EXHIBIT 10.2
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LOAN AGREEMENT
BY
ECONOMIC DEVELOPMENT AUTHORITY
OF
THE CITY OF BELLE PLAINE, MINNESOTA
AND
EXCELSIOR-XXXXXXXXX MOTORCYCLE MANUFACTURING COMPANY
DATED AS OF JULY 1, 1998
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This instrument was drafted by:
XXXXXXX & XXXXXX, Chartered
000 Xxxxxxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
EXHIBIT 10.2
TABLE OF CONTENTS
Page
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PARTIES...................................................................1
RECITALS..................................................................1
ARTICLE ONE
Definitions
Section 1.01. Defined Terms...........................................3
Section 1.02. Rules of Interpretation.................................5
ARTICLE TWO
Representations
Section 2.01. Representations by the Issuer...........................6
Section 2.02. Representations by the Borrower.........................7
Section 2.03. Lender May Rely on Representations......................8
Section 2.04. Other Agreements and Instruments........................9
ARTICLE THREE
The Loan
Section 3.01. Amount and Source of Loan; Repayment...................10
Section 3.02. Borrower's Obligations Unconditional...................10
Section 3.03. Borrower's Remedies....................................10
Section 3.04. Additional Payments....................................11
Section 3.05. Escrow Agreement; Loan Disbursement....................11
Section 3.06. Interest Upon Default..................................11
ARTICLE FOUR
Borrower's Covenants
Section 4.01. Covenants..............................................12
Section 4.02. Indemnity..............................................14
Section 4.03. Reports to Governmental Agencies.......................15
Section 4.04. Security Agreement.....................................15
Section 4.05. Concerning the Facility................................15
Section 4.06. Alterations and Disposal of Equipment..................15
Section 4.07. INTENTIONALLY OMITTED..................................15
Section 4.08. Use of Facility........................................15
Section 4.09. Maintenance and Possession of Equipment by Borrower....16
Section 4.10. Observance of Covenants and Terms of Resolution
and the Bond...........................................16
Section 4.11. Notice of Defaults.....................................16
Section 4.12. Borrower to Execute Further Documents..................16
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EXHIBIT 10.2
Section 4.13. Borrower to Maintain Certain Standards.................16
Section 4.14. Mergers and Consolidations.............................16
Section 4.15. Insurance..............................................16
Section 4.16. Taxes..................................................18
ARTICLE FIVE
Borrower's Options
Section 5.01. Prepayments............................................19
Section 5.02. Assignment.............................................19
ARTICLE SIX
Events of Default and Remedies
Section 6.01. Events of Default......................................20
Section 6.02. Remedies in the Event of Default.......................21
Section 6.03. Disposition of Funds...................................21
Section 6.04. Manner of Exercise.....................................21
Section 6.05. Effect of Waiver.......................................22
Section 6.06. Notice to Borrower of Event of Default.................22
ARTICLE SEVEN
General
Section 7.01. Notices................................................23
Section 7.02. Binding Effect.........................................23
Section 7.03. Severability...........................................23
Section 7.04. Amendments, Changes and Modifications..................23
Section 7.05. Execution; Counterparts................................24
Section 7.06. Concerning the Bond....................................24
Section 7.07. Limitation of Issuer's Liability.......................24
Section 7.08. Assignment by the Issuer...............................24
Section 7.09. Survival of Certain Provisions.........................25
Section 7.10 Publicity..............................................25
SIGNATURES .......................................................26
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EXHIBIT 10.2
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 1, 1998, is made and entered
into by EXCELSIOR-XXXXXXXXX MORTORCYCLE MANUFACTURING COMPANY (the
"Borrower") and ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF BELLE PLAINE,
MINNESOTA (the "Issuer").
WHEREAS, the Municipal Industrial Development Act, Minnesota
Statutes, Sections 469.152 to 469.165 (the "Act"), declares and provides that
the welfare of the State of Minnesota requires active promotion, attraction,
encouragement and development of economically sound industry and commerce
through governmental action to prevent, so far as possible, emergence of
blighted lands and areas of chronic unemployment, and it is the policy of the
State of Minnesota to facilitate and encourage action by local government
units to prevent the economic deterioration of such areas to the point where
the process can be reversed only by total redevelopment through the use of
local, state and federal funds derived from taxation with the attendant
necessity of relocating displaced persons and of duplicating public services
in other areas; and
WHEREAS, the Act further finds and declares that such governmental
action is required by technological change that has caused a shift to a
significant degree in the area of opportunity for educated youth to
processing, transporting, marketing, service and other industries, and unless
existing and related industries are retained and new industries are developed
to use the available resources in each community, a large part of the
existing investment of the community and of the State of Minnesota as a whole
in educational and public service facilities will be lost, and the movement
of talented, educated personnel of mature age to areas where their services
may be effectively used and compensated and the lessening attraction of
persons and businesses from other areas for purposes of industry, commerce
and tourism will deprive the community and the State of Minnesota of the
economic and human resources needed as a base for providing governmental
services and facilities for the remaining population; and
WHEREAS, the Act further finds and declares that such governmental
action is required by the increase in the amount and cost of governmental
services and the need for more intensive development and use of land to
provide an adequate tax base to finance these costs; and
WHEREAS, the Issuer is a "redevelopment agency," as such term is
defined in the Act, authorized by the Act to enter into a revenue agreement
with any person, firm, or public or private corporation or federal or state
governmental subdivision or agency in such manner that payments required
thereby to be made by the contracting party shall be fixed, and revised from
time to time as necessary, so as to produce income and revenue sufficient to
provide for the prompt payment of principal of and interest on all revenue
bonds issued under the Act when due, and the revenue agreement shall also
provide that the contracting party shall be required to pay all expenses of
the operation and maintenance of the "project" (as defined in the Act)
including adequate insurance thereon and insurance against all liability for
injury to persons or property arising from the operation thereof, and all
taxes and special assessments levied upon or with respect to the project and
payable during the term of the revenue agreement; and
WHEREAS, the Issuer is further authorized under the Act to issue
revenue bonds, in anticipation of the collection of revenues of a project, to
finance, in whole or in part, the cost of acquisition, construction,
reconstruction, improvement, betterment, or extension of such project; and
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EXHIBIT 10.2
WHEREAS, the Issuer proposes to finance the acquisition and
installation of certain manufacturing equipment and tooling (the
"Equipment"), installed or to be installed in the manufacturing and
distribution facility of the Borrower (the "Facility"), under the Act through
the issuance of a revenue bond of the Issuer (the "Bond") under the
Resolution, as hereinafter defined; and
WHEREAS, the Bond issued under the Resolution will be secured by a
reserve fund pursuant to an escrow deposit agreement and a security agreement
with respect to the Equipment, and by an assignment of the revenues derived
by the Issuer from the Loan Agreement, as hereinafter defined, and the Bond
and the interest on the Bond shall be payable solely from the revenue pledged
therefor and the Bond shall not constitute a debt of the Issuer within the
meaning of any constitutional or statutory limitation nor shall the Bond
constitute nor give rise to a pecuniary liability of the Issuer or a charge
against its general credit or taxing powers and shall not constitute a
charge, lien, or encumbrance, legal or equitable, upon any property of the
Issuer other than the Issuer's interest in the Loan Agreement; and
WHEREAS, the Borrower has acquired and installed portions of the
Equipment and proposes to acquire and install the remainder of the Equipment,
and the Issuer desires to finance the acquisition and installation of the
Equipment upon the terms and conditions as required by the Act and as
hereinafter in this Loan Agreement set forth; and
WHEREAS, the execution, delivery and performance of this Loan
Agreement have been duly authorized by the Issuer, and all conditions, acts
and things necessary and required by the Constitution or statutes of the
State of Minnesota or otherwise, to exist, to have happened, or to have been
performed precedent to and in the execution and delivery of this Loan
Agreement and in the issuance of the Bond, do exist, have happened and have
been performed in regular form, time and manner;
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties to this Agreement agree as follows:
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EXHIBIT 10.2
ARTICLE ONE
DEFINITIONS
Section 1.01. DEFINED TERMS. As used in this Loan Agreement, the
following terms shall have the following respective meanings:
ACT: the Municipal Industrial Development Act, Minnesota Statutes,
Sections 469.152 to 469.165, as amended.
ASSIGNMENT OF LOAN AGREEMENT: the Assignment of Loan Agreement, dated
as of July 1, 1998, executed by the Issuer, assigning certain interests of
the Issuer in this Loan Agreement to the Lender.
BOND: the revenue Bond issued in the original principal amount of
$6,100,000 pursuant to the Act by the Issuer and designated as the Economic
Development Authority of the City of Belle Plaine, Minnesota, Taxable
Industrial Development Revenue Bond (Excelsior-Xxxxxxxxx Project), Series
1998.
BORROWER: Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company, a
Minnesota corporation, and its successors and assigns.
BUILDING: the buildings and all other structures and facilities owned
by the Borrower, located on the Land, and forming a part of the Facility.
CITY: the City of Belle Plaine, Minnesota, and its successors.
CLOSING DATE: the date on which the Lender purchases the Bond from the
Issuer.
COSTS: with respect to the application of the proceeds of the Bond,
shall be deemed to include reimbursement of or payment for the costs of
acquisition and installation of the Equipment approved for disbursement by
the Lender pursuant to the Escrow Deposit Agreement, and shall also include
amounts paid or incurred for other items authorized by the Act, including but
not limited to:
(a) obligations of the Borrower incurred for labor and materials
(including obligations payable to the Borrower) in connection with the
acquisition and installation of the Equipment;
(b) the cost of contract bonds and of issuance thereof of all
kinds that may be required or necessary during the course of installation of
the Equipment;
(c) all costs of architectural and engineering services, including
the costs of the Borrower for test borings, surveys, estimates, plans and
specifications and preliminary investigations therefor, and for supervising
installation, as well as for the performance of all other duties required by
or consequent upon the proper installation of the Equipment;
(d) all expenses incurred in connection with the issuance of the
Bond for the purpose of providing funds for the acquisition and installation
of the Equipment, including without limitation, legal expenses and fees, and
recording and filing fees, including any mortgage registration tax;
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EXHIBIT 10.2
(e) any sums required to reimburse the Issuer or the Borrower for
advances made by or on behalf of either of them for any of the above items or
for any other costs incurred and for work done by either of them which are
properly chargeable to the Equipment; and
(f) interest incurred by the Borrower on loans made with respect
to the acquisition and installation of the Equipment.
ENVIRONMENTAL INDEMNITY AGREEMENT: the Environmental Indemnity
Agreement, dated as of July 1, 1998, executed by the Borrower and providing
for the environmental indemnification of the Lender and the Issuer.
EQUIPMENT: those items of manufacturing machinery, equipment, tooling,
and related property, referred to in the Security Agreement, and replacements
and substitutions thereof as permitted by this Loan Agreement and the
Security Agreement, acquired and to be acquired and installed in the Building
or elsewhere on or in connection with the Land with the proceeds from the
sale of the Bond for use in the motorcycle manufacturing business of the
Borrower.
ESCROW AGENT: National City Bank, N.A., and its successor and assigns.
ESCROW DEPOSIT AGREEMENT: the Escrow Deposit Agreement, dated as of
July 1, 1998, executed by the Borrower, the Lender, and the Escrow Agent, and
providing for the escrow and disbursement of the proceeds of the Bond.
EVENT OF DEFAULT: any event defined as such in Section 6.01 of this
Loan Agreement.
FACILITY: the Land and the Building.
HOLDER: the Lender or any subsequent holder of the Bond.
ISSUER: the Economic Development Authority of the City of Belle Plaine,
Minnesota.
LAND: the real estate described in Exhibit A.
LEASE: the lease for the Land between the Borrower and Ryan Belle
Plaine, LLC dated as of April 21, 1997, as supplemented as of the date of
this Loan Agreement.
LENDER: FINOVA Public Finance, Inc., its successors and assigns.
LOAN: the loan of the proceeds of the Bond from the Issuer to the
Borrower pursuant to this Loan Agreement.
LOAN AGREEMENT: this Loan Agreement, as the same may be amended,
modified, or supplemented from time to time.
RESERVE FUND: the fund by such name established with the Escrow Agent
pursuant to the Escrow Deposit Agreement required by Section 3.05 of this
Loan Agreement.
RESOLUTION: Resolution No. 98-07 of the Issuer adopted on June 15,
1998, authorizing the issuance of the Bond, prescribing the form of the Loan
Agreement and the Security Agreement, and
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EXHIBIT 10.2
determining other matters in connection with the issuance of the Bond and the
execution and delivery of and performance under the other aforesaid documents.
SECURITY AGREEMENT: the Security Agreement, dated as of July 1, 1998,
executed by the Borrower, granting a security interest in the Equipment to
the Lender.
STATE: the State of Minnesota
WARRANT AND FEE AGREEMENT: the Warrant and Fee Agreement, dated as of
July 1, 1998, executed by the Borrower, granting the Holder rights to certain
payments and stock warrants as described therein.
Section 1.02. RULES OF INTERPRETATION. (a) This Loan Agreement shall
be interpreted in accordance with and governed by the laws of the State.
(b) Unless the context clearly requires otherwise, the singular shall
include the plural and vice versa, and the masculine shall include the
feminine and vice versa.
(c) The words "herein" and "hereof" and words of similar import,
without reference to any particular section or subdivision, refer to this
Loan Agreement as a whole rather than to any particular section or
subdivision hereof.
(d) References herein to any particular section or subdivision hereof
are to the section or subdivision of this instrument as originally executed.
(e) The headings of articles and sections herein are for convenience of
reference only and are not a part of this Loan Agreement.
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EXHIBIT 10.2
ARTICLE TWO
REPRESENTATIONS
Section 2.01. REPRESENTATIONS BY THE ISSUER. The Issuer makes the
following representations as the basis for its covenants herein:
(a) the Issuer is an economic development authority, organized and
existing under the Constitution and laws of the State (including Minnesota
Statutes, Sections 469.090-469.1081) and has power to issue the Bond under
the Act;
(b) the Equipment comprises personal properties useful in connection
with the operation of a revenue-producing enterprise as contemplated by
the Act;
(c) on the basis of information provided to the Issuer by the
Borrower, it appears, and the Issuer hereby finds, that the effect of
the acquisition and installation of the Equipment will be to encourage
the development of economically sound commerce in the City, to increase
the taxable value of property within the City, and to increase current
employment opportunities for residents of the City, all to the benefit
of the residents and taxpayers of the City, the school district, Xxxxx
County, and the State;
(d) the financing of the Equipment, the issuance and sale of the Bond,
the execution and delivery of this Loan Agreement, the Assignment of Loan
Agreement, and the performance of all covenants and agreements of the
Issuer contained in the Bond, this Loan Agreement, the Assignment of Loan
Agreement, and all other documents that have been executed by the Issuer in
connection with this Loan Agreement and the transactions contemplated
hereby (collectively, all such documents are referred to herein as the
"Issuer Documents"), and of all other acts and things required under the
Constitution and laws of the State to make the Issuer Documents valid and
binding obligations of the Issuer in accordance with their terms are
authorized by the Act and, where necessary to be valid and binding, have
been duly authorized by a resolution of the Board of Commissioners of the
Issuer adopted at a meeting duly called and held by the affirmative vote of
not less than a majority of its members;
(e) the Issuer Documents are the legal, valid, and binding obligations
of the Issuer, enforceable against it in accordance with their respective
terms;
(f) the Facility will add to the tax base of the City, and will
accordingly be of direct benefit to the taxpayers of the Issuer;
(g) to provide funds to be loaned to finance Costs related to
acquisition and installation of the Equipment, in anticipation of the
repayment thereof, the Issuer has duly authorized the Bond in the
principal amount of not to exceed $8,500,000 to be issued upon the terms
set forth in the Resolution, under the provisions of which the Issuer has
agreed to assign its interest in this Loan Agreement and grant a security
interest therein to the Lender as security for the payment of the
principal of and interest on the Bond;
(h) pursuant to the Resolution, the Issuer has authorized and directed
the Lender to disburse the proceeds of the Bond directly to the Borrower
and such other parties as may be entitled to
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EXHIBIT 10.2
payment, upon receipt of such supporting documentation as the Lender may
deem reasonably necessary, including compliance with all conditions set
forth herein;
(i) the execution and delivery of the Issuer Documents will not
conflict with or constitute on the part of the Issuer a breach of, or a
default under, any existing law, or any existing agreement, indenture,
mortgage, lease, or other instrument to which the Issuer is subject or
is a party or by which it is bound and do not and will not constitute a
default under any of the foregoing, or result in the creation or imposition
of any lien, charge, or encumbrance of any nature upon any of the property
or assets of the Issuer contrary to the terms of any instrument or
agreement; and
(j) there are no proceedings, pending or threatened, contemplating the
liquidation or dissolution of the Issuer or threatening its existence or
powers or threatening the validity of the Issuer Documents.
Section 2.02. REPRESENTATIONS BY THE BORROWER. The Borrower makes the
following representations as the basis for its agreements and covenants
herein:
(a) the execution and delivery of this Loan Agreement, the Security
Agreement, the Escrow Deposit Agreement, the Environmental Indemnity
Agreement, and all other documents that have been executed by the Borrower in
connection with this Loan Agreement and the transactions contemplated hereby
(collectively, all such documents are referred to herein as the "Borrower
Documents"), the consummation of the transactions contemplated hereby, and
the fulfillment of the terms and conditions hereof do not and will not
conflict with or result in a breach of any of the terms or conditions of any
mortgage, indenture, loan agreement, or instrument to which the Borrower is
now a party or to which any property of the Borrower is subject, and do not
and will not constitute a default under any of the foregoing, or result in
the creation or imposition of any lien, charge, or encumbrance of any nature
upon any of the property or assets of the Borrower contrary to the terms of
any instrument or agreement;
(b) the Loan to be made by the Issuer will induce the Borrower to
undertake the acquisition and installation of the Equipment in the Facility;
(c) the proceeds of the Bond, together with any other funds to be
contributed to the payment of Costs by the Borrower, will be sufficient to
pay the costs of acquiring and installing the Equipment in the Facility for
use in the motorcycle manufacturing business of the Borrower, and the
proceeds of the Bond and the Loan will be used only for purposes authorized
by the Act;
(d) the Borrower does not rely on any warranty of the Issuer or Lender,
either express or implied, that the Equipment will be suitable to the
Borrower's needs, and recognizes that under the Act the Issuer is not
authorized to own and operate the Equipment or to expend any funds thereon
other than the revenues received by it therefrom or the proceeds of the Bond
or other funds granted to it for purposes contemplated in the Act;
(e) there is not pending, or to the best knowledge of the Borrower
threatened, any suit, action, or proceeding against or affecting the Borrower
before or by any court, arbitrator, administrative agency, or other
governmental authority which materially and adversely affects the validity,
as to the Borrower, of any of the transactions contemplated hereby, or the
ability of the Borrower to perform its obligations hereunder or contemplated
hereby, or the financial condition or status of the Borrower, or any material
contracts to which the Borrower is a party;
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EXHIBIT 10.2
(f) to the best of the Borrower's knowledge, the Facility and the
Equipment will meet, on the date hereof, all material requirements of law,
including requirements of any federal, State, Xxxxx County, Issuer, or other
governmental authority having jurisdiction over the Borrower or the Facility
or Equipment, including, but not limited to any applicable zoning, safety, or
health regulations;
(g) neither the Borrower Documents nor any other document provided to
the Lender for its use in considering whether to and agreeing to purchase the
Bond, contains any untrue statement of a material fact, and there is no fact
presently known to the Borrower which materially adversely affects or in the
future may (so far as the Borrower can now foresee) materially adversely
affect the business, operations, affairs, or condition of the Borrower or any
of its material properties which have not been set forth in the Borrower
Documents or otherwise provided to the Lender by the Borrower;
to the best knowledge of the Borrower, no member of the Board of
Commissioners of the Issuer or any officer or employee of the Issuer has an
unlawful direct or indirect financial interest in or will personally gain an
unlawful financial benefit from the Facility or the Equipment or from the
issuance of the Bond;
(i) the Borrower is a corporation, duly organized and in good standing
under the laws of the State, is not in violation of any provisions of its
articles of incorporation or bylaws, or the laws of the State, is duly
authorized to transact business within the State, has power to enter into the
Borrower Documents, and has duly authorized the execution, delivery, and
performance of the Borrower Documents by proper action of its board;
(j) the Facilities are serviced by all utilities necessary to operate
the Equipment, including, but not limited to, electricity, sewer and water,
and heating and cooling;
(k) the Borrower shall take all action necessary to assure that there
will be no material adverse change to the Borrower's business by reason of
the advent of the year 2000, including without limitation, that all
computer-based systems, imbedded microchips, and other processing
capabilities effectively recognize and process dates after April 1, 1999. At
the Lender's request, the Borrower shall provide to the Lender assurance
reasonably acceptable to the Lender that the Borrower's computer-based
systems, imbedded microchips, and other processing capabilities are year 2000
compatible;
(l) the Borrower possesses all necessary patents, licenses, trademarks,
trademark rights, trade names, trade name rights and copyrights to conduct
its business as now conducted, without known conflict with any patent,
license, trademark, trade name or copyrights of any other person;
(m) the audited financial statements provided to the Lender in
connection with the transactions contemplated hereby have been prepared in
accordance with generally accepted accounting principles consistently applied
(or, with regard to unaudited financial statements, have been in accordance
with standard reporting and auditing practices) and substantially comply with
usual and customary fiscal reporting practices for similar publicly held
companies;
Section 2.03. LENDER MAY RELY ON REPRESENTATIONS. The Issuer and the
Borrower agree that the representations contained in this Article Two are for
the use and benefit of the Holder, and the Holder shall be entitled to rely
thereon. The Borrower agrees that the representations contained in Section
2.02 hereof are for the benefit of and may be relied upon by the Issuer.
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EXHIBIT 10.2
Section 2.04. OTHER AGREEMENTS AND INSTRUMENTS. The Borrower
acknowledges and represents that the Borrower Documents and all other
agreements and instruments securing the Bond and executed and delivered in
contemplation of the issuance and delivery of the Bond shall be valid and
legally binding on the Borrower and shall inure to the benefit of the Lender
or any subsequent Holder of the Bond.
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EXHIBIT 10.2
ARTICLE THREE
THE LOAN
Section 3.01. AMOUNT AND SOURCE OF LOAN; REPAYMENT. The Issuer agrees
to issue the Bond and sell the Bond to the Lender. The Issuer agrees to loan
to the Borrower and the Borrower agrees to borrow from the Issuer, the
proceeds of the Bond upon the terms and conditions set forth herein. The
source of such Loan shall be the Bond proceeds, which proceeds shall be
advanced by the Lender, for the account of the Issuer, to or on behalf of the
Borrower in payment of Costs, all subject to and in accordance with the
provisions of this Loan Agreement. The Borrower agrees that it will repay
the Loan of the proceeds of the Bond by making repayments to the Holder
thereof for the account of the Issuer at the times and in the amounts
necessary to pay in full the principal of, prepayment premium, if any, and
interest on the Bond when due, at maturity or upon a mandatory redemption or
acceleration of maturity under the Bond, the Assignment, or this Loan
Agreement. The Borrower may prepay the Bond, for the account of the Issuer,
in accordance with the terms of the Bond. The Borrower agrees to be bound by
all of the terms and conditions of the Bond, including without limiting the
generality of the foregoing, terms specifying the interest rate, maturity
date, the installment payment amount, and provisions for redemption and
prepayment. The provisions of the Bond are incorporated by reference herein
and made a part hereof.
All payments received from the Borrower are to be applied first to
interest then due and then to the principal balance. In any event, the
payments hereunder shall be sufficient to enable the Issuer to pay all
principal and interest due on the Bond as such principal and interest become
due, at maturity, upon redemption or otherwise. Interest shall be computed
on the basis of the actual number of days elapsed in a 360-day year.
All payments hereunder shall be made directly to the Lender at its
principal office for the account of the Issuer. All payments received by the
Lender shall be applied to the indebtedness secured by the Bond.
Section 3.02. BORROWER'S OBLIGATIONS UNCONDITIONAL. All payments
required of the Borrower hereunder shall be paid without notice or demand and
without setoff, counterclaim, abatement, deduction or defense. The Borrower
will not suspend or discontinue any payments, and will perform and observe
all of its other agreements in this Loan Agreement and, except as expressly
permitted herein, will not terminate this Loan Agreement for any cause,
including, but not limited to, any acts or circumstances that may constitute
failure of consideration, destruction or damage to the Facility, eviction by
paramount title, commercial frustration of purpose, bankruptcy or insolvency
of the Issuer or the Lender, change in the tax or other laws or
administrative rulings or actions of the United States of America or of the
State or any political subdivision thereof, or failure of the Issuer to
perform and observe any agreement, whether express or implied, or any duty,
liability or obligation arising out of or connected with this Loan Agreement.
Section 3.03. BORROWER'S REMEDIES. Nothing contained in this Article
and no Payments made by the Borrower pursuant to Section 3.02, shall be
construed to release the Issuer from the performance of any of its agreements
in this Loan Agreement or to be a waiver of any of Borrower's rights, claims
or causes of action as would otherwise exist, and if the Issuer should fail
to perform any such agreement, the Borrower may institute such action against
the Issuer as the Borrower may deem necessary so long as
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EXHIBIT 10.2
such action shall not violate the Borrower's agreements in Section 3.02;
provided that no action taken by the Borrower hereunder shall affect the
Borrower's obligations under this Loan Agreement.
Section 3.04. ADDITIONAL PAYMENTS. The Borrower agrees to pay the
following amounts to the following persons as additional payments under this
Loan Agreement:
(a) to the Holder when due, all reasonable expenses, including without
limitation legal fees, of the Holder incurred in enforcing the Borrower
Documents, and all fees and expenses payable or which may become payable by
the Borrower pursuant to said instruments; and
(b) to the Issuer and the Holder as additional payments under this Loan
Agreement, all reasonable expenses incurred by the Issuer and the Holder in
relation to the Facility and the issuance and sale of the Bond which are not
otherwise required to be paid by the Borrower under the terms of this Loan
Agreement, including the fees and expenses of bond counsel fees and attorneys
representing the Issuer and the Holder and all permit and license fees
required under regulations or codes of the Issuer;
All fees payable under this Section 3.04 of this Loan Agreement are due
without regard to the payment or defeasance of the Bond, the exercise of any
remedy under the Security Agreement, termination of this Loan Agreement, or
any other event.
Section 3.05. ESCROW DEPOSIT AGREEMENT.
(a) In order to establish the Reserve Fund and the Project Fund under
the Escrow Deposit Agreement, the proceeds of the Bond will be paid to the
Escrow Agent on the Closing Date.
(b) The proceeds of the Bond will be disbursed by the Escrow Agent to
the Borrower in accordance with the terms and conditions of the Escrow
Deposit Agreement.
(c) The Issuer consents to the transfer of the Bond proceeds to the
Escrow Agent pursuant to the terms of the Escrow Deposit Agreement and
further consents to the disbursement of the Bond proceeds pursuant to the
terms of the Escrow Deposit Agreement.
Section 3.06. INTEREST UPON DEFAULT. In the event the Borrower should
fail to make any of the payments required by Sections 3.01 or 3.04 of this
Loan Agreement, or any payment required by the Environmental Indemnity
Agreement, the item in default shall continue as an obligation of the
Borrower until the amount in default shall have been fully paid, and the
Borrower agrees to pay the same with interest thereon until paid at the
lesser of 18% or the highest rate permitted by applicable law.
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EXHIBIT 10.2
ARTICLE FOUR
BORROWER'S COVENANTS
Section 4.01. COVENANTS. The Borrower covenants, warrants, represents and
agrees:
(a) that the Loan will be used solely to pay Costs;
(b) that the Facility shall comply with all applicable ordinances,
regulations and laws of all governments having jurisdiction over the Facility
and the Facility does not and shall not violate any enforceable private
restrictions or covenants or encroach upon or interfere with easements
affecting the Land;
(c) that the Borrower has completed or will complete the acquisition
and installation of the Equipment free from all mechanics', laborers' and
materialmen's liens and in a good and workmanlike manner;
(d) that the Borrower will keep, perform, enforce and maintain in full
force and effect all of the terms, covenants, conditions and requirements of
all agreements between the Lender, or any other Holder, and the Borrower with
respect to the Equipment;
(e) that, subject to the Borrower's right under the Security Agreement,
the Borrower will not create, permit to be created or allow to exist any
liens, charges, or encumbrances on the Equipment, other than such
encumbrances as may be approved in writing by the Lender or any other Holder;
(f) that the Borrower will not assign this Loan Agreement or any
interest herein except as herein expressly set forth or as may be approved in
writing by the Holder;
(g) that there have not been any adverse material changes in the
Borrower's financial or operating condition since March 31, 1998, and that no
such changes will occur prior to the Closing Date;
(h) that the Borrower will deliver to the Holder: (i) annual audited
financial statements of the Borrower within 120 days of the end of the fiscal
year end of the Borrower; (ii) unaudited quarterly financial statements
prepared by management of the Borrower within forty-five days after the end
of each fiscal quarter of the Borrower; (iii) unaudited monthly financial
statements and compliance certificates (such compliance certificates to be in
a form mutually acceptable to Holder and Borrower) within thirty days after
the end of each fiscal month; and (iv) such other related information as is
reasonably requested by the Holder;
(i) that the Borrower will have on hand at least $1,500,000 in cash and
cash equivalents at the end of each fiscal month during fiscal year 1998;
(j) that the Borrower will maintain a current ratio (defined as the
ratio of the Borrower's current assets to its current liabilities) of no less
than 1.0:1.0 at all times, measured as of the end of each fiscal month, as
long as the Loan is outstanding and unpaid;
(k) that the Borrower's tangible net worth (defined as the Borrower's
total assets, minus its intangible assets and total liabilities, plus debt
subordinated to the Loan Agreement and the Bond) shall
12
EXHIBIT 10.2
be: (i) as of the end of each fiscal month through its fiscal June, 1999, at
least $12,000,000; (ii) at the end of each fiscal month from the beginning of
its fiscal July, 1999 through the end of its fiscal December, 1999, at least
the greater of $12,000,000 or eighty percent of the Borrower's tangible net
worth as of the end of its fiscal June, 1999; (iii) at the end of each
fiscal month thereafter, at least the greater of the minimum tangible net
worth required under this Section 4.01(k) on the last day of its immediately
preceding fiscal December or eighty percent of the Borrower's actual tangible
net worth as of the immediately preceding fiscal year end.
(l) that the ratio of the Borrower's total liabilities to total
stockholders equity less any intangible assets will not exceed 3.0:1.0 at the
end of any fiscal month;
(m) that in its fiscal 1999, Borrower will maintain an annual debt
service coverage ratio of at least 1.25 (calculated by dividing the sum of
net income after tax, plus depreciation, amortization, and interest by the
sum of interest and total current maturities of long-term debt/capital
leases);
(n) that for all fiscal years subsequent to the end of its 1999 fiscal
year, Borrower will maintain an annual debt service coverage ratio of at
least 1.25 (calculated by dividing the sum of net income after tax,
depreciation, amortization, and interest (less nonfinanced capital
expenditures) by interest and total current maturities of long-term
debt/capital leases);
(o) that the Borrower shall, prior to any disbursement to the Borrower
being made pursuant to the Escrow Deposit Agreement, provide the Holder with
a production plan showing its projected monthly production of motorcycles
through 1999 (and projected annual production of motorcycles through 2002)
and certified to be its true and correct production plan, and that the
Borrower will provide the Holder, prior to the first day of the last month of
fiscal 1999 and the first day of the last month of each fiscal year
thereafter through fiscal 2004, a monthly plan, certified to be the
Borrower's true and correct projected production plan, and covering at least
the immediately next fiscal year (each such plan referred to herein as a
"Plan");
(p) that the Borrower will report to the Holder if the Borrower's
actual production of motorcycles in any fiscal month is less than eighty
percent of the production projected by the Plan for that fiscal month, with
such report made in a form reasonably satisfactory to the Holder and within
thirty days of the end of the month in which the shortfall occurs;
(q) the Borrower's actual production of motorcycles in any fiscal
quarter will not be less than eighty percent of the production projected by
the Plan for that fiscal quarter;
(r) that the Borrower will obtain regulatory approval from all state
and federal governmental bodies with regulatory authority over the commercial
production of motorcycles by no later than December 31, 1998, except that
regulatory approval from the State of California will be obtained by December
31, 1999;
(s) that the Borrower will maintain, through June 30, 2000, key man
life insurance coverage of at least $1,000,000 each on Xxxxx Xxxx and Xxx
Xxxxxxxx;
(t) that the Borrower will raise at least $5,000,000, gross, in
combined equity and debt subordinate to the Bond (as shown on a balance sheet
audited in accordance with generally accepted accounting principles) between
the Closing Date and December 31, 1998;
13
EXHIBIT 10.2
(u) that the Borrower has maintained and will, for purposes of this
Loan Agreement, maintain fiscal months, fiscal quarters, fiscal years,
financial statements, and practices that comply with generally accepted
accounting principles consistently applied (or, with regard to unaudited
financial statements, that comply with standard reporting and auditing
practices) and substantially comply with usual and customary fiscal reporting
practices for similar publicly held companies;
(v) that the Borrower's obligations to deliver financial information to
the Holder pursuant to this Section 4.01 are contingent upon the Holder
executing and delivering to the Borrower a confidentiality agreement in
substantially the form shown at Exhibit B to this Loan Agreement;
(w) that the Borrower will not incur any long-term debt subsequent to
the date of this Loan Agreement unless no Event of Default exists under this
Loan Agreement and unless a 1.25 debt service coverage ratio will exist on
the proposed additional debt plus existing debt (calculated by dividing the
sum of net income after tax, plus depreciation, amortization, and interest
less nonfinanced capital expenditures by the sum of interest and total
current maturities of long-term debt/capital leases);
(x) that any debt owed by the Borrower to any one or more of its
shareholders is and will be subordinate to the interest and obligations
created by this Loan Agreement and the Security Agreement; and
(y) that the Borrower will notify the Holder, in writing, within two
(2) business days upon receipt of a written late payment notice from Ryan
Belle Plaine, LLC or its successors for payments due by the Borrower under
the Lease.
Section 4.02. INDEMNITY. To the fullest extent permitted by law, the
Borrower will pay, and will protect, indemnify, and save the Issuer and the
members of its Board of Commissioners, the City and the members of its City
Council, the respective officers, employees, agents, and attorneys of the
Issuer and City, and any past and present Holder, and its officers,
employees, agents, attorneys, and any "Controlling Person" of any past or
present Holder (as defined in 15 U.S.C. Section 77o) (each an "Indemnified
Party") harmless from and against all liabilities, losses, damages, costs,
expenses (including attorneys' fees), causes of action, suits, claims,
demands, and judgments of any nature arising from the Facility or this Loan
Agreement, including but not limited to: (i) any injury, death, or property
damage arising from any actions or failures to act by the Borrower or arising
out of or connected with the Facility; (ii) violation of any contract,
agreement, or restriction to which the Borrower is a party relating to the
Facility; (iii) violation of any law, ordinance, or regulation affecting the
Facility, or the ownership, occupancy, or use of the Facility, including any
licensing of the Facility; and (iv) the use of the proceeds of the Bond, the
use of the Facility, or the use of the proceeds derived from the disposition
of the Facility or any part thereof. Without limiting the generality of the
foregoing, the Borrower agrees to pay all costs of the Indemnified Parties,
including the fees of attorneys, financial advisors, and accountants, and all
other costs of the Indemnified Parties (including staff time and
out-of-pocket expenses) with respect to any audit conducted by the Internal
Revenue Service (or the Minnesota Department of Revenue) related to the Bond,
the Borrower, or the Facility, or with respect to any enforcement action
conducted by the Securities and Exchange Commission (or the Minnesota
Department of Commerce) with respect to the offer or sale of the Bond or the
offer or sale of any related separate security, or with respect to the
investment of the gross proceeds of the Bond.
Promptly after receipt by the Issuer, the City, or any other Indemnified
Party, of notice of the commencement of any action in respect of which
indemnity may be sought against the Borrower under this Section 7, such
Indemnified Party will notify the Borrower in writing of the commencement
thereof,
14
EXHIBIT 10.2
and, subject to the provisions hereinafter stated, the Borrower shall assume
the defense of such action (including the employment of counsel who shall be
counsel satisfactory to the Indemnified Party claiming indemnification) and
the payment of expenses. Insofar as such action shall relate to any alleged
liability in respect of which indemnity may be sought against the Borrower,
the Indemnified Party claiming indemnity shall have the right to employ
separate counsel in any such action and to participate in the defense
thereof, and the fees and expenses of such counsel shall be at the expense of
the Borrower. The Borrower shall not be liable to indemnify any Indemnified
Party for any settlement of any such action effected without its consent.
The Borrower shall be entitled to negotiate a settlement of any action, suit,
claim or demand giving rise to indemnity hereunder, and the consent of an
Indemnified Party shall not be required thereto if: (a) no liability will be
imposed upon or will result to the Indemnified Party; or (b) the Borrower
fully reimburses the Indemnified Party for any liability arising from such
settlement.
The provisions of this Section 4.02 shall survive the payment and
discharge of the Bond.
Section 4.03. REPORTS TO GOVERNMENTAL AGENCIES. The Borrower will
furnish to agencies of the State, including, but not limited to, the
Commissioner of the Minnesota Department of Trade and Economic Development
and to the Lender, the City, and the Issuer, such periodic reports or
statements as they may reasonably require throughout the term of this Loan
Agreement. The Borrower shall notify the Issuer of any request by the
Borrower for the Holder's consent to alterations to the Equipment, or to the
sale, assignment or other disposition of the Equipment, and of the Holder's
action in response to such requests.
Section 4.04. SECURITY AGREEMENT. As additional security for the
Lender, and to induce the Issuer to issue and deliver the Bond, the Borrower
agrees to execute and deliver, or cause to be executed and delivered, to the
Lender: (i) the Security Agreement; and (ii) such other agreements or
documents as may be required by the Lender.
Section 4.05. CONCERNING THE FACILITY. The Borrower agrees to pay all
expenses of the operation and maintenance of the Facility including, but
without limitation, adequate insurance thereon and insurance against all
liability for injury to persons or property arising from the operation
thereof, and all taxes and special assessments levied upon or with respect to
the Facility and payable during the term of this Loan Agreement.
Section 4.06. ALTERATIONS TO AND DISPOSAL OF EQUIPMENT. The Borrower
shall not dispose of any Equipment without the prior written consent of the
Lender and in no event shall the Borrower do any act or thing which would
unduly impair or depreciate the value of the Equipment. All work done by
the Borrower in connection with any alterations or repairs to the Equipment
shall be done promptly and in good workmanlike manner and in compliance with
the building and zoning laws of the Issuer, the City, and other governmental
subdivisions wherein the Facility and the Equipment are situated, and with
all laws, ordinances, orders, rules, regulations and requirements of all
federal, State and municipal governments and the appropriate departments,
commissions, boards and officers thereof, and shall keep any policy of
insurance covering the Building and the Equipment in full force and effect,
and the work shall be prosecuted with reasonable dispatch, unavoidable delays
excepted.
Section 4.07. OMITTED. This Section intentionally omitted.
Section 4.08. USE OF FACILITY. The Borrower will use the Facility only
in furtherance of lawful purposes and will use and operate the Equipment only
as a revenue producing enterprise, eligible to be and defined as a "project"
under the Act. The Borrower will not use or permit any person to use the
15
EXHIBIT 10.2
Equipment or the Building for any use or purpose in violation of the laws of
the United States, the State, or any identifiable redevelopment plan of the
Issuer or the City, and agrees to comply with all the orders, rules,
regulations and requirements of the Board of Fire Underwriters and of the
City, the Issuer, Xxxxx County, or the State, or other governmental authority
having jurisdiction over the Facility. The Borrower shall have the right to
contest by appropriate legal proceedings, without cost or expense to the
Issuer, the validity of any law, ordinance, order, rule, regulation or
requirement of the nature herein referred to.
Section 4.09. MAINTENANCE AND POSSESSION OF EQUIPMENT BY BORROWER. The
Borrower agrees that so long as the Bond is outstanding, the Borrower will
keep the Equipment in good repair and good operating condition at its own
cost, including without limitation making such repairs and replacements as
are necessary in the judgment of the Borrower so that the Equipment will
remain a "project" under the Act.
Section 4.10. OBSERVANCE OF COVENANTS AND TERMS OF THE RESOLUTION AND
THE BOND. The Borrower will not do, in any manner, anything which will cause
or permit to occur any default under the Resolution or the Bond, but will
faithfully observe and perform, and will do all things necessary so that the
Issuer may observe and perform, all the conditions, covenants and
requirements of the Resolution and the Bond. The Issuer agrees that it will
observe and perform all obligations imposed upon it by this Loan Agreement
and the Resolution and the Bond, and will not suffer or permit any default to
occur thereunder; provided that the Issuer has no obligation to use its own
funds or funds of the State to perform or cause performance of any such
obligations.
Section 4.11. NOTICE OF DEFAULTS. The Borrower will furnish to the
Holder and the Issuer, immediately after the Borrower has obtained knowledge
of the occurrence, notice of each Event of Default or each event which with
the giving of notice or lapse of time or both would constitute an Event of
Default, which is continuing on the date of such notice, the notice of the
Borrower setting forth details of such Event of Default or event and the
action which the Borrower take with respect thereto.
Section 4.12. BORROWER TO EXECUTE FURTHER DOCUMENTS. The Borrower
agrees that it shall execute and deliver to the Issuer and the Holder such
further financing statements, acknowledgments, certificates and agreements as
shall be reasonably requested from time to time by the Issuer or the Holder
to protect the security provided for the payment of the Bond and to further
the transactions contemplated by this Loan Agreement.
Section 4.13. BORROWER TO MAINTAIN CERTAIN STANDARDS. The Borrower
agrees that it will at all times maintain its corporate existence and good
standing, and will at all times remain qualified to do business in all places
within the United States, where failure to be so qualified would have a
material adverse effect on the Borrower's business or financial condition.
Section 4.14. MERGERS AND CONSOLIDATION. The Borrower agrees that it
shall not enter into any merger, consolidation, combination, sale of all or
substantially all of its assets, or any other change in its corporate form if
doing so would result in an Event of Default under this Loan Agreement,
including without limitation the provisions of Section 5.02(d), (and the
provisions of Sections 4.01(i), 4.01(j), 4.01(l), and 4.01(m), if the
standards set forth in those Sections were applied on the day of the merger
or consolidation).
Section 4.15. INSURANCE. (a) The Borrower, at its sole cost and
expense, will maintain continuously in effect with respect to the Equipment
policies of insurance against such risks and in such
16
EXHIBIT 10.2
amounts as are acceptable to the Lender. Without limiting the generality of
the foregoing provision, the Borrower shall maintain insurance of the
following character:
(i) Insurance on the Equipment now existing and on the fixtures and
personal property included in the definition of Equipment against
loss by fire, and other hazards covered by the so-called
"all-risk" form of policy with no co-insurance clause, in an
amount equal to the actual replacement cost thereof, without
deduction for physical depreciation;
(ii) If the Land that the Equipment resides on is located in a
designated official flood-hazardous area, flood insurance
insuring the buildings and improvements now existing or hereafter
erected on the Land in an amount equal to the actual replacement
of the cost thereof without deduction for physical depreciation;
(iii) Comprehensive general liability insurance including product
liability and contractual liability protecting against
claims arising from any accident or occurrence in an amount
of not less than $2,000,000 in the aggregate and per
occurrence in connection with the operations of the
Borrower;
(iv) Worker's compensation insurance with statutory coverages and
Employer's Liability at a limit of $1,000,000 per occurrence
covering all persons engaged in the construction or installation
of the Project or the operations of the Borrower;
(v) Business interruption insurance with a limit sufficient to insure
not less than a 6 month loss of income, or extra expense
insurance;
(vi) Comprehensive Automobile Liability insurance in an amount not
less than $1,000,000 per occurrence covering all titled motor
vehicles used in the operations of the Borrower's business, such
insurance to include coverage for non-owned and hired vehicles;
and
(vii) such other insurance with respect to the Collateral (as
defined in the Security Agreement) as may be required by the
Lender.
(b) The insurance described in Sections 4.15(a)(i), 4.15(a)(ii), and
4.15(a)(v) shall:
(i) include a clause naming the Lender as Loss Payee;
(ii) identify the Equipment insured; and
(iii) state the applicable amount of insurance.
(c) The insurance described in Sections 4.15(a)(v) and 4.15(a)(vi) shall
include clauses which:
(i) name the Lender as an Additional Insured; and
17
EXHIBIT 10.2
(ii) provide that all insurance, except the limits of liability,
operate as if there were a separate policy covering each insured.
(d) All insurance required by this Section 4.15 shall:
(i) be provided with insurers rated "A IX" by A.M. Best Company, Inc.
(or the future equivalent thereof) or as otherwise approved by
the Lender;
(ii) provide the Lender with thirty (30) days advance written notice
of cancellation and/or material change in coverage directly from
insurers;
(iii) be primary and without the right of contribution from any
other insurance not specifically purchased by the Borrower
to be excess of, or in contribution with the insurances
required herein;
(iv) include a waiver of any subrogation rights the Borrower's
insurers may have against the Lender;
(v) provide that all insurance shall insure the interest of the
Lender regardless of any breach or violation by the Borrower or
any other party or entity of any warranties, declarations, or
conditions contained in such policies; and
(vi) be satisfactory in form, substance, limits, deductibles and
retentions to Lender.
Section 4.16. TAXES. The Borrower shall pay all taxes on the Equipment
and the Facility before such taxes become delinquent.
18
EXHIBIT 10.2
ARTICLE FIVE
BORROWER'S OPTIONS
Section 5.01. PREPAYMENTS. (a) In the event of mandatory prepayment or
acceleration of the Bond in accordance with the terms of the Bond, the
Borrower agrees to prepay the Loan in such amount and on such dates as will
permit the Issuer to pay the principal, premium, if any, and accrued interest
on the Bond when due. The prepayment premium on the Loan in the event of
mandatory prepayment or acceleration shall be equal to the prepayment premium
payable on the Bond determined in accordance with the terms of the Bond.
(b) The Borrower may prepay the principal of the Loan at such times, in
such amounts, and subject to all other terms applicable to optional
prepayments of the Bond by the Issuer. The Issuer agrees to immediately
apply all optional prepayments of the Loan by the Borrower to prepayments of
the Bond. The Issuer hereby authorizes the Borrower to pay all optional
prepayments on the Loan directly to the Holder.
Section 5.02. ASSIGNMENT. (a) The Borrower will not, during the term
of the Bond, sell the Equipment or assign its rights or interests in any part
thereof, or otherwise convey, dispose of or mortgage in any manner the
Equipment or any part thereof, without: (i) providing satisfactory
replacement collateral to secure the Holder's interest in the Equipment to be
sold or assigned; (ii) obtaining the Holder's written consent (such consent
not to be unreasonably withheld); and (iii) providing notice to the Issuer.
(b) Notwithstanding the foregoing, Equipment with a combined fair
market value of no more than $25,000 may be sold in any fiscal year without
Borrower's compliance with the terms of Section 5.02(a).
(c) In the event the Borrower sells, conveys, transfers, further
mortgages or encumbers or disposes of the Equipment or any part thereof, or
any interest therein, or agrees so to do, in violation of the terms and
conditions of this Section 5.02 and if the Holder declares the amount owing
on the Bond to be due and payable in full and calls for payment of the same
in full at once, the Borrower shall immediately pay on the Loan an amount
equal to same, plus any prepayment premium due.
(d) The Borrower will not, during the term of the Bond, sell or assign
its right or interest in this Loan Agreement, or any part thereof without the
written consent of the Holder and notice to the Issuer. If such sale or
assignment of the Borrower's interest in this Loan Agreement does not purport
to and does not release the Borrower from any of its obligations under this
Loan Agreement, the Holder's consent will not be unreasonably withheld. If
such sale or assignment of the Borrower's interest in this Loan Agreement
purports to or does release the Borrower from any of its obligations under
this Loan Agreement, the Holder will have sole discretion with regard to
giving its consent.
19
EXHIBIT 10.2
ARTICLE SIX
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. Subject to the notice and cure
provisions of Section 6.06, any one or more of the following events is, upon
expiration of the applicable cure period, an Event of Default under this Loan
Agreement:
(a) if the Borrower shall fail to make any payments required under this
Loan Agreement on the date that the payment is due, provided:
(i) If the Borrower fails to make any payment required under this Loan
Agreement within five (5) days of the date that the payment is due, then,
pursuant to the terms and conditions of the Escrow Deposit Agreement, the
Escrow Agent shall: (i) make such payment on the Borrower's behalf, such
payment to be made from the "Reserve Fund" (as defined in the Escrow
Deposit Agreement); and (ii) give written notice of such payment to the
Borrower.
(ii) If the Escrow Agent makes any payment on the Borrower's behalf from
the Reserve Fund, the Borrower will pay, within 7 days of such payment to
the Escrow Agent an amount equal to such payment for the purpose of
restoring the amount of the Reserve Fund to the balance in it prior to such
payment.
(iii) If the Borrower complies with the terms of Sections 6.01(a)(i) and
6.01(a)(ii), then no Event of Default shall exist; provided, however, that
if the balance of the Reserve Fund is inadequate to make the payment on
Borrower's behalf, or if the Escrow Agent makes three (3) or more payments
from the Reserve Fund on the Borrower's behalf in any three (3) month
period, such condition or conditions shall be an Event of Default under
this Loan Agreement.
(b) if the Borrower shall fail to observe and perform (prior to any
applicable cure period) the covenants described in sections 4.01(i), (j), (k)
or (l) of this Loan Agreement for two consecutive months;
(c) period, any other covenant, condition or agreement on its part under
this Loan Agreement, the Lease, the Escrow Deposit Agreement, the Warrant and
Fee Agreement, the Environmental Indemnity Agreement, any future working
capital financing agreements, or any material contract or agreement;
(d) if any representation or warranty made by the Borrower hereunder or by
a representative of the Borrower in any document or certificate furnished the
Lender or the Issuer in connection herewith or therewith or pursuant hereto
or thereto, shall prove at any time to be incorrect or misleading in any
material respect as of the date made;
(e) if the Borrower shall file a petition in bankruptcy or for an
arrangement pursuant to any present or future federal bankruptcy act or under
any similar federal or state law, or shall be adjudicated a bankrupt or
insolvent, or shall make an assignment for the benefit of its creditors or
shall admit in writing its inability to pay its debts generally as they
become due, or if a petition or answer proposing the adjudication of the
Borrower as a bankrupt under any present or future federal bankruptcy act or
any similar federal or state law shall be filed in any court and such
petition or answer shall not be discharged or denied within sixty (60) days
after the filing thereof, or a receiver, trustee or liquidator of all or
20
EXHIBIT 10.2
substantially all of the assets of the Borrower or of the Equipment shall be
appointed in any proceeding brought against the Borrower and shall not be
discharged within sixty (60) days after such appointment or if the Borrower
shall consent to or acquiesce in such appointment, or if the estate or
interest of the Borrower in the Equipment or a part thereof shall be levied
upon or attached in any proceeding and such process shall not be vacated or
discharged within sixty (60) days after such levy or attachment; or
(f) if an Event of Default shall occur under the Security Agreement or any
other instrument securing the Bond or if any representation or warranty made
by the Borrower thereunder shall prove at any time to be incorrect or
misleading in any material respect as of the date made.
Section 6.02. REMEDIES IN THE EVENT OF DEFAULT. Whenever any Event of
Default referred to in Section 6.01 shall have happened and be subsisting
(subject to the cure provisions of Section 6.06), any one or more of the
following remedial steps may be taken by the Holder directly or, upon written
consent of the Holder, by the Issuer:
(a) all sums payable under this Loan Agreement (being an amount equal
to that necessary to pay in full the Bond assuming acceleration of the Bond
under the terms thereof and to pay all other indebtedness secured by the
Security Agreement) may be declared to be immediately due and payable,
whereupon the same shall become immediately due and payable by the Borrower;
and
(b) whatever action at law or in equity or as provided in the Security
Agreement or any other instrument securing the Bond that may appear necessary
or appropriate to collect the amounts then due and thereafter to become due,
or to enforce performance and observance of any obligation, agreement or
covenant of the Borrower under this Loan Agreement may be taken.
Section 6.03. DISPOSITION OF FUNDS. Any amounts collected pursuant to
action taken under Section 6.02 shall be applied in such order as the Holder
may determine; provided that in the event that the Holder advances sums in
protecting the lien of the Security Agreement, in payment of taxes on the
Facility, in payment of premiums with respect to insurance covering the
Facility, in payment of principal and interest on prior liens against the
Facility, in order to cure any Event of Default under this Loan Agreement or
the Security Agreement or any default under the Lease (the Borrower hereby
authorizing the Holder to make any such advance on its behalf), and in
payment of expenses and attorneys' fees herein provided for and other sums
advanced by the Holder for any other purpose authorized in the Security
Agreement, the Borrower upon demand shall pay all such costs and expenses so
incurred and advances so made to the Holder together with interest at the
rate then payable on the Bond per annum (unless payment of such rate would be
contrary to law in which event such sums shall bear interest at the lesser of
18% or the highest rate permitted by applicable law).
Section 6.04. MANNER OF EXERCISE. No remedy herein conferred upon or
reserved to the Issuer is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Loan Agreement or
now or hereafter existing at law or in equity by statute. No delay or
omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof,
but any such right and power may be exercised from time to time and as often
as may be deemed expedient. In order to entitle the Issuer to exercise any
remedy reserved to it in this Article, it shall not be necessary to give any
notice, other than such notice as may be herein expressly required, but no
remedy shall be exercised by the Issuer without the prior written consent of
the Holder.
21
EXHIBIT 10.2
Section 6.05. EFFECT OF WAIVER. In the event any agreement contained in
this Loan Agreement should be breached by either party and thereafter waived
by the other party, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. If the
Holder, at the Borrower's request, waives any breach of this Loan Agreement
on the part of the Borrower, the Borrower will pay, upon the Holder's demand,
$1,500 to the Holder as reimbursement for the Holder's cost of providing such
a waiver.
Section 6.06. NOTICE TO BORROWER OF EVENT OF DEFAULT. (a) The
Borrower, except as otherwise specifically provided in this Article Six,
shall have the right to written notice from the Issuer or the Lender of any
alleged Event of Default (except an Event of Default under Section 6.01(a) of
this Loan Agreement, for which no notice shall be necessary), and shall,
except as provided in Section 6.06(b), have a period of thirty (30) days from
receipt of said notice, unless a longer period of time is provided by the
specific terms of this Loan Agreement, the Security Agreement, or the laws of
the State of Minnesota, to cure or correct such alleged Event of Default or
otherwise respond to said notice, and no Event of Default shall occur
hereunder until the expiration of such cure period.
(b) Notwithstanding anything to the contrary in this Article VI, an
Event of Default shall occur immediately upon the occurrence of any of the
following: (i) an event under Section 6.01(a)(ii) or section 6.01(a)(iii) of
this Loan Agreement; (ii) failure to carry or maintain insurance on the
Equipment as required by section 4.15 of this Loan Agreement and by the
Security Agreement; or (iii) any event described in Section 6.01(e) of this
Loan Agreement. The cure and notice provisions of Section 6.06(a) of this
Loan Agreement do not apply to the Events of Default referred to in this
paragraph (b) or the Events of Default referred to in Section 6.01(a)(i).
(c) Notice under this Section 6.06 shall be deemed received:
(i) if sent by facsimile before 4:00 p.m. Central Time on a
business day, on that business day;
(ii) if sent by facsimile after 4:00 p.m. Central Time on a business
day, or on a nonbusiness day, on the next business day; and
(iii) if sent by mail, 3 days after mailing
22
EXHIBIT 10.2
ARTICLE SEVEN
GENERAL
Section 7.01. NOTICES. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed
given when mailed by certified or registered mail, postage prepaid, with
proper address as indicated below. The Issuer, the Borrower and the Holder
may, by written notice given by each to the others, designate any address or
addresses to which notices, certificates or other communications to them
shall be sent when required as contemplated by this Loan Agreement. Until
otherwise provided by the respective parties, all notices, certificates and
communications to each of them shall be addressed as follows:
To the Issuer: Economic Development Authority
of the City of Belle Plaine, Minnesota
000 Xxxx Xxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxx 00000
Attn: City Administrator
To the Borrower: Excelsior-Xxxxxxxxx Motorcycle Manufacturing
Company
000 Xxxxxx Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx 00000
Attn: Chief Financial Officer
with a copy to: Xxxx Xxxxxx
Faegre & Xxxxxx
2200 Norwest Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
To the Lender: FINOVA Public Finance, Inc.
000 Xxxxx Xxxxxxx 000
Xxxxx 000
Xxxxxxxx, Xxxxxxxxx 00000
Attn: President
Section 7.02. BINDING EFFECT. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer and the Borrower and their
respective successors and assigns.
Section 7.03. SEVERABILITY. In the event any provision of this Loan
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 7.04. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided in this Loan Agreement or in the Resolution, subsequent to
the initial issuance of the Bond and before the Bond are satisfied and
discharged in accordance with its terms, this Loan Agreement may not be
effectively amended, changed, modified, altered, or terminated without the
written consent of the Holder.
23
EXHIBIT 10.2
Section 7.05. EXECUTION; COUNTERPARTS. This Loan Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 7.06. CONCERNING THE BOND. The Borrower agrees to be bound by
all of the terms and conditions set forth in the Bond.
Section 7.07. LIMITATION OF ISSUER'S LIABILITY. It is understood and
agreed by Borrower and the Lender that no covenant of the Issuer herein shall
give rise to any liability of the Issuer, other than from revenues derived
from this Loan Agreement, or constitute a charge against the general credit
or taxing powers of the Issuer. It is further understood and agreed by the
Borrower and the Lender that the Issuer shall incur no liability other than
from proceeds derived from this Loan Agreement hereunder, and shall not be
liable for any expenses related hereto, all of which the Borrower agrees to
pay.
Section 7.08. ASSIGNMENT BY THE ISSUER; ASSIGNMENT BY THE LENDER. (a)
The Borrower recognizes that the Issuer, pursuant to the Assignment of Loan
Agreement, has granted a security interest in all of its interest in, to, and
under this Loan Agreement (including all Loan repayments hereunder but
excluding any of its rights to indemnification and payment of costs or
expenses provided in Sections 3.04, 4.02 and 7.07 hereof) to the Lender as
security for the prompt payment of the principal, premium, if any, and
interest on the Bond, and hereby consents to such grant. The Borrower has
reviewed and hereby approves and consents to the terms of the Assignment of
Loan Agreement. The Issuer and the Borrower consent to any future
assignments by the Lender of the Issuer's interest in, to, and under this
Loan Agreement to any future Holder of the Bond.
(b) The Holder may not assign, transfer, sell, or otherwise convey this
Loan Agreement, the Bond, and the Security Agreement in whole, unless any
such assignment, transfer, sale, or conveyance complies with all state and
federal laws, rules, and regulations.
(c) Notwithstanding anything to the contrary in this Loan Agreement,
the Lender will not assign, transfer, sell, or otherwise convey a partial
interest or partial right in this Loan Agreement, the Bond, the Security
Agreement, or any related partial interest or partial right unless such
assignment, transfer, sale, or conveyance:
(i) complies with all state and federal laws, rules, and regulations;
(ii) is to only one other party and no third party shall have any
partial interest or partial right in the Loan Agreement, the Bond, the
Security Agreement, unless the Borrower approves in writing and at its
sole discretion, an additional assignment, transfer, sale or
conveyance; and
(iii) contains a condition in a form reasonably satisfactory to
the Borrower, that either the Lender or its assignee, but not both,
has and will exercise authority to act on the other's behalf with
regard to the Borrower's obligations under the Borrower Documents;
provided that this Section 7.08(c)(ii) shall not apply to assignment
by the Lender or Holder to the Issuer when such assignment is
expressly permitted by this Loan Agreement.
24
EXHIBIT 10.2
Section 7.09. SURVIVAL OF CERTAIN PROVISIONS. The provisions of
Section 4.02, Section 4.01(v), and the Environmental Indemnity Agreement
shall survive the payment and discharge of the Bond and any termination of
this Loan Agreement.
Section 7.10. PUBLICITY. The Lender may, upon the consent of the
Borrower (such consent to be given or withheld at the Borrower's sole
discretion) and in compliance with all state and federal laws, rules, and
regulations, publicize the Lender's purchase of the Bond and the purposes for
which it was purchased.
25
EXHIBIT 10.2
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be executed in their respective names as of the date first above
written.
EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY
By
-------------------------------------
Its
-------------------------------------
26
EXHIBIT 10.2
Loan Agreement signature page of the Issuer.
ECONOMIC DEVELOPMENT AUTHORITY
OF THE CITY OF BELLE PLAINE, MINNESOTA
By
-------------------------------------
Its
-------------------------------------
By
-------------------------------------
Its
-------------------------------------
EXHIBIT 10.2
EXHIBIT A
LEGAL DESCRIPTION OF LAND
Xxx 0, Xxxxx 0 and Xxx 0, Xxxxx Xxx, Xxxxxxxxx-Xxxxxxxxx Xxxxxxxxxx Xxxx
Subdivision, according to the recorded plat thereof, Xxxxx County, Minnesota.
EXHIBIT 10.2
EXHIBIT B
CONFIDENTIALITY AGREEMENT GOES HERE
