Exhibit






REVOLVING CREDIT LOAN AGREEMENT
 
This Revolving Credit Loan Agreement is entered into as of the 30th day of June 2017, by and between Glenbrook Building Supply, Inc., a Delaware corporation, EdgeBuilder, Inc., a Delaware corporation, and Premier Bank, a Minnesota corporation.  


In consideration of the mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 


ARTICLE I. 
Definitions


Section 1.01 Definitions.  For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: 


		
	(a)
	the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; and 




		
	(b)
	all accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP. 




“Accounts Receivable” means any and all accounts owed to Borrowers by their customers that, in accordance with GAAP, are required to be included in the accounts receivable account reflected on Borrowers’ balance sheets.


“Advance” means an advance of credit by the Bank to one or both of the Borrowers in the form of a loan pursuant to Section 2.01.


“Agreement” means this Revolving Credit Loan Agreement.


“Bank” means Premier Bank, a Minnesota corporation, its participants, successors and assigns. 


“Borrowers” means Glenbrook Building Supply, Inc., a Delaware corporation, and  EdgeBuilder, Inc., a Delaware corporation.  Each of the Borrowers may be referred to individually herein as a “Borrower”.


“Borrowing Base” means the sum of the following, as shown on the Borrowers’ most recent Borrowing Base Certificate: 


Seventy-five percent (75%) of Borrowers’ Eligible Accounts Receivable, 


plus, 










Fifty percent (50%) of Borrowers’ Eligible Inventory, 


plus, 


Fifty percent (50%) of Borrowers’ Eligible Equipment.
 
“Borrowing Base Certificate” means the certificate attached hereto as Exhibit A as completed and certified to by Borrowers from time to time.  The Borrowing Base Certificate may be amended or modified from time to time by the Bank.  


“Credit Documents” means this Agreement, the Revolving Note, the Security Agreements, all financing statements, all other documents described in Section 3.01 hereof, and any other documents or agreements executed by Borrowers in favor of Bank in connection with the transaction contemplated by this Agreement. 


“Date of Final Maturity” means the Date of Final Maturity as defined in the Revolving Note, as such date may be modified or extended from time to time.


“Debt” means the sum of (i) all items of indebtedness or liability of the Borrowers which in accordance with GAAP would be included in determining total liabilities as shown on the liabilities side of a balance sheet on the date as of which Debt is to be determined, plus (ii) indebtedness secured by any mortgage, deed of trust, assignment, security interest or other lien on property of the Borrowers whether or not the indebtedness secured thereby shall have been assumed, plus (iii) guaranties, endorsements (other than for purposes of collection in the ordinary course of business) and other contingent obligations of the Borrowers.


“Debt Service Coverage Ratio” means, for any calendar year: (A) the net income of the Borrowers for the calendar year, plus the Borrowers’ allowable depreciation and amortization for the calendar year, plus interest payments actually paid by Borrowers on any Debt during such calendar year, plus income tax payments actually paid with respect to the Borrowers’ income for such calendar year, divided by (B) the total amount of principal and interest payments that were due on all Funded Debt of the Borrower during such calendar year.


“Eligible Accounts Receivable” means the outstanding amount of all Accounts Receivable except the following: (i) any Account Receivable that is not paid in full within 90 days after the date of the original invoice to the customer; (ii) any Account Receivable owed by one of the Borrowers to the other; (iii) any Account Receivable as to which the account debtor or other obligor disputes liability or makes any claim; (iv) any Account Receivable owed by any officer, manager, governor, member, partner, director or shareholder of the Borrowers or any of their relatives or any partnership, corporation, company, association, joint venture or other business entity wholly or partly owned or controlled directly or indirectly by any of them or any of their relatives; (v) any Account Receivable owed by any person or entity as to whom a petition in bankruptcy or other application for relief is filed under any bankruptcy, reorganization, receivership, moratorium, insolvency or similar law; (vi) any Account Receivable owed by any person or entity who makes an assignment for the benefit of creditors, becomes insolvent, fails, 


2


4202603-4







suspends business, or goes out of business; (vii) any Account Receivable owed by the United States government or any agency of the United States government; (viii) consignment receivables; (ix) bonded receivables; (x) any Account Receivable owed by any person or entity located outside the United States of America; (xi) any Account Receivable owed by any person or entity with whose creditworthiness the Bank becomes dissatisfied; (xii) any account receivable for goods which have not been shipped or work which has not been fully performed; and (xiii) any Account Receivable in which the Bank does not have a perfected security interest constituting a first lien.  In the event that either of the Borrowers owes any amount to any person or entity that owes an Account Receivable to one of the Borrowers, such amount owed by the Borrowers shall be deducted from that portion of the Account Receivable which would otherwise qualify as an Eligible Account Receivable and only the difference thereof shall be considered an Eligible Account Receivable.  Furthermore, if more than twenty percent (20%) of all of the Accounts Receivable owed by any one account debtor are not Eligible Account Receivables because they fail to satisfy the requirement set forth in subparagraph (i) above, then all Accounts Receivable owed by such account debtor shall be excluded from the definition of Eligible Account Receivable.


“Eligible Equipment” means all Equipment owned by the Borrowers, except the following: (i) Equipment that is not located in the State of Minnesota or the State of Wisconsin (unless the Bank otherwise consents in writing); (ii) Equipment that is not in the possession or control of the Borrowers; and (iii) any Equipment in which the Bank does not have a perfected security interest constituting a first lien.  For the purpose of this Agreement, all equipment shall be valued at the lesser of (x) cost (less any depreciation allowed or allowable in accordance with GAAP) or (y) fair market value.


“Eligible Inventory” means the lesser of cost or fair market value of such Inventory of the Borrowers as the Bank, in its sole discretion, shall deem eligible, computed on a first-in, first-out basis in accordance with GAAP. Without limiting the discretion of the Bank to consider any Inventory not to be Eligible Inventory, and notwithstanding any earlier classification of eligibility, the following Inventory shall not be considered Eligible Inventory: (i) any Inventory that is not available to be used or consumed by the Borrowers in the normal and ordinary course of their businesses; (ii) any Inventory which does not meet all standards imposed by any governmental agency having regulatory authority over such Inventory, its use or sale; (iii) any Inventory which is not located in the State of Minnesota or the State of Wisconsin; (iv) any Inventory which is obsolete, or which is not usable by the Borrowers in the normal and ordinary course of their businesses; (v) any Inventory which is on consignment to or from any other person or entity, or which has been sold or otherwise delivered, transferred or conveyed to any other person or entity, or which is subject to any bailment or lease; (vi) any finished goods Inventory or work-in-process Inventory; and (vii) any Inventory in which the Bank does not have a perfected security interest constituting a first lien. 


“Environmental Laws” means all federal, state, local and foreign laws, statutes, codes, ordinances, regulations, requirements, rules and common law relating in any way to any hazardous or toxic materials or the protection of the environment. 




3


4202603-4







“Equipment” means any and all equipment, including but not limited to motor vehicles and other rolling stock, used in connection with the operation of the Borrowers’ businesses.  


“ERISA” means the Employee Retirement Income Security Act of 1974, as amended. 


“Event of Default” has the meaning specified in Section 6.01.


“Funded Debt” means all indebtedness of the Borrower for borrowed money and capital leases; all other indebtedness of the Borrower evidenced by notes, bonds, debentures and similar obligations; and all other interest-bearing indebtedness of the Borrower, including but not limited to, all indebtedness to the Bank under the Revolving Note.
 
“GAAP” means generally accepted accounting principles consistently applied.  Except as otherwise approved by the Bank in writing, all financial reporting, financial record keeping, and financial calculations in connection with this Agreement shall be made on the basis of accounting principles, methods, elections and estimates that are consistent with the accounting principles, methods, elections and estimates used in the financial statements described in Section 4.04 of this Agreement. 


“Guaranties” has the meaning specified in Section 3.01. 


“Inventory” means any and all materials, supplies, goods, and other items and things that are held by Borrowers for sale to their customers in the normal and ordinary course of business which, in accordance with GAAP, are required to be included in the inventory account reflected on Borrowers’ balance sheets.  For the purpose of this Agreement, inventory shall be valued at the lesser of cost or fair market value and shall be computed on a first-in, first-out basis in accordance with GAAP. 


“Line of Credit” has the meaning specified in Section 2.01. 


“Parent” means ATRM Holdings, Inc., a Minnesota corporation and parent company of the Borrowers.


“Permitted Liens” means (i) liens for taxes, assessments or similar charges, incurred in the ordinary course of business and which are not yet due and payable, (ii) pledges or deposits made in the ordinary course of business to secure payment of workers’ compensation, or to participate in any fund in connection with workers’ compensation, unemployment insurance, old-age pensions or other social security programs, (iii) liens of mechanics, materialmen, warehousemen, carriers, or other like liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default, (iv) good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business, (v) encumbrances consisting of zoning restrictions, easements or 


4


4202603-4







other restrictions on the use of real property, minor defects or irregularities in title, and other similar liens, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use, (vi) liens arising from operating leases and precautionary UCC financing statement filings in respect thereof and equipment or other materials that are not owned by the Borrowers located on the premises of the Borrowers (but not in connection with, or as part of, the financing thereof) from time to time in the ordinary course of business and consistent with current practices of the Borrowers and the precautionary UCC financing statement filings in respect thereof, and (vii) liens in connection with the Subordinated Obligations.


“Plan” has the meaning specified in Section 4.10. 


“Prohibited Transaction” has the meaning assigned to that term in ERISA. 


“Reportable Event” has the meaning assigned to that term in ERISA. 


“Revolving Note” has the meaning specified in Section 2.01. 


“Security Agreements” has the meaning specified in Section 3.01.


“Subordinated Obligations” means the obligations of the Borrowers to Edgebuilder Wall Panels, Inc., a Minnesota corporation, and Glenbrook Lumber & Supply, Inc., a Minnesota corporation, under the terms of an Asset Purchase Agreement, dated as of October 4, 2016, and amended as of the date hereof, pursuant to which the Borrowers acquired certain assets, and the related Pledge and Security Agreement, dated as of October 4, 2016, providing the sellers with a security interest in such assets to secure payment of such obligations.


ARTICLE II
 Amount and Terms of Advances 


Section 2.01    Advances.  Subject to the provisions of this Agreement (including, but not limited to the Borrowing Base restrictions set forth in Section 2.02 hereof), the Bank shall make Advances to the Borrower from time to time during the period from the date hereof to the Date of Final Maturity, or the earlier date of termination of the Line of Credit pursuant to Section 6.02, in an aggregate amount not to exceed at any time outstanding Three Million and 00/100ths Dollars ($3,000,000.00) (the “Line of Credit”).  Each Advance shall be in the amount of $1,000.00 or an integral multiple thereof.  Within the limits of the Line of Credit, the Borrowers may obtain Advances, prepay, and obtain new Advances under this Section 2.01.  The obligation to repay the Advances and to pay interest and other charges, fees and expenses thereon is evidenced by the Borrowers’ $3,000,000.00 Revolving Credit Promissory Note dated the date hereof and payable to the order of the Bank (together with any amendments, extensions, renewals and replacements thereof, called the “Revolving Note”). 


Each Borrower shall have the right to request and receive Advances hereunder up to the full Borrowing Base, and each Borrower shall be jointly and severally liable for the repayment of 


5


4202603-4







entire balance of the Revolving Note regardless of whether not or not it received some, all or none of the proceeds of the Advances.   


Section 2.02    Borrowing Base, Borrowing Base Certificate.  The aggregate outstanding principal amount of the debt evidenced by this Agreement must never exceed the lesser of the following amounts: (i) $3,000,000.00, or (ii) the then-current Borrowing Base. 


Within 20 days of the end of each calendar month, Borrowers shall provide Bank with (i) a Borrowing Base Certificate setting forth all information required by the Bank for the purpose of calculating the Borrowing Base, (ii) one or more aging reports detailing the status of the Borrowers’ Accounts Receivable, and (iii) internally prepared financial statements detailing the financial performance of the Borrowers for the previous calendar month and on a year-to-date basis.  


The Borrowing Base Certificates and aging reports shall be completed with amounts determined as of the last day of the previous month and shall be signed by the Borrowers.  A sample Borrowing Base Certificate is attached hereto as Exhibit A and incorporated herein by reference.  The aging report shall take such form and contain such information as the Bank shall require, in the Bank’s sole discretion.  Bank shall have the right to require modifications to the form of the Borrowing Base Certificate and the aging report at any time and from time to time.  Unless Bank objects to the form or content of a Borrowing Base Certificate, which objection may be made at any time and from time to time, the Borrowing Base will be calculated based on the information set forth in the most recent Borrowing Base Certificate.  


Section 2.03     Making the Advances.  Each Advance shall be made on the request of a Borrower, which request may be made (i) in writing, (ii) by telephone, or (iii) pursuant to the Bank’s established on-line banking procedures.  On-line requests shall be processed in accordance with the Bank’s on-line banking procedures, as such procedures may be amended or modified from time to time.  All written and telephonic requests from a Borrower to the Bank shall specify the date of the requested Advance and the amount thereof, and shall be received by the Bank no later than noon of the day on which the Advance is to be made. Upon fulfillment of the terms and conditions of this Agreement, the Bank shall disburse the amount of any requested Advance by crediting the same to the Borrower’s checking account at the Bank or in such other manner as the Bank and requesting Borrower may from time to time agree.  Any request for an Advance shall be deemed to be a representation that the statements set forth in Sections 3.02(c) and 3.02(d) are correct as of the date of such request.


In addition to the foregoing, Advances may also be made in accordance with any “sweep” agreement now or hereafter executed by one or both of the Borrowers and Bank.   


Section 2.04     Use of Proceeds. Subject to the terms of this Agreement, the Borrowers may use the proceeds of the Advances for any lawful business purpose. 


Section 2.05    Payment, Balance and Setoff. 




6


4202603-4







(a)    Borrowers shall make monthly interest payments to Bank as required by the terms of the Revolving Note. 


(b)    All principal, interest and other amounts due under the Revolving Note and the Credit Documents shall, if not paid sooner, be due and payable on the Date of Final Maturity.  From time to time at the request of Borrowers, the Bank may (but shall not be obligated to) extend the Date of Final Maturity. 


		
	(c) 
	Borrowers agree that the amount shown on the books and records of the Bank as being the unpaid balance of principal, accrued interest and other charges, fees and expenses under the Revolving Note and this Agreement shall be prima facie evidence thereof.  Borrowers hereby irrevocably authorize the Bank, if and to the extent payment is not promptly made pursuant hereto, to charge against any amount owing by the Bank to the Borrowers an amount equal to the principal, accrued interest and other charges, fees and expenses then due. In addition, the Borrowers hereby irrevocably authorize the Bank to collect interest and other charges, fees and expenses under the Revolving Note and this Agreement when due from time to time by charging any of Borrowers’ accounts at the Bank. 




Section 2.06     Origination Fee/Document Review Fee.  Borrowers agree to pay Bank an origination fee in the amount of $30,000.00 in connection with the loan evidenced by this Agreement. Borrowers also agree to pay Bank a document review fee in the amount of $500.00 in connection with the loan evidenced by this Agreement.  The fees shall be considered fully earned on the date hereof and Borrowers shall not be entitled to a refund or rebate of any portion of the fees for any reason.  The fees set forth above shall be in addition to all amounts paid by Borrowers to Bank in accordance with Section 7.03 hereof (including, without limitation, any attorney fees).  


Section 2.07  Depository Requirements.  During the entire term of this Agreement, Borrowers shall maintain all of their checking, savings, and other depository and operating accounts with the Bank.  If either Borrower fails to comply with the requirement of this Section 2.07, the Bank may increase the rate at which interest accrues on the unpaid principal balance of the Revolving Note by two percent (2%) per annum.  


ARTICLE III.
Conditions


Section 3.01 Required Documents.  Each Advance shall be subject to the condition precedent that the Bank shall have received prior thereto all of the following, in form and substance acceptable to the Bank: 


(a)     The Revolving Note, properly executed by the Borrower. 




7


4202603-4







		
	(b) 
	One or more security agreements (the “Security Agreements”) covering all business assets of the Borrowers, which Security Agreement must be properly executed by the Borrowers in favor of the Bank. 




		
	(c)
	All financing statements, pledge or lien cards, termination statements, landlords’ waivers, and other writings, properly executed, which are deemed by the Bank to be necessary or desirable to grant the Bank a perfected security interest constituting a first lien on the property described in the Security Agreements. 




		
	(d) 
	One or more certificates of insurance covering the tangible property described in the Security Agreements, in such amounts, against such risks and in such companies as shall be reasonably acceptable to the Bank, which certificates shall name the Bank as loss payee and shall provide for at least 30 days’ prior written notice to the Bank of any cancellation or modification of such insurance.  Borrower shall also provide proof of all other insurance required by Section 5.05. 




		
	(e)
	Certificates of good standing for the Borrowers, which certificates shall be issued by the Delaware Department of State, Division of Corporations. 




		
	(f)
	Proof of Borrowers’ authority to transact business in the State of Minnesota and the State of Wisconsin. 




		
	(g)
	An initial Borrowing Base Certificate and accounts receivable aging report properly completed and executed by the Borrower. 




		
	(h)
	Guaranties (“Guaranties”) executed by Jeffrey E. Eberwein and Parent, in favor of Bank on even date herewith. 




		
	(i) 
	Such other documents, agreements and instruments as the Bank shall reasonably request. 




     Section 3.02     Other Conditions.  Each Advance shall be subject to the further conditions precedent that: 


		
	(a)
	The Bank shall have received all certificates, submittals and other items required to be delivered or mailed by the Borrowers to Bank pursuant to the Credit Documents; and 




		
	(b)
	The most recent Borrowing Base Certificate shall show, to the satisfaction of the Bank, that the sum of the aggregate outstanding principal amount of all prior Advances plus the amount of the requested Advance does not, and will not, exceed the Borrowing Base; and 






8


4202603-4







		
	(c)
	The representations and warranties contained in Article IV are correct as of the date of such Advance as though made as of such date, except to the extent that such representations and warranties relate solely to an earlier date; and 




		
	(d)
	No event has occurred, or would result from such Advance, which constitutes an Event of Default or would constitute an Event of Default with notice or passage of time or both. 






ARTICLE IV. 
Representations and Warranties


The Borrowers represent and warrant to the Bank as follows: 


Section 4.01     Authority to Transact Business.  Borrowers are corporations duly formed and validly existing under the laws of the State of Delaware.  Borrowers have authority to transact business in the State of Minnesota and the State of Wisconsin.  In addition, Borrowers are duly licensed and qualified to transact business in all other jurisdictions where the character of the property owned or leased or the nature of the business transacted makes such licensing or qualification necessary.  Borrowers have all requisite power and authority to own their property and carry on their businesses.  Borrowers have all requisite power and authority to execute, deliver and perform all of their obligations under the Credit Documents. 


Section 4.02    Authorization.  The execution, delivery and performance by the Borrowers of the Credit Documents have been duly authorized by all requisite action and do not (a) require any consent or approval of any person or entity or governmental authority, (b) violate any law, rule, regulation, order, writ, injunction or decree, (c) result in a breach of or constitute a default under any contract, agreement or other writing to which a Borrower is a party or by which a Borrower or any property of a Borrower may be bound or affected, or (d) result in, or require the creation or imposition of, any mortgage, deed of trust, assignment, security interest or other lien, interest, encumbrance, claim or charge of any nature, except in favor of the Bank, upon or with respect to any property of the Borrowers. 


Section 4.03    Legal Agreements. The Credit Documents constitute the legal, valid and binding obligations of the Borrowers and are enforceable in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws, statutes of limitation and principles of equity. 


Section 4.04     Financial Statements.  The Borrowers have provided the following financial statements to the Bank: financial statements for period ending March 31, 2017.  Said statements, including all schedules and notes pertaining thereto, were prepared in accordance with GAAP and fully and fairly present the financial condition of the Borrowers on the dates thereof and the results of their operations for the periods covered thereby. 




9


4202603-4







Section 4.05     No Adverse Change.  There has been no material adverse change in the business, property or condition (financial or otherwise) of the Borrowers since the date of the latest financial statement delivered to Bank in accordance with Section 4.04 or Section 5.01 hereof. 


Section 4.06     Titles and Liens.  The Borrowers have good title to all of the property reflected in the latest balance sheets delivered to Bank in accordance with Section 4.04 or Section 5.01 hereof, free and clear of all mortgages, deeds of trust, assignments, security interests and other liens, interests, encumbrances, claims and charges, other than Permitted Liens. 


Section 4.07     Taxes.  The Borrowers have filed all required tax returns, have paid all due and payable taxes, assessments and other governmental charges levied or imposed upon it or upon its income or profits or upon any of its property, and have made adequate provision for the payment of such taxes, assessments and other charges accruing but not yet due and payable. 


Section 4.08     Litigation.  There is no pending or threatened notice, claim, litigation, proceeding or investigation against or affecting the Borrowers or any property of the Borrowers, whether or not covered by insurance, that would involve the payment by a Borrower of an amount that would be reasonably likely to have a material adverse effect on the financial condition, business, prospects, property or operations of a Borrower, and there is no basis for any such order, notice, claim, litigation, proceeding or investigation. 


Section 4.09     Margin Stock.  Borrowers are not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System), and no part of the proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. 


Section 4.10     Employee Benefit Plans.  No Reportable Event or Prohibited Transaction has occurred with respect to any employee benefit plan or other plan maintained for employees of the Borrowers (“Plan”). Each Plan is in compliance with all applicable requirements of ERISA and all-applicable rulings and regulations thereunder. 


Section 4.11     Environmental Matters. 


		
	(a)
	Borrowers are not in violation of any Environmental Law; and 




		
	(b)
	No disposal or release of any hazardous or toxic material has occurred on, from or under any property owned, operated or controlled by a Borrower, except as may have occurred in accordance with all applicable Environmental Laws; and


 
		
	(c)
	There has been no treatment, manufacturing, refining, handling or storage of any hazardous or toxic material at any property owned, operated or controlled by a Borrower, except as may have occurred in accordance with all applicable Environmental Laws; and 




10


4202603-4









		
	(d)
	No litigation, investigation or administrative action has been commenced or is pending or threatened; no settlement has been reached with any public or private party or parties; and no order has been issued that relates in any way to any alleged or actual presence, disposal or release of any hazardous or toxic material or any violation of any Environmental Law with respect to any property owned, operated or controlled by a Borrower; and 




		
	(e)
	Borrowers have filed all notices and permit applications required to be filed under the Environmental Laws with respect to their businesses, property and operations; and 




		
	(f)
	Borrowers have no known contingent liability with respect to their businesses, property or operations in connection with any hazardous or toxic material or any Environmental Law. 


ARTICLE V. 
Covenants


During the entire term of this Agreement, Borrowers shall comply with the following requirements: 


Section 5.01    Financial Statements and Other Information.  Borrowers shall deliver to the Bank, in form and substance acceptable to the Bank: 


		
	(a)
	Within 120 days of the end of each calendar year, Borrowers shall provide Bank with the audited financial statements of Parent (with a supporting schedule for the Borrowers).  The financial statements shall contain a balance sheet listing the assets, debts and equity of Parent as of the last day of the calendar year to which it relates.  The financial statements shall also contain an income statement showing the income and expenses of Parent for the year in question.  All items submitted in accordance with this provision shall be prepared by a certified public accountant acceptable to the Bank in accordance with GAAP; provided that Bank agrees that the selection of Boulay PLLP and its successors as such certified public accountant shall be acceptable to the Bank.   The supporting schedules for each Borrower shall contain sufficient detail to allow the Bank to understand and measure the financial performance of each Borrower.  Without limiting the preceding sentence, it is agreed that the supporting schedule will set forth the assets and liabilities of each Borrower as of the last day of each calendar year, and the income and expenses of each Borrower for the calendar year in question. 




		
	(b)
	Within 120 days of the end of each calendar year, Borrowers shall submit a certification, in form and substance satisfactory to the Bank, stating that the Borrowers are in compliance with all of the covenants and requirements of this Agreement.   






11


4202603-4







		
	(c)
	As promptly as practicable (but in any event not later than 5 days) after the Borrowers obtain knowledge thereof, written notice of all orders, notices, claims, litigation, proceedings and investigations against or affecting a Borrower or any property of a Borrower of the type described in Section 4.08 or 4.11. 




		
	(d)
	At least 30 days prior to the expiration thereof, proof of payment of the annual premiums for the insurance coverages required by Sections 5.05 and 3.01(d).




		
	(e)
	As promptly as practicable (but in any event not later than 5 days) after any officer or manager of a Borrower obtains knowledge of the occurrence of any event which constitutes an Event of Default or would constitute an Event of Default with notice or passage of time or both, written notice of such occurrence, together with a detailed statement by the Borrowers of the steps being taken by the Borrowers to cure the Event of Default. 




		
	(f)
	Within 10 days after the Bank’s request therefor, such other information respecting the condition (financial or otherwise), business and property of the Borrowers as the Bank may from time to time reasonably request. 




Section 5.02     Books, Records and Inspections.  Borrowers shall keep accurate books and records in which true and complete entries will be made in accordance with GAAP.  Upon request of the Bank, the Borrowers, during normal business hours, shall give any representatives of the Bank access to and permit such representatives to examine and copy all books, records and other writings in their possession, to inspect their property and to discuss their finances, accounts, property and businesses with any of their principal employees.


The Bank shall also have the right to carry out on-site inspections on any property owned or operated by Borrowers.  As of the date of this Agreement, Bank anticipates conducting inspections once per calendar year.  Borrowers agree to provide Bank with reasonable access to all of their properties for the purpose of allowing the Bank to complete such inspections.  


Section 5.03     Taxes and Other Claims.  Borrowers shall file when due all required tax returns, shall pay when due all taxes, assessments and other governmental charges levied or imposed upon the Borrowers or upon the Borrowers’ income or profits or upon any of the Borrowers’ property, and shall pay when due all lawful claims for labor, materials and supplies which, if unpaid, might become a lien or charge upon any property of the Borrowers; provided, that the Borrowers shall not be required to pay any such tax, assessment, charge or claim whose amount, applicability or validity is being contested in good faith by appropriate proceedings.  Notwithstanding the foregoing, in the event a Borrower elects to contest a tax, assessment, charge or claim, such Borrower shall provide Bank with such security as the Bank shall reasonably require to insure that such tax, assessment, charge or claim (and any costs or attorney fees attributable thereto) can be paid in full in the event such Borrower loses its challenge to such tax, assessment, charge or claim. 




12


4202603-4







Section 5.04    Maintenance of Properties.  Borrowers shall keep and maintain their inventory, equipment, real estate and other property necessary or useful in the Borrowers’ businesses in good condition and repair and shall pay when due all rental and mortgage payments due on such property; provided, that nothing in this Section shall prevent the Borrowers from discontinuing the operation and maintenance of any such property if such discontinuance is desirable in the conduct of the Borrowers’ businesses and does not disadvantage the Bank. 


Section 5.05     Insurance.  Borrowers shall obtain and maintain insurance policies covering such risks as the Bank shall require, in the Bank’s reasonable discretion. Such insurance policies shall include, but not be limited to, liability insurance; fire, hazard and extended coverage insurance on all of the Borrowers’ assets; necessary workers’ compensation insurance; and all other coverages as are consistent with industry practice.  Such policies shall be maintained with insurers and shall have such coverage limits as are reasonably acceptable to the Bank.  In the event the Borrowers fail to pay any premium on any such insurance, the Bank may do so, and the Borrowers shall reimburse the Bank for any such payment on demand. 


Section 5.06    Liens.  Borrowers shall not create, incur or permit to exist in favor of any person or entity other than the Bank any mortgage, deed of trust, assignment, security interest or other lien on any of their property now owned or hereafter acquired, other than Permitted Liens.
 
Section 5.07    Guaranties.  Borrowers shall not guarantee, endorse, assume or otherwise become directly or contingently liable in connection with any debt, obligation or liability of any other person or entity other than the Subordinated Obligations, except by the endorsement of negotiable instruments by the Borrowers for deposit or collection or similar transactions in the ordinary course of business. 


Section 5.08    Sale of Assets.  Borrowers shall not sell, lease, assign, transfer or otherwise dispose of all or substantially all of their assets (whether in one or more transactions). 


Section 5.09     Corporate Structure.  A Borrower shall not (i) consolidate its business with any other person or entity, (ii) merge its business into any other person or entity, (iii) permit any other person or entity to merge into a Borrower, or (iv) acquire all or a substantial part of the assets of any other person or entity, in each case without the prior written consent of the Bank.


Section 5.10    Nature of Business.  The Borrowers shall not engage in any line of business materially different from that presently engaged in by the Borrowers. 


Section 5.11     Sale and Leaseback.  The Borrowers shall not enter into any arrangement, directly or indirectly, with any other person or entity whereby the Borrowers shall sell or transfer any real or personal property and then or thereafter rent or lease as lessee such property or any part thereof or any other property which the Borrowers intends to use for substantially the same purpose as the property being sold or transferred. 






13


4202603-4







ARTICLE VI
Events of Default, Rights and Remedies


Section 6.01    Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”: 


		
	(a)
	Any payment due under the Revolving Note is not paid on or before the date it is due; or 




		
	(b)
	Any statement, representation or warranty of a Borrower (or any employee, agent or attorney of a Borrower) to the Bank at any time, including without limitation any statement, representation or warranty made in this Agreement or in any writing contemplated by this Agreement, shall be, or shall become, incorrect or misleading in any material respect when made or deemed made; or 




		
	(c)
	A default (other than as described in Section 6.01(a)) shall occur in the performance of this Agreement, the Credit Documents, or any other writings contemplated by this Agreement and such default continues unremedied for a period of 10 days after the earlier to occur of (x) the date on which such default is known or reasonably should have become known to any officer of any Borrower and (y) the date on which the Bank shall have notified any Borrower of such default; or 




		
	(d)
	A Borrower shall (i) become insolvent, (ii) make an assignment for the benefit of creditors, (iii) apply for, consent to the application of, or suffer the appointment of any receiver, trustee or similar officer, or (vi) initiate or have initiated against it any proceeding under any insolvency, bankruptcy, dissolution, liquidation or similar law; or 




		
	(e)
	A Borrower shall default in the payment of any Debt (other than the Line of Credit) and such default shall not be cured within any applicable grace or cure period; or 




		
	(f)
	A judgment or other order for the payment of money in excess of $75,000.00 shall be entered against a Borrower; or 




		
	(g)
	The issuance or filing of any writ, levy, warrant, attachment, garnishment, execution or similar process against any property of a Borrower, or the attachment of any tax lien to any property of a Borrower, and such writ, levy, warrant, attachment, garnishment, execution or similar process remains unpaid, unstayed or undismissed for a period of 14 days from the date thereof; or 




		
	(h)
	The occurrence of any Reportable Event or Prohibited Transaction in connection with any Plan, or any Plan shall not be in compliance with all applicable requirements of ERISA and all applicable rules and regulations thereunder, or any 




14


4202603-4







Plan shall terminate, or a trustee is appointed by any court to administer any Plan, or the Pension Benefit Guaranty Corporation shall institute any proceeding with respect to any Plan, which would have a material adverse effect on the financial condition, business, prospects, property or operations of a Borrower; or 


		
	(i) 
	A Guarantor (or any one purporting to act on behalf of a Guarantor) shall take any action to revoke or terminate any guaranty, liability or agreement in favor of the Bank; or 




		
	(j)
	Any audit of a Borrower reveals that the Borrowers’ actual Eligible Inventory,  Eligible Accounts Receivable or Eligible Equipment are materially less than the amounts being reported on the Borrowing Base Certificates.




		
	(k) 
	The Borrowers’ Debt Service Coverage Ratio for any calendar year shall be less than 1.2. 




		
	(l)
	Guarantor Jeffrey E. Eberwein shall fail to maintain, at any time during the term of the Revolving Note, unencumbered liquid assets with a value equal to or greater than $1,000,000.00.  For the purpose of this provision, “liquid assets” shall include U.S. dollar denominated savings accounts, money market accounts, certificates of deposits, state and federal notes, bills and bonds, and readily saleable stocks (i.e. stocks listed and readily available for purchase and sale on a national (U.S.) stock exchange).  Notwithstanding the foregoing, it is agreed that liquid assets shall not include the value of any of the stock of Parent owned by Jeffrey E. Eberwein.  The Borrowers must make sure that Jeffrey E. Eberwein produces such proof of liquid assets as the Bank may request from time to time.  




Section 6.02     Rights and Remedies.  Upon the commencement of any proceeding under any bankruptcy law by or against a Borrower, the Line of Credit shall automatically terminate, and all principal, interest, and other charges, fees and expenses under the Revolving Note and this Agreement automatically shall become immediately due and payable in full, all without declaration, presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Borrowers.  Thereafter, the Bank shall be entitled to exercise and enforce its rights and remedies under the Credit Documents, the other writings contemplated hereby, the Uniform Commercial Code, and any other applicable law.


If any Event of Default has occurred and is continuing, the Bank may exercise any and all of the following rights and remedies: 


		
	(a)
	The Bank may, by notice to the Borrowers, declare the Line of Credit to be terminated, whereupon the same shall terminate. 




		
	(b)
	The Bank may declare all principal, interest and other charges, fees and expenses under the Revolving Note and this Agreement to be immediately due and payable in full, whereupon the same shall become immediately due and payable in full, 




15


4202603-4







without presentment, demand, protest or other notices of any kind, all of which are hereby expressly waived by the Borrowers. 


		
	(c)
	The Bank may exercise and enforce its rights and remedies under the Credit Documents, the other writings contemplated hereby, the Uniform Commercial Code and any other applicable law. 




Section 6.03     Assignment and Setoff.  The Borrowers hereby grant the Bank a lien and security interest in all of the Borrowers’ present and future property now or hereafter in the possession, control or custody of, or in transit to, the Bank for any purpose, and the balance of every present and future account of the Borrowers with the Bank, and each present and future claim of the Borrowers against the Bank. Such lien and security interest secures all present and future debts, obligations and liabilities of the Borrowers to the Bank. In addition to all other rights and remedies, when or at any time after such debt, obligation or liability becomes due or an Event of Default has occurred, the Bank may foreclose such lien and security interest, and the Bank may offset or charge all or any part of the aggregate amount of such debts, obligations and liabilities against any such property, accounts and claims without notice.
 
 
ARTICLE VII
Miscellaneous


Section 7.01     Waiver and Amendment.  No provision of any of the Credit Documents can be waived, modified, amended, abridged, replaced, supplemented or terminated, except by a writing executed by the Bank. A waiver shall be effective only in the specific instance and for the specific purpose given. No delay or failure by the Bank to exercise any right or remedy shall be a waiver thereof, nor shall any single or partial exercise by the Bank of any right or remedy preclude any other exercise thereof or the exercise of any other right or remedy. All rights and remedies of the Bank under this Agreement and any other writing are cumulative and not exclusive. 


Section 7.02    Indemnification.  The Borrowers agree to indemnify and hold harmless the Bank and the Bank’s former, present and future officers, directors, employees, agents, shareholders, affiliates and attorneys, and all of their respective heirs, representatives, successors and assigns, from any and all losses, liabilities (including without limitation strict liability), suits, obligations, fines, damages, judgments, penalties, actions, causes of action, charges, costs and expenses, including but not limited to reasonable attorneys’ fees and legal expenses and consultants’ fees and expenses, whether based on tort, contract, implied or express warranty, statute, regulation, common law or otherwise, arising out of or related to the presence on, remediation of or release from any property at any time owned, operated or controlled by the Borrowers, including without limitation any building, structure or equipment thereon, of any toxic or hazardous waste, constituent or substance, or in connection with any Environmental Law applicable to any such hazardous or toxic waste, constituent or substance.  The provisions of this Section 7.02 shall survive the repayment and termination of the Line of Credit. 




16


4202603-4







Section 7.03     Costs and Expenses. Borrower agree to pay all expenses actually incurred by Bank in connection with the consideration of the application for the Line of Credit, the preparation of the Credit Documents, the closing of the Line of Credit, and the supervision of loan disbursements.  Such amounts may include, but shall not be limited to, loan brokerage fees, attorney fees, appraisal fees, closing fees, documentary or tax stamps, recording and filing fees, etc. Borrowers also agree to reimburse the Lender for all costs and attorney fees incurred by the Bank in the enforcement of this Agreement or the Credit Documents.  Borrowers agree to pay such amounts to Lender on demand.  Borrowers further agree that such expenses are in addition to the origination fee and document review fee paid to the Lender in connection with the Line of Credit.


Section 7.04     Notices.  All notices required by this Agreement shall be in writing and shall be delivered in person or by overnight courier, addressed as follows: 


If to the Borrowers:         EdgeBuilder, Inc. 
Glenbrook Building Supply, Inc.
5215 Gershwin Ave. N.
Oakdale, Minnesota 55128
Attention:  Daniel Koch 


If to the Bank:         Premier Bank
2866 White Bear Avenue
Maplewood, MN 55109
Attention: Brian L. Carnes        


or, as to each party, at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section. All such notices will be deemed to have been delivered (x) upon receipt when delivered personally or (y) one business day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. 


Section 7.05     Binding Effect and Assignment.  The Credit Documents shall bind and benefit the parties hereto and thereto and their respective successors and assigns, except that the Borrowers shall have no right to assign any of their rights hereunder or thereunder or any interest herein or therein without the prior written consent of the Bank, and any assignment in violation of this sentence shall be void.  If any provision or application of any of the Credit Documents is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect the other provisions or applications which can be given effect, and this Agreement and such writings shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or therein or prescribed hereby or thereby. 


Section 7.06     Jurisdiction and Venue.  Borrowers consent to the personal jurisdiction of the state and federal courts located in the State of Minnesota and State of Wisconsin in connection with any controversy related in any way to any of the Credit Documents or any transaction or matter relating to any of the Credit Documents, waives any argument that venue in 


17


4202603-4







such forums is not convenient, and agrees that any litigation initiated by the Borrower against the Bank in connection with any of the Credit Documents or any transaction or matter relating to any of the Credit Documents shall be venued in the District Court of Ramsey County, Minnesota. 


Section 7.07     Headings.  Article and Section headings in this Agreement are for convenience of reference and shall not limit the scope of the particular Articles or Sections to which they refer. 


Section 7.08    Governing Law.  This Agreement and the writings contemplated by this Agreement shall be governed by and construed in accordance with the internal laws of the State of Minnesota (excluding conflict of law rules). 


Section 7.09    Compliance Agreement.  In consideration of the Bank extending credit to the Borrowers, the Borrowers agree that they will fully cooperate with Bank to adjust for any clerical errors that occur in the Credit Documents or any other contract, statement or agreement executed in connection therewith.  Borrowers, upon receipt of a request from Bank, shall execute any and all corrective documents within 20 days of receipt of the request. If the Borrowers fail to execute such corrective documents within the time period set forth above, Borrowers shall be considered in default hereunder and the Bank shall have the right to exercise all rights and remedies provided by this Agreement and the other Credit Documents.  In addition, Borrowers shall be liable to the Bank for all losses, costs and damages (including attorney fees incurred in collection thereof) that are incurred by the Bank by reason of such failure.  


Section 7.10     Joint and Several Liability.  Each of the Borrowers shall be jointly and severally liable for all obligations arising under this Agreement and the other Credit Documents.  A default by any one Borrower shall be deemed a default by both Borrowers. 


BORROWERS REPRESENT, WARRANT AND CERTIFY TO THE BANK THAT THEY HAVE READ ALL OF THIS AGREEMENT AND UNDERSTAND ALL OF ITS PROVISIONS. 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed the day and year first above written.




		
	BORROWERS:
	Glenbrook Building Supply, Inc., a Delaware corporation






By:_______________________ 
      Daniel M. Koch        
Its: President and Chief Executive Officer




EdgeBuilder, Inc., a Delaware corporation


18


4202603-4











By:_______________________ 
      Daniel M. Koch        
Its: President and Chief Executive Officer




		
	BANK:
	Premier Bank, a Minnesota corporation






By:_______________________ 
      Brian L. Carnes        
Its: Chief Credit Officer




19


4202603-4








EXHIBIT A


(Borrowing Base Certificate)






4202603-4







GLENBROOK BUILDING SUPPLY/EDGEBUILDER
BORROWING BASE CERTIFICATE


	
		
	To:   Premier Bank               2866 White Bear Avenue         Maplewood, MN 55109   
	From:   Glenbrook Building Supply, Inc.
             EdgeBuilder, Inc.
             5215 Gershwin Ave. N.
            Oakdale, MN 55128-1326






Pursuant to the Revolving Credit Loan Agreement between Premier Bank (Bank) and Glenbrook Building Supply. Inc. and EdgeBuilder Inc. (Borrowers) dated June ___, 2017, and any amendments thereto (“Agreement”), Borrowers hereby (i) certify that all warranties and representations made in the Agreement are true and correct as of the date hereof, (ii) certify that there has been no material adverse change in the Borrowers’ financial conditions since the date of the Agreement, and (iii) certify and warrant that as of             , 20     (“Reporting Date”) Borrowers hold, subject to the first priority security interest of the Bank, the following collateral:


	
							
	Borrowing Base Values:
	 
	 
	 
	 

	1.)
	Accounts Receivable:
	 
	 
	$

	2.)
	Less A/R over 90 days:
	 
	 
	 

	3.)
	Eligible Accounts Receivable
	 
	 
	 

	 
	Eligible A/R (line 3) x 75%
	 
	X                0.75

	4.)
	A/R value for Borrowing Base Certificate:
	 

	 
	 
	 
	 
	 
	 
	 

	5.)
	Equipment value net of depreciation
	 
	 

	6.)
	Less balance of other loans against collateral:
	 

	7.)
	Eligible equipment value
	 
	 
	 

	 
	Eligible equipment (line 7) x 50%:
	X                0.50

	8.)
	Equipment value for Borrowing Base Certificate:
	 

	 
	 
	 
	 
	 
	 
	 

	9.)
	Inventory value:
	 
	 
	 
	 

	 
	Eligible Inventory (line 9) x 50%:
	X                0.50

	10.)
	Inventory value for Borrowing Base Certificate:
	 

	 
	 
	 
	 
	 
	 
	 

	11.)
	Amount available for line of credit (sum lines 4, 8 & 10):
	 

	Loan Value:
	 
	 
	 
	 
	 
	 

	12.)
	Loan limit (Line 11, or $3,000,000, whichever is less)
	 

	13.)
	Loan balance as of Reporting Date:
	 
	 

	14.)
	Net available (line 12 minus line 13)
	 
	 

	Prepared by
	 
	 
	 
	 
	Date:
	 

	Reviewed by
	 
	 
	 
	 
	Date:
	 








4202603-4