EXHIBIT 10.16
FINANCING AGREEMENT
JULY 30, 1997
Itasca Business Credit LLC
Xxxxxxxx Xxxxx, Xxxxx 000
0000 Xxxxx Xxxxxxx 000
Xx. Xxxxx Xxxx, XX 00000-0000
Gentlemen:
We propose the following arrangement with you for borrowing from you
based upon the loan value of our "accounts" (as that term is defined in the
Uniform Commercial Code) secured by a security interest in the accounts and
other collateral, as granted to you by the Security Agreement between us of even
date herewith.
SECTION I. LOAN AGREEMENT
At our request, you in your sole discretion may lend to us up to
seventy five percent (75.0%) of the net amount of accounts which are listed in
current schedules provided by us and which are deemed eligible for advances by
you, or any greater or lesser percentage at your absolute discretion. Loans for
additional sums requested by us may be made at your sole discretion based upon
your valuation of other collateral or other factors. All borrowings pursuant
hereto shall be due on demand and shall be evidenced by a Revolving Note of even
date herewith payable to your order.
At your discretion, you may from time to time make additional loans to
us on a demand basis, evidenced by Term Note(s). All of the collateral pledged
to you shall secure all of our obligations under the Revolving Note and any Term
Note(s).
You may from time to time furnish to us a statement of our account. Any
such statement shall be conclusive on us unless and except as written objections
thereto calling your attention to errors are received by you within 30 days
after it is mailed or delivered to us.
SECTION II. CHARGES
A. We agree to pay interest on the net balance owed to you at the close
of each day at a rate per annum (computed on the basis of actual number of days
elapsed and a year of 360 days) which is ten percent (10.0%) in excess of the
publicly announced prime rate (or other publicly announced reference rate) of
interest charged by the First Bank, N.A. Such interest will be due and payable
to you at the close of each month. We understand that the foregoing prime rate
or reference rate may not represent the lowest rate charged by the foregoing
lender.
B. If a third party participates in the advances to us, however, the
charge with respect to the portion of the borrowings represented by the third
party's advances will be the amount of its charges and a management fee charged
by you by reason of such participation.
C. There will be a net minimum interest charge payable to you of
$1,000.00 per month. We further agree that if this agreement is terminated under
Section VIII hereof, regardless of the date of such termination, the total
charges which shall have been paid or which shall be payable net to you, shall
not be less than $1,000.00 each month for a minimum of six months.
D. If we refinance the loan evidenced hereby with the proceeds of a
loan by a lender other than a state or national bank, we hereby agree to pay you
an exit fee of $5,000.00 and you shall not be required to release your liens on
any collateral until the foregoing fee has been paid in full.
SECTION III. LISTING ACCOUNTS
A. Prior to or concurrently with our initial borrowing hereunder, and
monthly thereafter, we shall furnish you a list and aging of all accounts owned
by us, in form acceptable to you; and weekly, or at other intervals mutually
agreed upon, we will deliver to you a list of all accounts created or acquired
by us since our last previous list and aging of accounts.
B. We warrant that, except as may be disclosed in the lists of accounts
furnished to you: each billing correctly states the subject matter and terms of
sale; the merchandise conforms thereto and is in all respects acceptable to the
customer; the date of billing is not prior to shipment; the account debtor is
not a subsidiary or affiliated company; and that we have no reason to believe
the account will not be paid in the regular course of business.
SECTION IV. CUSTODY AND INSPECTION OF RECORDS; HANDLING OF COLLECTIONS
A. All ledger sheets or cards, invoices, shipping records,
correspondence, and other writings relating to accounts shall, until delivered
to you or removed by you from our premises, be kept on our premises without cost
to you in appropriate containers in safe places.
B. Until our authority to do so is terminated by written notice from
you (which notice you may give at any time), we will at our expense and on your
behalf collect as your property and in trust for you all amounts unpaid on
accounts, and shall not mingle such collections with our own funds. We shall
remit all collections to you in kind, duly endorsed, on the same day if
practical, otherwise on the following business day; and you shall credit the
same to our account (subject to final collection thereof) after allowing three
days for collection of checks. This provision is subject to your rights under
paragraphs 4 and 5 of the Security Agreement of even date herewith.
C. If you take over the handling of collections, you may remove from
our premises all books and records, correspondence, documents and files relating
to accounts; and you may without cost or expense to you use such of our
personnel, supplies, space and equipment at our place of business as you may
desire for the handling of collections. We will pay any and all reasonable
internal, office and out of pocket expenses and costs of collection (including
reasonable attorneys fees) incurred by you in your handling of or effort to
enforce collections.
SECTION V. REPORTS
We will furnish you: (a) monthly, in such detail as you may request,
written reports, certified as correct by one of our officers, showing all sales
of merchandise, returns and allowances, collections, and all miscellaneous
charges and credits affecting the collateral; (b) monthly, similarly certified
financial and operating statements; (c) annually, at our expense, a complete
certified audit report of our operations and condition made by an independent
certified public accountant satisfactory to you; and (d) upon issuance, copies
of all public accountants' report rendered to us while we are indebted to you;
(e) within five days after the due date, proof of
payment or deposit, when due, of all withholding and F.I.C.A. taxes owing by us
from time to time; and (f) such other financial or other information regarding
us or any guarantor as you may request.
SECTION VI. WARRANTIES, REPRESENTATIONS AND COVENANTS
We warrant, represent to and covenant with you that we shall not:
permit any levy, attachment or restraint to be made affecting any of our assets;
or permit any receiver, trustee or assignee for the benefit of creditors to be
appointed to take possession of any or all of our assets. Except with your prior
written consent, we shall not: (a) other than in the ordinary course of our
business, sell, lease or otherwise dispose of or transfer any of our assets; (b)
merge or consolidate with any other corporation; (d) acquire any other
corporation; (d) enter into any transaction not in the usual course of our
business; (e) make any investment in the securities of any person, association,
firm, entity or corporation other than securities of the United States of
America; (f) guarantee or otherwise become in any way liable with respect to the
obligations of any person, association, firm, entity or corporation except by
endorsement of instruments or items of a payment for deposit to our general
account or which are transmitted or turned over to you on account of our
obligations; (g) pay or declare any dividends upon our capital stock; (h)
redeem, retire, purchase or otherwise acquire directly or indirectly any of our
capital stock; (i) make any change in our capital structure or in any of our
business objectives, purposes and operations which might in any way adversely
affect our ability to repay our obligation; (j) make any distribution of our
property or assets; (k) incur any debts for borrowed money; (l) incur any debts
other than trade payables which must be incurred and paid in the ordinary course
of our business; or (m) make any loan, advance, contribution or payment of money
or goods to any subsidiary, affiliated or parent corporation or to any officer,
director or stockholder thereof (except compensation for personal services
rendered). In addition, we further agree that we will not encumber, pledge,
assign or permit to be created a lien or security interest in any of our
property except for the liens in favor of the following persons on the following
property: ______________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________.
We hereby represent that none of the accounts shall at any time be subject to a
bond or other surety unless we have notified you in writing in advance of
obtaining the bond. All covenants, representations and warranties set forth in
this agreement and in any other agreements executed by us in connection herewith
and all terms, conditions, provisions and agreements to be performed by us
pursuant to this agreement and such other agreements shall be true and satisfied
at the time of our execution and shall survive the closing thereof and the
execution and delivery of such agreements.
SECTION VII. MISCELLANEOUS
A. We agree that you may from time to time, for your convenience,
segregate or apportion the collateral for purposes of determining the amounts
and maximum amounts of loans and advances which may be made hereunder.
Nevertheless, your security interest in all such collateral, and any other
collateral rights, interest and properties which may now or hereafter be
available to you, shall secure and may be applied to the payment of any and all
loans, advances and other indebtedness secured by your security interest, in any
order or manner of application and without regard to the method by which you
determine to make loans hereunder.
B. We hereby irrevocably make, constitute and appoint you, or any
person whom you may designate, our true and lawful attorney with power to
receive, open and dispose of all mail addressed to us; to endorse the name of
our company upon any notes, acceptances, checks, drafts, money orders or other
means of payment that may come into your possession as payment of or upon
accounts or other collateral; to endorse the name of our company on any invoice,
freight or express xxxx or xxxx of lading relating to any collateral; to sign
our name to drafts against debtors, to assignments and verification of accounts
and notices thereof to debtors; and to do all other things necessary or proper
to carry out the intent of this agreement.
C. At your request, we will deliver customers' monthly statements to
you for examination and for mailing in our stamped addressed envelope. From time
to time, you or your representatives may verify directly
with customers and the amounts owing, or at your request, we or our independent
accountants will do so and deliver the results to you in any manner satisfactory
to you.
D. We agree that any bank participating with you in loans to us
hereunder may exercise any and all rights of banker's lien or set-off with
respect to such participation as fully as if such participant had lent directly
to us the amount of such participation.
E. We agree to reimburse you for all attorney fees, filing fees, and
other out-of-pocket expenses you may incur in connection with the negotiation
and/or the interpretation of this agreement or any related agreements, the
preparation of documents relating thereto, perfecting any security interest or
lien granted thereby, or enforcing any of our obligations to you arising under
this or any other agreement between us, regardless of whether litigation is
commenced. In addition, we will reimburse you for any out- of-pocket expenses
incurred by you in managing our account, including any costs for wire transfers
and the costs of checks returned for insufficient funds. If you elect, you may
treat the amount of any such expense as a loan to us and add the amount to our
loan account with you.
F. This agreement shall bind and inure to the benefit of you and us and
your and our respective successors and assigns. This agreement, and all
assignments of collateral shall be construed pursuant to the laws of the State
of Minnesota. We hereby consent to the jurisdiction of the state and federal
courts located in Hennepin County, Minnesota and agree that any dispute arising
out of this agreement or any agreement delivered in connection herewith shall be
venued in Hennepin County, Minnesota. We hereby further waive any right to a
jury trial and agree that all disputes arising hereunder shall be tried by the
court sitting without a jury.
SECTION VIII. TERMINATION
We understand that this Credit Agreement represents a discretionary
line of credit and that you may refuse to make an advance hereunder at your
discretion. In addition, we understand that you may at your election make a
demand for amounts due hereunder at any time even though the provisions herein
are satisfied. We agree to provide you with 30 days' prior written notice of our
election to terminate this agreement and that any termination by us shall be
subject to the provisions hereof. Termination by us shall not impair or affect
your rights and our obligations then existing.
ITASCA BUSINESS CREDIT LLC NORTECH FOREST TECHNOLOGIES, INC.
Secured Party Debtor
By ______________________________ By _____________________________
Name: Xxxxxxx X. XxXxxxx Name: Xxxxxx X. Xxxxx
Title: Vice President Title: President
