FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996 or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from _______ to _______
Commission File Number: 33-58934
LUNDGREN BROS. CONSTRUCTION, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-0970679
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
935 East Wayzata Boulevard
Wayzata, Minnesota 55391
(Address of principal executive offices) (Zip Code)
(612)473-1231
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes __X__ No _____
On August 12, 1996, there were 594 voting shares and 10,031 nonvoting shares of
the registrant's no par value common stock outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
LUNDGREN BROS. CONSTRUCTION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
(UNAUDITED)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,071 $ 2,984
Restricted cash 1,677 816
Receivables 1,811 1,078
Deposits and prepaid expenses 3,235 2,861
Inventories 38,798 34,166
Land option and earnest money deposits 758 921
Property and equipment, net 1,528 1,682
Other assets 3,429 3,255
------- -------
Total assets $52,307 $47,763
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Obligations under bank lines of credit 5,446 3,650
Debt obligations 29,182 25,260
Obligations under capital leases 502 505
Accounts payable 5,425 7,303
Cost to complete sold homes 1,214 1,245
Customer deposits 3,053 1,846
Accrued expenses 932 1,484
Income taxes payable 58 85
------- -------
Total liabilities 45,812 41,378
Commitments and contingencies -- --
Stockholders' equity:
Common stock, no par value; authorized, 12,000
shares; 594 shares voting and 10,031
shares nonvoting issued and outstanding 99 99
Retained earnings 6,396 6,286
------- -------
6,495 6,385
------- -------
Total liabilities and stockholders' equity $52,307 $47,763
======= =======
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
<CAPTION>
LUNDGREN BROS. CONSTRUCTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 19,102 $ 15,995 $ 29,932 $ 27,209
Cost of revenues 16,468 13,820 25,565 23,367
-------- -------- -------- --------
Gross profit 2,634 2,175 4,367 3,842
Operating expenses:
Selling 681 631 1,310 1,372
General and administrative 1,031 1,125 2,012 2,032
-------- -------- -------- --------
922 419 1,045 438
Other income (expense):
Interest expense (538) (568) (993) (894)
Other, net (3) 10 131 30
-------- -------- -------- --------
Income (loss) from operations before
income taxes 381 (139) 183 (426)
Income tax provision (benefit) 152 (56) 73 (172)
-------- -------- -------- --------
Income (loss) from operations before cumulative
effect of change in accounting method 229 (83) 110 (254)
Cumulative effect on prior years of change in accounting
method, net of income taxes of $527 -- -- -- 763
-------- -------- -------- --------
Net income (loss) 229 (83) 110 509
Retained earnings, beginning of period 6,167 5,693 6,286 5,101
-------- -------- -------- --------
Retained earnings, end of period $ 6,396 $ 5,610 $ 6,396 $ 5,610
======== ======== ======== ========
Net income (loss) per share:
Income (loss) from operations $ 22 $ (8) $ 10 $ (24)
Cumulative effect of change in accounting method -- -- -- 72
-------- -------- -------- --------
$ 22 $ (8) $ 10 $ 48
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<TABLE>
<CAPTION>
LUNDGREN BROS. CONSTRUCTION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 110 $ 509
Adjustments to reconcile net income to
net cash used in operating activities:
Cumulative effect of change in accounting method -- (763)
Depreciation and amortization 224 263
Deferred income taxes -- 75
Gain on disposal of property and equipment -- (34)
Gain on sale of investment (123) --
Changes in operating assets and liabilities (6,480) (7,520)
-------- --------
Net cash used in operating activities (6,269) (7,470)
Cash flows from investing activities:
Expenditures for property and equipment (34) (122)
Proceeds from disposal of property and equipment -- 73
Proceeds from sale of investment 159 --
Increase in cash surrender value of
life insurance (260) (226)
Other 14 (67)
-------- --------
Net cash used in investing activities (121) (342)
Cash flows from financing activities:
Proceeds from bank lines of credit 18,115 10,022
Payment of principal on bank lines of credit (16,319) (5,710)
Proceeds from debt obligations 22,135 19,356
Payment of principal on debt obligations (19,451) (16,644)
Payment of principal on capital lease obligations (3) (14)
-------- --------
Net cash provided by financing activities 4,477 7,010
-------- --------
Decrease in cash and cash equivalents (1,913) (802)
Cash and cash equivalents, at the beginning of the period 2,984 3,318
-------- --------
Cash and cash equivalents, at the end of the period $ 1,071 $ 2,516
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
LUNDGREN BROS. CONSTRUCTION, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
NOTE 1. GENERAL
SIGNIFICANT ACCOUNTING POLICIES
The audited 1995 annual report of Lundgren Bros. Construction, Inc. and
Subsidiaries (the Company), filed in its 1995 Form 10-K, contains a summary of
significant accounting policies in the Notes to the Consolidated Financial
Statements. The same accounting policies are followed in the preparation of the
interim financial statements.
PER SHARE AMOUNTS
Per share amounts are computed by dividing by the weighted average number of
shares of voting and nonvoting common stock outstanding during each period. The
number of outstanding shares of common stock for the three and six months ended
June 30, 1996 and 1995 was 10,625.
BASIS OF PRESENTATION AND INTERIM PERIODS
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting only of normal recurring
accruals) considered necessary for fair presentation have been included. The
interim results are not necessarily indicative of the results for a fiscal year
as a whole.
NOTE 2. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
(UNAUDITED)
<S> <C> <C>
RECEIVABLES
Trade $ 1,091 $ 768
Escrows 708 319
Contracts and notes 23 26
Employees and officers 20 17
Other 24 3
------- -------
1,866 1,133
Less allowance for doubtful accounts 55 55
------- -------
$ 1,811 $ 1,078
======= =======
INVENTORIES
Homes under construction $15,870 $10,822
Model homes 2,516 3,539
Lots held for sale 10,839 14,464
Land under development 4,322 --
Land held for future development 5,251 5,341
------- -------
$38,798 $34,166
======= =======
ACCRUED EXPENSES
Payroll, bonuses and payroll taxes $ 299 $ 926
Other, principally interest 633 558
------- -------
$ 932 $ 1,484
======= =======
DEBT OBLIGATIONS
Construction loans on single family homes $12,606 $ 9,317
Promissory notes 4,791 3,860
Development loans 6,500 6,415
Subordinate debenture series 2,951 2,962
Street, sewer and water assessments on land
under development and lots held for sale 1,150 1,598
Installment loans 840 736
Unsecured demand notes payable, stockholders 329 357
Noncompete obligation, officer 15 15
------- -------
$29,182 $25,260
======= =======
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
The Company acquired developed lots and land for future development under
promissory notes with the sellers aggregating $1,238 and $928 during the
six months ended June 30, 1996 and 1995, respectively.
</TABLE>
NOTE 3. SEGMENT REPORTING
The Company operates principally in two business segments as follows:
* The new homes division, engaged in the interrelated activities of land
acquisition and development and the design, construction, painting,
staining and sale of detached single family homes.
* The remodeling division, engaged in the activities of designing and
constructing residential remodeling projects. These projects include
complete house renovations, kitchen remodelings, bathroom remodelings,
second story additions, finished basements, enclosed porches and patios
and other miscellaneous projects.
The following is a summary of the financial information relating to the
Company's two business segments. A substantial amount of cost allocations are
necessary to determine the operating income (loss) by segment. For this reason,
and because the Company is an integrated enterprise, management does not
represent that these segments, if operated as independent businesses, would
result in the operating income (loss) amounts shown. Intersegment sales are not
significant.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
New homes $ 18,253 $ 14,854 $ 28,177 $ 25,094
Remodeling 849 1,141 1,755 2,115
Operating income (loss):
New homes 1,047 422 1,280 577
Remodeling (125) (3) (235) (139)
</TABLE>
NOTE 4. LAND OPTION AND EARNEST MONEY DEPOSITS
The Company has entered into option and purchase agreements to acquire lots in
residential housing developments and land for future development. Upon exercise
of an option, option payments are generally applied to the purchase price of
land acquired in accordance with the terms of the agreement. Earnest money
deposits are credited against future purchases. The Company had land purchase
commitments totaling approximately $5,054 and $3,069 at June 30, 1996 and
December 31, 1995, respectively, related to the earnest money deposits.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company is organized in two business segments: new homes and remodeling. The
new homes segment includes land acquisition and development, home building and
home sales, and painting and staining services. Remodeling consists of home
remodeling design and construction services.
New Homes
Revenues increased $3.4 million or 22.9% and $3.1 million or 12.3% for the three
and six months ended June 30, 1996, respectively, compared to the same periods
in 1995. The Company closed on sales of 53 and 80 homes in the three and six
months ended June 30, 1996, respectively, compared to 47 and 77 closings in the
same periods in 1995. The average selling price of homes closed increased by
8.5% and 8.0% for the three and six months ended June 30, 1996, respectively,
from the average selling price of homes closed for the same periods in 1995. The
Company believes that the increase in homes closed in the three months ended
June 30, 1996 was due to the timing of the removal of customer purchase
contingencies and subsequent house starts in 1996 compared to 1995. The increase
in average selling price is due to general price increases as a result of
inflation and changes in the mix of homes closed in 1996 compared to 1995.
Gross profit margin for the new homes segment increased to 13.7% and 14.5% for
the three and six months ended June 30, 1996, respectively, compared to 13.2%
and 13.9% for the same periods in 1995. The Company believes that this increase
in gross profit margin is due to changes in the location of the home
developments, improvements to the Company's cost controls and an increase in the
mix of homes sold on land developed by the Company versus lots purchased from
other developers.
Operating expenses for the new homes segment (which include selling, general and
administrative expenses) decreased by $90,000 and $95,000 in the three and six
months ended June 30, 1996, respectively, compared to the same periods in 1995.
As a percentage of total new home revenues, these expenses decreased to 8.0% and
10.0% for the three and six months ended June 30, 1996, respectively, compared
to 10.4% and 11.6% for the same periods in 1995. The decrease is mainly due to
the write-off, in 1995, of costs incurred on abandoned land acquisition
projects. These reduced costs were partially offset with an increase in
personnel in 1996.
Remodeling
Operating loss for the remodeling segment increased to $125,000 and $235,000 in
the three and six months ended June 30, 1996, respectively, from $3,000 and
$139,000 for the same periods in 1995. This increase is due to lower sales
volume in 1996.
Other income (expense), net
Interest expense for the three months ended June 30, 1996 decreased $30,000 or
5.3% from the same period in 1995. This decrease is due to a reduction in the
complete homes inventories in the three months ended June 30, 1996, compared to
the same period in 1995. For the six months ended June 30, 1996, interest
expense increased $99,000 or 11.1% from the same period in 1995. This increase
is mainly due to increased borrowings for additional inventories in 1996. Other
income (expense), net increased $101,000 in the six months ended June 30, 1996
from the same period in 1995. The increase is mainly due to a gain on the sale
of an investment in a land development partnership.
Net income (loss)
Net income for the three months ended June 30, 1996 was $229,000, an increase of
$312,000 from $83,000 of net loss for the same period in 1995. This increase is
mainly due to an increase in homes closed in the three months ended June 30,
1996, compared to the same period in 1995. Net income for the six months ended
June 30, 1996 was $110,000, a decrease of $399,000 from $509,000 of net income
for the same period in 1995. This decrease is mainly due to the 1995 change in
accounting for land acquisition and development costs of $763,000, which is
partially offset by a gain on the sale of an investment in a land development
partnership and improved operating income from new home sales.
LIQUIDITY AND CAPITAL RESOURCES
Cash flows used in operating activities were $6.3 million for the six months
ended June 30, 1996, a decrease of approximately $1.2 million from the $7.5
million used for the same period in 1995. During the six months ended June 30,
1996, cash was used for the seasonal and general increase in inventories of $3.4
million, the related increases in restricted cash of $861,000 and in receivables
of $738,000, reduction of accounts payable of $1.9 million and the decrease in
accrued expenses, principally payment of accrued bonuses of $552,000. These uses
of cash were partially offset in 1996 by an increase in customer deposits of
$1.2 million, with the balance of cash used in operations financed through
increased borrowings on the company's lines of credit and other debt obligations
of $4.5 million and the reduction of cash and cash equivalents of $1.9 million.
Cash flows used in investing activities were $121,000 for the six months ended
June 30, 1996, a decrease of approximately $221,000 from $342,000 cash used for
the same period in 1995. The decrease was primarily due to proceeds from the
sale of an investment in a land development partnership and a reduction of
expenditures for property and equipment, which were partially offset by an
increase in the cash surrender value of life insurance.
Cash flows provided by financing activities were $4.5 million for the six months
ended June 30, 1996, a decrease of approximately $2.5 million from the $7.0
million for the same period in 1995. The decrease was primarily due to a
reduction in net borrowings on the Company's bank lines of credit as a result of
a decrease in cash used in operating activities in 1996 relative to 1995 and a
reduction in cash and cash equivalents as of June 30, 1996 compared to June 30,
1995.
Financing
The Company believes that internally generated funds, amounts available under
its three lines of credit and borrowing arrangements entered into in the
ordinary course of business will continue to be the primary sources of capital
for liquidity. However, the Company may seek additional long-term financing.
The Company's financing needs depend primarily upon sales volume, asset
turnover, land acquisition and inventory balances. The Company presently
finances substantially all of its land acquisition and development and home
construction activities through borrowing arrangements for individual projects
or homes under construction. The borrowing arrangements evolve with each stage
of the process from land acquisition, to development, to construction of a home
and to the sale of the home and lot.
The Company also utilizes secured lines of credit to finance its operations. The
Company has approved aggregate credit of $9.1 million subject to a borrowing
base. At June 30, 1996, the aggregate maximum credit available under the lines
of credit was $8.9 million, of which $5.4 million was utilized and $3.5 million
was available.
The Company's outstanding indebtedness as of June 30, 1996 included $20.4
million due within one year. The Company has historically operated with a
substantial amount of its outstanding indebtedness due within one year and has
historically paid such debt out of earnings or through refinancing, where
applicable. The Company believes that the amounts available under its lines of
credit, borrowing arrangements, and amounts generated from operations will be
sufficient to satisfy its debt obligations due in the next year. However, there
can be no assurance that the Company will be able to continue to obtain adequate
short-term financing, including bank financing, in the future. The Company may
explore additional financing alternatives in the future.
PART II. OTHER INFORMATION
Items 1 through 5.
Not applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are hereby incorporated by reference or filed
herewith as indicated.
*3.1 Articles of Incorporation of Lundgren in effect on the
date hereof.
*3.2 Bylaws of Lundgren on the date hereof.
*4.1 Form of Debenture (included as Sections 202(A) and (B) of
Indenture filed as Exhibit 4.2 hereto to this Annual
Report on Form 10-K).
*4.2 Form of Indenture by and between Lundgren and National
City Bank Minnesota, National Association, as Trustee,
including a Form of Debenture.
*10.1 Lease by and between Lundgren, as lessor, Glenbrook Office
Building Partnership, and Peter Pflaum and Patrick C.
Wells, general partners, dated September 28, 1978.
*10.2 Amended and Restated Stock Purchase Agreement, dated
February 1, 1993, by and among Lundgren, Peter Pflaum,
Patrick Wells, Edmund M. Lundgren, Gerald T. Lundgren and
Allan D. Lundgren.
***10.3 Revolving Credit Line Agreement between the Company and
Builders Development & Finance, Inc., dated March 18,
1994.
*****10.4 Amended and Restated Mortgage Note, dated January 25,
1995, of the Company payable to Builders Development &
Finance, Inc.
***10.5 Combination Mortgage, Security Agreement and Fixture
Financing Statement between the Company and Builders
Development & Finance, Inc., dated March 18, 1994.
*10.6 Guaranty by Peter Pflaum, Patrick C. Wells, Allan D.
Lundgren, Edmund M. Lundgren and Gerald T. Lundgren for
the benefit of Builders Development & Finance, Inc., dated
July 27, 1990.
*10.7 Demand Discretionary Revolving Credit Agreement between
the Company and Norwest Bank Minnesota, National
Association, dated November 30, 1990.
*10.8 First Amended and Restated Revolving Note, dated May 1,
1992, of the Company payable to Norwest Bank Minnesota,
National Association.
*10.9 Assignment of Life Insurance Policy as Collateral by the
Company in favor of Norwest Bank Minnesota, National
Association, dated November 30, 1990.
*10.10 Assignment of Life Insurance Policy as Collateral by the
Company in favor of Norwest Bank Minnesota, National
Association, dated May 1, 1992.
*10.11 Guaranty by Peter Pflaum, Patrick C. Wells, Allan D.
Lundgren, Edmund M. Lundgren and Gerald T. Lundgren for
the benefit of Norwest Bank Minnesota, National
Association, dated November 5, 1990 and all extensions
thereof.
*****10.12 Commercial Lease, dated June 1, 1995, by and between
Koecheler & Olson Leasing and Lundgren Bros. Plumbing.
*****10.13 Lease Agreement, dated April 10, 1995, by and between B.M.
Acquisitions Corporation (Brush Masters, Inc.) and John J.
Day.
*10.14 Loan Agreement, dated as of May 8, 1992, by and between
the Company and Builders Development & Finance, Inc.
*10.15 First Mortgage Note, dated May 8, 1992, of the Company
payable to Builders Development & Finance, Inc.
*10.16 Second Mortgage Note, dated May 8, 1992, of the Company
payable to Builders Development & Finance, Inc.
*10.17 First Mortgage, dated May 8, 1992, by the Company in favor
of Builders Development & Finance, Inc.
*10.18 Second Mortgage, dated May 8, 1992, by the Company in
favor of Builders Development & Finance, Inc.
*10.19 Guaranty, dated as of May 8, 1992, by Peter Pflaum, Edmund
M. Lundgren, Gerald T. Lundgren, Allan D. Lundgren and
Patrick C. Wells for the benefit of Builders Development &
Finance, Inc.
*10.20 Construction Loan Agreement, dated as of July 22, 1992, by
and between the Company and Scherer Bros. Financial
Services Co.
*10.21 Mortgage and Security Agreement, dated July 22, 1992,
between the Company and Scherer Bros. Financial Services
Co.
*10.22 Promissory Note, dated July 22, 1992, of the Company
payable to Scherer Bros. Financial Services Co.
*10.23 Guaranty, dated as of July 22, 1992, by Allan Lundgren for
the benefit of Scherer Bros. Financial Services Co.
*10.24 Guaranty, dated as of July 22, 1992, by Patrick Wells for
the benefit of Scherer Bros. Financial Services Co.
*10.25 Guaranty, dated as of July 22, 1992, by Peter Pflaum for
the benefit of Scherer Bros. Financial Services Co.
*10.26 Guaranty, dated as of July 22, 1992, by Edmund Lundgren
for the benefit of Scherer Bros. Financial Services Co.
*10.27 Guaranty, dated as of July 22, 1992, by Gerald Lundgren
for the benefit of Scherer Bros. Financial Services Co.
*10.28 Development Loan Agreement, dated May 15, 1992, by and
between the Company and Construction Mortgage Investors
Co.
*10.29 First Mortgage Note, dated May 15, 1992, of the Company
payable to Construction Mortgage Investors Co.
*10.30 First Mortgage, dated May 15, 1992, by the Company in
favor of Construction Mortgage Investors Co.
*10.31 Guaranty, dated May 15, 1992, by Peter Pflaum, Patrick C.
Wells, Allan D. Lundgren, Edmund M. Lundgren and Gerald T.
Lundgren for the benefit of Construction Mortgage
Investors Co.
*10.32 Contribution Agreement, dated as of February 17, 1993, by
and among the Company, Peter Pflaum, Patrick C. Wells,
Allan D. Lundgren, Edmund M. Lundgren and Gerald T.
Lundgren.
*****10.33 Shopping Center Lease, dated February 9, 1994, by and
between Oakdale Mall Associates and Lundgren Bros.
Construction, Inc. d/b/a Lundgren Bros. Remodeling.
*10.34 Form of Option to Purchase Land.
*10.35 Form of Contingent Purchase Agreement.
*****10.36 Amendment No. 1 to Amended and Restated Stock Purchase
Agreement, dated April 1, 1993.
**10.37 Amended and Restated Demand Discretionary Revolving Credit
Agreement, dated March 18, 1994, by and between Norwest
Bank Minnesota, National Association and Lundgren Bros.
Construction, Inc.
****10.38 Fourth Amended and Restated Revolving Note (Demand), dated
March 14, 1995, of the Company payable to Norwest Bank
Minnesota, National Association.
****10.39 Consent and Reaffirmation of Guaranty, dated March 14,
1995, by Peter Pflaum, Patrick C. Wells, Edmund M.
Lundgren, Allan D. Lundgren and Gerald T. Lundgren in
favor of Norwest Bank Minnesota, National Association.
***10.40 Satisfaction of Combination Mortgage, Security Agreement
and Fixture Financing Statement executed by Builders
Development & Finance, Inc. on March 29, 1994.
***10.41 Letter Agreement, dated February 17, 1994, between
Builders Funding Corporation and Lundgren Bros.
Construction, Inc.
****10.42 Amendment, Extension and Reaffirmation Agreement, dated
March 14, 1995, by and among Lundgren Bros. Construction,
Inc., Patrick C. Wells, Peter Pflaum, Edmund M. Lundgren,
Allan D. Lundgren and Gerald T. Lundgren and Norwest Bank
Minnesota, National Association.
****10.43 Supplemental Assignment of Life Insurance Policies as
Collateral, dated March 14, 1995, by Lundgren Bros.
Construction, Inc. in favor of Norwest Bank Minnesota,
National Association.
****10.44 Second Supplemental Assignment of Life Insurance Policies
as Collateral, dated March 16, 1995, by Lundgren Bros.
Construction, Inc. in favor of Norwest Bank Minnesota,
National Association.
*****10.45 Third Amendment to Combination Mortgage, Security
Agreement and Fixture Financing Statement and Amendment to
Revolving Credit Line Agreement, dated January 25, 1995,
by Lundgren Bros. Construction, Inc. and Builders
Development & Finance, Inc.
10.46 Second Amended and Restated Mortgage Note, dated May 20,
1996, of Lundgren Bros. Construction, Inc. payable to
Builders Development & Finance, Inc.
10.47 Eighth Amendment to Combination Mortgage, Security
Agreement and Fixture Financing Statement and Second
Amendment to Revolving Credit Line Agreement and
Reaffirmation Agreement, dated May 20, 1996, by Lundgren
Bros. Construction, Inc. and Builders Development &
Finance, Inc.
10.48 Promissory Note, dated March 21, 1996, of Lundgren Bros.
Construction, Inc. payable to First Bank National
Association.
10.49 Letter Agreement, dated March 21, 1996, by Lundgren Bros.
Construction, Inc. and First Bank National Association.
10.50 Pledge Agreement, dated March 21, 1996, by Lundgren Bros.
Construction, Inc. for the benefit of First Bank National
Association.
10.51 Control Agreement (With Broker or other Securities
Intermediary), dated March 21, 1996, by Lundgren Bros.
Construction, Inc., First Bank National Association and
FBS Investment Services, Inc.
10.52 Guaranty, dated March 12, 1996, by Edmund M. Lundgren for
the benefit of First Bank National Association.
10.53 Guaranty, dated March 12, 1996, by Allan Lundgren for the
benefit of First Bank National Association.
10.54 Guaranty, dated March 12, 1996, by Peter Pflaum for the
benefit of First Bank National Association.
10.55 Guaranty, dated March 12, 1996, by Patrick C. Wells for
the benefit of First Bank National Association.
10.56 Guaranty, dated March 12, 1996, by Gerald Lundgren for the
benefit of First Bank National Association.
****18.1 Letter on accounting change, Coopers & Lybrand, LLP, dated
May 12, 1995.
27 Financial Data Schedule
* Incorporated by reference to the Exhibit of the same number to the
Company's Registration Statement on Form S-1, Registration No. 33-58934.
** Incorporated by reference to the Exhibit of the same number to the
Company's Annual Report on Form 10-K for the year ended December 31, 1993.
*** Incorporated by reference to the Exhibit of the same number to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1994.
**** Incorporated by reference to the Exhibit of the same number to the
Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995.
***** Incorporated by reference to the Exhibit of the same number to the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.
(b) Reports on Form 8-K.
The Registrant filed no reports on Form 8-K during the quarter ended June
30, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LUNDGREN BROS. CONSTRUCTION, INC.
Date: August 12, 1996 By: /s/ Peter Pflaum
Peter Pflaum
(Principal Executive Officer)
(Principal Financial Officer)
$4,500,000.00 May 20, 1996
Wayzata, Minnesota
SECOND AMENDED AND RESTATED MORTGAGE NOTE
FOR VALUE RECEIVED, LUNDGREN BROS. CONSTRUCTION, INC., a Minnesota
corporation, as make ("Borrower"), promises to pay to the order of BUILDERS
DEVELOPMENT & FINANCE, INC., a Minnesota corporation ("Lender"), at Lender's
office in Wayzata, Minnesota, or such other place as the holder of this Note may
designate, on or before December 31, 1997, the sum of Four Million Five Hundred
Thousand and no/100 Dollars ($4,500,000.00), or if less, the aggregate unpaid
principal amount of all advances and re-advances, made by Lender pursuant to the
Revolving Credit Line Agreement (hereinafter defined), together with interest
before and after maturity on all cash amounts advanced at the interest rate of
three percent (3%) per annum above the "Reference Rate", from the date of the
first advance under this Note until the entire unpaid balance of principal and
accrued interest is paid in full. Interest accrued on the outstanding principal
balance hereof shall be payable monthly on the first day of each month. Any
interest remaining unpaid when due shall be added to and bear the same rate of
interest as principal. Interest will be computed on the actual number of days
elapsed in a 360-day year. The "Reference Rate" shall be that rate of interest
publicly announced as such by First Bank National Association, as the same
changes from time to time. Actual lending rates charged by said Bank to its
borrowers may be at, above, or below the "Reference Rate". All changes in the
rate of interest due on this Note because of a change in the "Reference Rate"
shall become effective automatically on the same day the "Reference Rate" change
takes effect.
If Borrower fails to pay any amount due under this Note within 10 days
after the date the amount is due, Borrower shall in addition pay to Lender a
late charge in an amount equal to 4% of the delinquent amount.
This Note amends and entirely restates that certain Amended and
Restated Mortgage Note in the amount of $3,000,000.00 dated January 25, 1995
("First Amended and Restated Note") made pursuant to a Revolving Credit Line
Agreement dated March 18, 1994, amended on the date of this Note (the
"Agreement") and evidences additional advances of $1,500,000.00 which may be
made under the Agreement. The outstanding principal balance under the First
Amended and Restated Note is included in the indebtedness evidenced by this Note
and the combined outstanding principal balances of the First Amended and
Restated Note and this Note shall not at any time exceed the sum of
$4,500,000.00. The execution delivery and acceptance of this Note shall not
constitute a novation or payment of the First Amended and Restated Note, and
shall not release, impair, diminish or otherwise affect the security for the
indebtedness thereby, or the priority thereof, or the liability of any maker,
co-maker, endorser, surety or guarantor of such indebtedness. All payments shall
be applied (i) first to any fees and costs owing under the Agreement, (ii) then
against interest accrued under this Note as of the date of said payment, and
(iii) thereafter to the reduction of the principal balance of this Note. This
Note may be prepaid at any time or times without penalty and its maturity is
subject to acceleration upon the terms provided in the Agreement.
This Note is secured by a Combination Mortgage, Security Agreement and
Fixture Financing Statement dated March 18, 1994 ("Mortgage"), amended June 10,
1994, August 22, 1994, January 25, 1995, February 13, 1995, May 11, 1995,
September 8, 1995, February 14, 1996, and on the date of this Note, presently
encumbering certain real property located in the State of Minnesota in the
Counties of Hennepin, Carver and Dakota.
This Note is subject to all provisions of the Agreement. If there is a
default under this Note, the Agreement, the Mortgage, or any other document
securing this Note, the entire unpaid principal balance of this Note, and all
accrued interest, will, at Lender's option, become immediately due and payable,
without notice other than that set forth in the Agreement.
Borrower and each endorser and guarantor guaranty payment of this Note,
and waive demand, presentment, notice of nonpayment, protest, notice of protest,
notice of dishonor and diligence in collection, and agrees that without any
notice Lender may from time to time extend, renew or otherwise modify the dates
or amounts of payment, or release any parts of the property and interests
subject to the Mortgage or other security for this Note, with or without
consideration, and that in any such case any guarantor will continue to be
liable to pay the unpaid balance of the indebtedness evidenced by this Note as
so extended, renewed or modified and notwithstanding any such release. Borrower
and each endorser and guarantor agree to pay all costs of collection, including
attorneys' fees, if any payment is not made when due, and all costs and expense,
including attorneys' fees incurred in protecting or preserving the security for
this Note. Such attorneys' fees shall be owed (i) whether suit is brought or
not, (ii) whether in any action Lender is a prevailing party or not, and (iii)
for any kind of an action, including but not limited to any bankruptcy,
insolvency or similar proceedings, and any probate or other proceedings
involving a decedent.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
day and year first above written.
LUNDGREN BROS. CONSTRUCTION, INC.
By ________________________________________
Its:______________________________________
MORTGAGE REGISTRATION TAX
DUE HEREON: $3,450.00
EIGHTH AMENDMENT TO COMBINATION MORTGAGE,
SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT
AND
SECOND AMENDMENT TO REVOLVING CREDIT LINE AGREEMENT
AND
REAFFIRMATION AGREEMENT
THIS AMENDMENT is made as of May 20, 1996, by and among Lundgren Bros.
Construction, Inc., a Minnesota corporation (the "Mortgagor"), Builders
Development & Finance, Inc., a Minnesota corporation (the "Mortgagee") and Peter
Pflaum, Patrick C. Wells, Allan D. Lundgren, Edmund M. Lundgren and Gerald T.
Lundgren (collectively, the "Guarantors").
RECITALS
A. The Mortgagor has executed and delivered to the Mortgagee a
Combination Mortgage, Security Agreement and Fixture Financing Statement dated
March 18, 1994 (the "Original Mortgage"). The Original Mortgage was amended by
that certain First Amendment to Combination Mortgage, Security Agreement and
Fixture Financing Statement dated as of June 10, 1994 ("First Amendment"), by
that certain Second Amendment to Combination Mortgage, Security Agreement and
Fixture Financing Statement dated as of August 22, 1994 ("Second Amendment"), by
that certain Third Amendment to Combination Mortgage, Security Agreement and
Fixture Financing Statement and Amendment to Revolving Credit Line Agreement
dated as of January 25, 1995 ("Third Amendment"), by that certain Fourth
Amendment to Combination Mortgage, Security Agreement and Fixture Financing
Statement dated as of February 13, 1995 ("Fourth Amendment"), by that certain
Fifth Amendment to Combination Mortgage, Security Agreement and Fixture
Financing Statement dated as of May 11, 1995 ("Fifth Amendment"), by that
certain Sixth Amendment to Combination Mortgage, Security Agreement and Fixture
Financing Statement dated as of September 8, 1995 ("Sixth Amendment") and by
that certain Seventh Amendment to Combination Mortgage, Security Agreement and
Fixture Financing Statement dated as of February 14, 1996 ("Seventh Amendment").
The Original Mortgage, the First Amendment, the Second Amendment, the Third
Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment and
the Seventh Amendment are collectively referred to herein as the "Mortgage."
Certain lots described in the Mortgage have been released from the Mortgage and
are no longer subject to the Mortgage or this instrument.
B. The Original Mortgage was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Hennepin County Recorder's Office April 4, 1994 6264214
Hennepin County Registrar of Titles June 6, 1994 2521600
Hennepin County Registrar of Titles April 4, 1994 2499013
Dakota County Recorder's Office April 4, 1994 1206249
Carver County Recorder's Office April 4, 1994 165103
Carver County Registrar of Titles April 4, 1994 T83447
C. The First Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Hennepin County Recorder's Office July 15, 1994 6313171
Hennepin County Registrar of Titles July 28, 1994 2536818
Dakota County Recorder's Office July 14, 1994 1228848
Carver County Recorder's Office July 19, 1994 169673
Carver County Registrar of Titles July 19, 1994 T84926
D. The Second Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Hennepin County Recorder's Office September 29, 1996 6345918
Hennepin County Recorder's Office August 31, 1994 6333560
Dakota County Recorder's Office September 2, 1994 1239106
E. The Third Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Hennepin County Recorder's Office February 3, 1995 6395270
Hennepin County Registrar of Titles February 6, 1995 2587774
Dakota County Recorder's Office February 2, 1995 1263412
Carver County Recorder's Office February 3, 1995 A177001
Carver County Registrar of Titles February 3, 1995 T87056
F. The Fourth Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Hennepin County Recorder's Office February 16, 1995 6399195
G. The Fifth Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Dakota County Recorder's Office May 16, 1995 1278546
Dakota County Registrar of Titles May 16, 1995 319850
H. The Sixth Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Dakota County Recorder's Office September 21, 1995 1302270
Dakota County Registrar of Titles September 21, 1995 325600
Carver County Recorder's Office September 19, 1995 185012
Carver County Registrar of Titles September 19, 1995 T89065
I. The Seventh Amendment was recorded as follows:
Office Filing Date Doc. No.
------ ----------- --------
Hennepin County Registrar of Titles February 26, 1996 2680664
J. The Mortgage secures that certain Amended and Restated Mortgage Note
dated January 25, 1995 (the "First Amended and Restated Note"), maturing on
March 31, 1996, given by the Mortgagor in the principal sum of Three Million
Dollars ($3,000,000), all or part of which may be advanced from time to time
under that certain Revolving Credit Line Agreement, dated March 18, 1994 between
the Mortgagor and the Mortgagee (the "Original Agreement"), as amended by the
Third Amendment. The Original Agreement and the Third Amendment are referred to
collectively as the "Agreement."
K. By separate agreement, the parties extended the term of the First
Amended and Restated Note and the Agreement to December 31, 1996.
L. Payment and performance of the obligations of the Mortgagor under
the Note, the Mortgage and the Agreement have been jointly and severally
guaranteed by the Guarantors pursuant to that certain Guaranty dated March 18,
1994, executed by the Guarantors and delivered to the Mortgagee.
M. The purpose of this Eighth Amendment is to: (i) extend the term of
the Agreement upon payment of an Extension Fee as described herein; (ii)
increase the maximum amount which Mortgagor may borrow under the Agreement;
(iii) reflect the execution and delivery to the Mortgagee of a Second Amended
and Restated Mortgage Note dated of even date herewith in the principal amount
of $4,500,000.00 (the "Second Amended and Restated Note") which amends the First
Amended and Restated Note to evidence additional advances of $1,500,000 which
may be made under the Agreement; (iv) amend the definition of the Maximum Loan
Amount; (v) add additional Mortgaged Property, as such term is defined in the
Mortgage; (v) establish new forms of Borrowing Base Certificate; (vi) set forth
the terms and conditions for the use of each Borrowing Base Certificate; and
(vii) reaffirm the obligations of the Guarantors.
AGREEMENT
NOW, THEREFORE, in consideration of the facts recited, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Mortgagor and the Mortgagee hereby agree as follows:
1. Extension of Agreement; Payment of Extension Fee. The term of the
Agreement is hereby extended to December 31, 1997. The Mortgagor herewith
delivers to the Mortgagee an Extension Fee in the amount of $45,000.
2. Second Amended and Restated Note Secured By Mortgage. The Mortgagor
hereby agrees that the lien of the Mortgage on the real estate described therein
shall secure the Second Amended and Restated Note. The references in the
Mortgage to the principal amount, maturity and interest rate of the Note are
hereby amended to the extent necessary to reflect the amount, maturity and
interest rate of the Second Amended and Restated Note. The Second Amended and
Restated Note is in the amount of $4,500,000.00, it matures on December 31, 1997
and it bears interest at the rate provided therein. Each reference in the
Agreement and the Mortgage to the "Note" shall be deemed, on and after the date
of this Amendment, to refer to the Second Amended and Restated Note.
The Second Amended and Restated Note amends and entirely restates the
First Amended and Restated Note. The outstanding principal balance under the
First Amended and Restated Note is included in the indebtedness evidenced by the
Second Amended and Restated Note and the combined outstanding principal balances
of the First Amended and Restated Note and the Second Amended and Restated Note
shall not at any time exceed the sum of $4,500,000.00. The execution, delivery
and acceptance of the Second Amended and Restated Note shall not constitute a
novation or payment of the First Amended and Restated Note, and shall not
release, impair, diminish or otherwise affect the security for the indebtedness
thereby, or the priority thereof, or the liability of any maker, co-maker,
endorser, surety or guarantor of such indebtedness.
3. Maximum Loan Amount. Paragraph 2.b. of the Agreement is amended and
restated as follows:
b. The Maximum Loan Amount from time to time under this
Agreement shall be calculated on the most recent Borrowing Base
Certificate filed with the Lender. Under no circumstances shall the
Maximum Loan Amount exceed $4,500,000. If the outstanding principal
amount owed under this Agreement at any time exceeds the current
Maximum Loan Amount, then the Borrower shall repay the Lender to the
extent necessary so that the outstanding principal balance does not
exceed the Maximum Loan Amount.
4. Additional Mortgaged Property. The terms "Land" and "Mortgaged
Property" as used in the Mortgage shall include the following land, as well as
that land which has not been released from the Mortgage heretofore:
Southwest 1/4 of the Southeast 1/4 of Section 20, township 119 North
Range 22 West, Hennepin County, Minnesota (the "Maple Grove Property").
5. Release of Portion of Maple Grove Property. Mortgagee is aware that
Mortgagor is under a contractual obligation to convey an approximately 2 acre
portion of the Maple Grove Property once Mortgagee receives municipal approval
to subdivide the parcel. Mortgagee agrees that it will execute and deliver a
partial release of mortgage for the lien of the Mortgage for said 2 acre portion
without a charge to Mortgagor.
6. Borrowing Base Certificate. The form of the Borrowing Base
Certificate as set forth in Exhibit A to the Agreement is revised to be the form
attached hereto as Exhibit A. All references in the Agreement and the Mortgage
to the "Borrowing Base Certificate" shall be deemed, on and after the date of
this Amendment, to refer to the form of Borrowing Base Certificate attached
hereto as Exhibit A.
7. Substitution of Replacement Borrowing Base Certificate. The
"Certificate Replacement Date" shall be the first occurring of either of the
following two dates: (i) the date that a final plat which subdivides any portion
of the Maple Grove Property then owned by Mortgagor into lots is filed with the
Hennepin County Recorder's Office; or (ii) the date that Mortgagor no longer
owns any portion of the Maple Grove Property. On the Certificate Replacement
Date, the form of the Borrowing Base Certificate as set forth in Exhibit A to
the Agreement shall be revised to be the form attached hereto as Exhibit B. All
references in the Agreement and the Mortgage to the "Borrowing Base Certificate"
shall be deemed, on and after the Certificate Replacement Date, to refer to the
form of Borrowing Base Certificate attached hereto as Exhibit B.
8. Consent of Guarantors. The Guarantors hereby consent to each and all
of the provisions of this Eighth Amendment. Guarantors further acknowledge and
agree that the Guaranty shall be and hereby is amended to provide that all
references contained in the Guaranty shall henceforth refer to the Second
Amended and Restated Note.
9. Acknowledgment of Guarantors. Each of the Guarantors hereby
acknowledges and agrees that the Guaranty executed by him and delivered to the
Lender remains fully enforceable and in full force and effect in accordance with
its original terms, except as expressly amended hereby, and is not subject to
any defense, counterclaim or right of set-off.
10. Terms and Conditions. All terms of the Agreement and the Mortgage
shall remain in full force and effect except as amended hereby, and the
Mortgagor restates and affirms all representations, warranties and covenants of
the Mortgagor as set forth in the Agreement and in the Mortgage with respect to
the Land herein described and with respect to that Land which has not been
released of record from the lien of the Mortgage, and Mortgagor agrees to be
bound by and to perform all of the covenants and agreements in the Mortgage at
the time and in the manner therein provided.
11. Security Unimpaired. Nothing herein contained shall be construed to
impair the security of the lien of the Mortgage on the property described in the
Mortgage, nor to affect or impair any rights or powers which the Mortgagee may
have under the Second Amended and Restated Note, the Agreement and the Mortgage,
all of which shall remain in full force and effect during the term of the Second
Amended and Restated Note. This Amendment shall be binding upon and inure to the
benefit of the Mortgagee and the Mortgagor and shall be binding upon the
successors and assigns of each.
12. Recording Fees and Taxes. The Mortgagor agrees to pay or reimburse
the Mortgagee for any and all fees payable to public officials in connection
with this instrument and the recording hereof, including any mortgage
registration tax that may be due.
IN WITNESS WHEREOF, the parties have executed this instrument as of the
day and year first above written.
MORTGAGOR:
LUNDGREN BROS. CONSTRUCTION, INC.
By _______________________________________
Its _____________________________________
MORTGAGEE:
BUILDERS DEVELOPMENT & FINANCE, INC.
By _______________________________________
Its _____________________________________
GUARANTORS
-----------------------------------------
Peter Pflaum
-----------------------------------------
Patrick C. Wells
-----------------------------------------
Allan D. Lundgren
-----------------------------------------
Edmund M. Lundgren
-----------------------------------------
Gerald T. Lundgren
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by ______________________________, the _______________________________ of
Lundgren Bros. Construction, Inc., a corporation organized under the laws of the
State of Minnesota, on behalf of the corporation.
-------------------------------
Notary Public
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by ______________________________, the _______________________________ of
Builders Development & Finance, Inc., a corporation organized under the laws of
the State of Minnesota, on behalf of the corporation.
-------------------------------
Notary Public
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by Peter Pflaum.
-------------------------------
Notary Public
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by Patrick C. Wells.
-------------------------------
Notary Public
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by Allan D. Lundgren.
-------------------------------
Notary Public
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by Edmund M. Lundgren.
-------------------------------
Notary Public
STATE OF MINNESOTA }
} ss.
COUNTY OF HENNEPIN }
The foregoing instrument was acknowledged before me this _____ day of May, 1996,
by Gerald T. Lundgren.
-------------------------------
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
LEONARD, STREET AND DEINARD (RLS/JCK)
150 South Fifth Street, Suite 2300
Minneapolis, Minnesota 55402
(612) 335-1500
EXHIBIT A
BORROWING BASE CERTIFICATE
TO: Builders Development & Finance, Inc. ("Lender")
1055 East Wayzata Boulevard, P.O. Box 637
Wayzata, MN 55391
FROM: Lundgren Bros. Construction, Inc. ("Borrower")
935 East Wayzata Boulevard
Wayzata, MN 55391
RE: $4,500,000.00 Revolving Credit Line Agreement
Dated: March 18, 1994, as Amended ("Agreement")
Pursuant to the terms of the Agreement and to induce Lender to extend
credit to, or forebear from the collection of indebtedness presently outstanding
from Lender to Borrower, Borrower hereby certifies to Lender that the following
figures, with respect to Borrower's assets and liabilities are true and correct
as of the ____ day of _________________, 199__:
1. Total Retail Value of Eligible Lots (Col. A)* $___________
2. Times Allowable Advance Percentage x___________%
3. Equals Gross Borrowing Base - Eligible Lots $___________
4. Minus Current Loan Balance (Col. B)* $___________
5. Minus Remaining Available Loan Funds (Col.C)* $___________
6. Minus Estimated Special Assessments not covered
by Remaining Available Loan Funds (Col.D)* $___________
7. Equals Net Borrowing Base - Eligible Lots (Not Greater
than $2,500,000) $___________
8. Borrowing Base - Parcels (Not Greater Than $1,000,000)** $___________
9. Borrowing Base - Maple Grove Property (Not Greater
Than $1,000,000)*** $___________
10. Maximum Loan Amount (Sum of Lines 7+8+9) $___________
*Column letters refer to the attached Collateral Summary Report.
**as defined in Section 2.e. of the Agreement
***as defined in Section 4 of the Eighth Amendment to Combination Mortgage,
Security Agreement and Fixture Financing Statement and Second Amendment to
Revolving Credit Line Agreement and Reaffirmation Agreement
Borrower further certifies that no adverse change in Borrower's assets
and liabilities has occurred since the date of the foregoing computation; no
Event of Default exists under the Agreement; the representations and warranties
contained in the Agreement are true and correct as of the date of this
Certificate; and that as of the date of this Certificate the Maximum Loan Amount
is not less than as calculated above.
LUNDGREN BROS. CONSTRUCTION, INC
By_________________________________
Peter Pflaum, President
EXHIBIT B
BORROWING BASE CERTIFICATE
TO: Builders Development & Finance, Inc. ("Lender")
1055 East Wayzata Boulevard, P.O. Box 637
Wayzata, MN 55391
FROM: Lundgren Bros. Construction, Inc. ("Borrower")
935 East Wayzata Boulevard
Wayzata, MN 55391
RE: $4,500,000.00 Revolving Credit Line Agreement
Dated: March 18, 1994, as Amended ("Agreement")
Pursuant to the terms of the Agreement and to induce Lender to extend
credit to, or forebear from the collection of indebtedness presently outstanding
from Lender to Borrower, Borrower hereby certifies to Lender that the following
figures, with respect to Borrower's assets and liabilities are true and correct
as of the ____ day of _________________, 199__:
1. Total Retail Value of Eligible Lots (Col. A)* $___________
2. Times Allowable Advance Percentage x___________%
3. Equals Gross Borrowing Base - Eligible Lots $___________
4. Minus Current Loan Balance (Col. B)* $___________
5. Minus Remaining Available Loan Funds (Col.C)* $___________
6. Minus Estimated Special Assessments not covered
by Remaining Available Loan Funds (Col.D)* $___________
7. Equals Net Borrowing Base - Eligible Lots
(Not Greater Than $3,000,000) $___________
8. Borrowing Base - Parcels (Not Greater Than 50% of
Line 7 and Not Greater Than $1,500,000)** $___________
9. Maximum Loan Amount (Sum of Lines 7 + 8) $___________
*Column letters refer to the attached Collateral Summary Report.
**as defined in Section 2.e. of the Agreement
Borrower further certifies that no adverse change in Borrower's assets
and liabilities has occurred since the date of the foregoing computation; no
Event of Default exists under the Agreement; the representations and warranties
contained in the Agreement are true and correct as of the date of this
Certificate; and that as of the date of this Certificate the Maximum Loan Amount
is not less than as calculated above.
LUNDGREN BROS. CONSTRUCTION, INC
By_________________________________
Peter Pflaum, President
PROMISSORY NOTE
$1,000,000.00 Minneapolis, Minnesota
March 21, 1996
FOR VALUE RECEIVED, on March 21, 1997, the undersigned, LUNDGREN BROS.
CONSTRUCTION, INC., promises to pay to the order of FIRST BANK NATIONAL
ASSOCIATION (the "Bank"), at its office in Minneapolis, Minnesota, or at such
other place as any present or future holder of this Note may designate from time
to time, the principal sum of (i) $1,000,000.00 or (ii) the aggregate unpaid
principal amount of all advances of credit made by the Bank to the undersigned
pursuant to this Note as shown in the records of any present or future holder of
this Note, whichever is less, plus interest thereon from the date of each
advance in whole or in part included in such amount until this Note is fully
paid, computed on the basis of the actual number of days elapsed and a 360-day
year, at an annual rate that shall always be 1.00% per annum in excess of the
Reference Rate and that shall change when and as the Reference Rate shall
change. Interest is due and payable on the last day of each month commencing
March 31, 1996, and at maturity. The term "Reference Rate" means the rate
established by the Bank from time to time in its sole discretion as its
Reference Rate; the Bank may lend to its customers at rates that are at, above
or below the Reference Rate. Notwithstanding the foregoing, after an Event of
Default this Note shall bear interest until paid at 2% per annum in excess of
the rate otherwise then in effect, which rate shall continue to vary based on
further changes in the Reference Rate.
All or any part of the unpaid balance of this Note may be prepaid at
any time without penalty. At the option of the then holder of this Note, any
payment under this Note may be applied first to the payment of other charges,
fees and expenses under this Note and any other agreement or writing in
connection with this Note, second to the payment of interest accrued through the
date of payment, and third to the payment of principal. Amounts may be advanced
and readvanced under this Note, provided the principal balance outstanding shall
not exceed the amount first above written.
The occurrence of any of the following events shall constitute an Event
of Default under this Note: (i) any breach or default in the payment of this
Note, and such breach or default continues for a period of 5 days; or (ii) any
breach or default under the terms of any other note, debenture, indenture,
obligation, mortgage, guaranty, other agreement, or other writing heretofore,
herewith or hereafter existing to which any maker, endorser, guarantor or surety
of this Note or any other person providing security for this Note or for any
guaranty of this Note is a party; or (iii) the insolvency, death, dissolution,
liquidation, merger or consolidation of any such maker, endorser, guarantor,
surety or other person; or (iv) any appointment of a receiver, trustee or
similar officer of any property of any such maker, endorser, guarantor, surety
or other person; or (v) any assignment for the benefit of creditors of any such
maker, endorser, guarantor, surety or other person; or (vi) any commencement of
any proceeding under any bankruptcy, insolvency, receivership, dissolution,
liquidation or similar law by or against any such maker, endorser, guarantor,
surety or other person; or (vii) the sale, lease or other disposition (whether
in one transaction or in a series of transactions) to one or more persons of all
or a substantial part of the assets of any such maker, endorser, guarantor,
surety or other person; or (viii) any such maker, endorser, guarantor, surety or
other person takes any action to revoke or terminate any agreement, liability or
security in favor of the Bank; or (ix) the entry of any final judgment or other
final order for the payment of money in the amount of $25,000.00 or more against
any such maker, endorser, guarantor, surety or other person, which judgment or
order is not or is no longer subject to a stay pending appeal; or (x) the
issuance or levy of any writ, warrant, attachment, garnishment, execution or
other process against any property of any such maker, endorser, guarantor,
surety or other person; or (xi) the attachment of any tax lien to any property
of any such maker, endorser, guarantor, surety or other person; or (xii) any
statement, representation or warranty made by any such maker, endorser,
guarantor, surety or other person (or any representative of any such maker,
endorser, guarantor, surety or other person) to any present or future holder of
this Note at any time shall be incorrect or misleading in any material respect
when made; or (xiii) there is a material adverse change in the condition
(financial or otherwise), business or property of any such maker, endorser,
guarantor, surety or other person; or (xiv) any present or future holder of this
Note shall in good faith believe that the prospect of due and punctual payment
or performance of this Note or the due and punctual payment or performance of
any other note, obligation, mortgage, guaranty, or other agreement heretofore,
herewith or hereafter given to or acquired by any present or future holder of
this Note in connection with this Note is impaired.
Upon the commencement of any proceeding under any bankruptcy law by or
against any such maker, endorser, guarantor, surety or other person, this Note
automatically shall become immediately due and payable for the entire unpaid
principal balance of this Note plus accrued interest and other charges, fees and
expenses under this Note without any declaration, presentment, demand, protest,
or other notice of any kind. Upon the occurrence of any other Event of Default
and at any time thereafter, the then holder of this Note may, at its option,
declare this Note to be immediately due and payable and thereupon this Note
shall become due and payable for the entire unpaid principal balance of this
Note plus accrued interest and other charges, fees and expenses under this Note
without any presentment, demand, protest or other notice of any kind.
The undersigned (i) waives demand, presentment, protest, notice of
protest, notice of dishonor and notice of nonpayment of this Note; (ii) agrees
to promptly provide all present and future holders of this Note from time to
time with financial statements of the undersigned and such other information
respecting the financial condition, business and property of the undersigned as
any such holder of this Note may request, in form and substance acceptable to
such holder of this Note; (iii) agrees that when or at any time after this Note
becomes due the then holder of this Note may offset or charge the full amount
owing on this Note against any account then maintained by the undersigned with
such holder of this Note without notice; (iv) agrees to pay on demand all fees,
costs and expenses of all present and future holders of this Note in connection
with this Note and any security and guaranties for this Note, and any
transactions and matters relating to this Note and to any security and
guaranties for this Note, including but not limited to audit fees and expenses
and reasonable attorneys' fees and legal expenses, plus interest on such amounts
at the rate set forth in this Note; and (v) consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota
in connection with any controversy related in any way to this Note or any
security or guaranty for this Note, or any transaction or matter relating to
this Note or to any security or guaranty for this Note, waives any argument that
venue in such forums is not convenient, and agrees that any litigation initiated
by the undersigned against the Bank or any other present or future holder of
this Note relating in any way to this Note or any security or guaranty for this
Note, or any transaction or matter relating to this Note or to any security or
guaranty for this Note, shall be venued in either the District Court of Hennepin
County, Minnesota, or the United States District Court, District of Minnesota,
Fourth Division. Interest on any amount under this Note shall continue to
accrue, at the option of any present or future holder of this Note, until such
holder receives final payment of such amount in collected funds in form and
substance acceptable to such holder.
No waiver of any right or remedy under this Note shall be valid unless
in writing executed by the holder of this Note, and any such waiver shall be
effective only in the specific instance and for the specific purpose given. All
rights and remedies of all present and future holders of this Note shall be
cumulative and may be exercised singly, concurrently or successively. This Note
shall bind the undersigned and the successors and assigns of the undersigned.
This Note shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE
UNDERSIGNED HAS READ ALL OF THIS NOTE AND UNDERSTANDS ALL OF THE PROVISIONS OF
THIS NOTE. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY ANY PRESENT OR FUTURE
HOLDER OF THIS NOTE WITH THE EXPRESS PROVISIONS OF THIS NOTE SHALL CONSTITUTE
GOOD FAITH AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
LUNDGREN BROS. CONSTRUCTION, INC.
By________________________________
Title____________________________
March 21, 1996
To: Lundgren Bros. Construction, Inc.
935 East Wayzata Blvd.
Wayzata, MN 55391
Ladies and Gentlemen:
This letter agreement confirms the additional agreements between Lundgren Bros.
Construction, Inc., a Minnesota corporation (the "Borrower"), and First Bank
National Association (the "Bank"). In consideration of the mutual agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the Borrower and the
Bank agree as follows:
1. Subject to the provisions of this letter agreement, at the
Borrower's request, the Bank shall make loans to the Borrower during the period
from the date of this letter agreement to March 21, 1997 in an aggregate amount
not exceeding $1,000,000.00 at any time outstanding (the "Line of Credit"). The
Line of Credit is a revolving line of credit, and the Borrower may borrow,
prepay and reborrow under the Line of Credit. The Borrower's obligation to repay
such loans and to pay interest and other charges, fees and expenses thereon is
evidenced by the Borrower's promissory note dated March 21, 1996 payable to the
order of the Bank in the principal amount of $1,000,000.00 (together with any
amendments, extensions, renewals and replacements thereof, called the "Revolving
Note"). The Bank shall have no obligation to make any such loan after the
occurrence of any default or event of default under the Revolving Note or any
other agreement of the Borrower with the Bank, or any other event that would
accelerate or allow the Bank to accelerate payment of the Revolving Note. The
Borrower shall use all proceeds of such loans solely for working capital of the
Borrower. Upon the execution of this letter agreement, the Borrower shall pay
the Bank in cash a loan fee in the amount of $7,500.00
2. The Borrower shall not at any time within 3 months after any
Determination Date permit the unpaid principal balance of the Revolving Note to
exceed the Borrowing Base (which Borrowing Base is computed as of the end of
such Determination Date).
3. As long as any now existing or hereafter arising debt, obligation or
liability of the Borrower to the Bank shall remain outstanding, the Borrower
shall comply with the following requirements:
a. The Borrower shall deliver to the Bank, in form and
substance acceptable to the Bank:
i. As soon as available, and in any event within 120 days after each fiscal year
of the Borrower: (A) the annual audited financial statements of the Borrower for
such fiscal year, with the unqualified opinion of independent certified public
accountants acceptable to the Bank, which shall include the balance sheet of the
Borrower as of the end of such fiscal year, and the related statements of
income, cash flows and stockholders' equity of the Borrower for such fiscal
year, including all supporting schedules and notes, all in reasonable detail,
prepared in accordance with GAAP; and (B) a listing of the Borrower's contingent
obligations as of the end of such fiscal year; and
ii. As soon as available, and in any event within 45 days after the end of each
of the first three quarters of each fiscal year of the Borrower, the quarterly
financial statements of the Borrower for such quarter, prepared by the Borrower
in accordance with GAAP; and
iii. Within 10 days after each Determination Date, a Borrower's Certificate in
the form of Exhibit A attached hereto executed by the chief financial officer of
the Borrower; and
iv. Within 10 days after the Bank's request therefor, such other information
about the Borrower as the Bank may reasonably request from time to time.
b. The Borrower 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 Borrower, 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 its possession, to inspect its
property and to discuss its finances, accounts, property and business with any
of its officers and directors.
c. The Borrower shall file when due all required tax returns,
shall pay when due all taxes, assessments and other governmental charges levied
or imposed upon it or upon its income or profits or upon any of its 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
Borrower; provided, that the Borrower 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.
d. The Borrower shall keep and maintain its inventory,
equipment, real estate and other property necessary or useful in its business 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 Borrower from discontinuing the operation and maintenance of any
such property if such discontinuance is, in the reasonable judgment of the
Borrower, desirable in the conduct of its business and not disadvantageous in
any material respect to the Bank
e. The Borrower shall obtain and maintain insurance with
insurers that are acceptable to the Bank, in such amounts and with such
coverages (including without limitation liability insurance, fire, hazard and
extended coverage insurance on all of its assets, necessary workers'
compensation insurance, and all other coverages as are consistent with industry
practice) as are acceptable to the Bank.
f. The Borrower shall preserve and maintain its existence and
all of its rights, privileges and franchises, and shall comply with all
applicable laws and regulations.
4. In this letter agreement:
a. "Borrowing Base" means the sum of (i) $300,000.00, plus
(ii) the aggregate fair market value of the Borrower's investments which the
Bank, in its sole discretion, shall deem acceptable, and in which the Bank shall
have a perfected security interest constituting a first lien in form and
substance acceptable to the Bank.
b. "Determination Date" shall mean March 21, 1996, June 21,
1996, September 21, 1996, and December 21, 1996.
c. "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 letter agreement shall be made on the basis of accounting
principles, methods, elections and estimates that are consistent and that are
consistent with the accounting principles, methods, elections and estimates used
in the last annual financial statements of the Borrower delivered by the
Borrower to the Bank before or upon the execution of this letter agreement.
5. The Borrower's failure to comply with any provision of this letter
agreement shall constitute a default under each of the Borrower's present and
future promissory notes to the Bank. No provision of this letter agreement can
be amended, modified, waived or terminated, except by a writing executed by the
Borrower and the Bank. The Borrower shall pay to the Bank on demand all of the
Bank's costs and expenses, including but not limited to reasonable attorneys'
fees and legal expenses, in connection with this letter agreement, the writings
executed herewith, and the transactions described herein and therein. This
letter agreement shall bind and benefit the parties and their respective
successors and assigns; provided, the Borrower shall not assign any of its
rights or obligations under this letter agreement without the prior written
consent of the Bank, and any assignment in violation of this sentence shall be
null and void. This letter agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
Sincerely,
FIRST BANK NATIONAL ASSOCIATION
By ____________________________________
Title __________________________________
Lundgren Bros. Construction, Inc. agrees to this letter agreement.
Executed as of March 21, 1996.
LUNDGREN BROS. CONSTRUCTION, INC.
By ________________________________________
Title ______________________________________
EXHIBIT A
LUNDGREN BROS. CONSTRUCTION, INC.
BORROWER'S CERTIFICATE
I, ________________________, the chief financial officer of Lundgren
Bros. Construction, Inc., a Minnesota corporation (the "Borrower"), pursuant to
the letter agreement dated March 21, 1996 (the "Agreement"), hereby certify to
First Bank National Association (the "Bank"):
As of the close of business on _________________, 1996 (the
most recent Determination Date), the aggregate fair market value of the
Borrower's investments in account number 000303451 at FBS Investment Services,
Inc. was $__________________.
As of the date of this Certificate, no event has occurred
which constitutes a default or an event of default under the Revolving Note (as
defined in the Agreement), or an event that would accelerate or allow the Bank
to accelerate payment of the Revolving Note, or would constitute any default or
event of default under the Revolving Note with notice or the passage of time or
both.
Date of Certificate: ______________________________, 19
____________________________
Signature
PLEDGE AGREEMENT
Date: March 21, 1996
Debtor: Lundgren Bros. Construction, Inc.
Address: 935 E. Wayzata Boulevard
Wayzata, MN 55391
Secured
Party: First Bank National Association
Address: 601 Second Avenue South
Minneapolis, MN 55402-4302
1. To secure the payment and performance of each and every debt,
liability and obligation of every type and description which the Debtor may now
or at any time owe to the Secured Party, whether now existing or hereafter
arising, direct or indirect, due or to become due, absolute or contingent,
primary or secondary, liquidated or unliquidated, independent, joint, several or
joint and several (all such debts, liabilities and obligations being herein
collectively referred to as the "Obligations"), the Debtor grants the Secured
Party a security interest (the "Security Interest") in the following property
(the "Collateral"):
All of Debtor's present and future investments and other property in
the Debtor's account number 000303451 with FBS Investment Services,
Inc., all present and future dividends and other distributions on such
investments and other property, all of the Debtor's other present and
future rights relating to such investments and other property, and all
proceeds of the foregoing, including without limitation all accounts,
instruments, chattel paper, other rights to payment, deposit accounts,
money and general intangibles related to the foregoing.
2. If the Debtor has or receives any certificate, other instrument,
chattel paper, option, right, interest, dividend, or other distribution relating
to any Collateral, the Debtor shall hold or accept the same as the Secured
Party's agent, in trust for the Secured Party, and shall deliver the same
forthwith to the Secured Party in the exact form received with, as applicable,
the Debtor's endorsement or appropriate assignment duly executed in blank in
form acceptable to the Secured Party, to be held by the Secured Party under the
terms of this Agreement; provided, until the occurrence of an Event of Default,
the Debtor shall retain all voting rights with respect to the Collateral. At any
time the Secured Party, at its option, may have any or all of the Collateral
registered in its name or that of its nominee. At the Secured Party's request,
the Debtor shall cause the issuer of the same to effect such registration.
3. The Debtor represents, warrants and agrees as follows:
a. The Debtor is a Minnesota corporation, and the address of the
Debtor's chief executive office is shown at the beginning of this Agreement. The
Debtor has not used any trade name, assumed name, or other name except Lundgren
Bros. Construction, Inc. The Debtor shall give the Secured Party prior written
notice of any change of the Debtor's name or address. The Debtor has power and
authority to enter into and perform this Agreement. The Debtor's Internal
Revenue Service taxpayer identification number is 41-0970679.
b. The Debtor has absolute legal and beneficial title to the
Collateral free and clear of all pledges, security interests, liens,
encumbrances and charges except the Security Interest. None of the Collateral is
or shall be held in trust for any person under the Indenture dated May 14, 1993
between the Debtor and National City Bank of Minneapolis, as trustee, or in
trust for any other person except the Secured Party. All stock constituting
Collateral has been duly and validly issued and is fully paid and nonassessable.
There is no restriction on the transfer of any stock or securities constituting
Collateral except as provided on the face of the certificates evidencing the
same delivered or to be delivered to the Secured Party. No financing statement
covering any Collateral is on file in any public office.
c. The Debtor, at its expense, shall defend the Collateral and the
Security Interest against the claims and demands of all persons other than the
Secured Party. The Debtor shall not sell or otherwise dispose of any Collateral
or any interest therein, or create, incur or permit to exist any pledge,
security interest, lien, encumbrance or charge in or with respect to any
Collateral, except the Security Interest. The Debtor shall promptly pay when due
all taxes and other charges levied or assessed upon or against any Collateral,
and shall execute such writings and take such other actions with respect to the
Collateral as the Secured Party may request.
d. The Debtor shall deliver to the Secured Party upon receipt all
notices, reports and other writings received by the Debtor as owner or holder of
any Collateral.
e. If, in the judgment of the Secured Party, the Collateral
decreases in value, or if the Collateral becomes unsatisfactory to the Secured
Party , the Debtor, at the request of the Secured Party, shall provide the
Secured Party with additional collateral security satisfactory and in form
acceptable to the Secured Party.
4. The Secured Party shall be deemed to have fulfilled its duty of care
with respect to any Collateral in its possession if the Secured Party exercises
reasonable care in physically safekeeping such Collateral, and with respect to
any Collateral in the possession of a bailee or other third person selected by
the Secured Party if the Secured Party exercises reasonable care in the
selection of the bailee or other person. The Secured Party shall have no other
duty, liability or responsibility with respect to any Collateral.
5. The Secured Party, in the name of the Debtor or otherwise, whether
or not an Event of Default has occurred, shall have the authority but shall not
be obligated to demand, collect, receive and receipt for, compromise, compound,
settle and give acquittance for and prosecute and discontinue any suits or
proceedings in respect of any Collateral; take any action which the Secured
Party may deem necessary with respect to the Collateral, including without
limitation performing any contract or agreement and endorsing in the name of the
Debtor any checks, drafts, notes or other writings related to any Collateral;
and apply any proceeds against any of the Obligations as the Secured Party, in
its sole discretion, may determine, whether the same shall then be due or not
due. The Debtor shall not agree to any modification, amendment, subordination or
cancellation of any Collateral without the prior written consent of the Secured
Party.
6. The occurrence of any of the following events shall constitute an
"Event of Default": (a) any breach or default in the payment or performance of
any of the Obligations; or (b) any breach or default under the terms of this
Agreement or any other note, debenture, indenture, obligation, mortgage,
guaranty, other agreement, or other writing heretofore, herewith or hereafter
existing to which the Debtor or any maker, endorser, guarantor or surety of any
of the Obligations or any other person providing security for any of the
Obligations or for any guaranty of any of the Obligations is a party; or (c) the
insolvency, death, dissolution, liquidation, merger or consolidation of the
Debtor or any such maker, endorser, guarantor, surety or other person; or (d)
any appointment of a receiver, trustee or similar officer of any property of the
Debtor or any such maker, endorser, guarantor, surety or other person; or (e)
any assignment for the benefit of creditors of the Debtor or any such maker,
endorser, guarantor, surety or other person; or (f) any commencement of any
proceeding under any bankruptcy, insolvency, receivership, dissolution,
liquidation or similar law by or against the Debtor or any such maker, endorser,
guarantor, surety or other person; or (g) the sale, lease or other disposition
(whether in one transaction or in a series of transactions) to one or more
persons of all or a substantial part of the assets of the Debtor or any such
maker, endorser, guarantor, surety or other person; or (h) the Debtor or any
such maker, endorser, guarantor, surety or other person takes any action to
revoke or terminate any agreement, liability or security in favor of the Secured
Party; or (i) the entry of any judgment or other order for the payment of money
in the amount of $25,000.00 or more against the Debtor or any such maker,
endorser, guarantor, surety or other person; or (j) the issuance or levy of any
writ, warrant, attachment, garnishment, execution or other process against any
property of the Debtor or any such maker, endorser, guarantor, surety or other
person; or (k) the attachment of any tax lien to any property of the Debtor or
any such maker, endorser, guarantor, surety or other person; or (l) any
statement, representation or warranty made by the Debtor or any such maker,
endorser, guarantor, surety or other person (or any representative of the Debtor
or any such maker, endorser, guarantor, surety or other person) to the Secured
Party at any time shall be incorrect or misleading in any material respect when
made; or (m) there is a material adverse change in the condition (financial or
otherwise), business or property of the Debtor or any such maker, endorser,
guarantor, surety or other person; or (n) the Secured Party shall in good faith
believe that the prospect for due and punctual payment or performance of any of
the Obligations, this Agreement or any other note, obligation, mortgage,
guaranty, or other agreement heretofore, herewith or hereafter given to or
acquired by the Secured Party in connection with any of the Obligations is
impaired.
7. Upon the commencement of any proceeding under any bankruptcy law by
or against the Debtor or any such maker, endorser, guarantor, surety or other
person, all Obligations automatically shall become immediately due and payable
in full, without declaration, presentment, or other notice or demand, all of
which are hereby waived by the Debtor. In addition, upon the occurrence of an
Event of Default and at any time thereafter, the Secured Party may exercise any
one or more of the following rights and remedies: (a) declare all Obligations to
be immediately due and payable in full and the same shall thereupon be
immediately due and payable in full, without presentment or other notice or
demand, all of which are hereby waived by the Debtor; (b) exercise all voting
and other rights and options with respect to the Collateral; (c) exercise and
enforce any and all other rights and remedies available upon default under this
Agreement, the Uniform Commercial Code and any other applicable agreements and
laws. If notice to the Debtor of any intended disposition of Collateral or other
action is required, such notice shall be deemed reasonably and properly given if
mailed by regular or certified mail, postage prepaid, to the Debtor at the
address stated at the beginning of this Agreement or at the most recent address
shown in the Secured Party's records, at least 10 days prior to the action
described in such notice.
8. If the Secured Party elects to exercise its right to sell or
otherwise dispose of any Collateral and if, in the judgment of the Secured
Party, it is necessary to have the Collateral to be disposed of registered under
the provisions of the Securities Act of 1933, as amended (hereinafter the
"Act"), or any other law, the Debtor shall use the Debtor's best efforts to
cause the issuer of the Collateral and its directors and officers to take all
actions necessary to register the Collateral to be disposed of under the
provisions of the Act or such other law, and otherwise comply with all
provisions of the Act and all other applicable laws as the Secured Party deems
necessary in order to dispose of such Collateral, all at the expense of the
Debtor. Notwithstanding the foregoing, the Debtor recognizes that the Secured
Party may be compelled to resort to one or more private sales of Collateral to a
restricted group of purchasers who will be obligated to agree, among other
things, to acquire the Collateral for their own account, for investment and not
with a view to distribution or resale thereof. The Debtor acknowledges and
agrees that any such private sales may be at prices and on terms less favorable
to the Secured Party than those of public sales, and agrees that such private
sales shall be deemed to have been made in a commercially reasonable manner and
that the Secured Party shall have no obligation to delay the sale of any
Collateral to permit the issuer thereof to register it under the Act or any
other law or take any other action.
9. All of the Secured Party's advances, fees, charges, costs and
expenses, including but not limited to audit fees and expenses and reasonable
attorneys' fees and legal expenses, in connection with this Agreement, the
Collateral, the Security Interest and the Obligations, together with interest
thereon from the date incurred or paid by the Secured Party at the highest rate
then applicable to any of the Obligations, shall be secured hereunder and shall
be paid by the Debtor to the Secured Party on demand.
10. The Debtor consents to the personal jurisdiction of the state and
federal courts located in the State of Minnesota in connection with any
controversy related to this Agreement, the Collateral, the Security Interest or
any of the Obligations, waives any argument that venue in such forums is not
convenient, and agrees that any litigation initiated by the Debtor against the
Secured Party in connection with this Agreement, the Collateral, the Security
Interest or any of the Obligations shall be venued in either the District Court
of Hennepin County, Minnesota, or the United States District Court, District of
Minnesota, Fourth Division.
11. A carbon, photographic or other reproduction of this Agreement is
sufficient as a financing statement. No provision of this Agreement can be
waived, modified, amended, abridged, supplemented, terminated or discharged and
the Security Interest cannot be released or terminated, except by a writing duly
executed by the Secured Party. A waiver shall be effective only in the specific
instance and for the specific purpose given. No delay or failure to act shall
preclude the exercise or enforcement of any of the Secured Party's rights or
remedies. All rights and remedies of the Secured Party shall be cumulative and
may be exercised singularly, concurrently or successively at the Secured Party's
option, and the exercise or enforcement of any one such right or remedy shall
not be a condition to or bar the exercise or enforcement of any other. This
Agreement shall bind and benefit the Debtor and the Secured Party and their
respective successors and assigns and shall take effect when executed by the
Debtor and delivered to the Secured Party, and the Debtor waives notice of the
Secured Party's acceptance hereof. If any provision or application of this
Agreement 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 Agreement 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
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation, payment and performance of the Obligations. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE DEBTOR REPRESENTS, CERTIFIES, WARRANTS AND AGREES THAT THE DEBTOR
HAS READ ALL OF THIS AGREEMENT AND UNDERSTANDS ALL OF THE PROVISIONS OF THIS
AGREEMENT. THE DEBTOR ALSO AGREES THAT COMPLIANCE BY THE SECURED PARTY WITH THE
EXPRESS PROVISIONS OF THIS AGREEMENT SHALL CONSTITUTE GOOD FAITH AND SHALL BE
CONSIDERED REASONABLE FOR ALL PURPOSES.
LUNDGREN BROS. CONSTRUCTION, INC.
By_____________________________
Title__________________________
CONTROL AGREEMENT
(With Broker or other Securities Intermediary)
Date: March 21, 1996
Debtor: Lundgren Bros. Construction, Inc.
935 E. Wayzata Boulevard
Wayzata, MN 55391
Bank: First Bank National Association
601 Second Avenue South
Minneapolis, MN 55402-4302
Broker or other Securities Intermediary:
FBS Investment Services, Inc.
100 South Fifth Street, Suite 1400
Minneapolis, MN 55402
Defined Words. In this agreement, "Debtor" means each and all of the persons
shown above as Debtor. "Bank" means the Bank shown above. "Intermediary" means
the broker or other securities intermediary shown above. "Control" is defined in
the Uniform Commercial Code. The Debtor, the Bank, and the Intermediary agree to
all of the provisions of this agreement. The Debtor consents to the Intermediary
entering into this agreement.
Security Interest. The Debtor has given the Bank a security interest in the
following property (called the "Collateral"):
All of the Debtor's present and future investments and other property
in the Debtor's account number 000303451 with the Intermediary, all
present and future dividends and other distributions on such
investments and other property, all of the Debtor's other present and
future rights relating to such investments and other property, and all
proceeds.
Notice of Security Interest. The Debtor and the Bank give the Intermediary
notice of the Bank's security interest in the Collateral. The Intermediary
agrees that the Intermediary has received this notice, and that the Bank has a
security interest in the Collateral.
Control. By entering into this agreement, the Debtor, the Bank, and the
Intermediary are giving the Bank control over the Collateral and are perfecting
the Bank's security interest in the Collateral by control. The Intermediary will
comply with all of the Bank's entitlement orders relating to any of the
Collateral without any further consent of the Debtor. This means that the
Intermediary will comply with all notices from the Bank that direct the
Intermediary to trade or redeem any Collateral, or to deliver, transfer or pay
any Collateral to the Bank or to anyone that the Bank designates.
Rights of Debtor and Others. Except for cash dividends, without the Bank's
written consent, the Intermediary will not comply with any notice or other
request from the Debtor or anyone else (except the Bank) relating to any
Collateral, and the Intermediary will not trade or redeem any Collateral (except
at the Bank's request), or deliver, transfer or pay any Collateral to the Debtor
or anyone else except the Bank.
Cash Dividends. Until the Intermediary receives notice from the Bank that the
Debtor's dividend rights are cancelled, the Intermediary will pay all cash
dividends on the Collateral to the Debtor. After the Intermediary receives
notice from the Bank that the Debtor's dividend rights are cancelled, the
Intermediary will pay all cash dividends to the Bank or to anyone that the Bank
designates in the notice.
Debtor's Rights. If the Debtor's debts secured by the Collateral are paid in
full, and the Bank's obligations to lend to the Debtor are cancelled, at the
Debtor's request the Bank will cancel the security interest in the Collateral,
and the Bank and the Intermediary will cancel this agreement.
Representations and Agreements. The Debtor and the Intermediary represent to the
Bank and agree that:
1. No one except the Bank and the Intermediary has control over any of
the Collateral. Neither the Debtor nor the Intermediary has entered into any
agreement that gives anyone except the Bank and the Intermediary control over
any of the Collateral. No one has made a claim against any of the Collateral. No
one (except the Debtor, the Bank and the Intermediary) has any security
interest, other interest, lien or other right in any of the Collateral. The
Debtor and the Intermediary will immediately notify the Bank if anyone (other
than the Debtor, the Bank, or the Intermediary) makes a claim against any of the
Collateral, or asserts any security interest, other interest, lien or other
right in any of the Collateral.
2. Neither the Debtor nor the Intermediary will permit anyone other
than the Bank and the Intermediary to have control over any of the Collateral.
Neither the Debtor nor the Intermediary will enter into any agreement that gives
anyone except the Bank and the Intermediary control over any of the Collateral.
Without the Bank's written consent, the Intermediary will not issue any
certificate for any of the Collateral. The Intermediary will not give the Debtor
or anyone else (except the Bank) any certificate for any of the Collateral.
3. The Intermediary subordinates to the Bank's security interest all of
the Intermediary's present and future security interests, liens, claims, rights
of offset, and other rights and interests relating to any of the Collateral. The
Intermediary will not assert or enforce any of the Intermediary's present or
future security interests, liens, claims, rights of offset or other rights or
interests in any of the Collateral.
4. The Intermediary maintains security accounts for others in the
ordinary course of its business. The Intermediary is acting in that capacity
with respect to the Collateral and the Debtor. The Intermediary is a securities
intermediary under the Uniform Commercial Code with respect to the Collateral.
The Debtor has a security entitlement (as defined in the Uniform Commercial
Code) with respect to the Collateral.
5. The agreement between the Debtor and the Intermediary is governed by
the law of the State of Minnesota. That state is the Intermediary's jurisdiction
for purposes of the Uniform Commercial Code.
6. If the Bank requests, the Intermediary will give the Bank a copy of
the Intermediary's statements on the Collateral and any other information about
the Collateral. The Intermediary will comply with all other requests of the Bank
relating to any of the Collateral.
Tax Reporting. Until the Bank notifies the Intermediary to use a different
number, the Intermediary will make all reports relating to the Collateral to
federal, state and local tax authorities under the name and tax identification
number of the Debtor.
Waiver, Changes and Cancellations. Nothing in this agreement can be waived,
changed or cancelled, except by a writing signed by the Debtor, the Bank, and
the Intermediary. Nothing in this agreement will be affected by any act or
omission by anyone. This agreement overrides all other present and future
agreements to the contrary, except for present and future agreements signed by
or at the request of the Bank.
Successors. This agreement binds and benefits the Debtor, the Bank, and the
Intermediary and each of their heirs, representatives, successors and assigns.
Governing Law. This agreement is governed by the law of the state specified
above.
Counterparts. The Debtor, the Bank, and the Intermediary may sign one or more
different copies of this agreement. All of the signed copies together make up
this agreement.
LUNDGREN BROS. CONSTRUCTION, INC.
By_____________________________
Title__________________________
FIRST BANK NATIONAL ASSOCIATION
By_____________________________
Title__________________________
FBS INVESTMENT SERVICES, INC.
By_____________________________
Title__________________________
Intermediary's Acknowledgment:
STATE OF ____________ }
} ss.
COUNTY OF _________ }
This instrument was acknowledged before me on __________________, 19__
by ___________________________________, as _______________________________ of
FBS Investment Services, Inc., a __________________ corporation, on behalf of
the corporation.
(Seal) _____________________________________
Notary Public
My commission expires:
GUARANTY
Minneapolis, Minnesota
March 21, 1996
For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of and to induce financial
accommodations of any kind, with or without security, given or to be given or
continued at any time and from time to time by FIRST BANK NATIONAL ASSOCIATION
(hereinafter called the "Bank") to or for the account of LUNDGREN BROS.
CONSTRUCTION, INC. (hereinafter called the "Borrower"), the undersigned
absolutely and unconditionally guarantees to the Bank the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of any and all indebtedness, obligations and liabilities of the
Borrower (and any and all successors of the Borrower) to the Bank and also to
others to the extent of their participations granted to or interests therein
created or acquired for them by the Bank, now or hereafter existing, absolute or
contingent, independent, joint, several or joint and several, secured or
unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation
all indebtedness, obligations and liabilities owed by the Borrower (and any and
all successors of the Borrower) as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower (or any
successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (hereinafter collectively referred to as the
"Indebtedness"); and the undersigned agrees to pay on demand all of the Bank's
fees, costs, expenses and attorneys' fees in connection with the Indebtedness,
any security therefor, and this guaranty, plus interest on such amounts at the
highest rate then applicable to any of the Indebtedness.
The Bank may at any time and from time to time, without
consent of or notice to the undersigned, without incurring responsibility to the
undersigned, without releasing, impairing or affecting the liability of the
undersigned hereunder, upon or without any terms or conditions, and in whole or
in part: (1) sell, pledge, surrender, compromise, settle, release, renew,
subordinate, extend, alter, substitute, exchange, change, modify or otherwise
dispose of or deal with in any manner and in any order any Indebtedness, any
evidence thereof, or any security or other guaranty therefor; (2) accept any
security for or other guarantors of any Indebtedness; (3) fail, neglect or omit
to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the
liquidation of the Indebtedness, or to exercise any other right against the
Borrower, the undersigned, any other guarantor or any other person; and (4)
apply any payments and credits to the Indebtedness in any manner and in any
order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment
of the liability of the undersigned hereunder, shall in any way release, impair
or otherwise affect the liability of the undersigned hereunder, and the
undersigned waives any and all defenses of the Borrower pertaining to the
Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign
this or any other guaranty shall not release, impair or affect the liability of
the undersigned hereunder. This guaranty is a primary obligation of the
undersigned and the Bank shall not be required to first resort for payment of
the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in
addition to and shall be cumulative with all other liabilities of the
undersigned to the Bank, as guarantor or otherwise, without any limitation as to
amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned for any reason (including without limitation the bankruptcy, insolvency
or reorganization of the Borrower or any 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 never been made.
The undersigned waives: (1) notice of acceptance of this
guaranty and of the creation and existence of the Indebtedness; (2) presentment,
demand for payment, notice of dishonor, notice of nonpayment, and protest of any
instrument evidencing the Indebtedness; and (3) all other demands and notices to
the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota
in connection with any controversy related to this guaranty, waives any argument
that venue in such forums is not convenient, and agrees that any litigation
initiated by the undersigned against the Bank in connection with this guaranty
shall be venued in either the District Court of Hennepin County, Minnesota, or
the United States District Court, District of Minnesota, Fourth Division.
The undersigned hereby agrees that the Bank shall have no duty
to advise the undersigned of information now or hereafter known to the Bank
regarding the financial or other condition of the Borrower or any other person
primarily or secondarily liable on the Indebtedness or regarding any
circumstance bearing on the risk of nonpayment of the Indebtedness. The
undersigned acknowledges and agrees that the undersigned has conducted its own
investigation of the business and affairs of the Borrower and any other person
primarily or secondarily liable on the Indebtedness to its satisfaction, has not
relied and will not rely on any information provided by the Bank in determining
whether to enter into or continue this guaranty, and is and will continue to
remain informed of the Borrower's financial condition, the status and financial
condition of other guarantors, if any, and all other circumstances which bear
upon the risk of nonpayment of the Indebtedness. The undersigned represents and
warrants to the Bank that there has been no material adverse change in the
financial condition of the undersigned since the date of the last personal
financial statement of the undersigned that was delivered to the Bank before the
date of this guaranty.
All property of the undersigned, now or hereafter in the
possession, control or custody of or in transit to the Bank for any purpose,
including without limitation the balance of every account of the undersigned
with and each claim of the undersigned against the Bank, shall be subject to a
lien and security interest in favor of the Bank, as security for all liabilities
of the undersigned to the Bank, and shall be subject to be set off against any
and all such liabilities, and the Bank may at any time and from time to time at
its option and without notice appropriate and apply any such property toward the
payment of any and all such liabilities. The undersigned agrees to promptly
provide the Bank from time to time with financial statements of the undersigned
and a listing of contingent obligations of the undersigned, in form and
substance acceptable to the Bank, at least once every 12 months and as otherwise
requested by the Bank. The undersigned agrees to promptly provide the Bank from
time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Bank may request, in
form and substance acceptable to the Bank.
The undersigned waives all claims, rights and remedies which
the undersigned may now have or hereafter acquire against any person at any time
now or hereafter liable to payment of any of the Indebtedness and as to any
collateral security, including but not limited to all claims, rights and
remedies of contribution, indemnification, exoneration, reimbursement, recourse
and subrogation, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise, whether or not the
Indebtedness has been fully paid, and all payments and recoveries under this
guaranty shall be considered equity investments by the undersigned in the
Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully
paid, against any person other than the Borrower. No delay or failure by the
Bank in exercising any right, and no partial or single exercise thereof shall
constitute a waiver thereof. No waiver of any rights hereunder, and no
modification or amendment of this guaranty shall be effective unless the same is
in writing duly executed by the Bank, and each such waiver, if any, shall apply
only with respect to the specific instance involved and shall not impair or
affect the rights of the Bank or the provisions of this guaranty in any other
respect at any other time. This guaranty shall continue until written notice of
revocation of this guaranty, executed by the undersigned, has been received by
the Bank; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to
Indebtedness arising before the Bank receives such written notice of revocation,
and the sole effect of revocation of this guaranty shall be to exclude from this
guaranty Indebtedness thereafter arising which is unconnected with Indebtedness
theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or
application of this guaranty shall not affect other lawful provisions and
applications hereof and to this end the provisions of this guaranty are declared
to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them
respectively, and shall benefit the Bank, its successors and assigns. This
guaranty shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE
BANK WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH
AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
__________________________________________
Edmund Lundgren
GUARANTY
Minneapolis, Minnesota
March 21, 1996
For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of and to induce financial
accommodations of any kind, with or without security, given or to be given or
continued at any time and from time to time by FIRST BANK NATIONAL ASSOCIATION
(hereinafter called the "Bank") to or for the account of LUNDGREN BROS.
CONSTRUCTION, INC. (hereinafter called the "Borrower"), the undersigned
absolutely and unconditionally guarantees to the Bank the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of any and all indebtedness, obligations and liabilities of the
Borrower (and any and all successors of the Borrower) to the Bank and also to
others to the extent of their participations granted to or interests therein
created or acquired for them by the Bank, now or hereafter existing, absolute or
contingent, independent, joint, several or joint and several, secured or
unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation
all indebtedness, obligations and liabilities owed by the Borrower (and any and
all successors of the Borrower) as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower (or any
successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (hereinafter collectively referred to as the
"Indebtedness"); and the undersigned agrees to pay on demand all of the Bank's
fees, costs, expenses and attorneys' fees in connection with the Indebtedness,
any security therefor, and this guaranty, plus interest on such amounts at the
highest rate then applicable to any of the Indebtedness.
The Bank may at any time and from time to time, without
consent of or notice to the undersigned, without incurring responsibility to the
undersigned, without releasing, impairing or affecting the liability of the
undersigned hereunder, upon or without any terms or conditions, and in whole or
in part: (1) sell, pledge, surrender, compromise, settle, release, renew,
subordinate, extend, alter, substitute, exchange, change, modify or otherwise
dispose of or deal with in any manner and in any order any Indebtedness, any
evidence thereof, or any security or other guaranty therefor; (2) accept any
security for or other guarantors of any Indebtedness; (3) fail, neglect or omit
to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the
liquidation of the Indebtedness, or to exercise any other right against the
Borrower, the undersigned, any other guarantor or any other person; and (4)
apply any payments and credits to the Indebtedness in any manner and in any
order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment
of the liability of the undersigned hereunder, shall in any way release, impair
or otherwise affect the liability of the undersigned hereunder, and the
undersigned waives any and all defenses of the Borrower pertaining to the
Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign
this or any other guaranty shall not release, impair or affect the liability of
the undersigned hereunder. This guaranty is a primary obligation of the
undersigned and the Bank shall not be required to first resort for payment of
the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in
addition to and shall be cumulative with all other liabilities of the
undersigned to the Bank, as guarantor or otherwise, without any limitation as to
amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned for any reason (including without limitation the bankruptcy, insolvency
or reorganization of the Borrower or any 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 never been made.
The undersigned waives: (1) notice of acceptance of this
guaranty and of the creation and existence of the Indebtedness; (2) presentment,
demand for payment, notice of dishonor, notice of nonpayment, and protest of any
instrument evidencing the Indebtedness; and (3) all other demands and notices to
the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota
in connection with any controversy related to this guaranty, waives any argument
that venue in such forums is not convenient, and agrees that any litigation
initiated by the undersigned against the Bank in connection with this guaranty
shall be venued in either the District Court of Hennepin County, Minnesota, or
the United States District Court, District of Minnesota, Fourth Division.
The undersigned hereby agrees that the Bank shall have no duty
to advise the undersigned of information now or hereafter known to the Bank
regarding the financial or other condition of the Borrower or any other person
primarily or secondarily liable on the Indebtedness or regarding any
circumstance bearing on the risk of nonpayment of the Indebtedness. The
undersigned acknowledges and agrees that the undersigned has conducted its own
investigation of the business and affairs of the Borrower and any other person
primarily or secondarily liable on the Indebtedness to its satisfaction, has not
relied and will not rely on any information provided by the Bank in determining
whether to enter into or continue this guaranty, and is and will continue to
remain informed of the Borrower's financial condition, the status and financial
condition of other guarantors, if any, and all other circumstances which bear
upon the risk of nonpayment of the Indebtedness. The undersigned represents and
warrants to the Bank that there has been no material adverse change in the
financial condition of the undersigned since the date of the last personal
financial statement of the undersigned that was delivered to the Bank before the
date of this guaranty.
All property of the undersigned, now or hereafter in the
possession, control or custody of or in transit to the Bank for any purpose,
including without limitation the balance of every account of the undersigned
with and each claim of the undersigned against the Bank, shall be subject to a
lien and security interest in favor of the Bank, as security for all liabilities
of the undersigned to the Bank, and shall be subject to be set off against any
and all such liabilities, and the Bank may at any time and from time to time at
its option and without notice appropriate and apply any such property toward the
payment of any and all such liabilities. The undersigned agrees to promptly
provide the Bank from time to time with financial statements of the undersigned
and a listing of contingent obligations of the undersigned, in form and
substance acceptable to the Bank, at least once every 12 months and as otherwise
requested by the Bank. The undersigned agrees to promptly provide the Bank from
time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Bank may request, in
form and substance acceptable to the Bank.
The undersigned waives all claims, rights and remedies which
the undersigned may now have or hereafter acquire against any person at any time
now or hereafter liable to payment of any of the Indebtedness and as to any
collateral security, including but not limited to all claims, rights and
remedies of contribution, indemnification, exoneration, reimbursement, recourse
and subrogation, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise, whether or not the
Indebtedness has been fully paid, and all payments and recoveries under this
guaranty shall be considered equity investments by the undersigned in the
Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully
paid, against any person other than the Borrower. No delay or failure by the
Bank in exercising any right, and no partial or single exercise thereof shall
constitute a waiver thereof. No waiver of any rights hereunder, and no
modification or amendment of this guaranty shall be effective unless the same is
in writing duly executed by the Bank, and each such waiver, if any, shall apply
only with respect to the specific instance involved and shall not impair or
affect the rights of the Bank or the provisions of this guaranty in any other
respect at any other time. This guaranty shall continue until written notice of
revocation of this guaranty, executed by the undersigned, has been received by
the Bank; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to
Indebtedness arising before the Bank receives such written notice of revocation,
and the sole effect of revocation of this guaranty shall be to exclude from this
guaranty Indebtedness thereafter arising which is unconnected with Indebtedness
theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or
application of this guaranty shall not affect other lawful provisions and
applications hereof and to this end the provisions of this guaranty are declared
to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them
respectively, and shall benefit the Bank, its successors and assigns. This
guaranty shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE
BANK WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH
AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
_____________________________________
Allan Lundgren
GUARANTY
Minneapolis, Minnesota
March 21, 1996
For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of and to induce financial
accommodations of any kind, with or without security, given or to be given or
continued at any time and from time to time by FIRST BANK NATIONAL ASSOCIATION
(hereinafter called the "Bank") to or for the account of LUNDGREN BROS.
CONSTRUCTION, INC. (hereinafter called the "Borrower"), the undersigned
absolutely and unconditionally guarantees to the Bank the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of any and all indebtedness, obligations and liabilities of the
Borrower (and any and all successors of the Borrower) to the Bank and also to
others to the extent of their participations granted to or interests therein
created or acquired for them by the Bank, now or hereafter existing, absolute or
contingent, independent, joint, several or joint and several, secured or
unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation
all indebtedness, obligations and liabilities owed by the Borrower (and any and
all successors of the Borrower) as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower (or any
successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (hereinafter collectively referred to as the
"Indebtedness"); and the undersigned agrees to pay on demand all of the Bank's
fees, costs, expenses and attorneys' fees in connection with the Indebtedness,
any security therefor, and this guaranty, plus interest on such amounts at the
highest rate then applicable to any of the Indebtedness.
The Bank may at any time and from time to time, without
consent of or notice to the undersigned, without incurring responsibility to the
undersigned, without releasing, impairing or affecting the liability of the
undersigned hereunder, upon or without any terms or conditions, and in whole or
in part: (1) sell, pledge, surrender, compromise, settle, release, renew,
subordinate, extend, alter, substitute, exchange, change, modify or otherwise
dispose of or deal with in any manner and in any order any Indebtedness, any
evidence thereof, or any security or other guaranty therefor; (2) accept any
security for or other guarantors of any Indebtedness; (3) fail, neglect or omit
to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the
liquidation of the Indebtedness, or to exercise any other right against the
Borrower, the undersigned, any other guarantor or any other person; and (4)
apply any payments and credits to the Indebtedness in any manner and in any
order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment
of the liability of the undersigned hereunder, shall in any way release, impair
or otherwise affect the liability of the undersigned hereunder, and the
undersigned waives any and all defenses of the Borrower pertaining to the
Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign
this or any other guaranty shall not release, impair or affect the liability of
the undersigned hereunder. This guaranty is a primary obligation of the
undersigned and the Bank shall not be required to first resort for payment of
the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in
addition to and shall be cumulative with all other liabilities of the
undersigned to the Bank, as guarantor or otherwise, without any limitation as to
amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned for any reason (including without limitation the bankruptcy, insolvency
or reorganization of the Borrower or any 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 never been made.
The undersigned waives: (1) notice of acceptance of this
guaranty and of the creation and existence of the Indebtedness; (2) presentment,
demand for payment, notice of dishonor, notice of nonpayment, and protest of any
instrument evidencing the Indebtedness; and (3) all other demands and notices to
the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota
in connection with any controversy related to this guaranty, waives any argument
that venue in such forums is not convenient, and agrees that any litigation
initiated by the undersigned against the Bank in connection with this guaranty
shall be venued in either the District Court of Hennepin County, Minnesota, or
the United States District Court, District of Minnesota, Fourth Division.
The undersigned hereby agrees that the Bank shall have no duty
to advise the undersigned of information now or hereafter known to the Bank
regarding the financial or other condition of the Borrower or any other person
primarily or secondarily liable on the Indebtedness or regarding any
circumstance bearing on the risk of nonpayment of the Indebtedness. The
undersigned acknowledges and agrees that the undersigned has conducted its own
investigation of the business and affairs of the Borrower and any other person
primarily or secondarily liable on the Indebtedness to its satisfaction, has not
relied and will not rely on any information provided by the Bank in determining
whether to enter into or continue this guaranty, and is and will continue to
remain informed of the Borrower's financial condition, the status and financial
condition of other guarantors, if any, and all other circumstances which bear
upon the risk of nonpayment of the Indebtedness. The undersigned represents and
warrants to the Bank that there has been no material adverse change in the
financial condition of the undersigned since the date of the last personal
financial statement of the undersigned that was delivered to the Bank before the
date of this guaranty.
All property of the undersigned, now or hereafter in the
possession, control or custody of or in transit to the Bank for any purpose,
including without limitation the balance of every account of the undersigned
with and each claim of the undersigned against the Bank, shall be subject to a
lien and security interest in favor of the Bank, as security for all liabilities
of the undersigned to the Bank, and shall be subject to be set off against any
and all such liabilities, and the Bank may at any time and from time to time at
its option and without notice appropriate and apply any such property toward the
payment of any and all such liabilities. The undersigned agrees to promptly
provide the Bank from time to time with financial statements of the undersigned
and a listing of contingent obligations of the undersigned, in form and
substance acceptable to the Bank, at least once every 12 months and as otherwise
requested by the Bank. The undersigned agrees to promptly provide the Bank from
time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Bank may request, in
form and substance acceptable to the Bank.
The undersigned waives all claims, rights and remedies which
the undersigned may now have or hereafter acquire against any person at any time
now or hereafter liable to payment of any of the Indebtedness and as to any
collateral security, including but not limited to all claims, rights and
remedies of contribution, indemnification, exoneration, reimbursement, recourse
and subrogation, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise, whether or not the
Indebtedness has been fully paid, and all payments and recoveries under this
guaranty shall be considered equity investments by the undersigned in the
Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully
paid, against any person other than the Borrower. No delay or failure by the
Bank in exercising any right, and no partial or single exercise thereof shall
constitute a waiver thereof. No waiver of any rights hereunder, and no
modification or amendment of this guaranty shall be effective unless the same is
in writing duly executed by the Bank, and each such waiver, if any, shall apply
only with respect to the specific instance involved and shall not impair or
affect the rights of the Bank or the provisions of this guaranty in any other
respect at any other time. This guaranty shall continue until written notice of
revocation of this guaranty, executed by the undersigned, has been received by
the Bank; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to
Indebtedness arising before the Bank receives such written notice of revocation,
and the sole effect of revocation of this guaranty shall be to exclude from this
guaranty Indebtedness thereafter arising which is unconnected with Indebtedness
theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or
application of this guaranty shall not affect other lawful provisions and
applications hereof and to this end the provisions of this guaranty are declared
to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them
respectively, and shall benefit the Bank, its successors and assigns. This
guaranty shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE
BANK WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH
AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
_____________________________________
Peter T. Pflaum
GUARANTY
Minneapolis, Minnesota
March 21, 1996
For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of and to induce financial
accommodations of any kind, with or without security, given or to be given or
continued at any time and from time to time by FIRST BANK NATIONAL ASSOCIATION
(hereinafter called the "Bank") to or for the account of LUNDGREN BROS.
CONSTRUCTION, INC. (hereinafter called the "Borrower"), the undersigned
absolutely and unconditionally guarantees to the Bank the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of any and all indebtedness, obligations and liabilities of the
Borrower (and any and all successors of the Borrower) to the Bank and also to
others to the extent of their participations granted to or interests therein
created or acquired for them by the Bank, now or hereafter existing, absolute or
contingent, independent, joint, several or joint and several, secured or
unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation
all indebtedness, obligations and liabilities owed by the Borrower (and any and
all successors of the Borrower) as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower (or any
successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (hereinafter collectively referred to as the
"Indebtedness"); and the undersigned agrees to pay on demand all of the Bank's
fees, costs, expenses and attorneys' fees in connection with the Indebtedness,
any security therefor, and this guaranty, plus interest on such amounts at the
highest rate then applicable to any of the Indebtedness.
The Bank may at any time and from time to time, without
consent of or notice to the undersigned, without incurring responsibility to the
undersigned, without releasing, impairing or affecting the liability of the
undersigned hereunder, upon or without any terms or conditions, and in whole or
in part: (1) sell, pledge, surrender, compromise, settle, release, renew,
subordinate, extend, alter, substitute, exchange, change, modify or otherwise
dispose of or deal with in any manner and in any order any Indebtedness, any
evidence thereof, or any security or other guaranty therefor; (2) accept any
security for or other guarantors of any Indebtedness; (3) fail, neglect or omit
to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the
liquidation of the Indebtedness, or to exercise any other right against the
Borrower, the undersigned, any other guarantor or any other person; and (4)
apply any payments and credits to the Indebtedness in any manner and in any
order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment
of the liability of the undersigned hereunder, shall in any way release, impair
or otherwise affect the liability of the undersigned hereunder, and the
undersigned waives any and all defenses of the Borrower pertaining to the
Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign
this or any other guaranty shall not release, impair or affect the liability of
the undersigned hereunder. This guaranty is a primary obligation of the
undersigned and the Bank shall not be required to first resort for payment of
the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in
addition to and shall be cumulative with all other liabilities of the
undersigned to the Bank, as guarantor or otherwise, without any limitation as to
amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned for any reason (including without limitation the bankruptcy, insolvency
or reorganization of the Borrower or any 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 never been made.
The undersigned waives: (1) notice of acceptance of this
guaranty and of the creation and existence of the Indebtedness; (2) presentment,
demand for payment, notice of dishonor, notice of nonpayment, and protest of any
instrument evidencing the Indebtedness; and (3) all other demands and notices to
the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota
in connection with any controversy related to this guaranty, waives any argument
that venue in such forums is not convenient, and agrees that any litigation
initiated by the undersigned against the Bank in connection with this guaranty
shall be venued in either the District Court of Hennepin County, Minnesota, or
the United States District Court, District of Minnesota, Fourth Division.
The undersigned hereby agrees that the Bank shall have no duty
to advise the undersigned of information now or hereafter known to the Bank
regarding the financial or other condition of the Borrower or any other person
primarily or secondarily liable on the Indebtedness or regarding any
circumstance bearing on the risk of nonpayment of the Indebtedness. The
undersigned acknowledges and agrees that the undersigned has conducted its own
investigation of the business and affairs of the Borrower and any other person
primarily or secondarily liable on the Indebtedness to its satisfaction, has not
relied and will not rely on any information provided by the Bank in determining
whether to enter into or continue this guaranty, and is and will continue to
remain informed of the Borrower's financial condition, the status and financial
condition of other guarantors, if any, and all other circumstances which bear
upon the risk of nonpayment of the Indebtedness. The undersigned represents and
warrants to the Bank that there has been no material adverse change in the
financial condition of the undersigned since the date of the last personal
financial statement of the undersigned that was delivered to the Bank before the
date of this guaranty.
All property of the undersigned, now or hereafter in the
possession, control or custody of or in transit to the Bank for any purpose,
including without limitation the balance of every account of the undersigned
with and each claim of the undersigned against the Bank, shall be subject to a
lien and security interest in favor of the Bank, as security for all liabilities
of the undersigned to the Bank, and shall be subject to be set off against any
and all such liabilities, and the Bank may at any time and from time to time at
its option and without notice appropriate and apply any such property toward the
payment of any and all such liabilities. The undersigned agrees to promptly
provide the Bank from time to time with financial statements of the undersigned
and a listing of contingent obligations of the undersigned, in form and
substance acceptable to the Bank, at least once every 12 months and as otherwise
requested by the Bank. The undersigned agrees to promptly provide the Bank from
time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Bank may request, in
form and substance acceptable to the Bank.
The undersigned waives all claims, rights and remedies which
the undersigned may now have or hereafter acquire against any person at any time
now or hereafter liable to payment of any of the Indebtedness and as to any
collateral security, including but not limited to all claims, rights and
remedies of contribution, indemnification, exoneration, reimbursement, recourse
and subrogation, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise, whether or not the
Indebtedness has been fully paid, and all payments and recoveries under this
guaranty shall be considered equity investments by the undersigned in the
Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully
paid, against any person other than the Borrower. No delay or failure by the
Bank in exercising any right, and no partial or single exercise thereof shall
constitute a waiver thereof. No waiver of any rights hereunder, and no
modification or amendment of this guaranty shall be effective unless the same is
in writing duly executed by the Bank, and each such waiver, if any, shall apply
only with respect to the specific instance involved and shall not impair or
affect the rights of the Bank or the provisions of this guaranty in any other
respect at any other time. This guaranty shall continue until written notice of
revocation of this guaranty, executed by the undersigned, has been received by
the Bank; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to
Indebtedness arising before the Bank receives such written notice of revocation,
and the sole effect of revocation of this guaranty shall be to exclude from this
guaranty Indebtedness thereafter arising which is unconnected with Indebtedness
theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or
application of this guaranty shall not affect other lawful provisions and
applications hereof and to this end the provisions of this guaranty are declared
to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them
respectively, and shall benefit the Bank, its successors and assigns. This
guaranty shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE
BANK WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH
AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
___________________________________________
Patrick C. Wells
GUARANTY
Minneapolis, Minnesota
March 21, 1996
For valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in consideration of and to induce financial
accommodations of any kind, with or without security, given or to be given or
continued at any time and from time to time by FIRST BANK NATIONAL ASSOCIATION
(hereinafter called the "Bank") to or for the account of LUNDGREN BROS.
CONSTRUCTION, INC. (hereinafter called the "Borrower"), the undersigned
absolutely and unconditionally guarantees to the Bank the full and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of any and all indebtedness, obligations and liabilities of the
Borrower (and any and all successors of the Borrower) to the Bank and also to
others to the extent of their participations granted to or interests therein
created or acquired for them by the Bank, now or hereafter existing, absolute or
contingent, independent, joint, several or joint and several, secured or
unsecured, due or to become due, contractual or tortious, liquidated or
unliquidated, arising by assignment or otherwise, including without limitation
all indebtedness, obligations and liabilities owed by the Borrower (and any and
all successors of the Borrower) as a member of any partnership, syndicate,
association or other group, and whether incurred by the Borrower (or any
successor of the Borrower) as principal, surety, endorser, guarantor,
accommodation party or otherwise (hereinafter collectively referred to as the
"Indebtedness"); and the undersigned agrees to pay on demand all of the Bank's
fees, costs, expenses and attorneys' fees in connection with the Indebtedness,
any security therefor, and this guaranty, plus interest on such amounts at the
highest rate then applicable to any of the Indebtedness.
The Bank may at any time and from time to time, without
consent of or notice to the undersigned, without incurring responsibility to the
undersigned, without releasing, impairing or affecting the liability of the
undersigned hereunder, upon or without any terms or conditions, and in whole or
in part: (1) sell, pledge, surrender, compromise, settle, release, renew,
subordinate, extend, alter, substitute, exchange, change, modify or otherwise
dispose of or deal with in any manner and in any order any Indebtedness, any
evidence thereof, or any security or other guaranty therefor; (2) accept any
security for or other guarantors of any Indebtedness; (3) fail, neglect or omit
to obtain, realize upon or protect any Indebtedness or any security therefor, to
exercise any lien upon or right to any money, credit or property toward the
liquidation of the Indebtedness, or to exercise any other right against the
Borrower, the undersigned, any other guarantor or any other person; and (4)
apply any payments and credits to the Indebtedness in any manner and in any
order. No act, omission or thing, except full payment and discharge of the
Indebtedness, which but for this provision could act as a release or impairment
of the liability of the undersigned hereunder, shall in any way release, impair
or otherwise affect the liability of the undersigned hereunder, and the
undersigned waives any and all defenses of the Borrower pertaining to the
Indebtedness, any evidence thereof, and any security therefor, except the
defense of discharge by payment. The failure of any person or persons to sign
this or any other guaranty shall not release, impair or affect the liability of
the undersigned hereunder. This guaranty is a primary obligation of the
undersigned and the Bank shall not be required to first resort for payment of
the Indebtedness to the Borrower or any other person, their properties or
estates, or any security or other rights or remedies whatsoever. The undersigned
shall be and remain liable for any deficiency remaining after foreclosure of any
mortgage or security interest securing the Indebtedness, whether or not the
liability of the Borrower or any other person for such deficiency is discharged
pursuant to statute, judicial decision or otherwise.
The liability of the undersigned under this guaranty is in
addition to and shall be cumulative with all other liabilities of the
undersigned to the Bank, as guarantor or otherwise, without any limitation as to
amount, unless the writing evidencing or creating such other liability
specifically provides to the contrary. If any payment applied by the Bank to the
Indebtedness is thereafter set aside, recovered, rescinded or required to be
returned for any reason (including without limitation the bankruptcy, insolvency
or reorganization of the Borrower or any 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 never been made.
The undersigned waives: (1) notice of acceptance of this
guaranty and of the creation and existence of the Indebtedness; (2) presentment,
demand for payment, notice of dishonor, notice of nonpayment, and protest of any
instrument evidencing the Indebtedness; and (3) all other demands and notices to
the undersigned or any other person and all other actions to establish the
liability of the undersigned hereunder. The undersigned consents to the personal
jurisdiction of the state and federal courts located in the State of Minnesota
in connection with any controversy related to this guaranty, waives any argument
that venue in such forums is not convenient, and agrees that any litigation
initiated by the undersigned against the Bank in connection with this guaranty
shall be venued in either the District Court of Hennepin County, Minnesota, or
the United States District Court, District of Minnesota, Fourth Division.
The undersigned hereby agrees that the Bank shall have no duty
to advise the undersigned of information now or hereafter known to the Bank
regarding the financial or other condition of the Borrower or any other person
primarily or secondarily liable on the Indebtedness or regarding any
circumstance bearing on the risk of nonpayment of the Indebtedness. The
undersigned acknowledges and agrees that the undersigned has conducted its own
investigation of the business and affairs of the Borrower and any other person
primarily or secondarily liable on the Indebtedness to its satisfaction, has not
relied and will not rely on any information provided by the Bank in determining
whether to enter into or continue this guaranty, and is and will continue to
remain informed of the Borrower's financial condition, the status and financial
condition of other guarantors, if any, and all other circumstances which bear
upon the risk of nonpayment of the Indebtedness. The undersigned represents and
warrants to the Bank that there has been no material adverse change in the
financial condition of the undersigned since the date of the last personal
financial statement of the undersigned that was delivered to the Bank before the
date of this guaranty.
All property of the undersigned, now or hereafter in the
possession, control or custody of or in transit to the Bank for any purpose,
including without limitation the balance of every account of the undersigned
with and each claim of the undersigned against the Bank, shall be subject to a
lien and security interest in favor of the Bank, as security for all liabilities
of the undersigned to the Bank, and shall be subject to be set off against any
and all such liabilities, and the Bank may at any time and from time to time at
its option and without notice appropriate and apply any such property toward the
payment of any and all such liabilities. The undersigned agrees to promptly
provide the Bank from time to time with financial statements of the undersigned
and a listing of contingent obligations of the undersigned, in form and
substance acceptable to the Bank, at least once every 12 months and as otherwise
requested by the Bank. The undersigned agrees to promptly provide the Bank from
time to time with such other information respecting the condition (financial and
otherwise), business and property of the undersigned as the Bank may request, in
form and substance acceptable to the Bank.
The undersigned waives all claims, rights and remedies which
the undersigned may now have or hereafter acquire against any person at any time
now or hereafter liable to payment of any of the Indebtedness and as to any
collateral security, including but not limited to all claims, rights and
remedies of contribution, indemnification, exoneration, reimbursement, recourse
and subrogation, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise, whether or not the
Indebtedness has been fully paid, and all payments and recoveries under this
guaranty shall be considered equity investments by the undersigned in the
Borrower; provided, nothing contained in this guaranty shall deprive the
undersigned of any claim, right or remedy, after the Indebtedness has been fully
paid, against any person other than the Borrower. No delay or failure by the
Bank in exercising any right, and no partial or single exercise thereof shall
constitute a waiver thereof. No waiver of any rights hereunder, and no
modification or amendment of this guaranty shall be effective unless the same is
in writing duly executed by the Bank, and each such waiver, if any, shall apply
only with respect to the specific instance involved and shall not impair or
affect the rights of the Bank or the provisions of this guaranty in any other
respect at any other time. This guaranty shall continue until written notice of
revocation of this guaranty, executed by the undersigned, has been received by
the Bank; provided, no revocation of this guaranty shall affect in any manner
any liability of the undersigned under this guaranty with respect to
Indebtedness arising before the Bank receives such written notice of revocation,
and the sole effect of revocation of this guaranty shall be to exclude from this
guaranty Indebtedness thereafter arising which is unconnected with Indebtedness
theretofore arising or transactions theretofore entered into.
Any invalidity or unenforceability of any provision or
application of this guaranty shall not affect other lawful provisions and
applications hereof and to this end the provisions of this guaranty are declared
to be severable. This guaranty shall bind the undersigned and the heirs,
representatives, successors and assigns of the undersigned, and of each of them
respectively, and shall benefit the Bank, its successors and assigns. This
guaranty shall be governed by and construed in accordance with the laws of the
State of Minnesota.
THE UNDERSIGNED REPRESENTS, CERTIFIES, WARRANTS AND AGREES
THAT THE UNDERSIGNED HAS READ ALL OF THIS GUARANTY AND UNDERSTANDS ALL OF THE
PROVISIONS OF THIS GUARANTY. THE UNDERSIGNED ALSO AGREES THAT COMPLIANCE BY THE
BANK WITH THE EXPRESS PROVISIONS OF THIS GUARANTY SHALL CONSTITUTE GOOD FAITH
AND SHALL BE CONSIDERED REASONABLE FOR ALL PURPOSES.
____________________________________________
Gerald Lundgren
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