum Capital Base of not less than (i)
$7,000,000 at all times through March 1, 1997, and (ii)
$7,500,000 at all times thereafter. All accounting
terms capitalized in this Agreement and not otherwise
defined shall be defined in accordance with GAAP except
that Net Worth shall be determined exclusive of currency
adjustments for foreign assets. Capital Base shall mean
Net Worth plus Subordinated Debt. Subordinated Debt
shall mean indebtedness of the Borrower the repayment of
which is specifically subordinated to repayment of the
Borrower's indebtedness to the Bank on terms
satisfactory to the Bank.
(g) Maintain a ratio of the Borrower's Current Assets to the
Borrower's Current Liabilities of not less than 0.75 to
1.0 tested monthly as of the last day of each month.
(h) Maintain a minimum coverage ratio of not less than 1.05
to 1.0 for each twelve month period ending December 31,
beginning with the twelve month period ending December
31, 1997. The Borrower's coverage ratio
is the ratio of its Cash Flow to Debt Service. "Cash
Flow" means the Borrower's Net Income plus the sum of
the Borrower's Depreciation, Amortization, and any other
non-cash expenses, plus the Borrower's Interest Expense,
plus the amount paid on any lease obligations, less the
Borrower's non-cash revenues. "Debt Service" means the
amount of Interest and Principal paid by the Borrower on
any indebtedness plus the amount of rent paid on any
lease obligations.
(i) Not allow its Net Loss for the fiscal year ending
December 31, 1997 to exceed $350,000, and will maintain
a minimum Net Income of not less than $100,000 for the
fiscal year ending December 31, 1998 and will maintain a
Net Income of not less than $250,000 for each fiscal
year thereafter.
(j) Maintain on deposit with the Bank the balance of any
proceeds received by the Borrower from any offerings of
capital, except to the extent such proceeds are used for
general corporate purposes.
(k) Maintain a cash balance on deposit with the Bank at all
times of no less than $150,000.
(l) Obtain commitments for at least $1,000,000 in
Subordinated Debt or additional equity on or before
March 1, 1997, with at least $700,000 of such
Subordinated Debt or equity to be paid in to the
Borrower on or before February 28, 1997, with the
remainder to be paid by no later than April 30, 1997,
and the Borrower will pay 30% of the proceeds of such
Subordinated Debt or equity to the Bank, as the same is
received for application on the Term Note. The
Subordinated Debt will permit no payments of principal
until at least one month after final maturity of the
Term Loan.
7. NEGATIVE COVENANTS. Without the Bank's written consent, the
Borrower will not:
(a) Grant any mortgage, security interest, assignment or any
other lien on any of the Borrower's assets (including
capitalized leases), or permit any such lien to exist or
continue, or subordinate any rights the Borrower may
have, except for liens in the Bank's favor and the
existing liens in favor of Sunrise Leasing Corporation,
Sunrise Financial Resources, Inc., and Citicorp Dealer
Finance, or liens in favor of a subordinate lender that
are subordinate to the liens of the Lender.
(b) Borrow any money, or sign any promissory note, or permit
any such loan or note to remain outstanding, in an
amount exceeding $50,000 in the aggregate in any fiscal
year, except for loans from the Bank and notes to the
Bank, and indebtedness secured by liens permitted under
7(a) above.
(c) Guarantee any obligations, except the endorsement of
checks for collection.
(d) Sell any of the Borrower's assets except in the ordinary
course of business.
(e) Consolidate or merge with any other corporation or
partnership.
(f) Engage in any line of business substantially different
from the Borrower's current business.
(g) Make or keep outstanding loans or advances to any of the
Borrower's officers, shareholders or employees over
$5,000 in each case, and except as in effect on the date
of this Agreement.
(h) Pay any cash dividends or shareholder distributions, or
redeem any stock for cash in any fiscal year.
(i) Make any investments or loans other than investments in
bank accounts or certificates and federal government
securities of a maturity of one year or less.
(j) Spend more than (i) $1,200,000 in cash plus that portion
of any amount of additional equity or Subordinated Debt
raised in excess of $1,000,000 from January 1, 1997
through December 31, 1997 (less the amount required to
be paid to the Bank under paragraph 8 below), and (ii)
$400,000 in cash plus any amount of additional equity or
Subordinated Debt raised during any fiscal year
thereafter, for capital expenditures; provided that the
Borrower will not spend more than $25,000 of such
expenditures in any fiscal year for new equipment
located in, or to be located in, Mexico (although the
Borrower may send used or refurbished equipment to its
Mexican subsidiary up to an aggregate value of $100,000
per fiscal year). For purposes of this covenant capital
expenditures shall mean the change during the period of
determination in the Borrower's gross fixed assets as
reflected on its financial statements, including the
inventory reclassification category.
8. MANDATORY PREPAYMENTS. If at any time after the date of this
Agreement through December 31, 1997, the Borrower raises capital
through Subordinated Debt, 30% of the proceeds received by the
Borrower on account of such Subordinated Debt shall immediately
be paid to the Bank for reduction of principal on the
indebtedness under the Term Note as set forth in this Agreement.
9. RIGHT TO CHARGE CHECKING ACCOUNT. The Borrower authorizes the
Bank to charge the Borrower's checking account with the Bank for
any amounts due on the Term Note.
10. EVENTS OF DEFAULT; REMEDIES.
A. The occurrence of any one or more of the following
events shall constitute an Event of Default:
(1) The Borrower shall fail to make when due (whether
by acceleration or otherwise) or within 5 days
thereafter, any payment of principal of or
interest on the Term Note, or any other
obligations of the Borrower to the Bank pursuant
to this Agreement.
(2) Any representation or warranty made by or on
behalf of the Borrower in this Agreement or by or
on behalf of the Borrower in any certificate,
statement, report or document herewith or
hereafter furnished to the Bank pursuant to this
Agreement shall prove to have been false or
misleading in any material respect on the date as
of which the facts set forth are stated or
certified.
(3) The Borrower shall fail to comply with any
agreement, covenant, condition, provision or term
contained in this Agreement (except for those set
forth in subsections (1) and (2) above) and such
failure to comply shall continue for twenty
calendar days.
(4) The Borrower shall generally not pay its debts as
they mature or shall apply for, shall consent to,
or shall acquiesce in the appointment of a
custodian, trustee or receiver of the Borrower or
for a substantial part of its property, in the
absence of such application, consent or
acquiescence, a custodian, trustee or receiver
shall be appointed for the Borrower or for a
substantial part of its property and shall not be
discharged within 45 days, or the Borrower shall
make an assignment for the benefit of creditors.
(5) Any bankruptcy, reorganization, debt arrangement
or other proceedings under any bankruptcy or
insolvency law shall be instituted by or against
the Borrower and, if instituted against the
Borrower, shall have been consented to or
acquiesced in by the Borrower or shall remain
undismissed for 45 days, or an order for relief
shall have been entered against the Borrower.
(6) Any dissolution or liquidation proceeding shall be
instituted by or against the Borrower and, if
instituted against the Borrower shall
be consented to or acquiesced in by the Borrower
or shall remain undismissed for 45 days.
(7) The audited Financial Statements furnished to the
Bank pursuant to Section 5(a) of this Agreement
for the period ended December 31, 1996, shall
prove to be materially worse than the year-end
financial statements prepared by the Borrower and
furnished to the Bank.
(8) A judgment or judgments for the payment of money
in excess of the sum of $75,000 in the aggregate
shall be rendered against the Borrower and the
Borrower shall not discharge the same or provide
for its discharge in accordance with its terms, or
procure a stay of execution thereof, prior to any
execution on such judgment by such judgment
creditor, within 45 days from the date of entry
thereof, and within said period of 45 days, or
such longer period during which execution of such
judgment shall be stayed, appeal therefrom and
cause the execution thereof to be stayed during
such appeal.
(9) The maturity of any indebtedness of the Borrower,
other than indebtedness under this Agreement to
the Bank shall be accelerated, or the Borrower
shall fail to pay any such indebtedness when due
(after the lapse of any applicable grace period)
or any event shall occur or condition shall exist
and shall continue for more than the period of
grace, if any, applicable thereto and shall have
the effect of causing, or permitting the holder of
any such indebtedness to cause, such indebtedness
to become due prior to its stated maturity or to
realize upon any collateral given as security
therefor.
(10) Any execution or attachment shall be issued
whereby any substantial part of the property of
the Borrower shall be taken or attempted to be
taken and the same shall not have been vacated or
stayed within 30 days after the issuance thereof.
(11) The occurrence of an Event of Default under the
Term Note or under any other agreement between the
Borrower and the Bank.
B. If (i) any Event of Default described in Sections 10A
(4), (5) or (6) shall occur with respect to the
Borrower, all other obligations of the Borrower to the
Bank under this Agreement and the Term Note shall
automatically become immediately due and payable, or
(ii) any other Event of Default shall occur and be
continuing, then the Bank may declare the Term Note and
all other obligations of the Borrower to the Bank under
this Agreement to be forthwith due and payable,
whereupon the same shall
immediately become due and payable, in each case without
presentment, demand, protest or other notice of any
kind, all of which are hereby expressly waived, anything
in this Agreement or in the Term Note to the contrary
notwithstanding, and enforce all rights and remedies
under any applicable law.
11. EXPENSES. The Borrower agrees to pay on demand all of the costs
and expenses incurred by the Bank in connection with any audits
and the negotiation, preparation, execution, perfection,
administration, amendment, and enforcement of this Agreement and
the other Loan Documents, including reasonable attorneys' fees
and expenses for lawyers employed by the Bank or the Bank's
affiliates.
12. MISCELLANEOUS.
(a) If the Bank does not exercise a right it has against the
Borrower, or if the Bank delays in exercising a right,
that does not mean that the Bank gives up that right.
(b) No Loan Document can be changed unless the Bank signs a
written amendment.
(c) The Bank has no obligation to renew or extend this
Agreement or the Term Note.
(d) Any notice or other communication to any party in
connection with this Agreement shall be in writing and
shall be sent by manual delivery, telegram, telex,
facsimile transmission, overnight courier or United
States mail (postage prepaid) addressed to such party at
the address specified on the signature page hereof, or
at such other address as such party shall have specified
to the other party hereto in writing. All periods of
notice shall be measured from the date of delivery
thereof if manually delivered, from the date of sending
thereof if sent by telegram, telex or facsimile
transmission, from the first business day after the date
of sending if sent by overnight courier, or from two
days after the date of mailing if mailed.
e) The Bank may assign this Agreement to any successor bank
or any affiliate. This Agreement will be enforceable
against the Borrower and the Borrower's successors.
13. WAIVER. Upon execution of this Agreement and compliance by the
Borrower with all conditions set forth in paragraph 2, the Bank
waives the Events of Default that occurred under the Prior Letter
Agreement due to the Borrower's failure to comply with the
provisions of the financial covenants set forth therein in
paragraphs 7(f), 7(h), 7(i) and 7(j) for all periods ended prior
to execution of this Agreement and waives compliance with the
provisions of paragraph 6(k) of this Agreement from the execution
of this Agreement until March 1, 1997. Such waivers are
limited to the terms hereof and to the periods so specified and
do not extend to any other Events of Default or any other
periods.
Please indicate your acceptance of this Agreement by signing the enclosed copy
of this letter and returning it to the undersigned.
Very truly yours,
FIRST BANK NATIONAL ASSOCIATION
By /S/ XXXXXXXXX X. XXXXXX
-------------------------------
Its Vice President
-------------------------------
Accepted and agreed to this 17th day
of February, 1997 .
HARMONY BROOK, INC.
By /s/ Xxxxx X. Xxxxxx
------------------------------
Its President
------------------------------
Exhibit A
TERM NOTE
$2,571,902.00 February 18, 1997
FOR VALUE RECEIVED, HARMONY BROOK, INC. (the "Borrower") hereby promises to pay
to the order of FIRST BANK NATIONAL ASSOCIATION (the "Lender") the principal sum
of TWO MILLION FIVE HUNDRED SEVENTY-ONE THOUSAND NINE HUNDRED TWO AND NO/100
DOLLARS ($2,571,902.00) together with interest (calculated on the basis of
actual days elapsed and a year of 360 days) on the unpaid principal balance
hereof at the rate or rates set forth below. Payments will be made to the
Lender at its office at Edina, Minnesota or at such other place as the Lender
may from time to time hereafter designate to the Borrower in writing in
immediately available, lawful money of the United States of America.
INTEREST RATE
The unpaid principal balance hereof from time to time outstanding shall bear
interest at a floating rate per annum equal to the sum of the "Reference Rate"
of the Lender plus 3.75% PROVIDED, HOWEVER, that in the event that Borrower's
net income from operations as of any fiscal year end (as reported in Borrower's
annual certified financial statements as required by Section 5(a) of the Loan
Agreement (defined below)) is at least $0, and there are no outstanding Events
of Default, then the interest rate per annum shall be the Reference Rate plus
3.25% from and after the first day of the first calendar month following the
date of Lender's receipt of the certified audit report, but in any event not
sooner than March 1, 1998 and shall continue at the Reference Rate plus 3.25% as
long as Borrower's net income from operations as of any subsequent fiscal year
end (as report in Borrower's annual certified financial statement, as required
by Section 5(a) of the Loan Agreement (defined below)) remains at least $0. In
the event of any changes in the Reference Rate, the rate applicable hereto shall
change effective as of such change in the Reference Rate. The Reference Rate is
the rate publicly announced by the Lender from time to time as its Reference
Rate; the Lender may lend to its customers at rates that are at, above or below
the Reference Rate.
Upon the occurrence and during the continuation of any Event of Default the
outstanding principal hereunder shall bear interest at a rate per annum equal to
the rate of interest otherwise applicable thereto, plus 2.0%.
REPAYMENT
The principal hereof is payable in consecutive monthly installments of $37,865
each on the first day of each month, commencing March 1, 1997 through January 1,
2000 and one final payment on February 1, 2000 in the amount of the entire
remaining principal balance.
Interest hereon shall be payable in arrears on the same days as principal is
payable.
This Note may be prepaid by the Borrower at any time in whole or from time to
time in part (in minimum partial payments of at least $10,000) without premium
or penalty. Any partial prepayment shall be applied first against accrued and
unpaid interest and the balance shall be applied against the installments hereon
in the inverse order of maturity.
BORROWER ACCOUNT; PAYMENT DATES
The Lender is authorized to charge any account maintained by the Borrower with
the Lender for payment of any amount owing on this Note when due. Whenever any
payment to be made on this Note shall be stated to be due on a Saturday, Sunday
or legal holiday, such payment shall be made on the next succeeding business day
and such extension of time, in the case of a payment of principal, shall be
included in the computation of any interest on such principal payment.
OTHER AGREEMENTS
This Note is issued pursuant to an Second Amended and Restated Letter Loan
Agreement of even date herewith (as the same may hereafter be amended, modified
or supplemented, or any agreement entered into in substitution or replacement
thereof, the "Loan Agreement") between the Borrower and the Lender and is
secured pursuant to documents described in the Loan Agreement (as the same may
hereafter be amended, modified or supplemented, or any agreement entered into in
substitution or replacement therefor, the "Security Documents") given by the
Borrower to the Lender. The Note is issued in substitution and replacement, but
not in payment, of certain notes as described in the Loan Agreement.
EVENTS OF DEFAULT; REMEDIES OF LENDER
The occurrence of any one or more of the following events shall constitute an
Event of Default, and upon the occurrence of any Event of Default the Lender may
declare this Note to be, and the same shall forthwith become, immediately due
and payable and the Lender may exercise all rights and remedies under the Loan
Agreement and the Security Documents and as may otherwise be allowed by law:
(a) The Borrower shall fail to make any payment of principal or interest
hereon when due and such failure shall continue for 5 days after the due
date thereof.
(b) The Borrower shall fail to comply with any other term of this Note .
c) The Borrower shall submit to Lender any credit application, financial
statement or other written information which shall prove to be incorrect in
any material respect when made, or the Borrower shall fail to provide
financial statements upon request or as otherwise required.
d) Any default or Event of Default shall occur under the Loan Agreement or
any of the Security Documents and shall continue beyond the period of
grace, if any, applicable thereto.
If any Event of Default occurs the Borrower agrees to pay all costs of
collection, including attorneys' fees, and the Lender shall have the right to
set off any indebtedness of the Lender to the Borrower against the indebtedness
on this Note.
OTHER TERMS
This Note cannot be amended or modified, or any provisions hereof waived, except
pursuant to a writing signed by the Lender. The Lender does not, by failing to
exercise or delaying in exercising any right against the Borrower give up that
right. The Lender has no obligation to renew or extend this Note. If part of
this Note is unenforceable, the rest of it will still be enforceable. The
Lender may assign this Note or grant participations herein at any time without
the Borrower's consent and share information about the Borrower in connection
therewith.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES THEREOF BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED
STATES APPLICABLE TO NATIONAL BANKS.
AT THE OPTION OF THE LENDER THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR
MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE BORROWER
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT THE VENUE IN SUCH FORUMS IS NOT CONVENIENT. IF THE BORROWER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE, THE
LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF
THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR, IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.
EACH OF THE BORROWER AND THE LENDER, BY ITS ACCEPTANCE OF THIS NOTE, IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY.
The Borrower hereby waives presentment for payment, notice of dishonor, protest
and notice of protest.
HARMONY BROOK, INC.
By Exhibit Copy
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Title
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Exhibit B
COMPLIANCE CERTIFICATE
This certificate is signed on ______________, 199__. The figures on this
certificate were determined as of _________, 199__.
This certificate is delivered under a loan agreement dated February ______,
1997, between First Bank National Association and the Company named below.
I certify that the following amounts were correctly determined according to
the loan agreement.
Covenants: Required Actual
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Capital Base
through 3-1-97 $7,000,000
thereafter $7,500,000
Current Ratio-minimum 0.75:1.0
Net Loss (FYE 12/31/97)-max $350,000
Net Income (FYE 12/31/98)-min $100,000
and thereafter-minimum $250,000
Coverage Ratio
(annual only, beginning with
FYE 12/31/96) 1.05:1.0
CAPEX
Max 1-1-97 through 12-31-97 $1,200,000
each fiscal year thereafter $400,000
(limitation of $25,000 per fiscal
year expended for new equipment
for Mexican subsidiary and $100,000
for used or refurbished equipment
transferred to the Mexican
subsidiary.) Limit increased by (a)
Sub Debt in excess of $1,000,000 raised
in 1997 (exclusive of amount
that must be paid to Bank),
and (b) Sub Debt raised thereafter.
Required Actual
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Cash balance on Deposit with
Bank-minimum $150,000
HARMONY BROOK, INC.
By
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Its
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