LOAN AGREEMENT
This Loan Agreement ("Loan Agreement") is made and given as of this
twenty-sixth (26th) day of February, 1998, by XXXXXXXX INC., a Minnesota
corporation (hereinafter called "Sheldahl" or "Borrower"), with its chief
executive office at 0000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxx 00000-0000, in
favor RELATIONAL FUNDING CORPORATION, whose address is 0000 Xxxxxxxxx Xxxx,
Xxxxx 000, Xxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000 (hereinafter called "Lender").
RECITALS
X. Xxxxxxxx is requesting that Lender lend the principal sum of
$2,334,764.13 to Xxxxxxxx on a full recourse basis (the "Xxxxxxxx Loan") and
Lender desires to make such loan on the terms and conditions provided herein.
X. Xxxxxxxx has entered into that certain Software License and Services
Agreement (the "Software License Agreement"), dated April 1, 1997, between
Xxxxxxxx and Oracle Corporation ("Oracle") as amended by Amendment One to
Software License and Service Agreement, dated April 1, 1997, pursuant to which
Oracle has licensed to Xxxxxxxx certain software and related products
including the disks and all other media on which it is contained and all
printed matter relating thereto (the "Software") and provided to Xxxxxxxx
certain related services (the "Services"). A full and complete list of the
Software and Services is attached hereto as Exhibit A.
C. As a condition for making the Xxxxxxxx Loan, Lender has required that
Borrower execute and deliver to Lender this Agreement granting certain rights
to Lender with respect to the Software. In addition, Lender has required that
Borrower execute and deliver a Security Agreement (the "Security Agreement")
granting a first priority security interest in certain personal computers as
identified in the Security Agreement (the "PC's") to Lender as additional
security for the Xxxxxxxx Loan.
D. In order to grant a first priority security interest in the PC's to
Lender, Xxxxxxxx has obtained a Subordination Agreement (the "Subordination
Agreement") from Norwest Bank Minnesota, N.A. ("Norwest"), pursuant to
which Norwest has subordinated its interest in the PC's to the interest
granted to the Lender pursuant to the Security Agreement.
TERMS AND CONDITIONS
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged by Borrower, it is agreed as
follows:
1. Recourse Loan. Subject to the terms and conditions set forth in
this Agreement, Lender shall lend to Xxxxxxxx the original
principal amount of the Xxxxxxxx Loan.
2. Promissory Note. The obligation of Xxxxxxxx to repay the Xxxxxxxx
Loan shall be evidenced by the Promissory Note of Xxxxxxxx to
Lender of even date herewith in the principal amount of
$2,334,764.13 (the "Note"). The Note, this Loan Agreement, the
Security Agreement, the Subordination Agreement and any other
instruments or documents given as security for the Xxxxxxxx Loan
are herein referred to as the "Loan Documents."
3. Representations, Warranties and Covenants of Borrower. Borrower
represents, warrants, covenants and agrees:
(a) Incorporation. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Minnesota and has all requisite power and authority to execute,
deliver and perform the Loan Documents.
(b) Authorization. The execution, delivery and performance of the
Loan Documents have been duly authorized by all necessary
corporate action and will not (i) require any consent or approval
of any entity which has not been obtained; (ii) violate any
provision of any indenture, agreement or instrument to which it is
a party or by which it is bound.
(c) Certifications. The representations and warranties of Borrower
contained in the Acceptance Certificate of Borrower, of even date,
are true and correct and are incorporated herein by reference.
(d) Title to Software. Borrower has a valid and enforceable license
to the Software and none of the Borrower's interest in the
Software is subject to any sublicense, lien, security interest or
other right, except for the rights granted under this Loan
Agreement or to Norwest. Except for the rights granted under this
Loan Agreement and to Norwest, Borrower has not granted, and will
not grant or permit to exist, any sublicense, lien or security
interests in all or a portion of the Borrower's interest in the
Software. Borrower shall not sell, assign, transfer or otherwise
dispose of the Borrower's interest in the Software prior to
payment in full of the Note without Lender's prior written
consent. Borrower shall defend its interest in the Software
against all claims and demands of all and any other persons at any
time claiming any interest therein adverse to Lender.
(e) Title To PC's and Priority of Lien. Borrower has granted to
Lender, pursuant to the Security Agreement, a security interest in
the PC's. Except for the security interest of Norwest, which has
been subordinated to the security interest granted pursuant to the
Security Agreement, the PC's are free and clear of liens, security
interests and encumbrances (except for the interest of Lender
granted hereunder). Other than the liens to Norwest and the
Lender, the Borrower has not granted, and will not grant or permit
to exist, any lien or security interest in all or a portion of the
PC's. The Borrower shall defend the PC's against all claims and
demands of all and any other person at any time claiming any
interest therein adverse to the Lender.
(f) Actions and Proceedings. There are no actions at law, suits in
equity or by other proceedings before any governmental agency,
commission, bureau, tribunal or other arbitration proceedings
against or affecting Borrower that if adversely determined would
adversely affect the rights of Borrower to enter into the Loan
Documents.
(g) Insurance. Borrower agrees it will keep the Software and the PC's
insured at all times against loss by fire and/or other hazards
concerning which, in the judgment of Lender, insurance protection
is reasonably necessary, in a company or companies reasonably
satisfactory to Lender and in amounts sufficient to protect
against loss or damage of the Software and the PC's and will pay
the premiums therefor. A Certificate of Insurance, and other
reasonable evidence of insurable coverage in form acceptable to
Lender which names Lender as loss payee and additional insured
shall be delivered to Lender.
(h) Costs of Collection. In the event of any action or proceeding to
enforce any of Lender's rights hereunder, Borrower shall pay
Lenders reasonable attorneys' fees and legal expenses incurred by
Lender in connection with or arising out of such action or
proceeding.
(i) Location of Software and PC's. The Software and the majority of
the PC's are located at the Borrower's facilities at the following
address:
000 Xxxxx Xxxxxxx 0
Xxxxxxxxxx, Xxxxxxxxx 00000
and will not be moved without 30 days prior written notice to
Lender.
The remainder of the PC's are located at the Borrower's facilities
at the following addresses:
0000 Xxxxxxxx Xxxx 000 Xxxxx Xxxxxxx 0 0000 X. Xxxxxxx
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000 Xxxxxxxx, XX 00000
Xxxx Xxx. 00, 000 X. Xxxxxx Xxxx 19 0000 Xxxxx Xxx.
Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
and will not be moved without 30 days prior written notice to
Lender.
(j) Certificates and Opinions. The Borrower has delivered herewith a
Certificate of Officer of Xxxxxxxx certifying as to the truth of
the representations and warranties contained herein and the
performance of the covenants contained herein and certifying as to
the Articles of Incorporation and Bylaws of Xxxxxxxx, the
resolutions of the Board of Directors approving the transactions
contemplated herein and the incumbency of the signatories hereto.
The Borrower shall cause to be delivered to Lender an opinion of
counsel to the Borrower with respect to the good standing of
Xxxxxxxx, the authorization and enforceability of the Loan
Documents, the creation and priority of the security interest
granted under the Security Agreement, and that the transactions
contemplated herein do not violate the Articles, Bylaws or any
agreement to which Xxxxxxxx is a party. All such certifications
and opinions shall be as are reasonably acceptable to Lender.
4. Event of Default. It shall be an Event of Default under the Loan
Documents upon the happening of any of the following:
(a) failure to make any payment on the Note, whether principal or
interest, or any other payment under the Loan Documents, when and
as the same becomes due (whether at the stated maturity or at a
date fixed for any installment payment or any accelerated payment
date or otherwise) and such failure shall continue unremedied for
a period of five (5) days after written notice from Lender to
Xxxxxxxx;
(b) failure to comply with or perform any of the terms, conditions or
covenants of the Loan Documents and such failure shall continue
unremedied for a period of thirty (30) days after written notice
from Lender to Xxxxxxxx;
(c) any material representation or warranty made by Borrower herein or
in any document, instrument, certificate, financial statements or
reports given in connection with the Note shall be false or
misleading when made;
(d) Borrower shall fail to pay its respective debts as they become
due, shall make an assignment for the benefit of its creditors,
shall admit in writing its respective inability to pay its
respective debts as they become due, shall file a petition under
any chapter of the Federal Bankruptcy Code or any similar law,
state or federal, now or hereafter existing, shall become
"insolvent" as that term is generally defined under the Federal
Bankruptcy Code, shall have any involuntary bankruptcy case
commenced against it or be the subject of an order for relief in
such bankruptcy case, or be adjudicated a bankrupt or insolvent,
or shall have a custodian, trustee or receiver appointed for, or
have any court take jurisdiction of its property, or any part
thereof, in any proceeding for the purpose of reorganization,
arrangement, dissolution or liquidation, and such custodian,
trustee or receiver shall not be discharged, or such jurisdiction
shall not be relinquished, vacated or stayed within thirty (30)
days of the appointment;
(e) Borrower shall be dissolved, liquidated or wound up or shall fail
to maintain its existence as a going concern in good standing
(excepting, however, reorganizations, consolidations and/or
mergers into or with affiliates owned by, owning or under common
control of or with such entity or into the parent of such entity,
providing the succeeding organization assumes and accepts such
entity's obligations hereunder); or
(f) An event of default occurs under any other lease or any other
agreement between Borrower and Lender.
5. Remedies. Upon an Event of Default, Lender may declare all
obligations of Borrower under the Loan Documents immediately due and
payable, and may, at its option, do any one or more of the following:
(a) notify Borrower that Borrower must discontinue use of the
Software. Within thirty (30) days of receipt of such notice,
Borrower will discontinue use of the Software throughout its
entire organization and all copies of the Software, including all
disks and all other media on which it is contained and all printed
matter relating thereto will be delivered to Oracle;
(b) exercise any of the remedies available to it under applicable
state law;
(c) proceed immediately to exercise each and all of the powers, rights
and privileges reserved or granted to Lender under the Loan
Documents;
(d) proceed to protect and enforce the Loan Documents by suits or
proceedings or otherwise, and for the enforcement of any other
legal or equity available to Lender.
6. Further Assurances. Borrower shall execute and deliver to Lender,
promptly and at Borrower's expense, such other documents and assurances, and
take such further action as Lender may reasonably require, in order to
effectively carry out the intent and purpose of the Loan Documents, and to
establish and protect the rights, interest and remedies of Lender under the
Loan Documents.
7. Cumulative Remedies. All of Borrower's rights and remedies herein
are cumulative and in addition to any rights or remedies available at law or
in equity, and may be exercised concurrently or separately. Borrower shall
pay all costs, expenses, losses, damages and legal costs (including reasonable
attorneys' fees) incurred by Lender as a result of enforcing any terms or
conditions of the Loan Documents.
8. No Liability Imposed on Lender. Lender shall not be obligated to
perform or discharge, nor does it hereby undertake to perform or discharge any
obligation, duty or liability under the Software License Agreement, nor shall
this Agreement operate to place responsibility for control, care, management
or repair of the Software upon Lender nor for the carrying out of any of the
terms and conditions of the Software License Agreement, nor shall it operate
to make Lender responsible for any dangerous or defective condition of the
Software.
9. Indemnification. Borrower shall and does hereby agree to
indemnify against and to hold Lender harmless from any and all liability, loss
or damage which it may or might incur under the Software License Agreement or
under or by reason of this Agreement and of and from any and all claims and
demands whatsoever which may be asserted against it by reason of any alleged
obligations or undertakings on its part to perform or discharge any of the
terms, covenants or agreements contained in the Software License Agreement.
Should Lender incur any such liability, should Lender be required to defend
against any such claims or demand or should a judgment be entered against
Lender, the amount hereof, including costs, expenses and reasonable attorney's
fees, shall bear interest thereon at the rate then in effect on the Note,
shall be secured hereby, shall be added to the obligations of Borrower
hereunder and Borrower shall reimburse Lender for the same immediately upon
demand, and upon the failure of Borrower so to do, Lender may declare all
obligations of Borrower immediately due and payable. In no event shall
Xxxxxxxx have any indemnification or other obligations to Lender with respect
to the Software License Agreement for actions taken by Lender in connection
with the sale or possession of the PC's.
10. Attorney-in-Fact. Upon the occurrence of any Event of Default and
at any time during the continuance thereof, Borrower hereby irrevocably
appoints Lender and its successors and assigns as its agent and attorney-in-
fact, irrevocable, which appointment is coupled with and interest, to exercise
any rights or remedies with respect to the Software and the PC's.
11. Expenses of Lender. All expenses of Lender, not to exceed five
thousand dollars ($5,000.00), in connection with the execution and delivery
of, and the closing with respect to, the Loan Documents and instruments
executed and delivered therewith, including Lender's attorneys' fees and
expenses, shall be paid upon demand by Borrower. All expenses in protecting,
storing, warehousing, insuring, handling and shipping of the Software and the
PC's, all costs of keeping the Borrower's interest in the Software and the
PC's free of liens, encumbrances and security interests, except for those of
Norwest and the Lender, and the removing of the same and all excise, property,
sales and use taxes imposed by state, federal or local authority on any of the
Software or with respect to the sale thereof, shall be borne and paid for by
Borrower and if Borrower fails to promptly pay any amounts thereof when due,
Lender may, at its option, but shall not be required to pay the same, or upon
the same shall constitute obligations of the Borrower hereunder and shall bear
interest at the rate specified in the Note.
12. Continuing Rights. The rights and powers of Lender or receiver
hereunder shall continue and remain in full force and effect until all
obligations of Borrower to Lender are paid in full.
13. Books and Records. Borrower will permit Lender and its
representatives to examine Borrower's books and records (including data
processing records and systems), with respect to the Software and the PC's and
make copies thereof, to the extent permitted under the Software License
Agreement, at any reasonable time and from time to time and Borrower will
furnish such information reports to Lender and its representatives regarding
the Software and the PC's as Lender and its representatives may from time to
time request. Lender shall have the authority, at any time, to require
Borrower to place upon Borrower's books and records relating to the Software
and the PC's a notation stating that any such Software or the PC's are subject
to certain rights in favor of the Lender and cannot be sublicensed,
transferred, sold, assigned or otherwise disposed of without the Lender's
prior written consent.
14. Chief Executive Office. The location of the chief executive
office of Borrower is set forth in the preamble hereto and will not be changed
without thirty (30) days' prior written notice to Lender. Borrower represents
that its books and records concerning accounts and chattel paper are located
at its chief executive office.
15. Name of Borrower. Borrower's true name is as set forth in the
preamble hereto. Borrower has not used any other name within the past five
(5) years. Borrower agrees that it will not change its name without thirty
(30) days' written notice to Lender.
16. Annual and Quarterly Statements. Borrower shall deliver or cause
to be delivered to Lender, within one hundred twenty (120) days following the
end of Borrower's fiscal years, an annual audited financial statement for
Borrower prepared in accordance with generally accepted accounting principles
certified by the certified public accountants of Borrower, and quarterly
financial statements within 45 days of the end of Borrower's fiscal quarters.
Lender agrees that Borrower's timely filing of Securities and Exchange
Commission forms 10K (annual) and forms 10Q (quarterly) through the "XXXXX"
filing system as satisfactory delivery of financial statements in accordance
with this paragraph.
17. Successors and Assigns. This Agreement and each and every
covenants, agreement and provision hereof shall be binding upon Borrower and
its successors and assigns and shall inure to the benefit of Lender and its
successors and assigns. Borrower acknowledges that Lender intends to assign
its rights under the Loan Documents to Xxxxxx & Xxxxxxxxx Investments
Corporation ("M&S") and shall execute a Notice and Acknowledgment of
Assignment in the form acceptable to M&S.
18. Governing Law. This Agreement is executed pursuant to and shall
be governed by the laws of the State of Minnesota.
19. Severability. It is the intent of this Agreement to confer to
Lender the rights and benefits hereunder to the full extent allowable by law.
The unenforceability or invalidity of any provisions hereof shall not render
any other provision or provisions herein contained unenforceable or invalid.
Any provisions found to be unenforceable shall be severable from this
Agreement.
20. Notices. Any notices and other communications permitted or
required by the provisions of this Agreement (except for telephonic notice
expressly permitted) shall be in writing and shall be deemed to have been
properly given or served by depositing the same with the United States Postal
Service, or any official successor thereto, designated as Registered or
Certified Mail, Return Receipt Requested, bearing adequate postage or delivery
by reputable private carrier such as Federal Express, Airborne, DHL or similar
overnight delivery service, and addressed as hereinafter provided. Each such
notice shall be effective upon being deposited as aforesaid. The time period
within which a response to any such notice must be given, however, shall
commence to run from the date of receipt of the notice by the addressee
thereof. Rejection or other refusal to accept or the inability to deliver
because of changed address of which no notice was given shall be deemed to be
receipt of the notice sent. By giving to the other party hereto at least ten
(10) days' notice thereof, either party hereto shall have the right from time
to time and at any time during the term of this Agreement to change its
address and shall have the right to specify as its address any other address
within the United States of America. Each notice shall be addressed to the
address of the recipient as set forth in the preamble to this Agreement.
21. Captions and Headings. The captions and headings of the various
sections of this Agreement are for convenience only and are not to be
construed as confining or limiting in any way the scope or intent of the
provisions hereof. Whenever the context requires or permits, the singular
shall include the plural, the plural shall include the singular and the
masculine, feminine and neuter shall be freely interchangeable.
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to be
executed as of the date first above written.
XXXXXXXX, INC. RELATIONAL FUNDING CORPORATION
By: _________________________ By: _________________________
Its: _________________________ Its: _________________________
