Document:

Exhibit 10.1 to Nature Vision, Inc. Form 8-K dated September 19, 2007

Exhibit 10.1 

 

DEMAND TERM NOTE

 

	
            $2,000,000
 	
            Minneapolis, Minnesota
 
	
             
 	
            September 19, 2007
 

 

FOR VALUE RECEIVED, Nature Vision, Inc., Minnesota corporation, located at 1480 Northern Pacific Road, Brainerd, MN  56401 (the “Borrower”) hereby promises to pay upon demand to the order of M&I Business Credit, LLC, a Minnesota limited liability company, its successors and assigns (the “Lender”), located at Suite 450, 651 Nicollet Mall, Minneapolis, Minnesota 55402, the principal sum of Two Million Dollars ($2,000,000), in lawful money of the United States and immediately available funds, together with interest on the unpaid balance accruing as of the date hereof at an annual rate equal at all times to three quarters percent (3/4%) per annum, above the rate of interest publicly announced by M&I Marshall & Ilsley Bank from time to time as its prime rate (or any similar successor rate), each change in the interest rate shall take effect simultaneously with
the corresponding change in such designated bank’s base rate or any similar successor rate.

 

If not sooner demanded, principal on this Note shall be due and payable in equal consecutive monthly installments of Sixteen Thousand Six Hundred Sixty-Seven Dollars ($16,667.00), which installments shall commence on November 1, 2007 and shall continue on the first (1st) day of each calendar month thereafter until March 1, 2008. Accrued interest shall be due and payable on the first (1st) day of each month. In any event all outstanding principal and accrued interest hereunder shall be due and payable in full upon demand but in no event later than April 1, 2008. Borrower further agrees to make all payments due hereunder via Automatic Clearing House (“ACH”) transfer, to Lender account.

 

In all cases interest on this Note shall be calculated on the basis of a 360 day year but charged for actual days principal is unpaid.

 

The outstanding principal balance of this Note may be prepaid at any time at the option of the Borrower, in whole or, in part, without premium or penalty. All payments and prepayments shall, at the option of the Lender, be applied first to any costs of collection, second to any late charges, third to accrued interest on this Note, and lastly to principal (and, in the case of any prepayments, to installments of principal in the inverse order of their maturity). 

 

If any installment of principal or interest on this Note, including the payment required on the Maturity Date, is not paid within ten (10) days of the due date thereof, the Borrower shall pay to the Lender a late charge equal to five percent (5%) of the amount of such installment. 

 

Notwithstanding anything to the contrary contained herein, if the rate of interest, late payment fee, prepayment penalties or any other charges or fees due hereunder are determined by a court of competent jurisdiction to be usurious, then said interest rate, fees and/or charges shall be reduced to the maximum amount permissible under applicable Minnesota law.

 

The payment of this Note has been guaranteed by Jeffrey P. Zernov (the “Guarantor”) pursuant to that certain Guaranty of even date herewith executed by the Guarantor in favor of the Lender (the “Guaranty”) and the Lender is entitled to all of the benefits provided for in the Guaranty.

 

The payment of this Note is secured under the terms of a Security Agreement (the “Security Agreement”) and the Revolving Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement (the “Mortgage”), both of even date herewith. 

 

The Borrower agrees and covenants to deliver to the Lender:

 

(1)   Within ninety (90) days after the end of each fiscal year, a statement of the Borrower’s financial condition as at the end of such fiscal year and a statement of earnings and retained earnings of the Borrower for such fiscal year, with comparative figures for the preceding fiscal year, prepared, if the Lender so requests, on a consolidating and consolidated basis to include any affiliate, certified without qualification by independent certified public accountants acceptable to Lender.

 

(2)       Within twenty (20) days after the end of each fiscal month, a statement of Borrower’s financial condition and an operating statement and statement of earnings and retained earnings of Borrower for such month, in each case with comparative figures for the same month in the preceding fiscal year, prepared on the same basis as the most recent annual statement provided pursuant to clause (1) above, certified by an officer of Borrower.

 

(3)       Upon filing thereof, any filing made by the Borrower with the Securities and Exchange Commission or any stock exchange or any other applicable regulatory authority.

 

(4)       Upon mailing thereof, any notices or materials sent to the Borrower’s stockholders.

 

(5)       From time to time, any other material, reports, records or information required by the Lender.

 

Upon the occurrence of an Event of Default or at any time thereafter, the outstanding principal balance hereof and accrued interest and all other amounts due hereon shall, at the option of the Lender, become immediately due and payable, without notice or demand.

 

Upon the occurrence of an Event of Default or anytime thereafter, the Lender shall have the right to set off any and all amounts due hereunder by the Borrower to the Lender against any indebtedness or obligation of the Lender to the Borrower.

 

The Borrower promises to pay to the Lender an origination fee of Ten Thousand Dollars ($10,000) and all expenses incurred by the Lender in connection with the preparation, negotiation, execution of this Note, including reasonable fees and disbursements of counsel contemporaneous with the execution and delivery of this Note.

 

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The Borrower promises to pay all costs of collection of this Note, including but not limited to attorneys’ fees, paid or incurred by the Lender on account of such collection, whether or not suit is filed with respect thereto and whether such cost or expense is paid or incurred, or to be paid or incurred, prior to or after the entry of judgment.

 

As used herein, the term “Event of Default” shall mean and include each or all of the following events:

 

(a)       the Borrower or Guarantor shall fail to pay, when due, any amounts required to be paid by him or it under this Note or any other Loan Documents (as hereinafter defined) or with respect to any other indebtedness of the Borrower or the Guarantor to the Lender, whether any such indebtedness is now existing or hereafter arises and whether direct or indirect, due or to become due, absolute or contingent, primary or secondary or joint or joint and several;

 

(b)       the Borrower or the Guarantor shall fail to observe or perform any of his or
its respective covenants, conditions or agreements to be observed or performed by him or it under the Guaranty, Security
Agreement, Mortgage or any other agreements, instruments or documents related thereto (collectively, the “Loan
Documents”) (other than defaults which are otherwise covered by the terms of Paragraphs (a) through (j) hereof or which can
be cured by a money payment) for a period of ten (10) days after written notice, specifying such default and requesting that it be
remedied (provided, however, that with respect to defaults which may be cured by money payment or which arise from the failure to
observe or perform a negative covenant which prohibits any said parties from taking certain actions no such ten (10) day notice
shall be required for an Event of Default to exist), has been given to such party by the Lender, unless the Lender shall agree in
writing to an extension of such time prior to its expiration for such longer period as may be reasonably necessary to remedy such
default provided that such party is proceeding with reasonable diligence to remedy the same;

 

(c)       the Borrower or the Guarantor shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future state or federal bankruptcy act or under any similar federal or state law, or shall be adjudicated a bankrupt or insolvent, or shall make a general assignment for the benefit of his or its creditors, or shall be unable to pay his or its debts generally as they become due; or if a petition or answer proposing the adjudication of the Borrower or the Guarantor as a bankrupt or his or its reorganization under any present or future state or federal bankruptcy act or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within sixty (60) days after the filing thereof; or if a receiver, trustee or liquidator of the Borrower or the Guarantor
or of all or substantially all of his or its assets or of the Mortgaged Property (as that term is defined in the Mortgage) shall be appointed in any proceeding brought against the Borrower or the Guarantor and shall not be discharged within sixty (60) days of such appointment; or if the Borrower or the Guarantor shall consent to or acquiesce 

 

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in such appointment; or if any property of the Borrower or the Guarantor shall be levied upon or attached in any proceeding;

 

(d)       final judgment(s) for the payment of money in excess of $10,000, individually or in the aggregate, shall be rendered against the Borrower or the Guarantor and shall remain undischarged for a period of thirty (30) days during which execution shall not be effectively stayed;

 

(e)       the Borrower or the Guarantor shall be or become insolvent (whether in the equity or bankruptcy sense) or the Borrower shall die;

 

(f)        any representation or warranty made by the Borrower or the Guarantor in the Loan Documents shall prove to be untrue or misleading in any material respect, or any statement, certificate or report furnished hereunder or under any of the foregoing documents by or on behalf of the Borrower or the Guarantor shall prove to be untrue or misleading in any material respect on the date when the facts set forth and recited therein are stated or certified;

 

(g)       any material adverse change in the financial condition of the Borrower or the Guarantor which, in the reasonable opinion of the Lender, increases its risk with respect to this Note or the Lender in good faith believes that the prospect of due and punctual payment of this Note is impaired;

 

(h)       the Borrower or the Guarantor shall fail to pay, withhold, collect or omit any tax or tax deficiency when assessed or due (other than any tax or tax deficiency which is being contested in good faith and by proper proceedings and for which it shall have set aside on its books adequate reserves therefor) or notice of any state or federal tax liens shall be filed or issued;

 

(i)        any property of the Borrower or the Guarantor shall be garnished, levied upon or attached in any proceeding and such garnishment or attachment shall remain undischarged for a period of thirty (30) days during which execution has not been effectively stayed; 

 

(j)        Any breach, default or event of default occurs under any note, loan agreement, indenture, lease, mortgage, contract for deed, security agreement or other contractual obligation binding upon the Borrower or Guarantor.

 

Demand, presentment, protest and notice of nonpayment and dishonor of this Note are hereby waived.

 

If more than one person or individual has executed this Note, their liability for the obligations arising hereunder shall be joint and several; and each agrees that it is not merely an accommodation party with respect to this Note and hereby waives any and all defenses based upon accommodation or suretyship status.

 

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This Note shall be governed by and construed in accordance with the laws of the State of Minnesota.

 

The Borrower hereby irrevocably submits to the jurisdiction of any Minnesota state court or federal court over any action or proceeding arising out of or relating to this Note, and any instrument, agreement or document related thereto, and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Minnesota state or federal court. The Borrower hereby irrevocably waives, to the fullest extent they may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. The Borrower agrees that judgment final by appeal, or expiration of time to appeal without an appeal being taken, in any such action or proceeding shall be conclusive and may be enforced in any other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Paragraph shall affect the
right of the Lender to serve legal process in any other manner permitted by law or affect the right of the Lender to bring any action or proceeding against the Borrower or its property in the courts of any other jurisdiction to the extent permitted by law.

 

Signature page follows.

 

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The Borrower hereby waives any right to a trial by jury in any action or proceeding arising out of this  Note, the obligations or any other agreements or transactions between Borrower and Lender. 

 

	
             
 	
            BORROWER:
 
	
             
 	
             
 
	
             
 	
            NATURE VISION, INC.
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            By   
 	
            /s/ Jeffrey P. Zernov
 
	
             
 	
             
 	
            Jeffrey P. Zernov, President
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            By 
 	
            /s/ Michael R. Day
 
	
             
 	
             
 	
            Michael R. Day, Chief Financial Officer
 

 

 

	
            STATE OF MINNESOTA
 	
            )
 
	
               
 	
            ) ss.
 
	
            COUNTY OF CROW WING
 	
            )
 

 

 

The foregoing instrument was executed and acknowledged before me this 19th day of September, 2007 by Jeffrey P. Zernov and Michael R. Day, the President and Chief Financial Officer, respectively of Nature Vision, Inc., a Minnesota corporation, on behalf of said corporation.

 

	
             
 	
             
 
	
             
 	
            /s/ Sindy M. Shanks
 
	
             
 	
            Notary Public
 

 

 

6Exhibit 10.2 to Nature Vision, Inc. Form 8-K dated September 19, 2007

Exhibit 10.2 

 

GUARANTY AGREEMENT

 

AGREEMENT made this 19th day of September, 2007 by the undersigned for the benefit of M&I Business Credit, LLC, a Minnesota limited liability company, (herein, with its participants, successors and assigns, called “Lender”).

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Lender from time to time to make one or more loans or extend other financial accommodations at the discretion of the Lender to Nature Vision, Inc., a Minnesota corporation, (herein called “Borrower”), the undersigned hereby guarantee(s) and agree(s) as follows:

 

The undersigned hereby absolutely and unconditionally guarantee(s) to Lender the full and prompt payment when due (whether on demand or at a stated maturity or earlier by reason of acceleration or otherwise) of any and all present and future debts, liabilities and obligations owed to Lender by Borrower under the Demand Term Note of even date herewith and related documentation; and the undersigned represent(s), warrant(s) and agree(s) that:

 

1.     The debts, liabilities and obligations guaranteed hereby (collectively referred to herein as the “Indebtedness”) shall include, but shall not be limited to, debts, liabilities and obligations of the Borrower arising out of loans, credit transactions and financial accommodations in connection with the Demand Term Note of even date herewith or arising out of the Security Agreement or Revolving Mortgage, Assignment of Rents, Security Agreement and Fixture Financing Statement of even date herewith and related documentation, in each case whether now existing or hereafter arising, whether absolute or contingent, direct or indirect, primary or secondary, joint, several or joint and several, secured or unsecured, due or not due, liquidated or unliquidated, arising by agreement or imposed by law or otherwise.

 

2.         No act or thing need occur to establish the liability of the undersigned hereunder, and no act or thing, except full payment and discharge of all Indebtedness, shall in any way exonerate the undersigned or modify, reduce, limit or release the liability of the undersigned hereunder. This is an absolute, unconditional and continuing guaranty of payment of the Indebtedness and shall continue to be in force and be binding upon the undersigned, whether or not all Indebtedness is paid in full, until this Guaranty is revoked prospectively as to future transactions, by written notice actually received by Lender, and such revocation shall not be effective as to Indebtedness existing or committed for at the time of actual receipt of such notice by Lender, or as to any renewals, extensions and refinancings thereof. Any adjudication of
bankruptcy or death or disability or incapacity of the undersigned shall not revoke this Guaranty, except upon actual receipt of written notice thereof by Lender and then only prospectively, as to future transactions, as herein set forth.

 

3.         If the undersigned shall die, shall be or become insolvent or shall initiate or have initiated against the undersigned any act, process or proceeding under the United States Bankruptcy Code or any other bankruptcy, insolvency or reorganization law or otherwise for the modification or adjustment of the rights of creditors, then the undersigned will forthwith pay to Lender, the full 

 

amount of all Indebtedness then outstanding, whether or not any Indebtedness is then due and payable.

 

4.         Notwithstanding the aggregate amount of Indebtedness which may from time to time be outstanding, the undersigned shall be liable for all Indebtedness, without any limitation as to amount, plus accrued interest thereon and all attorneys’ fees, collection costs and enforcement expenses referable thereto. Indebtedness may be created and continued in any amount, whether or not in excess of such principal amount, without affecting or impairing the liability of the undersigned hereunder, and Lender may pay (or allow for the payment of) the excess out of any sums received by or available to Lender on account of the Indebtedness from Borrower or any other person (except the undersigned), from their properties, out of any collateral security or from any other source, and such payment (or allowance) shall not reduce, affect or impair the
liability of the undersigned hereunder. If the liability of the undersigned is limited to a stated amount pursuant to this paragraph, any payment made by the undersigned under this Guaranty shall be effective to reduce or discharge such liability only if accompanied by a written transmittal document, received by Lender, advising Lender that such payment is made under this Guaranty for such purpose.  In no event shall Lender be obligated to return, account for, or incur a liability as a result of, any monies, collateral or other assets of the undersigned received by Lender under this Guaranty.

 

5.         The undersigned will not exercise or enforce any right of contribution, reimbursement, recourse or subrogation available to the undersigned as to any Indebtedness, or against any person liable therefor, or as to any collateral security therefor, unless and until all Indebtedness shall have been fully paid and discharged. 

 

6.         If any payment received and applied by Lender to Indebtedness is thereafter set aside, recovered or required to be returned for any reason (including, without limitation, the bankruptcy, insolvency or reorganization of Borrower or such other person), the Indebtedness to which such payment was applied shall, for the purposes of this Guaranty, be deemed to have continued in existence, notwithstanding such application, and this Guaranty shall be enforceable as to such Indebtedness as fully as if such application had not been made.

 

7.         Lender shall not be obligated by reason of its acceptance of this Guaranty to engage in any transactions with or for Borrower. Whether or not any existing relationship between the undersigned and Borrower has been changed or ended and whether or not this Guaranty has been revoked in accordance with Paragraph 2, Lender may enter into transactions resulting in the creation or continuance of Indebtedness and may otherwise agree, consent to, or suffer the creation or continuance of any Indebtedness, without any consent or approval by the undersigned and without any prior or subsequent notice to the undersigned. The liability of the undersigned shall not be affected or impaired by any of the following acts or things (which Lender is expressly authorized to do, omit or suffer from time to time, both before and after revocation of this
Guaranty, without consent or approval by or notice to the undersigned):  (i) any acceptance of collateral security, guarantors, accommodation parties or sureties for any or all Indebtedness; (ii) one or more extensions or renewals of Indebtedness (whether or not for longer than the original period) or any modification of the interest rates, maturities or other contractual terms applicable to any Indebtedness; (iii) any waiver or indulgence granted to Borrower, any delay or lack of diligence in the enforcement of 

 

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Indebtedness, or any failure to institute proceedings, file a claim, give any required notices or otherwise protect any Indebtedness; (iv) any full or partial release of, compromise or settlement with, or agreement not to sue Borrower or any other guarantor or other person liable in respect of any Indebtedness; (v) any release, surrender, cancellation or other discharge of any evidence of Indebtedness or the acceptance of any instrument in renewal or substitution therefor; (vi) any failure to obtain collateral security (including rights of setoff) for Indebtedness, or to see to the proper or sufficient creation and perfection thereof, or to establish the priority thereof, or to preserve, protect, insure, care for, exercise or enforce any collateral security; or any modification, alteration, substitution, exchange, surrender, cancellation, termination, release
or other change, impairment, limitation, loss or discharge of any collateral security; (vii) any collection, sale, lease or other disposition of, or any other foreclosure or enforcement of or realization on, any collateral security; (viii) any assignment, pledge or other transfer of any Indebtedness or any evidence thereof; (ix) any manner, order or method of application of any payments or credits upon Indebtedness. The undersigned waive(s) any and all defenses and discharges available to a surety, guarantor, or accommodation co-obligor, dependent on its character as such.

 

8.         The undersigned waive(s) any and all defenses, claims, setoffs, and discharges of Borrower, or any other obligor, pertaining to Indebtedness, except the defense of discharge by payment in full. Without limiting the generality of the foregoing, the undersigned will not assert against Lender any defense of waiver, release, discharge in bankruptcy, statute of limitations, res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity, minority, usury, illegality or unenforceability which may be available to Borrower or any other person liable in respect of any Indebtedness, or any setoff available against Lender to Borrower or any such other person, whether or not on account of a related transaction, and the undersigned expressly agree(s) that the undersigned shall be and remain liable for any deficiency remaining after
foreclosure of any mortgage or security interest securing Indebtedness, whether or not the liability of Borrower or any other obligor for such deficiency is discharged pursuant to statute or judicial decision. The liability of the undersigned shall not be affected or impaired by any voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of, or other similar event or proceeding affecting Borrower or any of its assets. The undersigned will not assert against Lender any claim, defense or setoff available to the undersigned against Borrower.

 

9.         The undersigned waive(s) presentment, demand for payment, notice of dishonor or nonpayment, and protest of any instrument evidencing Indebtedness. Lender shall not be required first to resort for payment of the Indebtedness to Borrower or other persons, or their properties, or first to enforce, realize upon or exhaust any collateral security for Indebtedness, before enforcing this Guaranty.

 

10.       The undersigned will pay or reimburse Lender for all costs and expenses (including attorneys’ fees and legal expenses) incurred by Lender in connection with the collection of any Indebtedness or the enforcement of this Guaranty.

 

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11.       This Guaranty shall be enforceable against each person signing this Guaranty, even if only one person signs and regardless of any failure of other persons to sign this Guaranty or to otherwise guaranty any of the Borrower’s debts, liabilities or obligations to Lender. If there be more than one signer, all agreements and promises herein shall be construed to be, and are hereby declared to be, joint and several in each and every particular and shall be fully binding upon and enforceable against either, any or all the undersigned. This Guaranty shall be binding upon the undersigned, and the heirs, successors and assigns of the undersigned and shall inure to the benefit of Lender and its respective participants, successors and assigns. Except to the extent otherwise required by law, this Guaranty and the transaction evidenced hereby shall be
governed by the substantive laws of the State of Minnesota. If any provision or application of this Guaranty is held unlawful or unenforceable in any respect, such illegality or unenforceability shall not affect other provisions or applications which can be given effect, and this Guaranty shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations and warranties contained in this Guaranty or in any other agreement between the undersigned and Lender shall survive the execution, delivery and performance of this Guaranty and the creation and payment of the Indebtedness. This Guaranty may not be waived, modified, invalidated, terminated or released or otherwise changed except by a writing signed by Lender. This Guaranty shall be effective whether or not accepted in writing by Lender and the undersigned waive(s) notice of the acceptance of this Guaranty by Lender.

 

12.       THE UNDERSIGNED HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITUATED IN HENNEPIN COUNTY, MINNESOTA AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, WITH REGARD TO ANY ACTIONS, CLAIMS, DISPUTES OR PROCEEDINGS RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY TRANSACTIONS ARISING THEREFROM, OR ENFORCEMENT AND/OR INTERPRETATION OF ANY OF THE FOREGOING. Nothing herein shall affect Lender’s right to serve process in any manner permitted by law, or limit Lender’s right to bring proceedings against the undersigned in the competent courts of any other jurisdiction or jurisdictions.

 

13.       THE UNDERSIGNED HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT, THE INDEBTEDNESS OR ANY OTHER AGREEMENTS OR TRANSACTIONS BETWEEN THE UNDERSIGNED AND LENDER.

 

14.       In the event Lender enters into a new revolving credit facility with Borrower in an amount exceeding the principal amount of the Demand Term Note, Lender will release the undersigned from any obligations under this Agreement.

 

Signature page follows.

 

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            IN WITNESS WHEREOF, this Guaranty has been duly executed and delivered by the undersigned on the day and year first above written.

 

	
             
 	
             
 	
             
 
	
             
 	
            /s/ Jeffrey P. Zernov
 
	
             
 	
            Jeffrey P. Zernov
 
	
            WITNESS:
 	
             
 
	
             
 	
            Address:   
 	
            22620 Obrien
 
	
             
 	
               
 	
            Brainerd, MN 56401
 

	
             
 	
             
 	
             
 
	
            /s/ Sindy M. Shanks
 
	
            Name:   
 	
            Sindy M. Shanks
 
	
            Address:  
 	
            14275 Golf Course Dr., Ste. 200
 
	
             
 	
            Baxter, MN 56925
 

 

 

	
            STATE OF MINNESOTA
 	
            )
 
	
               
 	
            ) ss.
 
	
            COUNTY OF CROW WING
 	
            )
 

 

Subscribed and Sworn to before me this 19th day of September, 2007, by Jeffrey P. Zernov.

	
             
 	
             
 
	
             
 	
            /s/ Sindy M. Shanks
 
	
             
 	
            Notary Public
 

 

 

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