CREDIT AND SECURITY AGREEMENT
Exhibit
10.5
AGREEMENT
made this 8th day of November, 2007, by Nature Vision, Inc., a Minnesota
corporation (herein called “Parent”) and Nature Vision Operating, Inc., a
Minnesota corporation, (herein called “Subsidiary”) (Parent and Subsidiary each
sometimes called “Borrower” and collectively sometimes called “Borrowers”) for
the benefit of M&I Business Credit, LLC, a Minnesota limited liability
company (herein with its participants, successors and assigns, called
“Lender”).
R
E C I T A L S
Lender
has made loans to Parent
pursuant to a Demand Term Note dated September 19, 2007 (herein called the
“Note”) secured by a Security Agreement (herein called the “Security Agreement”)
and a Revolving Mortgage, Assignment of Rents, Security Agreement and Fixture
Financing Statement (herein called the “Mortgage”). The aforesaid
loans shall also be governed by the terms of this Agreement.
Borrowers
have requested that Lender make loans to Borrower from time to time at Lender’s
sole discretion and, in connection therewith, has executed and delivered for
Lender’s benefit various ancillary and supplemental agreements and documents
(herein called the “Security Documents”), which include, without limitation, the
Note, Security Agreement and Mortgage.
This
Agreement sets forth certain additional obligations undertaken by Borrowers
to
induce Lender to make such loans. The obligations of Borrower set
forth herein are joint and several.
Any
term
used in the Uniform Commercial Code (“UCC”) and not otherwise defined in this
Agreement shall have the meaning given to the term in the UCC.
ACCORDINGLY,
to induce Lender to make one or more loans to Borrowers, and for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Borrowers hereby represent, warrant and agree for the benefit
of
Lender that:
1. The
Loans. Lender shall not be obligated to make any loans to
Borrowers. All loans which Lender may determine to make under this
Agreement shall be repayable on demand. Borrowers will comply with
the following procedure in requesting loans from Lender:
(a) Borrowers
will request loans from Lender in such manner as Lender may from time to time
prescribe.
(b) Lender
may make loans in any amount and in any manner requested orally or in writing
(i) by any officer of any Borrower; or (ii) by any person designated as any
Borrower’s agent by any officer of any Borrower in a writing delivered to
Lender; or (iii) by any person reasonably believed by Lender to be an officer
of
any Borrower or such a designated agent. Except as otherwise
instructed in writing by such officer, agent or person, Lender may disburse
loan
proceeds by deposit with any bank to or for the account of any Borrower or
to or
for the account of any third party designated by such officer, agent, or person,
or by an instrument payable to any Borrower or to any such third party delivered
to any such officer, agent, or person or to any such third party, or in any
other manner deemed appropriate by Lender. All principal of and
interest on loans made by Lender shall be repayable at the offices of Lender
in
Minneapolis, Minnesota, unless Lender designates a different place of payment
by
written notice to Borrowers.
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(c) Lender
may make loans on the basis of Collateral available hereunder and under the
Security Documents or any other basis deemed appropriate by Lender from time
to
time. Lender may change from time to time, at its sole discretion and
without notice to Borrowers, the standards, criteria and formulae used by Lender
in determining the type and amount of Collateral eligible for
advance. In any event, subject to change at Lender’s discretion,
Borrowers shall not request loans on the basis of the following
Collateral:
(1) Accounts
receivable which are (i) disputed or subject to claims or set offs; or (ii)
progress xxxxxxxx; or (iii) owed by an account debtor not located in the United
States or Canada and not secured by a bank letter of credit satisfactory to
Lender in its sole discretion; or (iv) owed by an account debtor which is the
subject of any bankruptcy or insolvency proceeding or is insolvent or has made
an assignment for the benefit of creditors or has failed or suspended or gone
out of business.
(2) Collateral
which is not as warranted herein or in the Security Documents.
(3) Collateral
which Lender, in its discretion, has declared ineligible collateral by written
notice to Borrowers.
(4) Accounts
receivable not paid within ninety (90) days after invoice or, if Lender in
its
discretion has determined that a particular dated receivable is eligible for
advance, within thirty (30) days after the due date stated.
(5) Accounts
receivable owed to Borrowers by any shareholder, subsidiary or affiliate of
any
Borrower or by any person or company obligated to pay any receivable deemed
ineligible under clauses (1) through (4), if such ineligible receivable is
10%
or more of the total amount due from such person or company.
Notwithstanding
any apportionment, exclusion or segregation of Collateral made by Lender for
purposes of determining the amount or maximum amount of loans made to Borrowers,
all rights and interests of Lender hereunder and under the Security Documents,
and all other collateral rights, interests and properties available to Lender,
shall secure and may be applied to pay any or all indebtedness of Borrowers
secured thereby, in any manner or order of application and without regard to
any
such apportionment, exclusion or segregation.
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(d) Borrowers
will pay interest on all outstanding loans under this Agreement at an annual
rate (computed on the basis of actual days elapsed in a 360-day year) which
shall at all times be equal to the greater of (i) six percent
(6%) per annum, or (ii) three-quarters percent
(.75%) above the rate of interest publicly announced by M&I
Xxxxxxxx & Ilsley Bank from time to time as its prime rate (or any
similar successor rate), each change in the interest rate shall take effect
simultaneously with the corresponding change in the designated bank’s prime rate
or any similar successor rate; provided that in no event shall the Borrowers
pay
interest at a rate greater than the highest rate permitted by
law. All interest shall accrue on the principal balance outstanding
from time to time and shall be payable on the first day of the next month in
which accrued and in any event on demand. Borrowers agree that Lender
may at any time or from time to time, without further request by Borrowers,
make
a loan to Borrowers, or apply the proceeds of any loans, for the purpose of
paying all such interest promptly when due. In the computation of
interest, Lender may allow two banking days for the collection of uncollected
funds. Notwithstanding anything to the contrary stated herein, the
interest charges payable pursuant to this Paragraph 1(d) for each twelve month
period shall never be less than One Hundred Twenty Thousand Dollars
($120,000). If for any twelve month period the interest pursuant to
Paragraph 1(d) shall be less than $120,000, Borrowers shall pay on the
anniversary date of this Agreement ending each twelve months the amount of
the
difference between $120,000 and the interest charges for such twelve month
period.
(e) In
addition to any other amounts payable by Borrowers to Lender, Borrowers agrees
to pay to the Lender on the date of this Agreement and on each anniversary
date
of this Agreement an annual fee equal to the greater of Forty-Five Thousand
Dollars ($45,000) or three-quarters percent (.75%) of the maximum amount that
the Lender may loan to Borrowers during the twelve (12) months following such
payment; provided, however, payment of such fee does not obligate Lender to
make
any loans to Borrowers, and Lender, in its sole discretion, shall determine
if
it will make loans and the amounts of any such loans pursuant to the terms
of
Paragraphs 1(a) through 1(h) of this Agreement.
(f) Lender
may maintain from time to time, at its discretion, liability records as to
any
and all loans made or repaid and interest accrued or paid under this
Agreement. All entries made on any such record shall be presumed
correct until Borrowers establish the contrary. On demand by Lender,
Borrowers will admit and certify in writing the exact principal balance which
Borrowers then assert to be outstanding to Lender for loans under this
Agreement. Any billing statement or accounting rendered by Lender
shall be conclusive and fully binding on Borrowers unless specific written
notice of exception is given to Lender by Borrowers within thirty (30) days
after its receipt by Borrowers.
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(g) Borrowers’
obligations with respect to all loans shall be fully binding and enforceable
without any note or other evidence of indebtedness. Nevertheless, if
Lender so requests, Borrowers will duly execute and deliver to Lender a
promissory note in negotiable form payable on demand to the order of Lender
in a
principal amount equal to the principal balance then outstanding to Lender
for
loans under this Agreement, together with interest as set forth in Paragraph
1(d).
(h) In
requesting any loans under this Agreement, Borrowers shall be deemed to
represent and warrant to Lender that, as of the date of the proposed loans,
(i)
all of the representations and warranties made in Paragraphs 3 and 4 will be
true and correct except for changes caused by transactions permitted under
this Agreement, and (ii) no breach or default under, and no Event of Default
defined or described in, this Agreement or any of the Security Documents will
exist.
2. Affiliate. For
the purposes of this Agreement, “Affiliate” refers to any corporation,
partnership, individual or other entity which now or hereafter controls, is
controlled by, or is under common control with any
Borrower. Borrowers agree that any breach, default or event of
default by or attributable to any Affiliate under any agreement between such
Affiliate and Lender shall constitute a breach of this Agreement and an Event
of
Default hereunder and under the Security Documents. “Affiliated
Corporation” shall refer to any entity that is not a natural
person.
3. Security
Interest.
(a)
Grant of Security Interest. Borrowers hereby assign to Lender
and grant Lender a security interest (collectively referred to as the “Security
Interests”) in the property described below, as security for the payment and
performance of each and every debt, liability and obligation of every type
and
description which any Borrower may now or at any time hereafter owe to Lender
(whether such debt, liability or obligation now exists or is hereafter created
or incurred, whether it arises in a transaction involving Lender alone or
in a
transaction involving other creditors of any Borrower, and whether it is
direct
or indirect, due or to become due, absolute or contingent, primary or secondary,
liquidated or unliquidated, or sole, joint, several or joint and several,
and
including specifically, but not limited to, all indebtedness of any Borrower
arising under this or any other present or future loan or credit agreement,
promissory note, guaranty or other undertaking of any Borrower enforceable
by
Lender; all such debts, liabilities and obligations are herein collectively
referred to as the “Obligations”). The Security Interests shall
attach to the all of the personal property and fixtures of any Borrower (the
"Collateral"), including all proceeds and products thereof and, including,
without limitation the following:
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INVENTORY: All
inventory, as such term is defined in the UCC, of every type and
description, now owned or hereafter acquired by any Borrower, including
inventory consisting of whole goods, spare parts or components, supplies
or materials and inventory acquired, held or furnished for sale,
for lease
or under service contracts or for manufacture or processing, or any
other
purpose, and wherever located.
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DOCUMENTS
OF TITLE: All warehouse receipts, bills of lading and
other documents of title of every type and description now owned
or
hereafter acquired by any Borrower.
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ACCOUNTS: All
accounts of any Borrower, as such term is defined in the UCC, now
existing
or hereafter arising, including each and every right of any Borrower
to
the payment of money, whether such right to payment now exists or
hereafter arises, whether such right to payment arises out of a sale,
lease or other disposition of goods or other property, out of a rendering
of services, out of a loan, out of the overpayment of taxes or other
liabilities, or any other transaction or event, whether such right
to
payment is created, generated or earned by any Borrower or by some
other
person whose interest is subsequently transferred to any Borrower,
whether
such right to payment is or is not already earned by performance,
and
howsoever such right to payment may be evidenced, together with all
other
rights and interests (including all liens, security interests and
guaranties) which any Borrower may at any time have by law or agreement
against any account debtor or other person obligated to make any
such
payment or against any property of such account debtor or other person;
all contract rights, chattel papers, bonds, notes and other debt
instruments, and all loans and obligations receivable, tax refunds
and
other rights to payment in the nature of general intangibles; all
checking
accounts, savings accounts and other depository accounts and all
savings
certificates and certificates of deposit maintained with or issued
by
Lender or any other bank or other financial
institution.
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EQUIPMENT
AND FIXTURES: All equipment, as such term is defined
in the UCC, now owned or hereafter acquired by any Borrower and all
fixtures of every type and description now owned or hereafter acquired
by
any Borrower, including (without limitation) all present and future
machinery, vehicles, furniture, fixtures, manufacturing equipment,
shop
equipment, office and recordkeeping equipment, parts, tools, supplies
and
all other goods (except inventory) used or bought for use by any
Borrower
for any business or enterprise; including (without limitation) all
goods
that are or may be attached or affixed or otherwise become fixtures
upon
any real property; and including specifically (without limitation)
the
goods described in any equipment schedule or list herewith or hereafter
furnished to Lender by any Borrower, all accessions attachments,
parts and
repairs now or hereafter attached or affixed or used in connection
with
equipment, all substitutions and replacements thereof, and all like
or
similar property now owned or hereafter acquired by any
Borrower. (No such schedule or list need be furnished in order
for the security interest granted herein to be valid as to all of
Borrower's equipment.)
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INVESTMENT
PROPERTY: All investment property, as such term is
defined in the UCC, whether now owned or hereafter acquired by any
Borrower, including (without limitation) all securities, security
entitlements, securities accounts, commodity contracts, commodity
accounts, stocks, bonds, mutual fund shares, money market shares
and U.S.
Government securities.
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GENERAL
INTANGIBLES: All general intangibles of every type and
description now owned or hereafter acquired by any Borrower, including
(without limitation) all present and future intellectual property,
proprietary rights, foreign and domestic patents, patent applications,
trademarks, trademark applications, service marks, service xxxx
applications, trade dress, mask works, copyrights, trade names, trade
secrets, shop drawings, engineering drawings, blueprints, specifications,
parts lists, manuals, operating instructions, customer or supplier
lists
and contracts, licenses, permits, franchises, the right to use Borrowers’
corporate names, and the goodwill of Borrowers’
businesses.
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MISCELLANEOUS
COLLATERAL: All instruments, chattel paper, deposit
accounts, documents, goods, letter-of-credit rights, letters of credit,
all sums on deposit in any collateral account, and any items in any
lockbox, now existing or hereafter arising, and any money or other
assets
of any Borrower that come into the possession, custody or control
of the
Lender.
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(b) Representations,
Warranties and Covenants. Borrowers represent, warrant and
covenant as follows:
(1) Borrowers
have (or will have at the time it acquires rights in Collateral hereafter
arising) and will maintain so long as the Security Interests may remain
outstanding, absolute title to each item of Collateral and all proceeds thereof,
free and clear of all interests, liens, attachments, encumbrances and security
interests except the Security Interests and as provided herein and except as
Lender may otherwise agree in writing. Borrowers will defend the
Collateral against all claims or demands of all persons (other than Lender)
claiming the Collateral or any interest therein. Borrowers will not
sell or otherwise dispose of the Collateral or any interest therein, except
the
sale of inventory in the ordinary course of Borrowers’ business, without
Lender’s prior written consent. Borrowers’ interest in the Collateral
is freely transferable to any person, without condition, limitation,
jurisdiction or restriction of governmental authority, or any other
qualification whatsoever.
(2) Borrowers’
exact legal names and federal employer identification and organization
identification numbers are as set forth below and state of organization is
as
set forth above. Borrowers do business solely under their own name
and the trade names (if any) set forth below. The places of business
and chief executive office of Borrowers are located at the address(es) set
forth
below, and all tangible Collateral is located at such address(es), except for
inventory in transit and inventory and tooling in the possession of vendors
in
China. All of Borrowers’ records relating to their business or the
Collateral are kept at its chief executive office. Borrowers will not
permit any tangible Collateral or any records pertaining to Collateral to be
located in any state or area in which, in the event of such location, a
financing statement covering such Collateral would be required to be, but has
not in fact been, filed in order to perfect the Security
Interests. Borrowers will not change their names, articles of
incorporation or jurisdiction of organization without prior written consent
of
Lender. Borrowers will not change their identity or corporate
structure or the location of their place of business, without prior written
notice to Lender.
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(3) None
of the Collateral is or will become a fixture on real estate, unless a
sufficient fixture filing is in effect with respect thereto.
(4) Each
account and other right to payment and each instrument, document, chattel paper
and other agreement constituting or evidencing Collateral is (or, in the case
of
all future Collateral, will be when arising or issued) the valid, genuine and
legally enforceable obligation, subject to no defense, setoff or counterclaim,
of the account debtor or other obligor named therein or in Borrowers’ records
pertaining thereto as being obligated to pay such
obligation. Borrowers will not agree to modify, amend, subordinate,
cancel or terminate the obligation of any such account debtor or other obligor,
without Lender’s prior written consent.
(5) Borrowers
will keep all tangible Collateral in good repair, working order and condition,
normal depreciation, wear and tear excepted, and will, from time to time,
replace any worn, broken or defective parts.
(6) Borrowers
will promptly pay all taxes and other governmental charges levied or assessed
upon or against any Collateral or upon or against the creation, perfection
or
continuance of the Security Interests.
(7) Borrowers
will keep all Collateral free and clear of all security interests, liens and
encumbrances except the Security Interests and as provided herein and except
other security interests approved in writing by Lender.
(8) Borrowers
will at all reasonable times permit Lender or its representatives to examine
or
inspect any Collateral, or any evidence of Collateral, wherever
located.
(9) Borrowers
will promptly notify Lender of any loss of or material damage to any Collateral
or of any substantial adverse change, known to Borrowers, in any Collateral
or
the prospect of payment thereof.
(10) Upon
request by Lender, whether such request is made before or after the occurrence
of any Event of Default, Borrowers will promptly deliver to Lender in pledge
all
instruments, documents and chattel paper constituting Collateral, duly endorsed
or assigned by Borrowers.
(11) Borrowers
will at all times keep all tangible Collateral insured against risks of fire
(including so-called extended coverage), theft, collision (for Collateral
consisting of motor vehicles) and such other risks and in such amounts as Lender
may reasonably request, with any loss payable to Lender to the extent of its
interest.
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(12) Borrowers
will use and keep the Collateral, and will require that others use and keep
the
Collateral, only for lawful purposes, without violation of any federal, state
or
local law, statute or ordinance.
(13) Borrowers
from time to time will execute and deliver or endorse any and all instruments,
documents, conveyances, assignments, security agreements, financing statements
and other agreements and writings which Lender may reasonably request in order
to secure, protect, perfect or enforce the Security Interests or the rights
of
Lender under this Agreement (but any failure to request or assure that Borrowers
execute, deliver or endorse any such item shall not affect or impair the
validity, sufficiency or enforceability of this Agreement and the Security
Interests, regardless of whether any such item was or was not executed,
delivered or endorsed in a similar context or on a prior occasion).
(14) Promptly
upon knowledge thereof, the Borrowers will deliver to Lender notice of any
commercial tort claims it may bring against any person, including the name
and
address of each defendant, a summary of the facts, an estimate of Borrowers’
damages, copies of any complaint or demand letter submitted by Borrowers, and
such other information as the Lender may request. Upon request by
Lender, Borrowers will grant the Lender a security interest in all commercial
tort claims it may have against any person.
(15) The
proper place to file financing statements to perfect the Security Interests
other than in Collateral which are fixtures is the Office of Secretary of State
of Minnesota and the proper place to file a financing statement to perfect
the
Security Interest in Collateral which are fixtures is the County Recorder of
Crow Wing County, Minnesota. When the financing statements prepared by Lender
are filed there, Lender will have valid and perfected Security Interests in
the
Collateral, subject to no prior security interest, assignment, lien or
encumbrance (except interests, if any, specifically approved by Lender in
writing).
If
any
Borrower at any time fails to perform or observe any of the foregoing
agreements, and if such failure shall continue for a period of ten (10) calendar
days after Lender gives Borrowers written notice thereof (or in the case of
the
agreements contained in Paragraphs 3(b)(7) and 3(b)(11) above, immediately
upon
the occurrence of such failure, without notice or lapse of time), Lender may,
but need not, perform or observe such agreement on behalf and in the name,
place
and stead of Borrowers (or, at Lender’s option, in the name of Lender) and may,
but need not, take any and all other actions which Lender may reasonably deem
necessary to cure or correct such failure (including, without limitation, the
payment of taxes, the satisfaction of security interests, liens or encumbrances,
the performance of obligations owed to account debtors or other obligors, the
procurement and maintenance of insurance, the execution of assignments, security
agreements and financing statements, and the endorsement of instruments); and
Borrowers shall thereupon pay to Lender on demand the amount of all monies
expended and all costs and expenses (including reasonable attorneys’ fees and
legal expenses) incurred by Lender in connection with or as a result of the
performance or observance of such agreements or the taking of such action by
Lender, together with interest thereon from the date expended or incurred at
the
highest lawful rate then applicable to any of the Obligations. To
facilitate the performance or observance by Lender of such agreements of
Borrowers, Borrowers hereby irrevocably appoint Lender, or the delegate of
Lender, acting alone, as the attorney-in-fact of Borrower with the right (but
not the duty) from time to time to create, prepare, complete, execute, deliver,
endorse or file in the name and on behalf of Borrowers any and all instruments,
documents, assignments, security agreements, financing statements, applications
for insurance and other agreements and writings required to be obtained,
executed, delivered or endorsed by Borrowers under this Paragraph
3(b).
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(c) Proceeds;
Collateral Account. Borrowers agree to deliver to Lender, or, at
Lender’s option, to deposit in one or more special collateral accounts
maintained for Lender by any bank reasonably satisfactory to Lender, all
proceeds of cash sales of inventory, all collections on accounts, contract
rights, chattel paper and other rights to payment constituting Collateral,
and
all other cash proceeds of Collateral, immediately upon receipt thereof, in
the
form received, except for Borrowers’ endorsement when deemed
necessary. Without limiting the foregoing, Borrowers further agree
upon Lender’s request to establish a lockbox and related services with a
financial institution approved by Lender for the collection and processing
of
all accounts and other payment rights of Borrowers. Once established,
such lockbox service may not be terminated without Lender’s written approval and
the proceeds of all related collections shall be remitted to Lender’s collateral
account in accordance with Lender’s instructions. Amounts deposited
in a collateral account shall not bear interest and shall not be subject to
withdrawal by Borrower, except after full payment and discharge of all
Obligations. All such collections shall constitute proceeds of
Collateral and shall not constitute payment of any Obligation. Until
delivered to Lender or deposited in a collateral account, all proceeds or
collections of Collateral shall be held in trust by Borrowers for and as the
property of Lender and shall not be commingled with any funds or property of
Borrowers. Lender may deposit any and all collections received by it
from Borrowers or out of any collateral account in Lender’s general account and
may commingle such collections with other property of Lender or any other
person. All items shall be delivered to Lender or deposited in any
collateral account subject to final payment. If any such item is
returned uncollected, Borrowers will immediately pay Lender, or, for items
deposited in a collateral account, the bank maintaining such account, the amount
of that item, or such bank in its discretion may charge any uncollected item
to
Borrowers’ commercial account or other account. Borrower shall be
liable as an endorser on all items deposited in any collateral account, whether
or not in fact endorsed by Borrowers. Lender from time to time at its
discretion may apply funds on deposit in any collateral account to the payment
of any or all Obligations, in any order or manner of application satisfactory
to
Lender.
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(d) Collection
Rights of Lender. In addition to the rights of Lender under
Paragraph 3(c), with respect to any and all rights to payment constituting
Collateral, Lender may at any time either before or after the occurrence of
an
Event of Default under Paragraph 7 notify any account debtor or other person
obligated to pay the amount due that such right to payment has been assigned
or
transferred to Lender for security and shall be paid directly to
Lender. Borrowers will join in giving such notice, if Lender so
requests. At any time after Borrowers or Lender give such notice to
an account debtor or other obligor, Lender may, but need not, in Lender’s name
or in Borrowers’ name, (i) demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of, or securing, any
such
right to payment, or grant any extension to, make any compromise or settlement
with or otherwise agree to waive, modify, amend or change the obligations
(including collateral obligations) of any such account debtor or other obligor;
and (ii) as agent and attorney-in-fact of Borrowers notify the United States
Postal Service to change the address for delivery of Borrowers’ mail to any
address designated by Lender and otherwise intercept, receive, open and dispose
of Borrowers’ mail, applying all Collateral as permitted under this Agreement
and holding all other mail for Borrower’s account or forwarding such mail to
Borrowers’ last known address.
(e) Assignment
of Insurance. As additional security for the payment and
performance of the Obligations, Borrowers hereby assign to Lender any and all
monies (including, without limitation, proceeds of insurance and refunds of
unearned premiums) due or to become due under, and all other rights of Borrowers
with respect to, any and all policies of insurance now or at any time hereafter
covering the Collateral or any evidence thereof or any business records or
valuable papers pertaining thereto (excluding any life insurance), and Borrowers
hereby direct the issuer of any such policy to pay all such monies directly
to
Lender. At any time, whether before or after the occurrence of any
Event of Default, Lender may (but need not), in Lender’s name or in Borrowers’
names, execute and deliver proofs of claim, receive all such monies, endorse
checks and other instruments representing payment of such monies, and adjust,
litigate, compromise or release any claim against the issuer of any such
policy.
(f) Filing
of Financing Statements. Borrowers authorize Lender to file
financing statements describing the Collateral and describing any other
statutory liens held by Lender.
(g) Verification. At
any time or from time to time, under its own name or under a trade name, Lender
may (but shall not be obligated to) send to and discuss with Borrowers’ account
debtors requests for verification of amounts owed to Borrowers. If
Lender so requests at any time, Borrowers will send requests for verification
to
its account debtors or join in any requests for verification sent by
Lender.
(h) Surplus
and Deficiency; Care of Collateral. This Agreement does not
contemplate a sale of accounts, contract rights or chattel paper, and, as
provided by law, Borrowers are entitled to any surplus and shall remain liable
for any deficiency. Lender’s duty of care with respect to Collateral
in its possession (as imposed by law) shall be deemed fulfilled if it exercises
reasonable care in physically keeping such Collateral, or in the case of
Collateral in the custody or possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third person,
and Lender need not otherwise preserve, protect, insure or care for any
Collateral. Lender shall not be obligated to preserve any rights
Borrowers may have against prior parties, to realize on the Collateral at all
or
in any particular manner or order or to apply any cash proceeds of the
Collateral in any particular order of application.
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4. Representations
and Warranties. Borrowers represent and warrant to Lender
that:
(a) Each
Borrower is a corporation duly organized and existing in good standing under
the
laws of the State of Minnesota. Each Borrower has the corporate power to own
its
property and to carry on its business as now conducted and is duly qualified
to
do business in all states in which such qualification is
required. Since September 2004, the formal corporate names of the
Borrowers have been Nature Vision, Inc and Nature Vision Operating,
Inc. Borrowers do not own any capital stock of any corporation or
equity or any entity, except that Parent owns all of the issued and outstanding
stock of Subsidiary.
(b) Each
Borrower is duly authorized and empowered to execute, deliver and perform this
Agreement and the Security Documents and to borrow money from
Lender.
(c) The
execution and delivery of this Agreement and the Security Documents, and the
performance by each Borrower of its obligations thereunder, do not and will
not
violate or conflict with any provision of law or the Articles of Incorporation
or By-Laws of any Borrower and do not and will not violate or conflict with,
or
cause any default or event of default to occur under, any agreement binding
upon
any Borrower.
(d) The
execution and delivery of this Agreement and the Security Documents have been
duly approved by all necessary action of the directors and shareholders of
each
Borrower; and this Agreement and the Security Documents have in fact been duly
executed and delivered by each Borrower and constitute its lawful and binding
obligations, legally enforceable against it in accordance with their respective
terms (subject to laws generally affecting the enforcement of creditors’
rights).
(e) No
litigation, tax claims or governmental proceedings are pending or are threatened
against any Borrower or any Affiliate and no judgment or order of any court
or
administrative agency is outstanding against any Borrower or any
Affiliate.
(f) The
transaction evidenced by this Agreement does not violate any law pertaining
to
usury or the payment of interest on loans.
(g) The
authorization, execution, delivery and performance of this Agreement and the
Security Documents are not and will not be subject to the jurisdiction, approval
or consent of, or to any requirement of registration with or notification to,
any federal, state or local regulatory body or administrative
agency.
16
(h) The
conduct of its business by Borrowers are not subject to registration with,
notification to, or regulation, licensing, franchising, consent or approval
by
any state or federal governmental authority or administrative agency, except
general laws and regulations which are not related or applicable particularly
or
uniquely to the type of business conducted by Borrowers, which do not materially
restrict or limit the business of Borrowers, and with which Borrowers are in
full compliance. All registrations and notifications required to be
made, and all licenses, franchises, permits, operating certificates, approvals
and consents required to be issued, to enter into or conduct such business
have
been duly and lawfully made or obtained and issued, and all terms and conditions
set forth therein or imposed thereby have been duly met and complied
with.
(i) To
the best knowledge of Borrowers based upon reasonable inquiry, no director,
shareholder, officer, employee or agent of, or consultant to, Borrower is
prohibited by law, by regulation, by contract, or by the terms of any license,
franchise, permit, certificate, approval or consent from participating in the
business of Borrowers as director, shareholder, partner, officer, employee
or
agent of, or as consultant to, Borrowers, or is the subject of any pending
or,
to Borrowers’ best knowledge, threatened proceeding which, if determined
adversely, would or could result in such a prohibition.
(j) All
assets of Borrowers and any Affiliate are free and clear of liens, security
interests and encumbrances, except those permitted under Paragraph
6(b).
(k) Borrowers
and all Affiliates have filed all federal and state tax returns which are
required to be filed, and all taxes shown as due thereon have been
paid. Borrowers and all Affiliates have paid or caused to be paid to
the proper authorities when due all federal, state and local taxes required
to
be withheld by them.
(l) Borrowers
have furnished to Lender the financial statements described below for the
periods described below:
December
31, 2005
December
31, 2006
September
30, 2007
These
statements were prepared in accordance with generally accepted accounting
principles consistently maintained, present fairly the financial condition
of
Borrowers as at the dates thereof, and disclose fully all liabilities of
Borrowers, whether or not contingent, with respect to any pension
plan. Since the date of the most recent financial statement, there
has been no material adverse change in the financial condition of
Borrowers.
17
(m) Each
qualified retirement plan of Borrowers presently conforms to and is administered
in a manner consistent with the Employee Retirement Income Security Act of
1974.
(n) Borrowers
will not request or maintain any credit for the purpose of purchasing or
carrying any security, within the meaning of Regulations T, U or X of the Board
of Governors of the Federal Reserve System.
5. Affirmative
Covenants. Borrowers covenant and agree that they
will:
(a) Use
the proceeds of any and all loans made by Lender solely for lawful and proper
corporate purposes of the Borrowers.
(b) Pay
all taxes, assessments and governmental charges prior to the time when any
penalties or interest accrue, unless contested in good faith with an adequate
reserve for payment; and pay to the proper authorities when due all federal,
state and local taxes required to be withheld by then.
(c) Continue
the conduct of their business; maintain their corporate existence; maintain
all
rights, licenses and franchises; and comply with all applicable laws and
regulations.
(d) Maintain
their property in good working order and condition and make all needful and
proper repairs, replacements, additions and improvements
thereto.
(e) Deliver
to Lender:
(1) Within
ninety (90) days after the end of each fiscal year, a statement of Borrowers’
financial condition as at the end of such fiscal year and a statement of
earnings and retained earnings of Borrowers for such fiscal year, with
comparative figures for the preceding fiscal year, prepared, if Lender so
requests, on a consolidating and consolidated basis to include any Affiliated
Corporation, certified without qualification by independent certified public
accountants acceptable to Lender.
(2) Within
twenty (20) days after the end of each fiscal month, a statement of Borrowers’
financial condition and an operating statement and statement of earnings and
retained earnings of Borrowers for such month, in each case with comparative
figures for the same month in the preceding fiscal year, prepared on the same
basis as the most recent annual statement provided pursuant to clause (1) above,
certified by an officer of any Borrower.
(3) Within
twenty (20) days after the end of each fiscal month a compliance certificate
certified by an officer of any Borrower in form acceptable to
Lender.
(4) Within
fifteen (15) days after the end of each month, an aging of Borrowers’ accounts
receivable as at the end of such month.
18
(5) Within
fifteen (15) days after the end of each month, an inventory certification report
as at the end of such month.
(6) Within
fifteen (15) days after the end of each month, an aging of Borrowers’ accounts
payable as at the end of such month.
(7) Immediately
upon filing, any reports filed with any regulatory agency, including the
Securities and Exchange Commission or any exchange wherein Borrowers’ securities
are registered.
(8) Immediately
upon mailing, any notices, reports or other mailings sent to any Borrower’s
shareholders.
(9) From
time to time, any and all receivables, schedules, collection reports, equipment
schedules, copies of invoices to account debtors and shipment documents and
delivery receipts for goods sold, and other material, reports, records or
information required by Lender.
(f) Permit
any officer, employee, attorney or accountant for Lender to audit, review,
make
extracts from, or copy any and all corporate and financial books, records and
properties of Borrowers at all times during ordinary business hours, to send
and
discuss with account debtors and other obligors’ requests for verification of
amounts owed to Borrowers, and to discuss the affairs of Borrowers with any
of
its directors, officers, employees or agents.
(g) Maintain
property, liability, business interruption, xxxxxxx’x compensation and other
forms of insurance in reasonable amounts designated at any time or from time
to
time by Lender.
(h) At
all times maintain the consolidated book net worth of Borrowers plus
subordinated debt and Borrowers’ consolidated tangible net worth (excluding all
assets designated by Lender as intangible) plus subordinated debt, as determined
in accordance with generally accepted accounting principles, at amounts equal
to
or in excess of the amounts set forth in the table below:
|
Book
Net Worth Plus
Subordinated Debt
|
Tangible
Net Worth Plus Subordinated Debt
|
|
|
From
date of this Agreement through 12/30/07
|
$5,250,000
|
$3,750,000
|
|
As
of 12/31/07
|
$6,000,000,
plus upon its sale, the
recorded gain on the Parent’s sale of its New Hope, MN
facility
|
$4,500,000,
upon its sale, the
recorded
gain on the Parent’s sale of its New Hope, MN
facility
|
|
From
January 31, 2008 and thereafter
|
See
below
|
See
below
|
19
During
each month of fiscal year 2008 and for each fiscal year thereafter, the Book
Net
Worth and Tangible Net Worth Covenants shall be adjusted to be equal to the
following:
|
|
(a)
|
Each
such covenant shall be equal to the Borrower’s final Book Net Worth and
Tangible Net Worth as of the end of the immediately preceding fiscal
year,
plus/minus (i) an amount equal to the year-to-date
budgeted net income or loss approved by the Borrower’s Board of Directors
for the then applicable fiscal year (the “Board-Approved
Budget”), minus (ii) 25% of the budgeted
year-end net income of the Borrower as set forth in the Board-Approved
Budget, plus (iii) upon its sale, the recorded gain on
the Parent’s sale of its New Hope, MN facility; provided
however, that notwithstanding the above, the Board-Approved
Budget must indicate that the Borrowers’ Book Net Worth and Tangible Net
Worth as of the then applicable fiscal year end will be at least
$100,000
greater than the Borrowers’ Book Net Worth and Tangible Net Worth as of
the immediately preceding fiscal year end, exclusive of gain on the
sale
of the Parent’s New Hope facility.
|
The
Borrower agrees that it shall deliver the Board-Approved Budget to the Lender
on
or before January 20th of each
fiscal
year.
(i) Notify
Lender promptly of (i) any disputes or claims by customers of Borrowers; (ii)
any goods returned to or recovered by Borrowers; (iii) any change in the persons
constituting the officers and directors of Borrowers; and (iv) the occurrence
of
any breach, default or event of default by or attributable to any Borrower
under
this Agreement or any of the Security Documents.
(j) Cause
to be maintained in force for the benefit of Lender a Support Agreement with
Xxxxxxx X. Xxxxxx.
(k) Until
the real estate described in the Revolving Mortgage, Assignment of Rents,
Security Agreement and Fixture Financing Statement dated September 12, 2007
is
sold and proceeds thereof of not less than $2,000,000 is applied to reduce
the
Indebtedness, the outstanding Indebtedness of Borrowers to Lender may at no
time
exceed the amount of Collateral eligible for loan advance as determined by
Lender’s standards, criteria and formulae then in effect less
$500,000.
6. Negative
Covenants. Borrowers covenant and agree that they will not,
except with the prior written approval of Lender:
(a) Become
or remain liable in any manner in respect of any indebtedness or contractual
liability (including, without limitation, notes, bonds, debentures, loans,
guaranties, obligations of partnerships, and pension liabilities, in each
case whether or not contingent and whether or not subordinated),
except:
(1) Indebtedness
arising under this Agreement;
20
(2) Unsecured
indebtedness, other than for money borrowed or for the purchase of a capital
asset, incurred in the ordinary course of its business, which becomes due and
must be fully satisfied within twelve months after the date on which it is
incurred;
(3) Unsecured
indebtedness, in an amount not exceeding One Million Dollars ($1,000,000) at
any
one time outstanding, which is fully subordinated in right of payment to all
indebtedness owed to Lender pursuant to a subordination agreement accepted
or
approved in writing by Lender;
(4) Indebtedness
arising out of the lease or purchase of goods constituting equipment and either
unsecured or secured only by a purchase money security interest securing
purchase money indebtedness, but in any event only if such equipment is acquired
in compliance with Paragraph 6(c); and
(5) Presently
outstanding unsecured borrowings for the amounts of Five Hundred Thousand
Dollars ($500,000) from Cass Creek and One Hundred Thousand Dollars ($100,000)
from Xxxxxxx Xxxxxxxx.
(6) Other
presently outstanding unsecured borrowings, if any, disclosed in the financial
statements referred to in Paragraph 4(m), but not including any extensions
or
renewals thereof.
(b) Create,
incur or cause to exist any mortgage, security interest, encumbrance, lien
or
other charge of any kind upon any of its property or assets, whether now owned
or hereafter acquired, except:
(1) The
interests created by this Agreement and the Security Documents;
(2) Liens
for taxes or assessments not yet due or contested in good faith by appropriate
proceedings;
(3) A
purchase money security interest or lessor’s interest securing indebtedness
permitted to be outstanding or incurred under Paragraph 6(a)(4);
(4) Security
interests approved by Lender in writing; and
(5) Other
liens, charges and encumbrances incidental to the conduct of its business or
the
ownership of its property which were not incurred in connection with the
borrowing of money or the purchase of property on credit and which do not in
the
aggregate materially detract from the value of its property or materially impair
the use thereof in its business.
(c) Expend
or contract to expend, in any one calendar year, more than Five Hundred Thousand
Dollars ($500,000) in the aggregate or more than Fifty Thousand Dollars
($50,000) in any one transaction for the lease, purchase or other acquisition
of
any capital asset, or for the lease of any other asset, whether payable
currently or in the future.
21
(d) Sell,
lease or otherwise dispose of all or any substantial part of its property,
except as expressly permitted hereunder or under the Security
Documents.
(e) Consolidate
or merge with any other corporation; or acquire any business; or acquire stock
of any corporation; or enter into any other partnership or joint
venture.
(f) Substantially
alter the nature of the business in which they are engaged.
(g) Declare
or pay any dividends (except dividends payable solely in its capital stock),
or
purchase or redeem any of its capital stock, or otherwise distribute any
property on account of its capital stock; or enter into any agreement
therefor.
(h) Purchase
stock or securities of, extend credit to or make investments in, become liable
as surety for, or guarantee or endorse any obligation of, any person, firm
or
corporation, except investments in direct obligations of the United States
and
commercial bank deposits and extensions of credit reflected by trade accounts
receivable arising for goods sold by Borrowers in the ordinary course of its
business.
(i) After
notice from Lender, grant any discount, credit or allowance to any customer
of
Borrowers or accept any return of goods sold.
(j) In
any manner transfer any property without prior or present receipt of full and
adequate consideration.
(k) Permit
more than Ten Thousand Dollars ($10,000) in the aggregate to be owing to
Borrowers by the officers, directors or shareholders of any Borrower or any
Affiliated Corporation, or members of their families, on account of any loan,
travel advance, credit sale or other transaction or event.
(l) Pay
excessive or unreasonable salaries, bonuses, commissions, consultant fees,
or
other compensation; or increase the salary, bonus, commissions, consultant
fees
or other compensation of any director, officer, or consultant, or any member
of
their families, by more than ten percent (10%) in any one year, either
individually or for all such persons in the aggregate, or pay any such increase
from any source other than profits earned in the year of payment.
(m) Permit
any breach, default or event of default to occur under any note, loan agreement,
indenture, lease, mortgage, contract for deed, security agreement or other
contractual obligation binding upon any Borrower.
(n) Permit
a “Change of Control” to occur. As used herein, Change of Control
means a change of thirty percent (30%) or more in the power to vote the equity
interests of the Borrowers or Xxxxxxx X. Xxxxxx ceases to actively manage the
Borrowers’ day to day business activities.
22
7. Event
of Default. Any breach of any representation, warranty, or
agreement of any Borrower set forth herein or in the Security Documents or
in
any other instrument or agreement securing any of the Obligations shall
constitute an Event of Default hereunder and under the Security
Documents.
8. Remedies
upon Default. Upon the occurrence of any Event of Default, and at
any time thereafter unless and until such Event of Default is waived in writing
by Lender, Lender may exercise one or several or all of the following rights
and
remedies:
(a) Lender
may terminate this Agreement with immediate effectiveness and without notice
or
lapse of time. Notwithstanding such termination, all claims, rights
and security interests of Lender and all debts, liabilities, obligations and
duties of Borrowers shall remain in full force and effect.
(b) Lender
may exercise and enforce any and all rights and remedies available upon default
to a secured party under the Uniform Commercial Code, including, without
limitation, the right to take possession of Collateral, or any evidence thereof,
proceeding without judicial process (without a prior hearing or notice thereof,
which Borrowers hereby expressly waive) and the right to sell, lease or
otherwise dispose of any or all of the Collateral, and in connection therewith
Borrowers will on demand assemble the Collateral and make it available to Lender
at a place to be designated by Lender which is reasonably convenient to all
parties. If notice to Borrowers of any intended disposition of
Collateral or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in
the
manner specified in Paragraph 13(a)) at least ten calendar days prior to the
date of intended disposition or other action. For the purpose of
enabling Lender to exercise such rights and remedies:
(1) Borrowers
hereby grant Lender (in addition to Lender’s security interest in general
intangibles) a nonexclusive license to use, sell or otherwise exploit in any
manner any and all trade names, trademarks, patents, copyrights, licenses and
other intangible properties necessary, appropriate or useful in the enforcement
of the Security Interests; and
(2) Borrowers
hereby grant Lender the right to possess and hold all premises owned, leased
or
held by Borrowers upon which any Collateral is or may be located (the
“Premises”), subject to the following terms and conditions:
(A)
Lender may take possession of the Premises upon the occurrence of an Event
of Default.
(B) Lender
may use the Premises only to hold, process, manufacture and sell or otherwise
dispose of goods which are inventory, or to provide services under contracts
for
receivables, or to use, operate, store, liquidate or realize upon goods which
are equipment or any other Collateral granted under this Agreement and for
other
purposes which Lender may in good xxxxx xxxx to be related or incidental
purposes.
23
(C)
The right of Lender to hold the Premises shall cease and terminate upon
the earlier of (i) payment in full and discharge of all Obligations, or (ii)
final sale or disposition of all goods constituting Collateral (including both
inventory and equipment) and delivery of all such goods to
purchasers.
(D) Lender
shall not be obligated to pay or account for any rent or other compensation
for
this grant or for the possession, occupancy or use of any of the
Premises.
(E) Borrowers
acknowledges and agrees that the breach of this grant is not fully compensable
by money damages, and that, accordingly, this grant may be enforced by an action
for specific performance.
(c) Lender
may exercise or enforce any and all other rights or remedies available by law
or
agreement against the Collateral, against Borrowers, or against any other person
or property.
9.
Acceleration Upon Bankruptcy. All of the Obligations shall be
immediately and automatically due and payable, without further act or condition,
if any case under the United States Bankruptcy Code is commenced voluntarily
by
any Borrower or involuntarily against any Borrower.
10. Setoff. Borrowers
agree that Lender may at any time or from time to time, at its sole discretion
and without demand and without notice to anyone, set off any deposit or other
liability owed to any Borrower by Lender, whether or not due, against any
indebtedness owed to Lender by Borrowers (for loans under this Agreement or
for
any other transaction or event), whether or not due. In addition,
each person holding a participating interest in any loans made to any Borrower
by Lender shall have the right to appropriate or set off any deposit or other
liability then owed by such person to Borrower, whether or not due, and apply
the same to the payment of said participating interest, as fully as if such
person had lent directly to such Borrower the amount of such participating
interest.
11. Termination
by Borrower. So long as Lender, in its sole discretion, is
willing to make loans to Borrowers for ordinary working capital purposes
subject to the availability of Collateral deemed eligible by Lender,
Borrowers may terminate this Agreement and (subject to payment and performance
of all outstanding secured obligations) may obtain any release or
termination of the Security Documents to which Borrowers are otherwise entitled
by law, effective only on the third or any subsequent anniversary date of this
Agreement, and then only if Lender receives at least 60 days prior written
notice of Borrowers’ intent to terminate this Agreement effective on such
anniversary date. Upon any such termination, all obligations of
Borrowers under this Agreement and the Security Documents shall remain in full
force and effect until all indebtedness arising under this Agreement and all
other debts, liabilities and obligations of Borrowers secured hereby, or by
the
Security Documents or any other collateral security have been fully paid and
satisfied.
24
12.
Reservation of Right to Make Demand and to Refuse to
Lend. Notwithstanding any other provisions contained herein,
Borrowers acknowledge that Lender reserves the right to demand immediate payment
of any or all loans and the interest thereon and of all other obligations of
Borrowers payable on demand, and the right to refuse to make any loans
hereunder, whether or not (a) an Event of Default has occurred hereunder, (b)
Borrowers have failed to comply with the terms of this Agreement or the Security
Documents, (c) Borrowers’ financial or other condition has changed, (d) Lender
has at that time or in connection with any previous demand or refusal to lend
given notice of its intention to make demand or to refuse to lend or (e) such
demand or refusal to lend shall not cause any loss or damage to
Borrowers.
13.
Miscellaneous. Borrowers agree that:
(a) This
Agreement can be waived, amended, terminated or discharged, and the Security
Interests can be released, only explicitly in a writing signed by
Lender. A waiver so signed shall be effective only in the specific
instance and for the specific purpose given. Mere delay or failure to
act shall not preclude the exercise or enforcement of any rights and remedies
available to Lender. All rights and remedies of Lender shall be
cumulative and may be exercised singularly in any order or sequence, or
concurrently, at Lender’s option, and the exercise or enforcement of any such
right or remedy shall neither be a condition to nor bar the exercise of
enforcement of any other. All notices to be given to Borrowers shall
be deemed sufficiently given if actually received by any officer of any Borrower
or if delivered or mailed by registered, certified or ordinary mail, postage
prepaid, to Borrowers at their address set forth below or at its most recent
address shown on Lender’s records.
(b) Borrowers
will furnish to Lender, prior to the first advance hereunder, (i) a certified
copy of resolutions of the directors and, if required, the shareholders of
Borrower, authorizing the execution, delivery and performance of this Agreement
and the Security Documents; (ii) a certificate of an officer of Borrowers
confirming the representations and warranties set forth in Paragraphs 3 and
4;
(iii) a written opinion of Borrowers’ independent legal counsel, addressed to
Lender, confirming to the satisfaction of Lender the representations and
warranties set forth in clause (b)(15) of Paragraph 3 and clauses (a) through
(h) of Paragraph 4; and (iv) currently certified copies of the Articles of
Incorporation and Bylaws of Borrowers and a Certificate of Good Standing issued
as to Borrowers by the Secretary of State of the state of its incorporation
and
(v) all certificates of insurance and insurance endorsements required hereunder
and under the Security Documents; and (vi) all collateral schedules, security
interest subordination agreements, searches, abstracts, releases and termination
statements which Lender may request adequately to assure and confirm the
creation, perfection and priority of the security interests created hereunder
or
under the Security Documents.
25
(c) On
demand, Borrowers will pay or reimburse Lender for all expenses, including
all
reasonable fees and disbursements of legal counsel, incurred by Lender in
connection with the preparation, negotiation, execution, performance or
enforcement of this Agreement or the Security Documents, or any document
contemplated thereby, or the perfection, protection, enforcement or foreclosure
of the Security Interests created hereby or by the Security Documents, or in
connection with the protection or enforcement of the interests and collateral
security of Lender in any litigation or bankruptcy or insolvency proceeding
or
the prosecution or defense or any action or proceeding relating in any way
to
the transactions contemplated by this Agreement. Additionally,
Borrowers will reimburse Lender for all out of pocket expenses incurred in
connection with periodic field exams and ongoing monitoring.
(d) Lender
and its participants, if any, are not partners or joint venturers, and Lender
shall have no liability or responsibility for any obligation, act or
omission of its participants under or as to this Agreement.
(e) This
Agreement shall be binding upon Borrowers and their successors and assigns
and
shall inure to the benefit of Lender and its participants, successors and
assigns. This Agreement shall be effective when executed by Borrower
and delivered to Lender, whether or not this Agreement is executed by
Lender. All rights and powers specifically conferred upon Lender
may be transferred or delegated by Lender to any of its participants, successors
or assigns. Except to the extent otherwise required by law, this
Agreement and the transactions evidenced hereby shall be governed by the
substantive laws of the State of Minnesota. If any provision or
application of this Agreement is held unlawful or unenforceable in any respect,
such illegality or unenforceability shall not affect other provisions or
applications which can be given effect, and this Agreement shall be construed
as
if the unlawful or unenforceable provision or application had never been
contained herein or prescribed hereby. All representations and
warranties contained in this Agreement or in any other agreement between
Borrowers and Lender shall survive the execution, delivery and performance
of
this Agreement and the creation and payment of any indebtedness to
Lender. Borrowers waive notice of the acceptance of this Agreement by
Lender.
14. Interest
Rate. Nothing herein contained nor any transaction related hereto
shall be construed or shall operate so as to require Borrowers or any person
liable for repayment of loans made hereunder to pay interest in an amount or
at
a rate greater than the maximum allowed, from time to time, by applicable laws,
if any. Should any interest or other charges, including any property,
tangible or intangible, or other items of value received by Lender, imposed
against or paid by the Borrower or any party liable for the payment of such
loans, result in a computation of earning of interest in excess of the maximum
legal rate of interest permitted under applicable law in effect while such
interest is being earned, then any and all of that excess shall be and is waived
by Lender, and all of that excess shall be automatically credited against and
in
reduction of the principal balance of such loans, without premium, with the
same
force and effect as though Borrowers had specifically designated such extra
sums
to be so applied to principal and the Lender to accept such extra payment(s)
as
a premium-free prepayment, and any portion of the excess that exceeds the
principal balance of loans made hereunder shall be paid by the Lender to
Borrowers or to any party liable for the payment of such loans, as applicable,
it being the intent of the parties hereto that under no circumstances shall
Borrowers or any party liable for the payment of the indebtedness evidenced
hereby be required to pay interest in excess of the maximum rate allowed by
any
applicable laws. The provisions of this Agreement are hereby modified
to the extent necessary to conform with the limitations and provisions of this
Paragraph, and this Paragraph shall govern over all other provisions in any
document or agreement now or hereafter existing. This Paragraph shall
never be superseded or waived unless there is a written document executed by
Lender and Borrowers, expressly declaring the usury limitation of this Agreement
to be null and void, and no other method or language shall be effective to
supersede or waive this Paragraph.
26
15. Environmental
Laws. Borrowers are and will continue to be throughout the term
of this Agreement in full and complete compliance with all federal, state and
local laws, rules and regulations governing hazardous and toxic substances,
waste or materials, any pollutants or contaminants or any other similar
substances, or pertaining to environmental regulations, contamination or
cleanup, including, without limitation, the Comprehensive Environmental Response
Compensation and Liability Act, as amended, or any other state lien or state
super lien or environmental cleanup statute (all such laws, rules and
regulations being referred to collectively as “Environmental
Laws”).
Borrowers
indemnify, defend and hold Lender and their officers, directors, employees
and
agents, harmless from and against any liability, loss, claims, damages or
expense (including attorneys’ fees and disbursements) arising out of or based
upon any violation or claim of violation of Environmental Laws by Borrowers
or
with respect to any assets owned or used by Borrower or any properties leased
or
occupied by Borrowers. This indemnity shall be continuing and remain
in full force and effect and shall survive this Agreement and the Security
Documents or any exercise of any remedy by Lender even if all indebtedness
and
other obligations to Lender have been satisfied in full.
16. Indemnification. Borrowers
shall pay, indemnify, defend and hold the Lender, each affiliate of Lender,
and
each participant in the obligations with Lender, and each of their respective
officers, directors, employees, agents, and attorneys-in-fact (each, an
“Indemnified Person”) harmless (to the fullest extent permitted by law)
from and against any and all claims, demands, suits, actions, investigations,
proceedings and damages, and all reasonable attorneys’ fees and disbursements
and other costs and expenses actually incurred in connection therewith (as
and
when they are incurred and irrespective of whether suit is brought), at any
time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution, delivery, enforcement,
performance, or administration of this Agreement, any of the other Security
Documents, or the transactions contemplated hereby or thereby, and (b) with
respect to any investigation, litigation, or proceeding related to this
Agreement, any other Security Document, or the use of the proceeds of the credit
provided hereunder (irrespective of whether any Indemnified Person is a party
thereto), or any act, omission, event, or circumstance in any manner related
thereto (all the foregoing, collectively, the “Indemnified
Liabilities”). The foregoing to the contrary notwithstanding,
Borrowers shall have no obligation to any Indemnified Person under this
Paragraph 16 with respect to any Indemnified Liability that a court of
competent jurisdiction finally determines to have resulted directly from the
willful misconduct or gross negligence of such Indemnified
Person. This provision shall survive the termination of this
Agreement and the repayment of the Obligations. If any Indemnified
Person makes any payment to any other Indemnified Person with respect to an
Indemnified Liability as to which Borrowers were required to indemnify the
Indemnified Person receiving such payment, the Indemnified Person making such
payment is entitled to be indemnified and reimbursed by Borrowers with respect
thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO
EACH INDEMNIFIED PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE
OR IN PART ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
INDEMNIFIED PERSON OR OF ANY OTHER PERSON.
27
17. Joint
and Several. Each Borrower shall be obligated, bound by, subject
to and comply with each and every agreement, covenant and provision contained
in
this Agreement and shall be deemed to have made every representation warranty
contained in this Agreement. Each Borrower acknowledges and agrees
that it is jointly and severally liable with the other Borrower for all
obligations, liabilities and indebtedness created or arising hereunder and
the
release or substitution of any other Borrower shall not release or diminish
its
liability hereunder. Each Borrower agrees that al obligations,
liabilities and indebtedness are joint and several and the primary obligations
of each of them, enforceable against each Borrower separately or all or any
combination of Borrowers together notwithstanding of any right or power of
any
party to assert any claim or defense as to the invalidity or unenforceability
of
any such obligations, liabilities and indebtedness. Each Borrower
hereby waives any defense it may claim as a guarantor, surety or accommodation
party. Lender may, from time to time, without notice to any of
Borrowers, (a) obtain or release any security interest in any property to secure
any of such obligations, liabilities and indebtedness; (b) obtain or release
the
primary or secondary liability of any party or parties with respect to any
of
such obligations, liabilities and indebtedness (including, without limitation,
the liability of any other Borrower); (c) extend or renew for any period, alter
or exchange any of such obligations, liabilities and indebtedness or release
or
compromise any of such obligations, liabilities and indebtedness of any obligor
with respect to any thereof; or (d) resort to any Borrower for payment of any
such obligations, liabilities and indebtedness whether or not the Lender shall
have resorted to any Collateral or to any other Borrower or any other party
primarily or secondarily liable with respect to any such obligations,
liabilities and indebtedness.
18. Earlier
Agreements. The Note, Security Agreement and Mortgage and related
agreements and documents executed and/or delivered in connection therewith
shall
remain in full force and effect; provided, however, (a) all loans to Borrower
shall also be governed by this Agreement, (b)in the event of a conflict between
the aforesaid agreements and this Agreement, this Agreement shall take
precedence and be controlling, and (c) this Agreement is a restatement of the
Security Agreement and replaces the Security Agreement in its
entirety.
19. Jurisdiction
and Venue. BORROWERS HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION
OF ANY STATE OR FEDERAL COURT SITUATED IN HENNEPIN COUNTY, MINNESOTA AND WAIVES
ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS,
DISPUTES OR PROCEEDINGS RELATED TO THIS AGREEMENT, THE COLLATERAL, THE
OBLIGATIONS, OR ANY OTHER SECURITY DOCUMENT, OR ANY TRANSACTIONS ARISING
THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE
FOREGOING. Nothing herein shall affect Lender’s rights to serve
process in any manner permitted by law, or limit Lender’s right to bring
proceedings against Borrowers in the competent courts of any other jurisdiction
or jurisdictions.
28
20. Waiver
of Trial by Jury. BORROWERS HEREBY WAIVE ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT, THE
COLLATERAL, THE OBLIGATIONS OR ANY OTHER SECURITY DOCUMENT OR TRANSACTIONS
BETWEEN BORROWERS AND LENDER.
Signature
page follows.
29
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
proper officers thereunto duly authorized on the day and year first above
written.
|
By
|
/S/ Xxxxxxx X. Xxxxxx | |||
|
|
President and Chief Executive Officer | |||
|
By
|
/S/ Xxxxxxx Xxx | |||
| Chief Financial Officer | ||||
|
Federal
Identification Number: 00-0000000
|
||||
|
Organizational
Number: W164
|
||||
|
NATURE
VISION OPERATING, INC.
|
||||
|
By
|
/S/ Xxxxxxx X. Xxxxxx | |||
|
|
President and Chief Executive Officer | |||
|
By
|
/S/ Xxxxxxx Xxx | |||
|
|
Chief Financial Officer | |||
|
Federal
Identification Number: 00-0000000
|
||||
|
Organizational
Number: 9Z969
|
||||
|
TRADE
NAMES OF BORROWER:
|
ADDRESS
OF CHIEF EXECUTIVE OFFICES:
|
|||
|
|
0000
Xxxxxxxx Xxxxxxx Xxxx
|
|||
|
Xxxxxxxx,
XX 00000
|
||||
30
|
COLLATERAL
LOCATIONS:
|
OTHER
ADDRESSES:
|
||
|
|
|
||
|
|
|
|
Accepted
at Minneapolis, Minnesota
|
||
|
on
November 8, 2007.
|
||
|
M&I
BUSINESS CREDIT, LLC
|
||
|
By
|
/S/ Xxxxxx X. Xxxxxxx | |
|
Its
|
Vice President | |
31
