EXHIBIT 10.21
REVOLVING CREDIT AGREEMENT
Agreement made this 1st day of March, 2001, by ▇▇▇▇▇▇ Investment Corporation
(herein called "the Borrower") and Rural American Bank - Luck, a Wisconsin
Corporation (herein called "the Bank").
ARTICLE I. LOANS
1.1 REVOLVING CREDIT LOANS. From time to time, prior to March 1, 2003, or
the earlier termination hereof (in either case the "TERMINATION DATE"),
the Borrower may borrow from the Bank up to the aggregate principal
amount outstanding at any one time of $4,000,000.00 (the "LOAN
AMOUNT"). All revolving loans hereunder shall be evidenced by multiple
Promissory Notes of the Borrower payable to the order of the Bank in
cumulative amounts not to exceed $4,000,000.00 (the "NOTES"). Although
the Notes shall be expressed to be payable in the full Loan Amount, the
Borrower shall be obligated to pay only the amounts actually disbursed
hereunder, together with accrued interest on the outstanding balance at
the rates and on the dates specified therein and such other charges
provided for herein.
1.2 ADVANCES AND REPAYMENT. Discretionary loan advances will be made solely
for the purpose of acquiring real estate in Minnesota and/or Wisconsin
for future development and resale. Advances will be limited to 80% of
the lesser of (1) the purchase price of the property, or (2) the Bank's
Estimate of Real Estate Market Value. Development costs may also be
considered on a case-by-case basis. Prior to each advance, the Borrower
will submit the following to the Bank:
a) Amount of advance requested.
b) Copy of Purchase Agreement for the real estate to be
purchased.
c) Itemized estimate of development costs, if funding for
development costs is requested.
d) Preliminary Title Policy Commitment.
e) Preliminary Plat showing the number of lots to be developed
and their location.
f) Schedule, in a form acceptable to the Bank, showing the
Purchase Price, Retail Value. Loan Amount, and Lot Release
Price, all as allocated to each individual lot.
Principal repayment will occur as lots are sold. The Bank agrees to
release each lot for a Lot Release Price equal to 1.30 times the amount
of the loan balance allocated to each lot according to the following
conditions:
a) Upon the sale of a lot by the Borrower for cash, the Borrower
shall pay the required Lot Release Price to the Bank
immediately upon closing the sale.
b) Upon the sale of a lot by the Borrower for terms, the Borrower
shall pay to the Bank the required Lot Release Price when the
mortgage is put into the Borrower's line of credit with
Diversified Business Credit, Inc., or is sold to a third
party. Payment to the Bank shall be made in less than 45 days
from the date of the sale. Immediately upon sale for terms,
the Borrower will forward to the Bank a copy of the Note and
Mortgage evidencing the balance due the Borrower.
Any remaining principal balance under a Promissory Note shall be
payable in full on the second anniversary date of the Promissory Note.
Interest payments will be payable monthly at the end of each month. The
rate of interest will be the prime rate of interest as published in the
WALL STREET JOURNAL, less 0.25%.
1.3 ORIGINATION FEE. The Borrower shall pay to the Bank at the time of
issuance of each Promissory Note $50,000 or greater an Origination Fee
in an amount equal to the lesser of $2,000 or 0.50% of the amount of
the respective Promissory Note. An Origination Fee of $250 will be
payable by the Borrower to the Bank at the time of issuance of each
Promissory Note less than $50,000.
1.4 CONDITIONS TO BORROWING. The Bank shall not be obligated to make (or
continue to make) advances hereunder unless (i) the Bank has received
executed copies of the Notes and all other documents or agreements
applicable to the loans described herein, including but not limited to
the documents specified in Article III (collectively with this
Agreement the "Loan Documents"), in form and content satisfactory to
the Bank: (ii) if the loan is secured, the Bank has received
confirmation satisfactory to it that the Bank has a properly perfected
security interest, mortgage or lien, with the proper priority; (iii)
the Bank has received certified copies of the Borrower's Articles of
Incorporation and By-Laws, a certificate of good standing and all other
relevant documents; (iv) the Bank has received a certified copy of a
resolution or authorization in form and content satisfactory to the
Bank authorizing the loan and all acts contemplated by this Agreement
and all related documents, and confirmation of proper authorization of
all guaranties and other acts of third parties contemplated hereunder;
(v) no default exists under this Agreement or under any other Loan
Documents, or under any other agreements by and between the Borrower
and the Bank; and (vi) all proceedings taken in connection with the
transactions contemplated by this Agreement (including any required
environmental assessments), and all instruments, authorizations and
other documents applicable thereto, shall be satisfactory to the Bank.
ARTICLE II. WARRANTIES AND COVENANTS
During the term of this Agreement, and while any part of the credit granted the
Borrower is available or any obligations under any of the Loan Documents are
unpaid or outstanding, the Borrower warrants and agrees as follows:
2.1 ORGANIZATION AND AUTHORITY; LITIGATION. The Borrower is a validly
existing corporation in good standing under the laws of its state of
organization and has all requisite power and authority, corporate or
otherwise, and possesses all licenses necessary, to conduct its
business and own its properties. The execution, delivery and
performance of this Agreement and the other Loan Documents (i) are
within the Borrower's power; (ii) have been duly authorized by proper
corporate action; (iii) do not require the approval of any governmental
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agency; and (iv) will not violate any law, agreement or restriction by
which the Borrower is bound. This Agreement and the other Loan
Documents are the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their terms. There
is no litigation or administrative proceeding threatened or pending
against the Borrower which would, if adversely determined, have a
material adverse effect on the Borrower's financial condition or its
property.
2.2 CORPORATE EXISTENCE; BUSINESS ACTIVITIES; ASSETS. The Borrower will (i)
preserve its corporate existence, rights and franchises; (ii) carry on
its business activities in substantially the manner such activities are
conducted as of the date of this Agreement; (iii) not liquidate,
dissolve, merge or consolidate with or into another entity; and (iv)
not sell, lease, transfer or otherwise dispose of all or substantially
all of its assets.
2.3 USE OF PROCEEDS; MARGIN STOCK; SPECULATION. Advances by the Bank
hereunder shall be used exclusively by the Borrower for purposes
described in Section 1.2. The Borrower will not use any of the loan
proceeds to purchase or carry "margin" stock (as defined in Regulation
U of the Board of Governors of the Federal Reserve System). No part of
any of the proceeds shall be used for speculative investment purposes,
including, without limitation, speculating or hedging in the
commodities and/or futures market.
2.4 ENVIRONMENTAL MATTERS. There exists no uncorrected violation by the
Borrower of any federal, state or local laws (including statutes,
regulations, ordinances or other governmental restrictions and
requirements) relating to the discharge of air pollutants, water
pollutants, or process waste water or otherwise relating to the
environment or hazardous substances, whether currently existing or
enacted in the future (collectively "Environmental Laws"). The Borrower
does not and will not generate or have in its possession any hazardous
or toxic wastes, chemicals or other substances, the generation,
possession or existence of which is prohibited or governed by any
Environmental Laws (collectively "Hazardous Substances"). The Borrower
is not subject to any judgment, decree order or citation, or a party to
(or threatened with) any litigation or administrative proceeding which
asserts that the Borrower (i) violated any Environmental Laws; (ii) is
required to clean up, remove or take remedial or other action with
respect to any Hazardous Substances (collectively "Remedial Action");
or (iii) is required to pay all or a portion of the cost of any
Remedial Action, as a potentially responsible party. There are not now,
nor to the Borrower's knowledge after reasonable investigation have
there ever been, any Hazardous Substances (or tanks or other facilities
for the storage of Hazardous Substances) stored, deposited, recycled or
disposed of on, under or at any real estate owned or occupied by the
Borrower during the periods that the Borrower owned or occupied such
real estate, which if present on the property or in soils or ground
water, could require Remedial Action. To the Borrower's knowledge,
there are no proposed or pending changes in Environmental Laws which
would adversely affect the Borrower or its business, and there are no
conditions existing currently or likely to exist during the term of
this loan which would subject the Borrower to Remedial Action or other
liability. The Borrower will timely comply with all applicable
Environmental Laws; and provide the Bank, immediately upon receipt,
copies of any correspondence, notice, complaint, order or other
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document from any source asserting or alleging any circumstance or
condition which requires or may require a financial contribution by the
Borrower or Remedial Action or other response by or on the part of the
Borrower under Environmental Laws, or which seeks damages or civil,
criminal or punitive penalties from the Borrower for an alleged
violation of Environmental Laws.
2.5 ENVIRONMENTAL PERMITS. The Borrower has all permits, licenses and
approvals required under Environmental Laws.
2.6 INSURANCE. The Borrower will maintain insurance to such extent,
covering such risks and with such insurers as is usual and customary
for businesses operating similar properties, and as is satisfactory to
the Bank and designate the Bank as "Mortgagee" on such policies and
take such other action as the Bank may reasonable request to ensure
that the Bank will receive (subject to no other interests) the
insurance proceeds on the Bank's collateral.
2.7 TAXES AND OTHER LIABILITIES. The Borrower will pay and discharge, when
due, all of its taxes, assessments and other liabilities, except when
the payment thereof is being contested in good faith by appropriate
procedures which will avoid foreclosure of liens securing such items,
and with adequate reserves provided therefor.
2.8 FINANCIAL STATEMENTS AND REPORTING. The financial statements and other
information previously provided to the Bank or provided to the Bank in
the future are or will be complete and accurate and prepared in
accordance with generally accepted accounting principles. There has
been no material adverse change in the Borrower's financial condition
since such information was provided to the Bank. The Borrower will
(i) maintain accounting records in accordance with generally recognized
and accepted principles of accounting consistently applied throughout
the accounting periods involved; (ii) provide the Bank with such
information concerning its business affairs and financial condition
(including insurance coverage) as the Bank may reasonably request; and
(iii) without request provide the Bank with management-prepared, annual
and quarterly financial statements as submitted to the Securities and
Exchange Commission within 45 days of the end of each quarter; and
annual audited financial statements prepared by an accounting firm
acceptable to the Bank within 90 days of the end of each fiscal year.
The Borrower also agrees to provide,without request, an annual personal
financial statement of the Guarantor.
2.9 INSPECTION OF PROPERTIES AND RECORDS; FISCAL YEAR. The Borrower will
permit representatives of the Bank to visit and inspect any of the
properties and examine any of the books and records of the Borrower at
any reasonable time and as often as the Bank may reasonably desire. The
Borrower will not change its fiscal year.
ARTICLE III. COLLATERAL AND GUARANTIES
3.1 COLLATERAL. This Agreement and the Notes are secured by Real Estate
Mortgage(s) covering real estate to be purchased by the Borrower.
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3.2 GUARANTIES. This loan is guaranteed by ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ as
evidenced by a guaranty dated March 1, 2001. The amount of liability
under this guaranty shall be limited to $1,000,000. ----
3.3 CREDIT BALANCES; SETOFF. The Borrower grants the Bank a security
interest and lien in any credit balance or other money now or hereafter
owed the Borrower by the Bank, and, in addition, agrees that the Bank
may, at any time after an occurrence of an event described in Section
4.1 below (notwithstanding any cure periods), without notice or demand,
set off against any such credit balance or other money any indebtedness
outstanding hereunder or under the Note.
The information in this Article III is for information only and the omission of
any reference to an agreement shall not affect the validity or enforceability
thereof. The rights and remedies of the Bank outlined in this Agreement and the
documents identified above are intended to be cumulative.
ARTICLE IV. DEFAULTS
4.1 DEFAULTS. The occurrence of one or more of the following events shall
constitute a default:
a) NONPAYMENT. The Borrower shall fail to pay (i) any interest
due on the Notes, or any other amount payable hereunder, by
five days after the same becomes due; or (ii) any principal
amount due on the Notes when due.
b) NONPERFORMANCE. The Borrower or any guarantor shall default in
the performance of any agreement, term, provision condition,
or covenant (other than nonpayment) required to be performed
or observed by the Borrower or any guarantor hereunder or
under any other Loan Document, continuing for a period of 15
days.
c) MISREPRESENTATION. Any financial information, statement,
certificate, representation or warranty given to the Bank by
the Borrower or any guarantor (or any of their
representatives) in connection with entering into this
Agreement or the other Loan Documents and/or any borrowing
hereunder, or required to be furnished under the terms hereof,
shall prove untrue in any material respect (as determined by
the Bank in the exercise of its reasonable judgment) as of the
time when given.
d) DEFAULT ON OTHER OBLIGATIONS. The Borrower or any guarantor
shall be in default under the terms of any loan agreement,
Promissory Note, lease, conditional sale contract or other
agreement, document or instrument evidencing, governing or
securing any indebtedness owing by the Borrower or any
guarantor to the Bank or by the Borrower to any third party,
and the period of grace, if any, to cure said default shall
have passed.
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e) JUDGMENTS. Any judgment shall be obtained against the Borrower
or any guarantor which, together with all other outstanding
unsatisfied judgments against the Borrower (or such
guarantor), shall exceed the sum of $10,000 and shall remain
unvacated, unbonded or unstayed for a period of 45 days
following the date of entry thereof.
f) INABILITY TO PERFORM; BANKRUPTCY/INSOLVENCY. (i) the Borrower
or any guarantor shall die or cease to exist; or (ii) any
guarantor shall attempt to revoke any guaranty of the
obligations described herein, or any guaranty becomes
unenforceable in whole or in part for any reason, or (iii) any
bankruptcy, insolvency or receivership proceedings, or an
assignment for the benefit of creditors, shall be commenced
under any federal or state law by or against the Borrower or
any guarantor; or (iv) the Borrower or any guarantor shall
become the subject of any out-of-court settlement with its
creditors; or (v) the Borrower or any guarantor is unable or
admits in writing its inability to pay its debts as they
mature.
g) ADVERSE CHANGE; ENVIRONMENTAL VIOLATIONS; INSECURITY. (i)
there is a material adverse change in the financial condition
of the Borrower or any guarantor, or (ii) any violation of
Environmental Laws affecting the Borrower or its properties
occurs or is discovered; or (iii) the Bank in good ▇▇▇▇▇ ▇▇▇▇▇
itself insecure.
h) DEBT/EQUITY COVENANT. The Borrower shall fail to maintain at
all times a Debt-to-Equity Ratio of less than 4 to 1. Debt
shall be defined as all liabilities of the Borrower, including
Senior Subordinated Debt and Deferred Income Taxes. Equity
shall include Common Stock. Additional Paid-In Capital and
Retained Earnings.
4.2 TERMINATION OF LOANS. Upon the occurrence of any of the events
identified in Section 4.1, the Bank may at any time thereafter
(notwithstanding the cure periods identified in Sections 4.1(a),
4.1(b), 4.1(d) and 4.1(e)) immediately terminate its obligation to make
additional loans hereunder without demand or further notice of any
kind, all of which are hereby waived.
4.3 ACCELERATION OF OBLIGATIONS. Upon the occurrence of any of the events
identified in Sections 4.1(a) through 4.1(e) and 4.1(g), and the
passage of any applicable cure period, the Bank may at any time
thereafter, by written notice to the Borrower, declare the unpaid
principal balance of the Notes together with the interest accrued
thereon and other amounts accrued hereunder, to be immediately due and
payable; and the unpaid balance shall thereupon be due and payable, all
without presentation, demand, protest or further notice of any kind,
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all of which are hereby waived, and notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents. Upon
the occurrence of any event under Section 4.1(f), then the unpaid
principal balance under the Notes, together with all interest accrued
thereon and other amounts accrued hereunder, shall thereupon be
immediately due and payable, all without presentation, demand, protest
or notice of any kind, all of which are hereby waived, and
notwithstanding anything to the contrary contained herein or in any of
the other Loan Documents.
4.4 OTHER REMEDIES. Nothing in this Article IV is intended to restrict the
Bank's rights under any of the Loan Documents or at law, and the Bank
may exercise all such rights and remedies as and when they are
available.
ARTICLE V. MISCELLANEOUS
5.1 DELAY; CUMULATIVE REMEDIES. No delay on the part of the Bank in
exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right,
power or privilege hereunder preclude other or further exercise thereof
or the exercise of any other right, power or privilege. The rights and
remedies herein specified are cumulative and are not exclusive of any
rights or remedies which the Bank would otherwise have.
5.2 RELATIONSHIP TO OTHER DOCUMENTS. The warranties, covenants and other
obligations of the Borrower (and the rights and remedies of the Bank)
that are outlined in this Agreement and the other Loan Documents are
intended to supplement each other. In the event of any inconsistencies
in any of the terms in the Loan Documents, all terms shall be
cumulative so as to give the Bank the most favorable rights set forth
in the conflicting documents.
5.3 PARTICIPATIONS. The Bank may, at its option sell all or any interests
in the Notes and other Loan Documents to other financial institutions,
and in connection with such sales (and thereafter) disclose any
financial information the Bank may have concerning the Borrower to any
such participant or potential participant.
5.4 SUCCESSORS. The rights, options, powers and remedies granted in this
Agreement shall extend to the Bank and to its successors and assigns,
shall be binding upon the Borrower and its successors and assigns and
shall be applicable hereto and to all renewals and/or extensions
hereof.
5.5 EXPENSES AND ATTORNEY'S FEES. The Borrower agrees to reimburse the Bank
for all fees and out-of-pocket disbursements incurred by the Bank (and
any participant) in connection with the preparation, execution,
delivery, administration and enforcement of this Agreement or any of
the other Loan Documents, and any waivers or amendments with respect
hereto, including all costs of collection before and after judgment,
and including,without limitation, the fees and disbursements of counsel
for the Bank or any participant.
5.6 PAYMENTS. Payments due under the Notes and other Loan Documents shall
be made in lawful money of the United States, and the Bank is
authorized to charge payments due under the Loan Documents against any
account of the Borrower. All payments may be applied by the Bank to
principal, interest and any other amounts due under the Loan Documents
in any order which the Bank elects.
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5.7 APPLICABLE LAW AND JURISDICTION; INTERPRETATION AND MODIFICATION. This
Agreement and all other Loan Documents shall be governed by and
interpreted in accordance with the laws of the State of Wisconsin.
Invalidity of any provision of this Agreement shall not affect the
validity of any other provision. The provisions of the Loan Documents
shall not be altered, amended or waived without the express written
consent of the Bank (and the Borrower, when appropriate). THE BORROWER
HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL
COURT SITUATED IN THE COUNTY WHERE THE BANK'S OFFICE WHICH IS
DESIGNATED IN THE NOTE AS THE PLACE FOR PAYMENT IS LOCATED (OR, IN THE
ABSENCE OF SUCH DESIGNATION, THE BANK'S MAIN OFFICE), AND WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS,
CLAIMS, DISPUTES OR PROCEEDINGS RELATING TO THIS AGREEMENT, THE
COLLATERAL, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING
THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE
FOREGOING. This Agreement, the other Loan Documents and any amendments
hereto (regardless of when executed) will be deemed effective and
accepted only at the Bank's offices, and only upon the Bank's receipt
of the executed originals thereof.
5.8 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK HEREBY JOINTLY AND
SEVERALLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING RELATING TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS
THEREUNDER OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO.
THE BORROWER AND THE BANK EACH REPRESENTS TO THE OTHER THAT THIS WAIVER
IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
5.9 NOTICES. All notices and correspondence related to the Loan Documents
shall be sent to:
a) If to the Borrower: b) If to the Bank:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
President President
▇▇▇▇▇▇ Investment Corporation Rural American Bank - Luck
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
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IN WITNESS WHEREOF, the undersigned have executed this REVOLVING CREDIT
AGREEMENT as of the 1st day of March, 2001.
▇▇▇▇▇▇ INVESTMENT CORPORATION
(Borrower)
a Minnesota Corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name & Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Asst. Vice Pres.
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By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name & Title: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ President
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RURAL AMERICAN BANK - LUCK
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name & Title: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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