EXHIBIT 10.1
MASTER TERM LOAN AGREEMENT
This MASTER TERM LOAN
AGREEMENT is entered into as of
October 31, 2007, between CapSource Financial, Inc. a Colorado
corporation (“Borrower”), and Randolph M. Pentel, an
individual residing in Minnesota (“Lender”).
WHEREAS , Lender has
agreed to make available to Borrower a term loan upon and subject
to the terms and conditions set forth in this Agreement;
WHEREAS , Borrower and
Lender have conducted substantial negotiations of the Agreement in
the State of Minnesota; and
WHEREAS , Borrower has
delivered this Agreement and the Note (defined below) in the State
of Minnesota.
NOW, THEREFORE , in
consideration of the mutual agreements, provisions and covenants
contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and
intending to be legally bound hereby, the parties agree as
follows:
ARTICLE 1 - DEFINITIONS
The definitions appearing in this Agreement or any
supplement or addendum to this Agreement, shall be applicable to
both the singular and plural forms of the defined terms:
“AGREEMENT” means this Master Term Loan
Agreement as it may be amended or supplemented from time to
time.
“BANKRUPTCY CODE” means the Federal
Bankruptcy Reform Act of 1978 (11 U.S.C. ss.101, et Seq.), as
amended.
“BASIC INTEREST” means the accrued
interest due and payable on the outstanding Loan Amount as
calculated at the Designated Rate.
“BORROWING DATE” means the Business Day
on which the proceeds of a Loan are disbursed by Lender.
“BUSINESS DAY” means any day other than
a Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to close.
“COMMITMENT AMOUNT” means the obligation
of Lender to make a Loan to Borrower in an aggregate, original
principal amount equal to the LOAN AMOUNT .
“DEFAULT” means an event which with the
giving of notice, passage of time, or both would constitute an
Event of Default.
“DEFAULT RATE” is defined in SECTION
2.5.
“DESIGNATED RATE” means a fixed rate of
interest per annum between nine and one-half percent (91/2 %) and
twelve percent (12%).
“EVENT OF DEFAULT” is defined in ARTICLE
7.
“INSOLVENCY PROCEEDING” means (a) any
case, action or proceeding before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency,
liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or
other, similar arrangement in respect of its creditors generally or
any substantial portion of its creditors, undertaken under U.S.
Federal, state or foreign law, including the Bankruptcy
Code.
“LOAN(s)” means the extension of credit
by Lender under SECTION 2 of this Agreement.
“LOAN AMOUNT” means the original
principal amount of any Loan extended by the Lender up to Seven
Hundred Fifty Thousand Dollars ($750,000).
“LOAN DOCUMENTS” means, individually and
collectively, this Agreement, the Note and all other contracts,
instruments, addenda and documents executed in connection with this
Agreement or the extensions of credit which are the subject of this
Agreement.
“MATERIAL ADVERSE EFFECT” or
“MATERIAL ADVERSE CHANGE” means (a) a material
adverse change in, or a material adverse effect upon, the
operations, revenues, assets, business, properties, or condition
(financial or otherwise) of Borrower; (b) a material impairment of
the ability of Borrower to perform under any Loan Document or under
any material agreement of the Borrower; or (c) a material adverse
effect upon the legality, validity, binding effect or
enforceability against Borrower of any Loan Document.
“MATURITY DATE” means, one (1) year from
the Borrowing Date of any Loan and is the date on which payment of
all outstanding principal and accrued interest with respect to such
Loan is due.
“NOTE” means a promissory note
substantially in the form of EXHIBIT “A” hereto,
executed by Borrower evidencing an individual Loan under this
Agreement.
“OBLIGATIONS” means all debts,
liabilities, obligations, covenants and duties arising under any
Loan Document, owing by Borrower to Lender, whether direct or
indirect (including those acquired by assignment), absolute or
contingent, liquidated or unliquidated, due or to become due, now
existing or hereafter arising.
“TERMINAL PAYMENT” means, with respect
to a Loan, an amount payable on the Maturity Date of the Loan equal
to the Loan Amount and any accrued but unpaid Basic Interest under
the Loan.
ARTICLE 2 - THE COMMITMENT AND
LOANS
2.1 THE COMMITMENT. Subject to the terms and
conditions of this Agreement, Lender agrees to make one or more
term Loans together totaling an amount equal to the Loan Amount to
Borrower. The Commitment is not a revolving credit commitment, and
Borrower shall not have the right to repay and re-borrow hereunder.
Upon Borrower’s receipt of a Loan under this agreement, the
Borrower will issue to Lender a Note in the form attached as
EXHIBIT A in the
original principal amount equal to the amount of each
Loan.
2.2 PAYMENT OF THE NOTE(s): Each Note shall be
payable as follows: (a) Basic Interest shall be accrued from the
Borrowing Date and paid on the Maturity Date; and (b) the Terminal
Payment shall be paid on the Maturity Date.
2.3 INTEREST. Basic Interest on the outstanding Loan
Amount shall accrue daily at the Designated Rate from the Borrowing
Date through the Maturity Date.
2.4 INTEREST RATE CALCULATION. Basic Interest, along
with charges and fees under this Agreement and any Loan Document,
shall be calculated for actual days elapsed on the basis of a
365-day year. In no event shall Borrower be obligated to pay Lender
interest, charges or fees at a rate in excess of the highest rate
permitted by applicable law from time to time in effect.
2.5 DEFAULT INTEREST. Any unpaid payments of Basic
Interest or the Terminal Payment shall bear interest from their
respective maturities, whether scheduled or accelerated, at the
Designated Rate for such Loan PLUS five percent (5.00%) per annum
(the “Default Rate”), until paid in full, whether
before or after judgment (the “Default Interest”).
Borrower shall pay the Default Interest on the demand of
Lender.
2.6 LENDER’S RECORDS. Basic Interest, Default
Interest, Terminal Payment and all other sums owed under any Loan
Document shall be evidenced by entries in records customarily
maintained by Lender for such purpose. Each payment on and
any
other credits with respect to Basic Interest,
Default Interest or Terminal Payment and all other sums outstanding
under any Loan Document shall be evidenced by entries in such
records. Absent manifest error, Lender’s records shall be
conclusive evidence thereof; provided, however, that the failure of
Lender to maintain such records or any error therein shall not in
any manner affect the obligations of Borrower to repay the Loan or
any interest or fees called for herein.
2.7 PROMISE TO PAY; MANNER OF PAYMENT. Borrower
absolutely and unconditionally promises to pay to Lender principal,
interest and all other amounts payable hereunder, or under any
other Loan Document, without any right of rescission and without
any deduction whatsoever, including any deduction for any setoff,
counterclaim or recoupment, or any other event. All payments made
by Borrower shall be made on the date when due in U.S.
Dollars.
ARTICLE 3 - REPRESENTATIONS AND
WARRANTIES
Borrower represents and warrants that, as of the
Borrowing Date, except as set forth on a Schedule of Exceptions
(“Schedule of Exceptions”) to be amended from time to
time:
3.1 DUE ORGANIZATION. Borrower is a corporation duly
organized and validly existing in good standing under the laws of
Colorado, and is duly qualified to conduct business and is in good
standing in each other jurisdiction in which its business is
conducted or its properties are located, except where the failure
to be so qualified would not have a Material Adverse
Effect.
3.2 AUTHORIZATION, VALIDITY AND ENFORCEABILITY. The
execution, delivery and performance of all Loan Documents executed
by Borrower are within Borrower’s powers, have been duly
authorized, and are not in conflict with Borrower’s articles
of incorporation or by-laws, or the terms of any charter or other
organizational document of Borrower, as amended from time to time;
and all such Loan Documents constitute valid and binding
obligations of Borrower, enforceable in accordance with their terms
(except as may be limited by bankruptcy, insolvency and similar
laws affecting the enforcement of creditors’ rights in
general, and subject to general principles of equity).
3.3 COMPLIANCE WITH APPLICABLE LAWS. Borrower has
complied with all licensing, permit and fictitious name
requirements necessary to lawfully conduct the business in which it
is engaged, and to any sales, leases or the furnishing of services
by Borrower, including without limitation those requiring consumer
or other disclosures, the noncompliance with which would have a
Material Adverse Effect.
3.4 NO CONFLICT. The execution, delivery, and
performance by Borrower of all Loan Documents are not in conflict
with any law, rule, regulation, order or directive, or any
indenture, agreement, or undertaking to which Borrower is a party
or by which Borrower may be bound or affected.
3.5 NO LITIGATION, CLAIMS OR PROCEEDINGS. There is
no litigation, tax claim or proceeding pending, or, to the
knowledge of Borrower following due investigation, threatened
against Borrower or its property.
3.6 CORRECTNESS OF FINANCIAL STATEMENTS.
Borrower’s financial statements which have been delivered to
Lender fairly, fully and accurately reflect Borrower’s
financial condition as of December 31, 2006; and, since that date
there has been no Material Adverse Change.
3.7 NO EVENT OF DEFAULT. No Default or Event of
Default has occurred and is continuing.
3.8 FULL DISCLOSURE. None of the representations or
warranties made by Borrower in the Loan Documents as of the date
such representations and warranties are made or deemed made, and
none of the statements contained in any exhibit, report, statement
or certificate furnished by or on behalf of Borrower in connection
with the Loan Documents (including disclosure materials delivered
by or on behalf of Borrower to Lender prior to a Borrowing Date),
when taken together, contains any untrue statement of a material
fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the
time when made or delivered.
3.9 INSURANCE. Borrower has in full force and effect
such insurance policies as are customary in its
industry.
3.10 INVESTMENT COMPANY ACT. Borrower is not an
“investment company” registered or required to be
registered under the Investment Company Act of 1940, as amended, or
is controlled by such an “investment
company.”
3.11 SOLVENCY. Borrower is solvent and will continue
to be solvent after the creation of the obligations of Borrower to
Lender hereunder and the consummation of the other transactions
contemplated hereby.
ARTICLE 4 - AFFIRMATIVE COVENANTS
During the term of this Agreement and until its
performance of all obligations to Lender, Borrower will:
4.1 NOTICE TO LENDER. Promptly give written notice
to Lender of:
(A) Any
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