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Exhibit 10.1
Xx. Xxxx X. Xxxxx
Chairman and Chief Executive Officer
The TesseracT Group, Inc.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
Re: Loan Agreement
$1,362,000.00 Loan to The TesseracT Group, Inc., a Minnesota corporation
The undersigned, The TesseracT Group, Inc., a Minnesota corporation (the
"BORROWER"), hereby applies to JEBCO Group, Inc., a Minnesota corporation,
(the "LENDER"), for a loan of $1,362,000.00 (the "LOAN").
1. LOAN TERMS. Subject to the terms, covenants and conditions contained
in Lender's standard form loan documents, the basic terms and conditions of the
Loan are as follows:
1.01. BORROWER: The TesseracT Group, Inc., a Minnesota
corporation
1.02. AMOUNT: $1,362,000.00
1.03. PURPOSE: To provide Borrower with working capital.
1.04. INTEREST RATE: Fixed rate of interest equal to eleven and
one-half percent (11.5%) per annum,
calculated on the basis of the actual number
of days elapsed and a 360 day year.
1.05. TERM: one (1) year, maturity date.
1.06. PAYMENT: Minimum monthly installments of principal and
accrued interest in the amount of $14,524.77,
plus real estate tax and insurance escrow
payments as required by Lender.
1.07. FUNDING: $1,293,000.00 of the loan amount will be
funded to the Borrower at closing, $87,000.00
of which will be funded to the Payment
Reserve Fund.
Borrower hereby acknowledges that the Loan is
a "discount" loan and that Borrower shall be
obligated to repay the entire $1,362,000.00
face amount of the Note despite the
disbursement of only $1,293,000.00 by Lender.
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1.08. LATE FEES: Payments received more than ten (10) days after
the due date shall be subject to a five percent
(5%) late fee.
1.09. COLLATERAL: The Loan will be secured by a first priority
Deed of Trust and Assignment of Rents (the
"DEED OF TRUST") on the real property and
improvements at the southwest corner of Xxxx
Road and North 98th Street in Scottsdale,
Arizona, and legally described in the Deed
of Trust.
1.10. EARLY PAYOFF
REDUCTION: If Borrower repays the entire principal balance
of the Note together with accrued interest
thereon and all other amounts owed in connection
with the Loan on or before three (3) months from
the date of the Note, then the principal balance
of the Note shall be reduced by $32,000.00 This
early payoff reduction is contingent upon
Lender's receipt of all monthly payments within
ten (10) days of the due dates thereof and upon
the non-occurrence of any events of default.
1.11. PAYMENT RESERVE
FUND: Borrower agrees that $87,000.00 of the Loan
shall be deposited by Borrower with Lender to
establish a reserve fund for payment of
principal, interest, real estate taxes and
insurance (the "PAYMENT RESERVE FUND"). Borrower
agrees that the Payment Reserve Fund shall begin
to accrue interest immediately under the Note
from the date of the Note. No earnings or
interest shall be payable to Borrower on the
Payment Reserve Fund and Lender may commingle
the Payment Reserve Fund with other monies held
by Lender. A letter agreement more fully
describing the Payment Reserve Fund will be
executed at closing. Subject to all further
requirements in said letter agreement, an amount
not exceeding three-fourths (3/4) of the total
monthly payments of principal, interest, real
estate taxes and insurance may be disbursed from
the Payment Reserve Fund each month and Borrower
shall pay the one-fourth (1/4) balance of said
monthly payments each month until the Payment
Reserve Fund is exhausted and then the full
amount thereof.
2. CONDITIONS TO CLOSING. The following documents or items are to be
delivered to Lender prior to or at closing and shall be in the form and content
satisfactory to Lender and Lender's legal counsel in their sole discretion, and
shall include but not be limited to the following:
2.01. $1,362,000.00 Promissory Note (the "NOTE").
2.02. The Deed of Trust.
2.03. One or more UCC-1 Financing Statements to be filed in the
Maricopa County, Arizona real estate records and with the Arizona Secretary of
State regarding the Deed of Trust.
2.04. An Environmental Indemnification Agreement for the real
property and improvements described in the Deed of Trust.
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2.05 Financial statements and other financial
information/documentation as the Lender may require.
2.06. Borrower shall provide a standard form mortgagee's title
insurance policy issued to Lender in form and substance acceptable to
Lender.
2.07. Borrower shall provide to Lender a recent survey of the real
property and improvements described in the Deed of Trust acceptable to the
Lender, or in the alternative provide Lender with survey coverage
acceptable to Lender under Lender's title insurance policy.
2.08. Borrower will provide evidence satisfactory to Lender that the
use of the real property and improvements described in the Deed of Trust
are permitted by and comply with all prior instruments of record and all
applicable codes and laws.
2.09. Prior to closing, Borrower shall provide Lender with
satisfactory evidence of insurance showing that Borrower has obtained
coverage for liability and hazard insurance, in the amounts and from a
carrier acceptable to Lender for the real property and improvements
described in the Deed of Trust.
2.10. Borrower shall provide evidence that all delinquent taxes and
all assessments relating to the real property and improvements described in
the Deed of Trust, if any, shall have been paid in full.
2.11. Appraisal acceptable to Lender regarding the real property and
improvements described in the Deed of Trust.
2.12. An environmental report acceptable to Lender for the real
property and improvements described in the Deed of Trust.
2.13. A written opinion by an independent third party attorney of
Borrower covering such matters as Lender deems necessary, including,
without limitation, statements of opinion as to the due organization, good
standing and authority of Borrower and that the loan documents are duly and
properly executed and validly binding obligations of the Borrower.
2.14. The Borrower and any other appropriate party shall have
executed and delivered to the Lender such other documents, instruments and
agreements as the Lender may reasonably request.
3. REPRESENTATIONS AND WARRANTIES. To further induce the Lender to make
the requested Loan, Borrower hereby represents and warrants to the Lender that:
3.01. The proceeds of the requested loan will be used by Borrower
exclusively for business and commercial purposes.
3.02. The real property and improvements described in the Deed of
Trust and contemplated uses thereof are permitted by and comply with all
applicable restrictions and requirements in prior conveyances, zoning
ordinances, subdivision and platting requirements and other laws and
regulations.
3.03. Except for any such item as might be shown in any environmental
report received by Lender prior to the date hereof in connection with the
Loan, there are no hazardous waste or substances contained on, under or in
the real property and improvements described in the Deed of Trust except as
may be used in the ordinary course of business in full compliance with all
applicable
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laws, rules and regulations.
3.04. There is no action, suit or proceeding pending or threatened
against or affecting the Borrower which, if adversely determined, would
have a material adverse effect on the condition (financial or otherwise),
properties or assets of the Borrower or which would question the validity
of this Loan Agreement or any instrument, document or other agreement
related thereto or required thereby, or impair the ability of the Borrower
to perform the Borrower's obligations hereunder or thereunder.
3.05. The Borrower is not in default of a material provision under
any material agreement, instrument, decree or order to which the Borrower
is a party or by which the Borrower or the Borrower's property is bound or
affected.
3.06. The Borrower has filed all tax returns required to be filed and
have paid all taxes shown thereon to be due, including interest and
penalties, which are not being contested in good faith and by appropriate
proceedings, and have no information or knowledge of any objections to or
claims for additional taxes in respect of federal or state income tax
returns for prior years.
3.07. There are no judgments outstanding or docketed against the
Borrower.
4. COVENANTS OF BORROWER. So long as the Note shall remain unpaid, the
Borrower will comply with the following requirements, unless the Lender shall
otherwise consent in writing:
4.01. FINANCIAL STATEMENTS. The Borrower will deliver to the Lender:
(a) as soon as available and, in any event, within 120 days after the
end of each fiscal year of the Borrower, a copy of the annual
financial statements and tax returns of the Borrower certified by
an officer of the Borrower as true and correct and acceptable
to the Lender, which financial statements shall include the
balance sheet of the Borrower as of the end of such fiscal year
and the related statements of income, retained earnings and
statements of cash flow of the Borrower for the fiscal year then
ended, all in reasonable detail and all prepared in accordance
with generally accepted accounting principles consistently
applied;
(b) immediately after the commencement thereof, notice in writing of
all litigation and of all proceedings before any governmental
or regulatory agency affecting the Borrower or which seek a
monetary recovery against the Borrower in excess of $25,000; and
(c) such other information regarding the financial condition of the
Borrower and the results of operations of the Borrower as the
Lender may from time to time reasonably request.
4.02. BOOKS AND RECORDS: INSPECTION AND EXAMINATION. The Borrower
will keep accurate books of record and account for itself in which true and
complete entries will be made in accordance with generally accepted
accounting principles consistently applied and, upon request of the Lender,
will give any representative of the Lender access to, and permit such
representative to examine, copy or make extracts from, any and all books,
records and documents in its possession, to inspect any of its properties
and to discuss its affairs, finances and accounts with any of its principal
officers, all at such times during normal business hours and as often as
the Lender may reasonably request.
4.03. COMPLIANCE WITH LAWS. The Borrower will comply with the
requirements of
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applicable laws and regulations with which noncompliance would materially and
adversely affect its business or its financial condition.
4.04 PAYMENT OF TAXES AND OTHER CLAIMS. The Borrower will pay or
discharge all taxes, assessments and governmental charges levied or imposed
upon it or upon its income or profits, or upon any properties belonging to it,
prior to the date on which the penalties attach thereto and all lawful claims
for labor, materials and supplies which, if unpaid, might by law become a lien
or charge upon any properties of the Borrower; provided, that the Borrower
shall not be required to pay any such tax, assessment, charge, or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings.
4.05. BUSINESS ORGANIZATION EXISTENCE. Borrower shall preserve
and maintain its corporate existence and all of its rights, privileges and
franchises.
4.06 MATERIAL ADVERSE EVENTS. The Borrower shall immediately
notify the Lender of all events which could have a material adverse effect on
the operation of the Borrower's business or the real property and improvements
described in the Deed of Trust.
4.07 NEGATIVE COVENANTS. The Borrower hereby covenants and
agrees with the Lender that so long as the Note shall remain unpaid, the
Borrower, without the Lender's prior written consent, shall not:
(a) sell, assign, transfer or otherwise convey a majority
or controlling interest in Borrower whether in one
transaction or in a series of transactions;
(b) lease or sell all or substantially all of its
property and business to any other entity or
entities, whether in one transaction or in a series
of related transactions; or
(c) consolidate with or merge into or with any other
entity or entities.
5. DEFAULT.
5.01 Occurrence of one or more of the following shall constitute
an "EVENT OF DEFAULT" hereunder:
(a) The occurrence of an Event of Default under the Note
(as defined therein).
(b) The occurrence of any default under the Deed of
Trust.
(3) The Borrower shall fail to duly observe or perform
any of the terms, conditions, covenants or agreements
required to be observed or performed by it hereunder.
(4) Any representation or warranty made by the Borrower
herein or in any financial statement, certificate or
report furnished pursuant to this agreement or in
order to induce the Lender to make the Loan shall
prove to have been untrue in any materially respect
or
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materially misleading as of the time such representation or
warranty was made.
5.02. Upon the occurrence of an Event of Default and at any time
thereafter during the continuance thereof, the Lender may, at its option,
exercise any or all of the following rights and remedies (and any other rights
and remedies available to it under applicable law):
(a) The Lender may declare immediately due and payable all unpaid
principal of an accrued interest on the Note, together with all
other sums payable hereunder, and the same shall thereupon be
immediately due and payable without presentment or other demand,
protest, notice of dishonor or any other notice of any kind, all
of which are hereby expressly waived.
(b) The Lender shall have the right, in addition to any other rights
provided by law to enforce its rights and remedies under the Deed
of Trust and any of the other loan documents executed and
delivered in conjunction with the Loan.
6. ADDITIONAL TERMS.
6.01. This Loan Agreement may be signed in counterparts, all of which
taken together shall constitute one and the same agreement.
6.02. This Loan Agreement is personal to the Borrower and may not be
assigned by the Borrower in whole or in part without the prior written consent
of the Lender.
6.03. All notices to be given pursuant to the Agreement or the Note,
or any request, demand or other communication permitted or required hereunder
or thereunder shall be deemed duly given if delivered or mailed postage
prepaid, certified or registered, addressed to the address of such party at the
following addresses:
If to Borrower: Xx. Xxxx X. Xxxxx
Chairman and Chief Executive Officer
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The TesseracT Group, Inc.
0000 X. Xxxx Xxxx
Xxxxxxxxxx, XX 00000
If to Lender: JEBCO Group, Inc.
000 X. Xxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
with a copy to: Xxxxxx X. Xxxxxxx III
Xxxxxxx, X'Xxxxx,
Xxxxxxx, Xxxxxxx & Xxxx, Ltd.
000 Xxxxxxx Xxxxxx
00 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, XX 00000
6.04. To the extent not inconsistent herewith, the terms of that
certain letter loan proposal between Lender and Borrower dated February 7, 2000
shall control with respect to payment of expenses, costs, fees and other
matters as referenced therein. This Loan Agreement shall control with respect
to any inconsistencies between this Loan Agreement and said letter loan
proposal.
6.05. If any provision of this Loan Agreement is determined to be
void, invalid or unenforceable, the other provisions of this Loan Agreement
shall remain in full force and effect.
6.06. This Agreement shall be governed, construed and interpreted
in accordance with the laws of the State of Arizona in the United States.
Sincerely,
JEBCO GROUP, INC.
By: ____________________________________________
______________
Its: ___________________________________________
____________________________________________
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Accepted and agreed this 9th day of February, 2000.
BORROWER:
THE TESSERACT GROUP, INC.,
a Minnesota corporation
By _______________________________________
Xxxx X. Xxxxx
Its Chairman and Chief Executive Officer
