TERM LOAN AGREEMENT
THIS AGREEMENT, made as of the 24 day of October, 1997, by and between
Infinite Graphics Incorporated (the "Borrower"), Xxxxxxxx X. Xxxxxxx, Xx.
("Guarantor") and Riverside Bank (the "Bank").
W I T N E S S E T H:
WHEREAS, the Borrower has requested the Bank to extend a Two Hundred Fifty
Thousand and no/100 Dollars ($250,000.00) term loan for the purpose of providing
refinancing of real estate located at 0000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx (the "Property"); and
WHEREAS, the Bank is willing and prepared to extend such term loan to the
Borrower upon the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. TERM LOAN: On the date hereof the Bank has made a $250,000.00 term loan to
the Borrower ("Term Loan").
2. NOTE: The obligation of the Borrower to repay the Term Loan is evidenced by
that certain note of even date herewith executed by the Borrower in the original
principal amount of Two Hundred Fifty Thousand and no/100 Dollars ($250,000.00)
("Loan Amount") and payable to the order of the Bank ("Note"). Reference is
hereby made to the Note for the terms thereof relating to maturity, repayment
schedule, interest rate and other matters governing the repayment of the Term
Loan.
3. COLLATERAL DOCUMENTS: As a condition precedent to the agreement of the Bank
to make the Term Loan, the Borrower has executed and delivered to the Bank a
Combination Mortgage, Security Agreement, Fixture Financing Statement and
Assignment of Rents (the "Mortgage") pursuant to which the Borrower has granted
a first lien security interest to the Bank on the Property to secure payment of,
among other things, the Note.
To further secure the Note payment, the Guarantor has executed a Guaranty
Agreement ("Guaranty") in favor of the Bank.
This Agreement, Note, the Mortgage and Guaranty are hereinafter
collectively referred to as the "Borrower Documents".
4. REPRESENTATIONS. In order to induce the Bank to make the Term Loan, the
Borrower hereby warrants and represents to the Bank as follows:
A. Authority. The Borrower has full power and authority to execute and
deliver the Borrower Documents, and to incur and perform his obligations
hereunder and thereunder; the execution, delivery and performance by the
Borrower of the Borrower Documents and any and all other documents and
transactions contemplated hereby and thereby will not result in the breach
of, constitute a default under, or create or give rise to any lien under
any indenture or other agreement or instrument to which the Borrower is
party or by which the Borrower or his property may be bound or affected.
B. Enforceability. The Borrower Documents each constitute the legal, valid
and binding obligations of the Borrower enforceable in accordance with
their respective terms (subject, as to enforceability, to limitations
resulting from bankruptcy, insolvency and other similar laws affecting
creditors' rights generally).
C. Financial Condition. The financial statements of the Borrower and
Guarantor heretofore furnished to the Bank are complete and correct in all
respects and fairly present the financial condition of the Borrower and
Guarantor at the date of such statement. Since the most recent set of
financial statements delivered by the Borrower to the Bank, there have
been no material adverse changes in the financial condition of the
Borrower.
D. Litigation. There is no action, suit or proceeding pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower
which, if adversely determined, would have a material adverse effect on
the condition (financial or otherwise), business, properties or assets of
the Borrower or which would question the validity or enforceability of the
Borrower Documents or any instrument, document or other agreement related
hereto or required hereby, or impair the ability of the Borrower to
perform his obligations under the foregoing agreements.
E. Licenses. The Borrower possesses adequate licenses, permits,
franchises, patents, copyrights, trademarks and trade names, or rights
thereto, to conduct its business as presently conducted and proposed to be
conducted.
F. Default. The Borrower is not in default of a material provision under
any material agreement, instrument, decree or order to which he is party
or by which his property is bound or affected.
G. Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, or notice to, any governmental
authority or any third party is required in connection with the execution
and delivery of this Agreement, or any of the agreements or instruments
herein mentioned or related hereto to which the Borrower is party or the
carrying out or performance of any of the transactions required or
contemplate hereby or thereby or, if required, such consent approval,
order or
authorization has been obtained or such registration, declaration or
filing has been accomplished or such notice has been given prior to the
date hereof.
H. Taxes. The Borrower has filed all tax returns required to be filed and
either paid all taxes shown thereon to be due, including interest and
penalties, which are not being contested in good faith and by appropriate
proceedings, or provided adequate reserves for payment thereof, and the
Borrower has no information or knowledge of any objections to or excess
profits tax returns for prior years.
I. Titles, Etc. The Borrower has good title to the Property free and clear
of all mortgages, liens and encumbrances, except such liens and
encumbrances as may from time to time be consented to in writing by the
Bank (hereinafter collectively referred to as the "Permitted Interests").
J. Use of Loans. The Borrower is not engaged principally, nor as one of
important activities, in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of Regulation U
of the Board of Governors of the Federal Reserve System), and no part of
the proceeds of any loan hereunder will be used to purchase or carry any
such margin stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock.
5. COVENANTS OF THE BORROWER. On and after the date hereof and until the payment
in full of the Note and any and all of other indebtedness of the Borrower to the
Bank, the Borrower agrees that, unless the Bank shall otherwise consent in
writing, he shall:
A. Financial Information. From time to time, with reasonable promptness,
provide to the Bank such information and statements regarding the
business, operations, affairs and financial condition of the Borrower and
Guarantor as the Bank may request. Specifically, but not exclusively, the
Borrower and Guarantor shall provide to the Bank current financial
statements certified by Borrower and Guarantor as being true and correct
in all material respects, not later than August 1 of each calendar year
during the term hereof, along with a copy of their Federal Income Tax
Returns for such year, with all schedules attached to be delivered to the
Bank by January 31 of each year.
B. Taxes and Claims. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon him or upon the income or
profits, or upon any of his assets or properties, prior to the date on
which penalties attached thereto, and all lawful claims which, if unpaid,
might become a lien or charge upon the property or assets of the Borrower;
provided, however, that the Borrower shall not be required to pay any such
tax, assessment, charge, levy or claim the payment of which is being
contested in good faith and by proper proceedings and for which he shall
have set aside on his books adequate reserves therefor.
C. Insurance. Maintain insurance coverage with responsible insurance
companies licensed to do business in Minnesota in such amount and against
such risks as is required
by the Mortgage or as required by law, naming the Bank as a loss payee,
and the Borrower shall furnish to the Bank upon written request, full
information and written evidence as to the insurance maintained by the
Borrower.
D. Compliance with Applicable Laws. Comply with the requirements of all
applicable state and federal laws, and of all rules, regulations and
orders of any governmental or other authority or agency, a breach of which
would materially and adversely affect his business or credit, except where
contested in good faith and by proper proceedings.
E. Litigation. Promptly give the Bank notice in writing of all litigation
and of all proceedings by or before any court or governmental or
regulatory agency affecting the Borrower, except litigation or proceedings
which, if adversely determined, would not materially affect the financial
condition of business of such party.
F. Liens. The Borrower shall not create, assume incur or suffer to exist
any assignment, mortgage, lease, pledge, security interest, lien, charge
or other encumbrance whatsoever upon the property which would assume
priority over the Mortgage granted herein or any document related hereto
to the Bank.
G. Access to Books and Inspection. Keep proper books of record and
accounts for himself, and, upon request of the Bank, provide any duly
authorized representative of the Bank, upon 48 hours notice, access during
normal business hours to, and permit such representative to examine, copy
or make extracts from, any and all books, records and documents relating
to the Property, the Borrower's affairs and to inspect any of his
facilities and properties. (The Bank shall be permitted to disclose the
information contained therein to its legal counsel, its independent public
accountants, any participating banks, or in connection with any action to
collect any indebtedness of the Borrower or to enforce this Agreement and
the documents related hereto, or as otherwise permitted or required by
law.)
H. Environmental Report. The Borrower shall provide the Bank with an
environmental report for the Property site and the building(s) located
thereon from an independent engineering or consulting firm acceptable to
the Bank, which report shall detail the following:
1. For the building:
The location and condition of any materials found to contain
asbestos, PCB's or other hazardous substances;
2. For the site:
Any evidence of hazardous materials, hazardous wastes, and/or
petroleum products having been disposed of, stored, released
on the site, or evidence that the site may have been
contaminated by other locations.
I. Property Operating Account. Borrower shall maintain all operating bank
accounts for the Property and its business with the Bank and shall execute
appropriate authorization for the Bank to debit the operating accounts on
a monthly basis in an amount sufficient to make payment on the Note and
the Escrow Items hereafter deposited.
J. Funds for Taxes. Borrower shall pay to the Bank on the day monthly
payments are due under the Note, until the Note is paid in full, a sum
("Funds") for yearly taxes and assessments which may attain priority over
the Mortgage as a lien on the Property. These items are called "Escrow
Items."
The Funds shall be held by the Bank in an interest-bearing account.
The Bank shall apply the Funds to pay the Escrow Items.
6. NOTICES. All notices, consents, requests, demands and other communications
hereunder shall be given to or made upon the respective parties hereto at their
respective addresses specified below or, as to any party, at such other address
as may be designated by it in a written notice to the other party. All notices,
requests, consents and demands hereunder shall be effective when personally
delivered or duly deposited in the United States mail, certified or registered,
postage prepaid, or delivered to the telegraph company, addressed as aforesaid:
IF TO THE BANK: Riverside Bank
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
IF TO THE BORROWER AND GUARANTOR: Infinite Graphics Incorporated
Attn: Xxxxxxxx X. Xxxxxxx, Xx.
0000 Xxxx Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
7. EVENTS OF DEFAULT. Each of the following shall be an "Event of Default"
hereunder:
A. Borrower defaults in any payment due hereunder or under the Note and
such default shall continue for a period of 15 days after written
notice thereof.
B. Any representation made by or on behalf of the Borrower in
connection with this Agreement or the transactions contemplated
hereby proves to have been materially false or misleading when made.
C. Borrower fails to comply with any covenant contained in this
Agreement which failure is not cured within 30 days after written
notice of such default from the Bank, provided that, if in the
opinion of the Bank, Borrower is diligently
attempting to cure such default, the Bank will allow such Borrower
such additional time as is reasonably necessary to cure such default
in the opinion of the Bank.
D. An Event of Default, as therein defined, occurs under any of the
Borrower Documents.
Upon or after the occurrence of any Event of Default or event which, with
the giving of notice or passage of time, would be an Event of Default, the Bank
may demand payment in full of the principal of and interest on the Note and any
amounts owing under this Agreement and commence exercising its remedies under
any Borrower Documents.
8. MISCELLANEOUS.
A. Waivers, Etc. No failure on the part of the Bank to exercise, and no
delay in exercising, any right or remedy hereunder or under applicable law
or any document or agreement related hereto shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right or
remedy preclude any other or further exercise of any other right or
remedy. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
B. Expenses. The Borrower shall pay the Bank a loan fee of $2,500.00 and
shall reimburse the Bank for any and all costs and expenses, including,
without limitation, attorneys' fees paid or incurred by the Bank or any
participation in connection with (i) the preparation of this Agreement and
any other document or agreement related hereto or thereto of the
transactions contemplated hereby; (ii) the negotiation of any amendments,
modifications or extensions to any of the foregoing documents, instruments
or agreements, and the preparation of any and all documents necessary or
desirable to effect such amendments, modifications or extensions; and
(iii) the enforcement by the Bank during the term hereof or thereafter of
any of the right or remedies of the Bank under any of the foregoing
documents, instrument or agreements or under applicable law, whether or
not suit is filed with respect thereto.
C. Amendments, Etc. This Agreement and documents related hereto may not be
amended or modified, nor may any of its terms (including, without
limitation, terms affecting the maturity of or rate of interest on the
Note) be modified or waived, except by written instruments signed by the
Bank and the Borrower.
D. Successors. This Agreement shall be binding upon and inure to the
benefit of the Borrower and the Bank and their respective successors and
assigns.
E. Offsets. Nothing in this Agreement shall be deemed a waiver or
prohibition of the Bank's or any participant bank's right of banker's
lien, offset, or counterclaim, which right the Borrower hereby grants to
the Bank and each such participant.
F. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement,
and any of the parties hereto may execute this Agreement by signing any
such counterpart.
H. Headings. The descriptive headings for the several sections of this
Agreement are inserted for convenience only and shall not define or limit
any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
RIVERSIDE BANK
By /s/ Xxxxxx X. X'Xxxxx
--------------------------------
Xxxxxx X. X'Xxxxx
Vice President
INFINITE GRAPHICS INCORPORATED
By /s/ Xxxxxxxx X. Xxxxxxx Xx.
--------------------------------
Its CEO
--------------------------------
