EXHIBIT 10.6
NORWEST BANK MINNESOTA NORTH, RESTATED TERM LOAN
NATIONAL ASSOCIATION AND CREDIT AGREEMENT
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THIS RESTATED TERM LOAN AND CREDIT AGREEMENT (the "Agreement") dated as of
November 20, 1997 (the "Effective Date") is between Norwest Bank Minnesota
North, National Association (the "Bank") and Industrial Rubber Applicators, Inc.
(the "Borrower").
BACKGROUND
The Borrower and the Bank entered into a Term Loan and Credit Agreement dated
August 19, 1996, which was amended by a First Amendment dated May 28, 1997 and a
Second Amendment dated August 1, 1997 (as amended, the "Previous Agreement"),
pursuant to which the Bank extended to the Borrower the following facilities
which remain in existence 1) a $1,000,000.00 conditional revolving line of
credit (the "Line"), and 2) a $1,000,000.00 term loan (the "Term Loan. (sic)
Borrowings under the Line are evidenced by a revolving note dated August 1, 1997
(the "Existing Revolving Note") and borrowings under the Term Loan are evidenced
by a term note dated August 19, 1996 (the "1996 Term Note").
The Borrower has requested that the Bank: 1) extend the expiration date of the
Line from September 30, 1997 to due on DEMAND; 2) increase the amount of credit
available under the Line to $1,500,000.00; and renew the Term Loan.
The Bank is agreeable to meeting the Borrower's requests, provided that the
Borrower agrees to the terms and conditions of this Agreement.
For purposes of this Agreement, the Revolving Note (as defined below) and the
Term Note shall collectively be referred to as the "Notes."
The Notes, this Agreement, and all "Security Documents" described in Exhibit B
shall be referred to collectively as the "Documents."
In consideration of the above premises, the Bank and the Borrower agree as
follows:
1. LINE OF CREDIT
1.1 LINE OF CREDIT AMOUNT. The Bank agrees to provide a conditional
revolving line of credit (the "Line") to the Borrower until such time
that the Bank in its discretion terminates the Line. Outstanding
amounts under the Line shall not, at any one time, exceed the lesser of
the Borrower Base or ONE MILLION FIVE HUNDRED THOUSAND AND 00/100
DOLLARS ($1,500,000.00). The Borrowing Base is defined in Exhibit A-1
to this Agreement. THIS IS A CONDITIONAL REVOLVING LINE OF CREDIT, AND
EACH ADVANCE UNDER THE LINE, IF MADE, SHALL BE AT THE SOLE DISCRETION
OF THE BANK.
1.2 THE REVOLVING NOTE. The Borrower's obligation to repay advances under
the Line shall be evidenced by a single promissory note (the "Revolving
Note") dated as of the Effective Date, and in form and content
acceptable to the Bank. The Revolving Note shall replace, but not be
deemed to satisfy, the Existing Revolving Note. The initial balance of
the
Revolving Note shall be the outstanding balance of the Existing
Revolving Note as of the Effective Date. Reference is made to the
Revolving Note for interest rate and repayment terms.
1.3 MANDATORY PREPAYMENT. If at any time the principal outstanding under
the Revolving Note exceeds the lesser of the Borrowing Base or
$1,500,000.00, the Borrower must immediately prepay the Revolving Note
in an amount sufficient to eliminate the excess.
2. THE TERM LOAN
The Bank has previously provided the term Loan to the Borrower in the
original principal amount of ONE MILLION AND 00/100 DOLLARS
($1,000,000.00) as evidenced by the 1996 Term Note. The Term Note has
matured and the Bank has agreed to meet the Borrower's request that the
Term Loan be renewed in the amount of $ 388,826.32 , which represents
the unpaid principal amount as of the Effective Date.
The Borrower shall execute and deliver to the Bank as of the Effective
Date a new term note the ("Term Note"), (sic) which shall replace, but
not satisfy, the 1996 Term Note. Reference is made to the Term Note for
interest rate and repayment terms.
3. FEES AND EXPENSES
3.1 FACILITY FEE. The Borrower shall pay an annual $1,500.00 facility fee
with respect to the Line. This fee shall be paid annually in advance,
beginning on the Effective Date.
3.2 AUDIT EXPENSE. The Borrower agrees to reimburse the Bank for the cost
of periodic audits of all collateral granted to the Bank by the
Borrower, to be conducted as such intervals as the Bank may reasonably
require.
3.3 DOCUMENTATION EXPENSE. The Borrower agrees to reimburse the Bank for
its reasonable expenses relating to the preparation of the Documents
and any possible future amendments to the Documents, which
reimbursement may include, but shall not be limited to, reimbursement
of reasonable attorneys' fees, including the allocated costs of the
Bank's in-house counsel. Despite such reimbursement the Borrower
acknowledges that the Bank's counsel is engaged solely to represent the
Bank and does not represent the Borrower.
3.4 COLLECTION EXPENSE. In the event the Borrower fails to pay the Bank any
amounts due under this Agreement or under the Documents, the Borrower
shall pay all costs of collection, including reasonable attorneys' fees
and legal expenses incurred by the Bank.
3.5 MISCELLANEOUS EXPENSE. The Borrower agrees to reimburse the Bank for
its expenses incurred in perfecting any security interest in property
granted by the Borrower to the Bank.
4. ADVANCES AND PAYMENTS
4.1 REQUESTS FOR ADVANCES. Any Line advance requested under the terms of
this Agreement shall be requested by telephone or in a writing
delivered to the Bank (or transmitted via facsimile) by any person
reasonably believed by the Bank to be authorized by the Borrower
to do so. The Bank will not consider any such request following an
event which is, or with notice or the lapse of time would be, an event
of default under this Agreement. Proceeds shall be deposited into the
Borrower's account at the Bank or disbursed in such other manner as the
parties may agree.
4.2 PAYMENTS. All principal, interest and fees due under the Documents
shall be paid in immediately available funds as contracted in this
Agreement and no later than the payment due date set forth in the
statement mailed to the Borrower by the Bank. Should a payment come due
on a day other than a day on which the Bank is open for substantially
all of its business (a "Banking Day"), then the payment shall be made
no later than the next Banking Day and interest shall continue to
accrue during the extended period.
5. SECURITY
During the time period that credit is available under this Agreement,
and afterward until all amounts due under the Documents are paid in
full, unless the Bank shall otherwise agree in writing, all amounts due
under this Agreement and the Documents shall be secured at all times as
provided in Exhibit B. The Borrower also hereby grants the Bank a
security interest (independent of the Bank's right of set-off) in its
deposit accounts at the Bank and in any other debt obligations of the
Bank to the Borrower.
6. CONDITIONS PRECEDENT
The Borrower must deliver to the Bank the documents described in
Exhibit B, properly executed and in form and content acceptable to the
Bank, prior to the Bank's initial advance or disbursement under this
Agreement. The Borrower must also deliver to the Bank, prior to the
initial advance and any subsequent line advances under this Agreement,
a Borrowing Base Certificate in the form of Exhibit A-2, at the
intervals provided in Section 8.1(c).
7. REPRESENTATIONS AND WARRANTIES
To induce the Bank to enter into this Agreement, the Borrower, to the
best of its knowledge and upon due inquiry, makes the representations
and warranties contained in Exhibit C. Each request for an advance or a
disbursement under this Agreement following the Effective Date
constitutes a reaffirmation of these representations and warranties.
8. COVENANTS
8.1 FINANCING INFORMATION AND REPORTING
Except as otherwise stated in this Agreement, all financial information
provided to the Bank shall be compiled using generally accepted
accounting principles consistently applied.
During the time period that credit is available under this Agreement,
and afterward until all amounts due under the Documents are paid in
full, unless the Bank shall otherwise agree in writing, the Borrower
agrees to:
(a) Annual Financial Statements. Provide the Bank within 90 days of the
Borrower's fiscal
year end, the Borrower's annual financial statements. The statements
must be reviewed by a certified public accountant acceptable to the
Bank.
(b) Interim Financial Statements. Provide the Bank within 15 days of each
month end, the Borrower's company prepared financial statements for the
interim period then ending, including a breakout of the Borrower's Utah
operations, and combined balance sheet. The statements must be current
through the end of that period and must be certified as correct by an
officer of the Borrower in form acceptable to the Bank.
(c) Borrowing Base Certificate. Upon the Bank's request, provide the Bank
within 15 days of the Bank's request, a Borrowing Base Certificate in
the form of Exhibit A-2, current through the end of that period and
certified as correct by an officer of the Borrower acceptable to the
Bank. At the time of each request for an advance under this Agreement
following the Effective Date, the Borrower shall deliver to the Bank a
new Borrowing Base Certificate, current as of the date of the requested
advance.
(d) Accounts Receivable Aging. Provide the Bank concurrently with each
Borrowing Base Certificate, an accounts receivable aging report, in
form acceptable to the Bank, current through the end of that period and
certified as correct by an officer of the Borrower acceptable to the
Bank.
(e) Inventory List. Provide the Bank concurrently with each Borrowing Base
Certificate, an inventory list in form acceptable to the Bank, current
through the end of that period and certified as correct by an officer
of the Borrower acceptable to the Bank.
(f) Guarantor Financial Statements. Provide the Bank within 30 days of each
calendar year end the updated personal financial statement of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ (the "Guarantor").
(g) Guarantor Income Tax Return. Provide the Bank within 30 days of filing,
copies of the current federal income tax return of the Guarantor.
(h) Notices of Default. Provide the Bank prompt written notice of: 1) any
event which has or might after the passage of time or the giving of
notice, or both, constitute an event of default under any of the
Documents; 2) any future event that would cause the representations and
warranties contained in this Agreement to be untrue when applied to the
Borrower's circumstances as of the date of such event; 3) its discovery
of any unpermitted release, emission, discharge or disposal of any
material or environmental concern; or 4) its receipt of a claim from
any governmental entity or third party alleging noncompliance with
environmental laws applicable to its operations or properties.
(i) Additional Information. Provide the Bank with such other information as
it may reasonably request, and permit the Bank to visit and inspect its
properties and examine its books and records.
8.2 FINANCIAL COVENANTS
During the time period that credit is available under this Agreement,
and afterward until all amounts due under the Documents are paid in
full, unless the Bank shall otherwise agree in
writing, the Borrower agrees to comply with the financial covenants
described below, which shall be calculated using generally accepted
accounting principles consistently applied, except as they may be
otherwise modified by the following capitalized definitions:
(a) Total Liabilities to Tangible Net Worth Ration. Maintain a ratio of
total liabilities to Tangible Net Worth of less than 3.0 to 1.0 as of
December 31, 1997.
"Tangible Net Worth" means total assets less total liabilities and less
the following types of assets: (1) leasehold improvements; (2)
receivables and other investments in or amounts due from any
shareholder, director, officer, employee or other person or entity
related to or affiliated with the Borrower; (3) goodwill, patents,
copyrights, mailing lists, trade names, trademarks, servicing rights,
organizational and franchise costs, bond underwriting costs and other
like assets properly classified as intangible.
(b) Current Ratio. Maintain a ratio of Current Assets to Current
Liabilities of at least 1.2 to 1.0 as of December 31, 1997.
"Current Assets" means current assets less receivables and investment
in or other amounts due from any shareholder, director, officer,
employee or any person or entity related to or affiliated with the
Borrower.
"Current Liabilities" means current liabilities less any portion of
such current liabilities that constitute Subordinated Debt.
(c) Debt Service Coverage Ratio. Maintain a ratio of Traditional Cash Flow
to Current Maturities of Long Term Debt of at least 1.5 to 1.0 as of
December 31, 1997.
"Current Maturities of Long Term Debt" means that portion of the
Borrower's long term debt and capital leases payable within 12 months
of the determination date.
8.3 OTHER COVENANTS
During the time period that credit is available under this Agreement,
and afterward until all amounts due under the Documents are paid in
full, unless the Bank shall otherwise agree in writing, the Borrower
agrees to:
(a) Additional Borrowings. Refrain from incurring any indebtedness except:
(1) trade credit incurred in the ordinary course of business;
(2) indebtedness expressly subordinated to the Bank in a writing
acceptable to the Bank; and
(3) indebtedness in existence on the date of this Agreement and
disclosed in advance to the Bank in writing.
(b) Other Liens. Refrain from allowing any security interest or lien on
property it owns now or in the future or assign any interest that it
may have in any assets or subordinate any rights
that it may have in any assets now or in the future, except:
(1) liens in favor of the Bank;
(2) liens outstanding on the date of this Agreement and disclosed
in advance to the Bank in writing; and
(3) liens for taxes not delinquent or which the Borrower is
contesting in good faith.
(c) Insurance. Cause its properties to be adequately insured by a reputable
insurance company against loss or damage and to carry such other
insurance (including business interruption, flood, or environmental
risk insurance) as is required of or usually carried by persons engaged
in the same or similar business. Such insurance must, with respect to
the Bank's collateral security, include a lender's loss payable
endorsement in favor of the Bank in form acceptable to the Bank.
(d) Dividends. Refrain from:
(1) declaring or paying any dividends on any of its capital stock;
or
(2) purchasing, redeeming or otherwise acquiring any of its
capital stock, except cash dividends totaling less than 50% of
the Borrower's after-tax net income during any fiscal year.
(e) Change of Ownership. Refrain from permitting or suffering any change,
direct or indirect, in its capital ownership.
(f) Change in Management. Refrain from permitting or suffering any material
change in its management personnel or management structure.
(g) Collateral Audits. Permit the Bank to conduct audits of all collateral
pledged to the Bank by the Borrower at such intervals as the Bank may
reasonably required. The audits may be performed by employees of the
Bank or independent contractors retained by the Bank.
(h) Nature of Business. Refrain from engaging in any line of business
materially different from that presently engaged in by the Borrower.
(i) Key Man Life Insurance. Maintain insurance on the life of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ (sic) with a minimum death benefit of $1,000,000.00. Such
insurance must be issued by a reputable and solvent insurance company
and the right to receive proceeds from the policy must be assigned to
the Bank and the assignment consented to by the Bank.
(j) Guaranties. Refrain from assuming, guaranteeing, endorsing or otherwise
becoming contingently liable for any obligations of any other person,
except for those guaranties outstanding as of the Effective Date and
disclosed to the Bank in writing.
(k) Deposit Accounts. Maintain its principal deposit accounts with the
Bank.
(l) Form of Organization and Mergers. Refrain from changing its legal form
of organization, or consolidating, merging, pooling, syndicating or
otherwise combining with any other entity.
(m) Maintenance of Properties. Make all repairs, renewals or replacements
necessary to keep its plant, properties and equipment in good working
condition.
(n) Books and Records. Maintain adequate books and records, refrain from
making any material changes in its accounting procedures for tax or
other purposes, and permit the Bank to inspect same upon reasonable
notice.
(o) Compliance with Laws. Comply in all material respects with all laws
applicable to its form of organization, business, and the ownership of
its property.
(p) Preservation of Rights. Maintain and preserve all permits, licenses,
rights, privileges, charters and franchises that it now owns.
These covenants were negotiated by the Bank and Borrower based on
information provided to the Bank by the Borrower. A breach of a
covenant is an indication that the risk of the transaction has
increased. As consideration for any waiver or modification of these
covenants, the Bank may require: additional collateral, guaranties or
other credit support; higher fees or interest rates; and possible
modifications to the Documents and the monitoring of the Agreement. The
waiver or modification of any covenant that has been violated by the
Borrower shall be made at the sole discretion of the Bank. These
options do not limit the Bank's right to exercise its rights under
Section 9 of this Agreement.
9. EVENTS OF DEFAULT AND REMEDIES
9.1 DEFAULT
The Line is a conditional line of credit, which means that the Bank is
not obligated to make advances under the Line even if the Borrower is
in compliance with the terms of this Agreement, and the Revolving Note
evidencing borrowings under the Line shall be payable by the Borrower
upon DEMAND by the Bank.
Despite this reservation of rights, upon the occurrence of any one or
more of the following events of default, or at any time afterward
unless the default has been cured, the Bank may declare the Line to be
terminated and in its discretion accelerate and declare the unpaid
principal, accrued interest and all other amounts payable under the
Notes and the Documents to be immediately due and payable:
(a) Failure by the Borrower to make any payment of principal or interest
due under any of the Notes which continues for 10 days after its due
date.
(b) Default by the Borrower in the observance or performance of any
covenant or agreement contained in this Agreement, and continuance for
more than 15 days.
(c) Default by the Borrower in the observance or performance of any
covenant or agreement
contained in any of the Documents (excepting this Agreement), after
giving effect to any applicable grace period.
(d) Default by the Borrower with respect to any indebtedness or obligation
owed to the Bank, which is unrelated to any loan or facility subject to
the terms of this Agreement, or to any other creditor, which would
allow the maturity of any such indebtedness or obligation to be
accelerated.
(e) Any representation or warranty made by the Borrower to the Bank in the
Agreement, or any financial statement or report submitted to the Bank
by or on behalf of the Borrower or the Guarantor before or after the
Effective Date of this Agreement is untrue or misleading in any
material respect.
(f) Any litigation or governmental proceeding against the Borrower seeking
an amount in excess of $100,000.00 which is not insured or subject to
indemnity by a solvent third party either 1) results in a judgment
equal to in excess of that amount against the Borrower or 2) remains
unresolved on the 270th day following the date of service on the
Borrower.
(g) A garnishment, levy or writ of attachment, or any local, state, or
federal notice of tax lien or levy is made or issued against the
Borrower, or any post judgment process or procedure is commenced or any
supplementary remedy for the enforcement of a judgment is employed
against the Borrower or the Borrower's property.
(h) The Guarantor dies or attempts to revoke his Guaranty, or becomes
insolvent or is the subject of a voluntary or involuntary petition
under the United States Bankruptcy Code.
(i) A material adverse change occurs in the Borrower's financial condition
or ability to repay its obligations to the Bank.
9.2 IMMEDIATE DEFAULT
If, with or without the Borrower's consent, a custodian, trustee or
receiver is appointed for any of the Borrower's properties, or if a
petition is filed by or against the Borrower under the United States
Bankruptcy Code, or the Borrower is dissolved, liquidated, or winds up
its business, then the Line shall immediately terminate without notice,
and the unpaid principal, accrued interest, and all other amounts
payable under the Notes and the Documents shall become immediately due
and payable without notice or demand.
9.3 SUPPLEMENTARY CROSS DEFAULT OF OTHER PROMISSORY NOTES
The Borrower agrees that each promissory note evidencing indebtedness
of the Borrower to the Bank which is not included in the definition of
"Notes" stated on the first page of this Agreement or which is not
otherwise documented in this Agreement, and regardless of whether
delivered before or after the Effective Date, shall hereby be amended
on a supplementary basis to provide that each such promissory note may
be accelerated by the Bank in its discretion following the occurrence
of any event of default agreed to in Section 9.1, or shall be
accelerated and become immediately due and payable without notice by
the Bank following the occurrence of any event of default agreed to in
Section 9.2, which
events of default and rights of acceleration are in addition to, and
not exclusive of, any events of default and rights of acceleration
agreed to in the promissory note itself.
10. MISCELLANEOUS.
(a) No Waiver; Cumulative Remedies. No failure or delay by the Bank in
exercising any rights under this Agreement shall be deemed a waiver of
those rights. The remedies provided for in the Agreement are cumulative
and no exclusive of any remedies provided by law.
(b) Amendment or Modifications. Any amendment or modification of this
Agreement must be in writing and signed by the Bank and Borrower. Any
waiver of any provision in this Agreement must be in writing and signed
by the Bank.
(c) Binding Effect; Assignment. This Agreement and the Documents are
binding on the successors and assigns of the Borrower and Bank. The
Borrower may not assign its rights under this Agreement and the
Documents without the Bank's prior written consent. The Bank may sell
participations in or assign this Agreement and the Documents and
exchange financial information about the Borrower with actual or
potential participants or assignees.
(d) Minnesota Law. This Agreement and the Documents shall be governed by
the substantive laws of the State of Minnesota.
(e) Severability of Provisions. If any part of this Agreement or the
Documents are unenforceable, the rest of this Agreement or the
Documents may still be enforced.
(f) Integration. This Agreement and the Documents describes the entire
understanding and agreement of the parties and supersedes all prior
agreements between the Bank and the Borrower relating to each credit
facility subject to this Agreement, whether verbal or in writing.
Address for notices to Bank: Address for notices to Borrower:
Norwest Bank Minnesota North,
National Association Industrial Rubber Applicators, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Vice President
NORWEST BANK MINNESOTA NORTH,
NATIONAL ASSOCIATION INDUSTRIAL RUBBER APPLICATORS, INC.
BY: BY:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, VICE PRESIDENT ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, PRESIDENT
EXHIBIT A-1
BORROWING BASE DEFINITION
Borrowing Base means the sum of 75% of Eligible Accounts Receivable (as defined
below) plus 50% of Eligible Inventory (as defined below).
Eligible Accounts Receivable means all accounts receivable of the Borrower
except those which are:
1) Greater than 90 days past the invoice date.
2) Due from an account debtor, 10% or more of whose accounts owed to
the Borrower are more than 90 days past the invoice date.
3) Subject to offset or dispute.
4) Due from an account debtor who is subject to any bankruptcy
proceeding.
5) Owed by a shareholder, subsidiary, affiliate, officer or employee of
the Borrower.
6) Not subject to a perfected first lien security interest in favor of
the Bank.
7) Due from an account debtor located outside the United States and
Canada and not supported by a standby letter of credit acceptable to
the Bank.
8) Due from a unit of government, whether foreign or domestic.
9) Otherwise deemed ineligible by the Bank in its reasonable
discretion.
Eligible Inventory means all raw materials gum rubber inventory of the Borrower,
at the lower of cost or market as determined by generally accepting (sic)
accounting principals.
EXHIBIT A-2
INDUSTRIAL RUBBER APPLICATORS, INC.
BORROWING BASE CERTIFICATE
TO: Norwest Bank Minnesota North,
National Association
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Bank")
Industrial Rubber Applicators, Inc. (the "Borrower") certifies that the
following computation of the Borrowing Base was performed as of ________________
in accordance with the Borrowing Base definitions set forth in Exhibit A-1 to
the Restated Term Loan and Credit Agreement entered into between the Bank and
the Borrower dated November 20, 1997:
Total A/R $
---------------------
Less: 1) Greater than 90 days $
---------------------
2) Other ineligibles $
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Eligible A/R $
---------------------
75% of Eligible Accts. Receivable $
=====================
Total Inventory $
---------------------
Less: Ineligible Inventory $
---------------------
Eligible Inventory $
---------------------
50% of Eligible Inventory $
=====================
Total Borrowing Base $
=====================
Total Line Outstandings (sic) ($ )
============
Excess (Deficit) $
=====================
INDUSTRIAL RUBBER APPLICATORS, INC.
BY:
----------------------------------
ITS:
---------------------------------
DATE:
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EXHIBIT B
CONDITIONS PRECEDENT AND SECURITY
PLEASE NOTE: This Exhibit describes each Note, Security Document, Authorizations
(sic), Organizational Documents (sic), and all miscellaneous documents, reports,
certificates and other information required as a condition to each advance or
disbursement under the Agreement, whether or not they have previously been
delivered to the Bank. PLEASE REFER TO THE CLOSING CHECKLIST FOR A COMPLETE
DESCRIPTION OF WHICH OF THE FOLLOWING DOCUMENTS REMAIN TO BE DELIVERED TO THE
BANK.
NOTE
The Revolving Note and the Term Note.
SECURITY DOCUMENTS
Each Security Document described below must continue in full force and effect at
all times in accordance with its terms during the time period that credit is
available under this Agreement, and afterward until all amounts due under the
Documents are paid in full. THE FAILURE OF ANY SECURITY DOCUMENT TO MEET THESE
REQUIREMENTS MAY RESULT IN AN EVENT OF DEFAULT UNDER THE AGREEMENT AND THE
ACCELERATION OF ALL OF THE BORROWER'S OBLIGATIONS TO THE BANK EVIDENCED BY THE
DOCUMENTS.
Personal Guaranty of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. The unlimited, unconditional personal
Guaranty of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
Security Agreement of Industrial Rubber Applicators, Inc. A Security Agreement
signed by the Borrower, granting the Bank a first lien security interest in the
Borrower's accounts, inventory, equipment and general intangibles, described in
that Agreement, together with one or more UCC-1 Financing Statements sufficient
to perfect the security interest granted to the Bank in each jurisdiction where
such property is located.
Assignment of Life Insurance Policy of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇. An Assignment of Life
Insurance Policy signed by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, assigning to the Bank a
1,000,000.00 (sic) life insurance policy owned by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and issued
by Valley Forge Life Insurance Company, insuring the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
together with a Life Insurance Assignment Questionnaire to be completed by the
issuer of the policy.
AUTHORIZATION
Certificate of Authority of Borrower. A Certificate of Authority executed by
such person or persons authorized by the Borrower's organizational documents
and/or agreements to do so, certifying the incumbency and signatures of the
officers or other persons authorized to execute the Documents, and authorizing
the execution of the Documents and performance in accordance with their terms.
ORGANIZATION
Articles of Incorporation and By-Laws. A recently certified copy of the
Borrower's Articles of Incorporation and By-laws, and any amendments, if
applicable.
Certificate of Good Standing. A recently certified copy of the Borrower's
Certificate of Good Standing.
OTHER
Arbitration Agreement. The Bank's standard form of Arbitration Agreement signed
by the Bank and Borrower, subjecting potential controversies between them to
binding arbitration, including but not limited to those relating to the
Documents and this Agreement.
EXHIBIT C
REPRESENTATIONS AND WARRANTIES
Organizational Status. The Borrower is a corporation duly formed and in good
standing under the laws of the State of Minnesota.
Authorization. The execution and delivery of the Documents is within the
Borrower's powers, has been duly authorized by the Borrower and does not
conflict with any of its organizational documents or any other agreement by
which the Borrower is bound, and has been signed by all persons authorized and
required to do so under its organizational documents.
Financial Reports. The Borrower has provided the Bank with the Borrower's annual
reviewed financial statements dated December 31, 1996 and its interim financial
statement dated August 31, 1997, and these statement fairly represent the
financial condition of the Borrower as of their respective dates and were
prepared in accordance with generally accepted accounting principles
consistently applied.
Litigation. There is no litigation or governmental proceeding pending or
threatened against the Borrower which could have a material adverse effect on
the Borrower's financial condition or business.
Taxes. The Borrower has paid when due all federal, state and local taxes.
No Default. There is no event which is, or with notice or the lapse of time
would be, an event of default under this Agreement.
ERISA. The Borrower is in compliance in all material respects with the Employee
Retirement Income Security Act of 1974 and has received no notice to the
contrary from the Pension Benefit Guaranty Corporation or any related
governmental entity.
Environmental Matters. 1) The Borrower is in compliance with all material
respects with all health and environmental laws applicable to the Borrower and
its operations and knows of no conditions or circumstances that could interfere
with such compliance in the future; 2) the Borrower has obtained all
environmental permits and approvals required by law for the operation of its
business; and 3) the Borrower has not identified any "recognized environmental
conditions", as that term is defined by the American Society for Testing and
Materials in its standards for environmental due diligence, which could subject
the Borrower to enforcement action if brought to the attention of appropriate
governmental authorities.
ACKNOWLEDGMENT AND CONSENT OF GUARANTOR:
The undersigned, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, acknowledges that he has reviewed the terms
of the above Agreement and agrees that his personal Guaranty, dated August 19,
1996, will support the borrower's obligations under the Agreement and continue
in full force and effect.
Dated: November 20, 1997
-------------------------------- -----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
NORWEST BANK MINNESOTA NORTH,
NATIONAL ASSOCIATION REVOLVING NOTE #450048
================================================================================
$1,500,000.00 November 20, 1997
FOR VALUE RECEIVED, Industrial Rubber Applicators, Inc. (the "Borrower")
promises to pay to the order of Norwest Bank Minnesota North, National
Association (the "Bank"), at its principal office or such other address as the
Bank or holder may designate from time to time, the principal sum of ONE MILLION
FIVE HUNDRED THOUSAND AND 00/100 DOLLARS ($1,500,000.00) or the amount shown on
the Bank's records to be outstanding, plus interest (calculated on the basis of
actual days elapsed in a 360-day year) accruing each day on the unpaid principal
balance at the annual interest rate defined below. Absent manifest error, the
Bank's records shall be conclusive evidence of the principal and accrued
interest owing hereunder.
This Revolving Note is issued pursuant to a Restated Term Loan and Credit
Agreement of even date herewith (the "Agreement") between the Bank and the
Borrower and shall replace but not be deemed to satisfy the Existing Revolving
Note as defined in the Agreement. The Agreement, and any amendments or
substitution thereto, contain additional terms and conditions including default
and acceleration provisions. The terms of the Agreement are incorporated into
this Revolving Note by reference. Capitalized terms not expressly defined herein
shall have the meanings given them in the Agreement.
INTEREST RATE. The principal balance outstanding under this Revolving Note shall
bear interest at an annual rate equal to the Base Rate, floating. Base Rate
means the rate of interest established by Norwest Bank Minnesota North, National
Association, from time to time as its "base" or "prime" rate of interest at its
principal office in Hibbing, Minnesota.
REPAYMENT TERMS
INTEREST. Interest shall be payable on the first day of each month, beginning
December 1, 1997, or on DEMAND.
PRINCIPAL. Principal, and any unpaid interest, shall be due on DEMAND.
ADDITIONAL TERMS AND CONDITIONS. The Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees and legal expenses incurred by
the Bank if this Revolving Note is not paid as provided above. The Revolving
Note shall be governed by the substantive laws of the State of Minnesota.
WAIVER OR PRESENTMENT AND NOTICE OF DISHONOR. Borrower and any other person who
signs, guarantees or endorses this Revolving Note, to the extent allowed by law,
hereby waives presentment, demand for payment, notice of dishonor, protest, and
any notice relating to the acceleration of the maturity of this Revolving Note.
INDUSTRIAL RUBBER APPLICATORS, INC.
BY:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ITS: President
-----------------------------
NORWEST BANK MINNESOTA NORTH,
NATIONAL ASSOCIATION TERM NOTE #460006
================================================================================
$388,826.32 November 20, 1997
FOR VALUE RECEIVED, Industrial Rubber Applicators, Inc. (the "Borrower")
promises to pay to the order of Norwest Bank Minnesota North, National
Association (the "Bank"), at its principal office or such other address as the
Bank or holder may designate form time to time, the principal sum of THRE (sic)
HUNDRED EIGHT-EIGHT THOUSAND EIGHT HUNDRED TWENTY-SIX AND 32/100 DOLLARS
($388,828.32) or the amount shown on the Bank's records to be outstanding, plus
interest (calculated on the basis of actual days elapsed in a 360-day year)
accruing each day on the unpaid principal balance at the annual interest rate
defined below. Absent manifest error, the Bank's records shall be conclusive
evidence of the principal and accrued interest owing hereunder.
This Term Note is issued pursuant to a Restated Term Loan and Credit Agreement
of even date herewith (the "Agreement") between the Bank and the Borrower and
shall replace but not be deemed to satisfy the 1996 Term Note as defined in the
Agreement. The Agreement, and any amendments or substitutions thereto, contain
additional terms and conditions including default and acceleration provisions.
The terms of the Agreement are incorporated into this Term Note by reference.
Capitalized terms not expressly defined herein shall have the meanings given
them in the Agreement.
INTEREST RATE. The principal balance outstanding under this Term Note shall bear
interest at an annual rate equal to the Base Rate, floating. Base Rate means the
rate of interest established by Norwest Bank Minnesota North, National
Association, from time to time as its "base" or "prime" rate of interest at its
principal office in Hibbing, Minnesota.
REPAYMENT TERMS.
PAYMENT AMOUNT. Principal and interest shall be payable in successive monthly
installments of TWENTY THOUSAND NINE HUNDRED AND 00/100 DOLLARS ($20,900.00)
beginning on December 20, 1997. The remaining principal balance, plus any
accrued interest, shall be fully due and payable on August 20, 1999.
CHANGES IN PAYMENT AMOUNT. Each payment shall be applied as scheduled or as the
Bank in its discretion deems appropriate.
PREPAYMENT. The Borrower may prepay this Term Note in full or in part at any
time. Each prepayment shall be applied as scheduled or as the Bank in its sole
discretion may deem appropriate. Such prepayment shall not excuse the Borrower
from making subsequent payments as scheduled above until the indebtedness is
paid in full.
ADDITIONAL TERMS AND CONDITIONS. The Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees and legal expenses incurred by
the Bank if this Term Note is not paid as provided above. This Term Note shall
be governed by the substantive laws of the State of Minnesota.
WAIVER OF PRESENTMENT AND NOTICE OF DISHONOR. Borrower and any other person who
signs, guarantees or endorses this Term Note, to the extent allowed by law,
hereby waives presentment, demand for payment, notice of dishonor, protest, and
any notice relating to the acceleration of the maturity of this Term Note.
INDUSTRIAL RUBBER APPLICATORS, INC.
BY:
------------------------------
ITS: President
-----------------------------