Document:

CapSource Financial, Inc. Exhibit 10.5 to Form 8-K Dated August 10, 2007

EXHIBIT 10.5

 

PROMISSORY NOTE

 

	
            $150,000
 	
            August 10, 2007
 

Minneapolis, MN

 

FOR VALUE RECEIVED, the undersigned, CapSource Financial, Inc., a Colorado corporation (the “Borrower”), with its principal executive office at 2305 Canyon Boulevard, Suite 103, Boulder, CO 80302, hereby promises to pay to the order of Pandora Select Partners, L.P., (the “Lender”) or its assigns, at its offices at 3033 Excelsior Boulevard, Suite 300, Minneapolis, Minnesota 55416 or at such other place as the Lender may designate by written notice to the Borrower, the principal sum of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000),  pursuant to the terms of that certain Term Loan Agreement between the parties (the “Loan Agreement”) of even date
herewith,  together with Basic Interest at the rate of 9% per annum thereon from the date each advance is made until paid in full. Payments of principal and interest shall be made in immediately available funds in lawful money of the United States. Capitalized terms not otherwise defined herein shall have the meaning given them in the Loan Agreement.

 

1.        Payment of Principal and Interest

 

 (a) Borrower shall pay accrued Basic Interest (and Default Interest, if applicable) on the outstanding principal balance under this Note on a quarterly basis, commencing with a pro rated payment on September 30, 2007 for the quarter then-ended, and continuing on the last day of each calendar quarter thereafter through the Maturity Date. Interest on this Note shall be calculated on the basis of a 365-day year and for the actual number of calendar days elapsed.

 

 (b) The entire unpaid principal balance, together with any accrued but unpaid Basic Interest, Default Interest and any other unpaid charges or fees hereunder or under any of the Loan Documents, shall be due and payable in full on August  9, 2009 (the “Maturity Date”).

 

 (c) The Borrower shall have the right to prepay this Note, in whole or in part, pursuant to the terms of the Loan Agreement. Any prepayments shall be applied first to accrued Basic Interest, accrued Default Interest until the entire amount thereof has been paid, and next to principal.

 

 (d) Notwithstanding anything herein to the contrary, if any amount of principal or interest becomes due on a day that is not a Business Day, the due date thereof shall be extended to the immediately succeeding day which is a Business Day, and Basic Interest (and Default Interest, if applicable) thereon shall accrue during the period of such extension at the rate provided for herein.

2.        Events of Default. If an Event of Default shall occur, the Lender shall have such rights and remedies as are set forth in Section 6 of the Loan Agreement. The term “Event of Default” shall have the meaning ascribed to it in the Loan Agreement.

 

3.        Amendments. Changes in or additions to this Note may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), only in writing.

 

4.        Waiver. The failure of the Lender to insist, in any one or more instances, on performance of any of the terms, covenants and conditions hereof shall not be construed as a waiver or relinquishment of any rights granted hereunder or of the future performance of any such terms, covenants or conditions, but the obligation of the Borrower with respect thereto shall continue to be in full force and effect.

 

5.        Benefits; Assignment. The rights and benefits of the Lender hereunder shall inure to the benefit of its successors and assigns, and Borrower acknowledges that Lender may pledge this Note to its lenders. The Borrower may not assign any rights or obligations hereunder without the prior written consent of the Lender, and any such attempted assignment shall be null and void and of no force or effect.

 

6.        Notices. All notices, requests and demands to or upon the parties hereto shall be deemed to have been given or made when deposited in the mail, certified or registered, postage prepaid, addressed to the address of the party set forth in the Loan Agreement or such other address as any party may request by notice given as aforesaid.

 

7.        Collection. The Borrower agrees to pay any costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by the Lender in the collection of any and all amounts due under this Note that are not paid when due and payable and the enforcement of the Lender’s rights under this Note.

 

8.        Governing Law. This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Minnesota, without giving effect to the principles of conflict of laws thereof.

 

9.        Severability. The holding of any provision of this Note to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision hereof and all other provisions hereof shall remain in fill force and effect.

 

10.      Conflicts. To the extent that any term or provision of this Note shall conflict with the Loan Agreement, the Loan Agreement shall control.

 

11.      Guaranty. The obligations of the Borrower under this Note are guaranteed by the Personal Guaranty dated of even date herewith and issued on behalf of the Lender by Randolph M. Pentel. A copy of the Personal Guaranty is attached hereto as Exhibit A.

IN WITNESS WHEREOF, this Promissory Note has been executed and delivered on the date first above written by the undersigned Borrower.

 

	
             
 	
            CAPSOURCE FINANCIAL, INC.
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Steven E. Reichert
 
	
             
 	
             
 	
             
 
	
             
 	
            Its
 	
            Vice PresidentCapSource Financial, Inc. Exhibit 10.6 to Form 8-K Dated August 10, 2007

EXHIBIT 10.6

PERSONAL GUARANTY

 

WHEREAS, pursuant to that certain Term Loan Agreement to be dated August 10, 2007 between Pandora Select Partners, L.P., a British Virgin Islands limited partnership (“Lender”), and CapSource Financial, Inc., a Colorado corporation (“Borrower”), a copy of which is attached hereto as Exhibit A, Lender has agreed to loan to Borrower the sum of One Hundred Fifty Thousand Dollars ($150,000) (the “Loan”); and

 

WHEREAS, simultaneously with the execution of the Term Loan Agreement, Debtor intends to execute and issue to Lender its Promissory Note in the original principal amount of $150,000, a copy of which is attached hereto and made a part hereof as Exhibit B (the “Note”); and

 

WHEREAS, the Lender’s willingness to enter into the Term Loan Agreement and make such Loan to Borrower is conditioned upon the personal guaranty as to the payment of all indebtedness and obligations under the Term Loan Agreement, Note and related Loan Documents by Randolph M. Pentel, an individual residing in Minnesota, (“Guarantor”).

 

NOW, THEREFORE, Guarantor agrees as follows:

1.        In order to induce Lender to enter into the Term Loan Agreement with and make the Loan to Borrower, Guarantor does hereby absolutely and unconditionally guarantee to Lender the payment, and not merely the collection, of all indebtedness and obligations of whatever nature of Borrower to Lender under the Term Loan Agreement, Note and Loan Documents, as and when the same shall in any manner be or become due according to the terms and conditions provided therein (the “Indebtedness”).

 

2.        Without limiting the generality of the foregoing, the Guarantor agrees that he will pay the full amount of the Loan Amount, Basic Interest, Default Interest, fees or any other charges under the Term Loan Agreement, Note and Loan Documents, now or hereafter due, as and when the same shall in any manner be or become due according to the terms and conditions provided therein. 

 

3.        The Guarantor hereby waives (a) notice of acceptance of this Guaranty by Lender; (b) the creation of Indebtedness of Borrower to Lender; (c) demand, notice of dishonor, presentment for payment, protest and notice of protest and of non-performance on all of said Indebtedness; and (d) if said Indebtedness is renewed, or if the time for payment thereof be extended (to which Guarantor hereby consents) either with or without notice to Guarantor, Guarantor unconditionally guarantees the payment of such Indebtedness at the time fixed for the payment thereof in and by any such renewal or extension. 

 

4.        Guarantor further waives all rights, by statute or otherwise, to require Lender to proceed in the first instance against the Borrower, and hereby expressly agrees that in any right of action which shall accrue to Lender by reason of the Indebtedness, Lender may, at its sole option, proceed: (a) against Guarantor together with Borrower; (b) against Guarantor together with Borrower; or (c) against the Guarantor only, without having first commenced any action against or having obtained any judgment against Borrower; it being specifically agreed that Lender is in no way required to exercise diligence to enforce its rights against the Borrower or against any other person, firm or corporation, as may be applicable, with respect to the Indebtedness. 

 

 

5.        To the extent permitted by law, Guarantor hereby waives all defenses legally available to Guarantor, Guarantor being bound to the payment of said indebtedness of the original maker of said Guaranteed Promissory Note. Guarantor covenants that, on the date of this Guaranty, Guarantor has no defense to any action that may be instituted on this Guaranty.

 

6.        The Lender may, at its sole option, take any new, additional or substituted security for the Indebtedness from time to time without in any way impairing the obligation of the Guarantor hereunder. Any impairment of such security, which Lender may from time to time hold as security for the Indebtedness, shall in no way operate to discharge the obligations of the Guarantor in whole or in part under this Guaranty. The Lender is hereby authorized at any time, in its sole discretion and without notice, to take, change, release or in any way deal with the security herein; but the Lender shall be under no obligation to collect or to protect any of such security or said Indebtedness, and its neglect or failure to collect or protect the same is hereby excused. 

 

7.        Any forbearance or waiver on the part of the Lender to take steps to enforce payment of the Indebtedness, whether from Borrower or Guarantor, shall in no way construed as a waiver or relinquishment of any rights held by Lender under  any of the Term Loan Agreement, Note or related Loan Documents, and the obligations of Guarantor and Borrower shall continue in full force and effect. 

 

8.         This Guaranty is for the use and benefit of the holder of the Indebtedness, who in the first instance will be the Lender. Lender may assign this Guaranty, and this Guaranty shall then also be for the use and benefit of any such subsequent successor or assignee of Lender.

 

9.         All reasonable costs and expenses, including attorney’s fees, incurred by the Lender to enforce this Guaranty shall be paid by the Guarantor.

 

10.       The liability of the Guarantor shall continue until payment is made of every obligation of the Borrower now or hereafter incurred in connection with said Indebtedness, and until payment is made of any loss or damage incurred by the Lender with respect to any matter covered by this Guaranty or any of the Term Loan Agreement, Note or related Loan Documents.

 

11.       Guarantor hereby consents and agrees  that the Lender may, without notice to or consent of Guarantor, on such terms as Lender may deem advisable, extend in whole or in part, by renewal or otherwise, the time of payment of the Indebtedness now or hereafter owing by the Borrower to the Lender or held by the Lender as security for any obligation herein described, or may do or refrain from doing any act whatever. Guarantor also consents and agrees that Lender may release, surrender, exchange, modify, impair or extend the periods of duration or the time for performance or payment of any collateral securing the obligations of Borrower to Lender, and may also accept partial payment on the Indebtedness, settle, release or compromise any claim of Lender against Borrower with respect to the Indebtedness or against any other person or
corporation whose obligation is held by Lender as collateral security for the Indebtedness. Guarantor hereby ratifies and affirms any such actions, and all such actions shall be binding on Guarantor, and Guarantor hereby waives all defenses, counterclaims or offsets which Guarantor may have. Any action or inaction of Lender taken pursuant to this Section 9 shall not alter or in any way discharge Guarantor’s obligations under this Guaranty.

 

12.       Guarantor also waives notice of failure of any person to pay to Lender any debt held by Lender as collateral security for the Indebtedness, and all defenses, offsets and counterclaims which Guarantor may at any time have to any claim of Lender against Borrower.

 

13.       Guarantor represents and warrants to Lender that at the time of the execution and delivery of this Guaranty nothing exists to impair the effectiveness or enforceability of this Guaranty.

 

14.       This Guaranty shall be binding upon the heirs, administrators, executors, legal representatives, successors, and assigns of Guarantor and shall inure to the benefit of Lender’s successors and assigns.

 

15.       The liability of Guarantor to Lender shall become fixed by the failure of Borrower to pay, as it matures or is accelerated, any of the Indebtedness. The liability of Guarantor under this Guaranty shall be primary and unconditional and shall be discharged only by full payment of the Indebtedness. 

 

16.       Guarantor consents to the jurisdiction of the district courts located in Hennepin County in the State of Minnesota and agrees that this Guaranty shall be construed and enforced in accordance with, and the right of the parties governed by, the laws of the State of Minnesota, without giving effect to its principles of conflicts of laws. 

 

17.       The holding of any provision of this Guaranty to be invalid or unenforceable by a court of competent jurisdiction shall not affect any other provision hereof and all other provisions hereof shall remain in full force and effect.

 

18.       This Guaranty may not be modified or amended unless in writing by the mutual agreement of Guarantor and Lender. 

 

19.       Capitalized terms used but not otherwise defined herein shall have the meaning ascribed to them under the Term Loan Agreement, Note or any related Loan Document(s).

 

Executed by the undersigned this ____ day of August, 2007.

 

 

	
            GUARANTOR:
 
	
             
 
	
            /s/ Randolph M. Pentel
 
	
            Randolph M. Pentel
 

 

 

Witnessed this 10th day of August, 2007.

 

/s/ Nancy J. Bauer

	
             
 	
            [Notary]

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