--------------------------------------------------------------------------------
LOAN AND SECURITY AGREEMENT
by and among
THE NEW ALGAE COMPANY
dba Cell Tech, an Oregon corporation
THE NEW EARTH COMPANY,
an Oregon corporation
and
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank,
a California corporation
Dated as of June 21, 1999
--------------------------------------------------------------------------------
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
Table of Contents
-----------------
Page
----
1. DEFINITIONS ........................................................... 1
Account Debtor ................................................... 1
"Advances" ....................................................... 1
Affiliate ........................................................ 1
Audit ............................................................ 1
Borrower ......................................................... 1
Borrower's Address ............................................... 1
Business Day ..................................................... 1
Change of Control ................................................ 1
Closing Date ..................................................... 2
Coast ............................................................ 2
Code ............................................................. 2
Collateral ....................................................... 2
Collections ...................................................... 2
Credit Limit ..................................................... 2
Debt ............................................................. 2
Debt Service Coverage Ratio ...................................... 2
Default .......................................................... 2
Deposit Account .................................................. 2
Dollars or $ ..................................................... 2
Early Termination Fee ............................................ 2
EBITDA ........................................................... 2
Eligible Inventory ............................................... 2
Eligible Wholesale Receivables ................................... 2
Equipment ........................................................ 4
Equipment Acquisition Loans ...................................... 4
Event of Default ................................................. 4
GAAP ............................................................. 4
General Intangibles .............................................. 4
Gross Collections ................................................ 4
Guarantors ....................................................... 4
Inventory ........................................................ 4
Inventory Loans .................................................. 4
Loan Documents ................................................... 4
Loans ............................................................ 4
Material Adverse Effect .......................................... 4
Maturity Date .................................................... 5
Maximum Dollar Amount ............................................ 5
Minimum Monthly Interest ......................................... 5
Net Collections .................................................. 5
Network Marketing Customer Base .................................. 5
Network Marketing Customers ...................................... 5
Obligations ...................................................... 5
Permitted Liens .................................................. 5
Person ........................................................... 6
Prime Rate ....................................................... 6
Real Property .................................................... 6
Receivable Loans ................................................. 6
Receivables ...................................................... 6
Renewal Date ..................................................... 6
Renewal Fee ...................................................... 6
Solvent .......................................................... 6
Tangible Net Worth ............................................... 6
Term Loan ........................................................ 7
Wholesale Receivables ............................................ 7
Year 2000 Problem ................................................ 7
Other Terms ...................................................... 7
2. CREDIT FACILITIES ..................................................... 7
2.1 Loans ............................................................ 7
3. INTEREST AND FEES ..................................................... 7
3.1 Interest ......................................................... 7
3.2 Fees ............................................................. 7
4. SECURITY INTEREST ..................................................... 7
5. CONDITIONS PRECEDENT .................................................. 7
5.1 Status of Accounts at Closing ................................... 7
5.2 Minimum Availability ............................................ 7
5.3 Landlord Waiver ................................................. 7
5.4 Real Property ................................................... 8
5.5 Executed Agreement .............................................. 8
5.6 Opinion of Borrower's, Guarantors', Klamath's and
Humascan's Counsel .............................................. 8
5.7 Priority of Coast's Liens ....................................... 8
5.8 Insurance ....................................................... 8
5.9 Borrower's Existence ............................................ 8
5.10 Organizational Documents ........................................ 8
5.11 Taxes ........................................................... 8
5.12 Year 2000 Problem Assessment Certificate ........................ 8
5.13 Due Diligence ................................................... 8
5.14 Other Documents and Agreements .................................. 8
5.15 Blocked Account Agreements ...................................... 9
5.16 Minimum Tangible Net Worth ...................................... 9
5.17 Certificates of Title ........................................... 9
5.18 Equipment Review ................................................ 9
5.19 Management Background Checks .................................... 9
i
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
5.20 Review of Nature Conservancy Liens ............................. 9
5.21 Real Estate Appraisals and Phase I's ............................ 9
5.22 Humanascan to be Publicly Traded ................................ 9
5.23 IRS Subordination ............................................... 9
5.24 Continuing Guarantees and Financial Statements .................. 9
5.25 The Nature Conservancy .................................... 9
5.26 Assignment of Canal Leases/Licenses ....................... 10
5.27 Bailee Letters ............................................ 10
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER ............. 10
6.1 Existence and Authority ......................................... 10
6.2 Name; Trade Names and Styles .................................... 10
6.3 Place of Business; Location of Collateral ....................... 10
6.4 Title to Collateral; Permitted Liens ............................ 11
6.5 Maintenance of Collateral ....................................... 11
6.6 Books and Records ............................................... 11
6.7 Financial Condition, Statements and Reports ..................... 11
6.8 Tax Returns and Payments; Pension Contributions ................. 11
6.9 Compliance with Law ............................................. 11
6.10 Litigation ...................................................... 11
6.11 Use of Proceeds ................................................. 11
6.12 Year 2000 Compliance ............................................ 11
7. RECEIVABLES AND COLLECTIONS ........................................... 12
7.1 Representation Relating to Receivables and Collections .......... 12
7.2 Representations Relating to Documents and Legal Compliance ...... 12
7.3 Schedules and Documents Relating to Receivables and Collections . 12
7.4 Collection of Receivables and Collections ....................... 12
7.5 Remittance of Proceeds .......................................... 12
7.6 Disputes ........................................................ 13
7.7 Returns ......................................................... 13
7.8 Verification .................................................... 13
7.9 No Liability .................................................... 13
8. ADDITIONAL DUTIES OF THE BORROWER ..................................... 13
8.1 Financial and Other Covenants ................................... 13
8.2 Insurance ....................................................... 13
8.3 Reports ......................................................... 14
8.4 Access to Collateral, Books and Records ......................... 14
8.5 Negative Covenants .............................................. 14
8.6 Litigation Cooperation .......................................... 15
8.7 Further Assurances .............................................. 15
9. TERM .................................................................. 15
9.1 Maturity Date ................................................... 15
9.2 Early Termination ............................................... 15
9.3 Payment of Obligations .......................................... 15
10. EVENTS OF DEFAULT AND REMEDIES ........................................ 15
10.1 Events of Default ............................................... 15
10.2 Remedies ........................................................ 17
10.3 Standards for Determining Commercial Reasonableness ............. 18
10.4 Power of Attorney ............................................... 18
10.5 Application of Proceeds ......................................... 19
10.6 Remedies Cumulative ............................................. 20
11. GENERAL PROVISIONS .................................................... 20
11.1 Interest Computation ............................................ 20
11.2 Application of Payments ......................................... 20
11.3 Charges to Accounts ............................................. 20
11.4 Monthly Accountings ............................................. 20
11.5 Notices ......................................................... 20
11.6 Severability .................................................... 21
11.7 Integration ..................................................... 21
11.8 Waivers ......................................................... 21
11.9 No Liability for Ordinary Negligence ............................ 21
11.10 Amendment ....................................................... 21
11.11 Time of Essence ................................................. 21
11.12 Attorneys Fees, Costs and Charges ............................... 21
11.13 Benefit of Agreement ............................................ 22
11.14 Publicity ....................................................... 22
11.15 Paragraph Headings; Construction ................................ 22
11.16 Governing Law; Jurisdiction; Venue .............................. 22
11.17 Mutual Waiver of Jury Trial ..................................... 22
ii
Coast
Loan and Security Agreement
BORROWER: THE NEW ALGAE COMPANY
DBA CELL TECH,
AN OREGON CORPORATION
ADDRESS: 0000 XXXX XXXXXX
XXXXXXX XXXXX, XXXXXX 00000
BORROWER: THE NEW EARTH COMPANY,
AN OREGON CORPORATION
ADDRESS: 0000 XXXX XXXXXX
XXXXXXX XXXXX, XXXXXX 00000
DATE: JUNE 21, 1999
THIS LOAN AND SECURITY AGREEMENT is entered into on the above date between COAST
BUSINESS CREDIT, a division of Southern Pacific Bank ("Coast"), a California
corporation, with offices at 00000 Xxxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000, and the borrower(s) named above (jointly and severally, the
"Borrower"), whose chief executive office is located at the above address
("Borrower's Address"). The Schedule to this Agreement (the "Schedule") shall
for all purposes be deemed to be a part of this Agreement, and the same is an
integral part of this Agreement. (Definitions of certain terms used in this
Agreement are set forth in Section 1 below.)
1. DEFINITIONS. As used in this Agreement, the following terms have the
following meanings:
"Account Debtor" means the obligor on a Receivable or General Intangible.
"Advances" means the Loans described in Section 2(b) of the Schedule.
"Affiliate" means, with respect to any Person, a relative, partner,
shareholder, director, officer, or employee of such Person, or any parent or
subsidiary of such Person, or any Person controlling, controlled by or under
common control with such Person.
"Audit" means to inspect, audit and copy Borrower's books and records and
the Collateral.
"Borrower" has the meaning set forth in the introduction to this
Agreement.
"Borrower's Address" has the meaning set forth in the introduction to this
Agreement.
"Business Day" means a day on which Coast is open for business.
"Change of Control" shall be deemed to have occurred at such time as a
"person" or "group" (within
1
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
the meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) (other than the current holders of the ownership interests in any
Borrower) becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934), directly or indirectly, as a result of any
single transaction, of more than twenty percent (20%) of the total voting power
of all classes of stock or other ownership interests then outstanding of any
Borrower normally entitled to vote in the election of directors or analogous
governing body.
"Closing Date" date of the initial funding under this Agreement.
"Coast" has the meaning set forth in the introduction to this Agreement.
"Code" means the Uniform Commercial Code as adopted and in effect in the
State of California from time to time.
"Collateral" has the meaning set forth in Section 4 hereof.
"Collections" means those collections of Borrower including, but not
limited to, collections arising from the following: the Network Marketing
Customer Base of Borrower or from other Borrower sales.
"Credit Limit" means the maximum amount of Loans that Coast may make to
Borrower pursuant to the amounts and percentages shown on the Schedule.
"Debt" means, as of the date of determination, the sum, but without
duplication, of any and all of Borrower's: (i) indebtedness heretofore or
hereafter created, issued, incurred or assumed by such Borrower (directly or
indirectly) for or in respect of money borrowed; (ii) obligations for the
deferred purchase price of property or services.
"Debt Service Coverage Ratio" means the ratio, in any fiscal quarter, whose
numerator is EBITDA minus cash capital expenditures minus cash tax expenses, and
whose denominator is all principal payments on Debt plus all interest payments
on Debt plus all capital lease payments.
"Default" means any event which with notice or passage of time or both,
would constitute an Event of Default.
"Deposit Account" has the meaning set forth in Section 9105 of the Code.
"Dollars or $" means United States dollars.
"Early Termination Fee" means the amount set forth on the Schedule that
Borrower must pay Coast if this Agreement is terminated by Borrower or Coast
pursuant to Section 9.2 hereof.
"EBITDA" means, in any fiscal period, Borrower's consolidated net income or
net loss (other than extraordinary or non-recurring gains of Borrower for such
period), plus (i) the amount of all interest expense, income tax expense,
depreciation expense and amortization expense of Borrower for such period, on a
consolidated basis, and plus or minus (as the case may be) (ii) any other
non-cash charges which have been added or subtracted, as the case may be, in
calculating Borrower's consolidated net income for such period.
"Eligible Inventory" means Inventory which Coast, in its sole judgment,
deems eligible for borrowing, based on such considerations as Coast may from
time to time deem appropriate. Without limiting the fact that the determination
of which Inventory is eligible for borrowing is a matter of Coast's discretion,
Inventory which does not meet the following requirements will not be deemed to
be Eligible Inventory: Inventory which (i) consists of finished goods, in good,
new and salable condition which is not perishable, not obsolete or
unmerchantable, and is not comprised of raw materials, work in process,
packaging materials or supplies; (ii) meets all applicable governmental
standards; (iii) has been manufactured in compliance with the Fair Labor
Standards Act; (iv) conforms in all respects to the warranties and
representations set forth in this Agreement; (v) is at all times subject to
Coast's duly perfected, first priority security interest; and (vi) is situated
at one of the locations set forth on the Schedule.
"Eligible Wholesale Receivables" means Wholesale Receivables arising in the
ordinary course of Borrower's business from the sale of goods or
2
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
rendition of services, which Coast, in its sole judgment exercised in good
faith, shall deem eligible for borrowing, based on such considerations as Coast
may from time to time deem appropriate. Eligible Wholesale Receivables shall not
include the following:
(a) Wholesale Receivables that the Account Debtor has failed to pay within
90 days of invoice date or Accounts with selling terms of more than 30 days;
(b) Wholesale Receivables owed by an Account Debtor or its Affiliates where
twenty-five percent (25%) or more of all Wholesale Receivables owed by that
Account Debtor (or its Affiliates) are deemed ineligible under clause (a) above;
(c) Wholesale Receivables with respect to which the Account Debtor is an
employee, Affiliate, or agent of Borrower;
(d) Wholesale Receivables with respect to which goods are placed on
consignment, guaranteed sale, sale or return, sale on approval, xxxx and hold,
or other terms by reason of which the payment by the Account Debtor may be
conditional;
(e) Wholesale Receivables, that are not payable in Dollars or with respect
to which the Account Debtor: (i) does not maintain its chief executive office in
the United States, or (ii) is not organized under the laws of the United States
or any State thereof, or (iii) is the government of any foreign country or
sovereign state, or of any state, province, municipality, or other political
subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof;
(f) Wholesale Receivables with respect to which the Account Debtor is
either (i) the United States or any department, agency, or instrumentality of
the United States (exclusive, however, of Accounts with respect to which
Borrower has complied, to the satisfaction of Coast, with the Assignment of
Claims Act, 31 U.S.C. section 3727), or (ii) any State of the United States
(exclusive, however, of Wholesale Receivables owed by any State that does not
have a statutory counterpart to the Assignment of Claims Act);
(g) Wholesale Receivables with respect to which the Account Debtor is a
creditor of Borrower, has or has asserted a right of setoff, has disputed its
liability, or has made any claim with respect to the Wholesale Receivables;
(h) Wholesale Receivables with respect to an Account Debtor whose total
obligations owing to Borrower exceed twenty percent (20%) of all Eligible
Wholesale Receivables, to the extent of the obligations owing by such Account
Debtor in excess of such percentage;
(i) Wholesale Receivables with respect to which the Account Debtor is
subject to any reorganization, bankruptcy, insolvency, arrangement, readjustment
of debt, dissolution or liquidation proceeding, or becomes insolvent, or goes
out of business;
(j) Wholesale Receivables the collection of which Coast, in its reasonable
credit judgment, believes to be doubtful by reason of the Account Debtor's
financial condition;
(k) Wholesale Receivables with respect to which the goods giving rise to
such Wholesale Receivable have not been shipped and billed to the Account
Debtor, the services giving rise to such Wholesale Receivable have not been
performed and accepted by the Account Debtor, or the Wholesale Receivable
otherwise does not represent a final sale;
(l) Wholesale Receivables with respect to which the Account Debtor is
located in the states of New Jersey, Minnesota, Indiana, or West Virginia (or
any other state that requires a creditor to file a Business Activity Report or
similar document in order to bring suit or otherwise enforce its remedies
against such Account Debtor in the courts or through any judicial process of
such state), unless Borrower has qualified to do business in New Jersey,
Minnesota, Indiana, West Virginia, or such other states, or has filed a Notice
of Business Activities Report with the applicable division of taxation, the
department of revenue, or with such other state offices as appropriate, for the
then-current year, or is exempt from such filing requirement; and
(m) Wholesale Receivables that represent progress payments or other advance
xxxxxxxx that are
3
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
due prior to the completion of performance by Borrower of the subject contract
for goods or services.
"Equipment" means all of Borrower's present and hereafter acquired
machinery, molds, machine tools, motors, furniture, equipment, furnishings,
fixtures, trade fixtures, motor vehicles, tools, parts, dies, jigs, goods and
other goods (other than Inventory) of every kind and description used in
Borrower's operations or owned by Borrower and any interest in any of the
foregoing, and all attachments, accessories, accessions, replacements,
substitutions, additions or improvements to any of the foregoing, wherever
located.
"Equipment Acquisition Loans" means the Loans described in Section 2(e) of
the Schedule.
"Event of Default" means any of the events set forth in Section 10.1 of
this Agreement.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States, consistently applied.
"General Intangibles" means all general intangibles of Borrower, whether
now owned or hereafter created or acquired by Borrower, including, without
limitation, all choses in action, causes of action, corporate or other business
records, Deposit Accounts, investment property, inventions, designs, drawings,
blueprints, patents, patent applications, trademarks and the goodwill of the
business symbolized thereby, names, trade names, trade secrets, goodwill,
copyrights, registrations, licenses, franchises, customer lists, security and
other deposits, rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all judgments now
or hereafter arising therefrom, all claims of Borrower against Coast, rights to
purchase or sell real or personal property, rights as a licensor or licensee of
any kind, royalties, telephone numbers, proprietary information, purchase
orders, and all insurance policies and claims (including without limitation life
insurance, key man insurance, credit insurance, liability insurance, property
insurance and other insurance), tax refunds and claims, computer programs,
discs, tapes and tape files, claims under guaranties, security interests or
other security held by or granted to Borrower, all rights to indemnification and
all other intangible property of every kind and nature (other than Receivables).
"Gross Collections" means the gross collections of Borrower from the
Network Marketing Customer Base.
"Guarantors" means Xxxxx X. Xxxxxxx and Xxxxx X. Xxxxxxx.
"Humascan" means Humascan Inc., a Delaware corporation.
"Inventory" means all of Borrower's now owned and hereafter acquired goods,
merchandise or other personal property, wherever located, to be furnished under
any contract of service or held for sale or lease (including without limitation
all raw materials, work in process, finished goods and goods in transit, and
including without limitation all farm products), and all materials and supplies
of every kind, nature and description which are or might be used or consumed in
Borrower's business or used in connection with the manufacture, packing,
shipping, advertising, selling or finishing of such goods, merchandise or other
personal property, and all warehouse receipts, documents of title and other
documents representing any of the foregoing.
"Inventory Loans" means the Loans described in Section 2(c) of the
Schedule.
"Investment Property" has the meaning set forth in Section 9115 of the Code
as in effect as of the date hereof.
"Klamath" means Klamath Cold Storage, Inc., an Oregon corporation.
"Loan Documents" means this Agreement, the agreements and documents listed
on Section 5 of the Schedule, and any other agreement, instrument or document
executed in connection herewith or therewith.
"Loans" has the meaning set forth in Section 2.1 hereof.
"Material Adverse Effect" means a material adverse effect on (i) the
business, assets, condition (financial or otherwise) or results of operations of
Borrower or any subsidiary of Borrower or any
4
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
guarantor of any of the Obligations, (ii) the ability of Borrower or any
guarantor of any of the Obligations to perform its obligations under this
Agreement (including, without limitation, repayment of the Obligations as they
come due) or (iii) the validity or enforceability of this Agreement or any other
agreement or document entered into by any party in connection herewith, or the
rights or remedies of Coast hereunder or thereunder.
"Maturity Date" means the date that this Agreement shall cease to be
effective, as set forth on the Schedule, subject to the provisions of Section
9.1 and 9.2 hereof.
"Maximum Dollar Amount" has the meaning set forth in Section 2 of the
Schedule.
"Minimum Monthly Interest" has the meaning set forth in Section 3 of the
Schedule.
"Net Collections" means the gross collections of Borrower from the Network
Marketing Customer Base less commissions paid to Network Marketing Customer Base
distributors.
"Network Marketing Customer Base" means Borrower's customers who are
distributors that have signed on Independent Distributor Agreement.
"Network Marketing Customers" means distributors who have signed
Independent Distributor Agreements entitling them to purchase product at
wholesale cost for resale and for personal consumption.
"Obligations" means all present and future Loans, advances, debts,
liabilities, obligations, guaranties, covenants, duties and indebtedness at any
time owing by Borrower to Coast, whether evidenced by this Agreement or any note
or other instrument or document, whether arising from an extension of credit,
opening of a letter of credit, banker's acceptance, loan, guaranty,
indemnification or otherwise, whether direct or indirect (including, without
limitation, those acquired by assignment and any participation by Coast in
Borrower's debts owing to others), absolute or contingent, due or to become due,
including, without limitation, all interest, charges, expenses, fees, attorneys'
fees (including attorneys' fees and expenses incurred in bankruptcy), expert
witness fees, audit fees, letter of credit fees, collateral monitoring fees,
closing fees, facility fees, termination fees, minimum interest charges and any
other sums chargeable to Borrower under this Agreement or under any other
present or future instrument or agreement between Borrower and Coast.
"Permitted Liens" means the following:
(a) purchase money security interests in specific items of Equipment;
(b) leases of specific items of Equipment;
(c) liens for taxes not yet payable;
(d) additional security interests and liens consented to in writing by
Coast, which consent shall not be unreasonably withheld;
(e) security interests being terminated substantially concurrently
with this Agreement;
(f) liens of materialmen, mechanics, warehousemen, carriers, or other
similar liens arising in the ordinary course of business and securing
obligations which are not delinquent;
(g) liens incurred in connection with the extension, renewal or
refinancing of the indebtedness secured by liens of the type described above in
clauses (a) or (b) above, provided that any extension, renewal or replacement
lien is limited to the property encumbered by the existing lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase; or
(h) liens in favor of customs and revenue authorities which secure
payment of customs duties in connection with the importation of goods.
Coast will have the right to require, as a condition to its consent under clause
(d) above, that the holder of the additional security interest or lien sign an
intercreditor agreement on Coast's then standard form, acknowledge that the
security interest is subordinate to the security interest in favor of Coast, and
agree not to take any action to enforce its subordinate security interest so
long as any Obligations remain outstanding, and that Borrower agree that any
uncured default in
5
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
any obligation secured by the subordinate security interest shall also
constitute an Event of Default under this Agreement.
"Person" means any individual, sole proprietorship, general partnership,
limited partnership, limited liability partnership, limited liability company,
joint venture, trust, unincorporated organization, association, corporation,
government, or any agency or political division thereof, or any other entity.
"Prime Rate" means the actual "Reference Rate" or the substitute therefor
of the Bank of America NT & SA whether or not that rate is the lowest interest
rate charged by said bank. If the Prime Rate, as defined, is unavailable, "Prime
Rate" shall mean the highest of the prime rates published in the Wall Street
Journal on the first business day of the applicable month, as the base rate on
corporate loans at large U.S. money center commercial banks.
"Real Property" means: (1) Guarantor's real property located at: (i) 1340,
1350 and 0000 X. 0xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx, (ii) 000 Xxxxxxxx Xxxxxxx,
Xxxxxxx Xxxxx, Xxxxxx, (iii) that certain 39.65 acres of raw land at Northern
Heights, (iv) 0000 Xxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxx, and (v) 1400 and 0000
X. 0xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx; (2) Klamath's real property located at:
(i) 000 X. Xxxxxx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxx, and (ii) 000 Xxxxxx Xxxxxx,
Xxxxxxx Xxxxx, Xxxxxx; and (3) additional properties that may secure Borrower's
Obligations to Coast in the future.
"Receivable Loans" means the Loans described in Section 2(a) of the
Schedule.
"Receivables" means all of Borrower's now owned and hereafter acquired
accounts (whether or not earned by performance), letters of credit, contract
rights, chattel paper, instruments, securities, documents, securities accounts,
security entitlements, commodity contracts, commodity accounts, investment
property and all other forms of obligations at any time owing to Borrower, all
guaranties and other security therefor, all merchandise returned to or
repossessed by Borrower, and all rights of stoppage in transit and all other
rights or remedies of an unpaid vendor, lienor or secured party.
"Renewal Date" shall mean the Maturity Date if this Agreement is renewed
pursuant to Section 9.1 hereof, and each anniversary thereafter that this
Agreement is renewed pursuant to Section 9.1 hereof.
"Renewal Fee" means the fee that Borrower must pay Coast upon renewal of
this Agreement pursuant to Section 9.1 hereof, in the amount set forth on the
Schedule.
"Solvent" means, with respect to any Person on a particular date, that on
such date (a) at fair valuations, all of the properties and assets of such
Person are greater than the sum of the debts, including contingent liabilities,
of such Person, (b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its properties and assets and
pay its debts and other liabilities, contingent obligations and other
commitments as they mature in the normal course of business, (d) such Person
does not intend to, and does not believe that it will, incur debts beyond such
Person's ability to pay as such debts mature, and (e) such Person is not engaged
in business or a transaction, and is not about to engage in business or a
transaction, for which such Person's properties and assets would constitute
unreasonably small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended that such
liabilities will be computed at the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that reasonably can
be expected to become an actual or matured liability.
"Tangible Net Worth" means consolidated Owner's equity, plus subordinated
debt otherwise permitted hereunder, less, goodwill, patents, trademarks,
copyrights, franchises, formulas, leasehold interests, leasehold improvements,
non-compete agreements, engineering plans, deferred tax benefits, organization
costs, prepaid items, and any other assets of Borrower that would be treated as
intangible assets on Borrower's balance sheet prepared in accordance with GAAP.
6
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
"Term Loan" means the Loans described in Section 2(d) of the Schedule.
"Wholesale Receivables" means Receivables owing from account debtors who
are other than Network Marketing Customers.
"Year 2000 Problem" means the risk that computer systems, software and
applications used by a Person may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any dates after
December 31, 1999.
"Other Terms." All accounting terms used in this Agreement, unless
otherwise indicated, shall have the meanings given to such terms in accordance
with GAAP. All other terms contained in this Agreement, unless otherwise
indicated, shall have the meanings provided by the Code, to the extent such
terms are defined therein.
2. CREDIT FACILITIES.
2.1 LOANS. Coast will make loans to Borrower (the "Loans"), in amounts and
in percentages to be determined by Coast in its good faith discretion, up to the
Credit Limit, provided no Default or Event of Default has occurred and is
continuing. In addition, Coast may create reserves against or reduce its advance
rates based upon Eligible Wholesale Receivables or Eligible Inventory or create
reserves or reduce the Advance multiple then applicable to Net Collections
without declaring a Default or an Event of Default if it determines that there
has occurred a Material Adverse Effect.
3. INTEREST AND FEES.
3.1 INTEREST. All Loans and all other monetary Obligations shall bear
interest at the rate shown on the Schedule, except where expressly set forth to
the contrary in this Agreement. Interest shall be payable monthly, on the last
day of the month. Interest may, in Coast's discretion, be charged to Borrower's
loan account, and the same shall thereafter bear interest at the same rate as
the other Loans. Regardless of the amount of Obligations that may be outstanding
from time to time, Borrower shall pay Coast Minimum Monthly Interest during the
term of this Agreement with respect to the Receivable Loans, the Inventory Loans
and the Advances in the amount set forth on the Schedule.
3.2 Fees. Borrower shall pay Coast the fee(s) shown on the Schedule, which
are in addition to all interest and other sums payable to Coast and are deemed
fully earned and are nonrefundable.
4. SECURITY INTEREST.
To secure the payment and performance of all of the Obligations when due,
Borrower hereby grants to Coast a security interest in all of Borrower's
interest in the following, whether now owned or hereafter acquired, and wherever
located: All Receivables, Inventory, Equipment, Investment Property, and General
Intangibles, including, without limitation, all of Borrower's Deposit Accounts,
and all money, and all property now or at any time in the future in Coast's
possession (including claims and credit balances), and all proceeds of any of
the foregoing (including proceeds of any insurance policies, proceeds of
proceeds, and claims against third parties), all products of any of the
foregoing, and all books and records related to any of the foregoing (all of the
foregoing, together with all other property in which Coast may now or in the
future be granted a lien or security interest, is referred to herein,
collectively, as the "Collateral").
5. CONDITIONS PRECEDENT.
The obligation of Coast to make the Loans is subject to the satisfaction,
in the sole discretion of Coast, at or prior to the first advance of funds
hereunder, of each, every and all of the following conditions:
5.1 STATUS OF ACCOUNTS AT CLOSING. No accounts payable shall be due and
unpaid ninety (90) days past its due date except for such accounts payable being
contested in good faith in appropriate proceedings and for which adequate
reserves have been provided.
5.2 MINIMUM AVAILABILITY. Borrower shall have minimum availability
immediately following the initial funding in the amount set forth on the
Schedule.
5.3 LANDLORD WAIVER. Coast shall have received duly executed
7
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
(a) landlord waivers and access agreements in form and substance
satisfactory to Coast, in Coast's sole and absolute discretion, and, when deemed
appropriate by Coast, in form for recording in the appropriate recording office,
with respect to all leased locations where Borrower maintains any inventory or
equipment.
(b) warehouse waivers in form and substance satisfactory to Coast, in
Coast's sole and absolute discretion, and when deemed appropriate by Coast, in
form for recording in the appropriate recording office, with respect to all
warehouse locations where Borrower maintains any inventory or equipment.
5.4 REAL PROPERTY. Coast shall have received duly executed mortgages and/or
deeds of trust in form and substance satisfactory to Coast, in Coast's sole and
absolute discretion, in form for recording in the appropriate recording office,
with respect to the Real Property. All mortgages and/or deeds of trust against
the Real Property shall be in first lien position, except as otherwise agreed to
by Coast, and Coast shall have obtained title insurance on each such mortgage
and/or deed of trust insuring Coast's position in form, substance and amount and
from a title company satisfactory to Coast.
5.5 EXECUTED AGREEMENT. Coast shall have received this Agreement duly
executed and in form and substance satisfactory to Coast in its sole and
absolute discretion.
5.6 OPINION OF BORROWER'S, GUARANTORS', KLAMATH'S AND HUMASCAN'S COUNSEL.
Coast shall have received opinions of Borrower's, Guarantors', Klamath's and
Humascan's counsel, in form and substance satisfactory to Coast in its sole and
absolute discretion.
5.7 PRIORITY OF COAST'S LIENS. Coast shall have received the results of "of
record" searches satisfactory to Coast in its sole and absolute discretion,
reflecting its Uniform Commercial Code filings against Borrower indicating that
Coast has a perfected, first priority lien in and upon all of the Collateral,
subject only to Permitted Liens.
5.8 INSURANCE. Coast shall have received copies of the insurance binders or
certificates evidencing Borrower's compliance with Section 8.2 hereof, including
lender's loss payee endorsements.
5.9 BORROWER'S EXISTENCE. Coast shall have received copies of Borrower's
articles of incorporation and all amendments thereto, and a Certificate of Good
Standing, each certified by the Secretary of State of the state of Borrower's
organization, and dated a recent date prior to the Closing Date, and Coast shall
have received Certificates of Foreign Qualification for Borrower from the
Secretary of State of each state wherein the failure to be so qualified could
have a Material Adverse Effect.
5.10 ORGANIZATIONAL DOCUMENTS. Coast shall have received copies of
Borrower's By-laws and all amendments thereto, and Coast shall have received
copies of the resolutions of the board of directors of Borrower, authorizing the
execution and delivery of this Agreement and the other documents contemplated
hereby, and authorizing the transactions contemplated hereunder and thereunder,
and authorizing specific officers of Borrower to execute the same on behalf of
Borrower, in each case certified by the Secretary or other acceptable officer of
Borrower as of the Closing Date.
5.11 TAXES. Coast shall have received evidence from Borrower that Borrower
has complied with all tax withholding and Internal Revenue Service regulations,
in form and substance satisfactory to Coast in its sole and absolute discretion.
5.12 YEAR 2000 PROBLEM ASSESSMENT CERTIFICATE. Coast shall have received a
certificate from the relevant officer of Borrower to the effect that, as the
result of a comprehensive assessment undertaken by Borrower of Borrower's
computer systems, software and applications and after due inquiry made to
Borrower's material suppliers, vendors and customers, Borrower knows of no facts
that would cause Borrower to reasonably believe that the Year 2000 Problem will
cause a Material Adverse Effect.
5.13 DUE DILIGENCE. Coast shall have completed its due diligence with
respect to Borrower.
5.14 OTHER DOCUMENTS AND AGREEMENTS. Coast shall have received such other
agreements, instruments and documents as Coast may require in
8
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
connection with the transactions contemplated hereby, all in form and substance
satisfactory to Coast in Coast's sole and absolute discretion, and in form for
filing in the appropriate filing office, including, but not limited to, those
documents listed in Section 5 of the Schedule.
5.15 BLOCKED ACCOUNT AGREEMENTS. Coast shall have received evidence that
all cash remittances of Borrower including, without limitation, remittances from
First USA Merchant Services, Inc., shall be collected pursuant to one or more
blocked account agreements in form and substance acceptable to Coast.
5.16 MINIMUM TANGIBLE NET WORTH. Borrower's Tangible Net Worth shall be a
no less than Twenty Seven Million Dollars ($27,000,000) on the closing Date.
5.17 CERTIFICATES OF TITLE. Coast shall have received certificates of title
for all of Borrower's motor vehicles which evidence Coast's first lien and
security interest thereon, with said certificates of title to be in form and
substance satisfactory to Coast in its sole and absolute discretion.
5.18 EQUIPMENT REVIEW. Coast shall have completed its review of Borrower's
Equipment and shall have verified that no Equipment included in the appraisal of
Borrower's Equipment is subject to a lien or security interest in favor of any
Person other than Coast. The results of said review shall be acceptable to Coast
in its sole and absolute discretion.
5.19 MANAGEMENT BACKGROUND CHECKS. Coast shall have received the results of
management background checks, including without limitation, TRWs, tax lien and
litigation searches, LEXIS/NEXIS searches and such other due diligence as Coast
may deem necessary on Xxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxxx and Xxxxxx
Xxxxx with said background checks to be satisfactory to Coast in its sole and
absolute discretion.
5.20 REVIEW OF NATURE CONSERVANCY LIENS. Coast shall have completed its
review of the Nature Conservancy's liens against Borrower's assets to ensure:
(i) that the encumbered assets are unrelated to water rights pertaining to the
harvesting of algae; and (ii) that the lien does not encumber any machinery,
equipment, inventory or other assets integral to processing algae. The results
of said review shall be acceptable to Coast in its sole and absolute discretion.
5.21 REAL ESTATE APPRAISALS AND PHASE I's. Coast shall have received
appraisals and Phase I's of the Real Property with the results of same to be
acceptable to Coast in its sole and absolute discretion. In the event that the
Real Property does not have an aggregate fair market value of at least
$12,800,000, additional real property must be provided as Collateral until the
aggregate value of the Real Property is at least $12,800,000.
5.22 HUMASCAN TO BE PUBLICLY TRADED. Humascan, the holding company parent
of Borrower, shall be a publicly traded company prior to the first advance of
funds hereunder.
5.23 IRS SUBORDINATION. Coast shall have received an agreement from the
Internal Revenue Service ("IRS") wherein the IRS: (i) agrees to subordinate its
liens against Xxxxx Xxxxxxx, Xxxxx Xxxxxxx and/or Borrower upon the receipt of
Five Million Five Hundred Thousand Dollars ($5,500,000), (ii) agrees to
subordinate all past due income taxes, related penalties and interest owed by
Xxxxx Xxxxxxx, Xxxxx Xxxxxxx and/or Borrower, and (iii) agrees not to take any
action against the assets of Xxxxx Xxxxxxx, Xxxxx Xxxxxxx and/or Borrower which
serve as Collateral for Borrower's Obligations to Coast. Said agreement shall be
in form and substance acceptable to Coast in its sole and absolute discretion.
5.24 CONTINUING GUARANTIES AND FINANCIAL STATEMENTS. Coast shall have
received continuing guaranties from Guarantors, Klamath and Humascan and shall
have received financial statements from Guarantors in form and substance
acceptable to Coast in its sole and absolute discretion.
5.25 THE NATURE CONSERVANCY. Coast shall have received a duly executed
Intercreditor Agreement from The Nature Conservancy, in form and substance
acceptable to Coast in its sole and absolute discretion, containing terms
whereby The Nature Conservancy agrees to subordinate its lien in Borrower's
assets which serve as Collateral for Borrower's Obligations to Coast.
9
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
5.26 ASSIGNMENT OF CANAL LEASES/LICENSES. Coast shall have received duly
executed assignments and consents to assignments for Borrower's canal
leases/licenses with the form and content of said assignments and consents to be
acceptable to Coast in its sole and absolute discretion.
5.27 BAILEE LETTERS. Coast shall have received duly executed bailee letters
from third party processors who are from time to time in possession of
Borrower's assets with the form and content of said assignments to be acceptable
to Coast in its sole discretion.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BORROWER.
In order to induce Coast to enter into this Agreement and to make Loans,
Borrower represents and warrants to Coast as follows, and Borrower covenants
that the following representations will continue to be true, and that Borrower
will at all times comply with all of the following covenants:
6.1 EXISTENCE AND AUTHORITY. Borrower is and will continue to be, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization. Borrower is and will continue to be qualified
and licensed to do business in all jurisdictions in which any failure to do so
would have a Material Adverse Effect. The execution, delivery and performance by
Borrower of this Agreement, and all other documents contemplated hereby (a) have
been duly and validly authorized, (b) are enforceable against Borrower in
accordance with their terms (except as enforcement may be limited by equitable
principles and by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to creditors' rights generally), and (c) do not violate
Borrower's articles of incorporation, or Borrower's by-laws, or any law or any
material agreement or instrument which is binding upon Borrower or its property,
and (d) do not constitute grounds for acceleration of any material indebtedness
or obligation under any material agreement or instrument which is binding upon
Borrower or its property.
6.2 NAME; TRADE NAMES AND STYLES. The name of Borrower set forth in the
heading to this Agreement is its correct name. Listed on the Schedule are all
prior names of Borrower and all of Borrower's present and prior trade names.
Borrower shall give Coast thirty (30) days' prior written notice before changing
its name or doing business under any other name. Borrower has complied, and will
in the future comply, with all laws relating to the conduct of business under a
fictitious business name.
6.3 PLACE OF BUSINESS; LOCATION OF COLLATERAL. The address set forth in the
heading to this Agreement is Borrower's chief executive office. In addition,
Borrower has places of business and Collateral is located only at the locations
set forth on the Schedule. Borrower will give Coast at least thirty (30) days'
prior written notice before opening any additional place of business, changing
its chief executive office, or moving any of the Collateral to a location other
than Borrower's Address or one of the locations set forth on the Schedule.
6.4 TITLE TO COLLATERAL; PERMITTED LIENS. Borrower is now, and will at all times
in the future be, the sole owner of all the Collateral, except for items of
Equipment which are leased by Borrower. The Collateral now is and will remain
free and clear of any and all liens, charges, security interests, encumbrances
and adverse claims, except for Permitted Liens. Coast now has, and will continue
to have, a first-priority perfected and enforceable security interest in all of
the Collateral, subject only to the Permitted Liens, and Borrower will at all
times defend Coast and the Collateral against all claims of others. None of the
Collateral now is or will be affixed to any real property in such a manner, or
with such intent, as to become a fixture. Borrower is not and will not become a
lessee under any real property lease pursuant to which the lessor may obtain any
rights in any of the Collateral and no such lease now prohibits, restrains,
impairs or will prohibit, restrain or impair Borrower's right to remove any
Collateral from the leased premises. Whenever any Collateral is located upon
premises in which any third party has an interest (whether as owner, mortgagee,
beneficiary under a deed of trust, lien or otherwise), Borrower shall, whenever
requested by Coast, use its best efforts to cause such third party to execute
and deliver to Coast, in form acceptable to Coast, such waivers and
subordinations as Coast shall specify, so as to ensure that Coast's rights in
the Collateral are, and will continue to be, superior to the rights of any such
third party. Borrower will keep in full force and effect, and will comply with
all the terms of,
10
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
any lease of real property where any of the Collateral now or in the future may
be located.
6.5 MAINTENANCE OF COLLATERAL. Borrower will maintain the Collateral in
good working condition, and Borrower will not use the Collateral for any
unlawful purpose. Borrower will immediately advise Coast in writing of any
material loss or damage to the Collateral.
6.6 BOOKS AND RECORDS. Borrower has maintained and will maintain at
Borrower's Address complete and accurate books and records, comprising an
accounting system in accordance with GAAP.
6.7 FINANCIAL CONDITION, STATEMENTS AND REPORTS. All financial statements
now or in the future delivered to Coast have been, and will be, prepared in
conformity with GAAP (except, in the case of unaudited financial statements, for
the absence of footnotes and subject to normal year-end adjustments) and now and
in the future will fairly reflect the financial condition of Borrower, at the
times and for the periods therein stated. Between the last date covered by any
such statement provided to Coast and the date hereof, there has been no Material
Adverse Effect. Borrower is now and will continue to be Solvent.
6.8 TAX RETURNS AND PAYMENTS; PENSION CONTRIBUTIONS. Borrower has timely
filed, and will timely file, all tax returns and reports required by foreign,
federal, state and local law, and Borrower has timely paid, and will timely pay,
all foreign, federal, state and local taxes, assessments, deposits and
contributions now or in the future owed by Borrower. Borrower may, however,
defer payment of any contested taxes, provided that Borrower (i) in good faith
contests Borrower's obligation to pay the taxes by appropriate proceedings
promptly and diligently instituted and conducted, (ii) notifies Coast in writing
of the commencement of, and any material development in, the proceedings, and
(iii) posts bonds or takes any other steps required to keep the contested taxes
from becoming a lien upon any of the Collateral. As of the date hereof, Borrower
is unaware of any claims or adjustments proposed for any of Borrower's prior tax
years which could result in additional taxes becoming due and payable by
Borrower. Borrower has paid, and shall continue to pay all amounts necessary to
fund all present and future pension, profit sharing and deferred compensation
plans in accordance with their terms, and Borrower has not and will not withdraw
from participation in, permit partial or complete termination of, or permit the
occurrence of any other event with respect to, any such plan which could result
in any liability of Borrower, including any liability to the Pension Benefit
Guaranty Corporation or its successors or any other governmental agency.
Borrower shall, at all times, utilize the services of an outside payroll service
providing for the automatic deposit of all payroll taxes payable by Borrower.
6.9 COMPLIANCE WITH LAW. Borrower has complied, and will comply, in all
material respects, with all provisions of all material foreign, federal, state
and local laws and regulations relating to Borrower, including, but not limited
to, the Fair Labor Standards Act, and those relating to Borrower's ownership of
real or personal property, the conduct and licensing of Borrower's business, and
environmental matters.
6.10 LITIGATION. Except as disclosed in the Schedule, there is no claim,
suit, litigation, proceeding or investigation pending or (to best of Borrower's
knowledge) threatened by or against or affecting Borrower in any court or before
any governmental agency (or any basis therefor known to Borrower) which may
result, either separately or in the aggregate, in a Material Adverse Effect.
Borrower will promptly inform Coast in writing of any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
Borrower involving an amount set forth on the Schedule.
6.11 USE OF PROCEEDS. All proceeds of all Loans shall be used solely for
lawful business purposes. Borrower is not purchasing or carrying any "margin
stock" (as defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no part of the proceeds of any Loan will be used to purchase
or carry any "margin stock" or to extend credit to others for the purpose of
purchasing or carrying any "margin stock."
6.12 YEAR 2000 COMPLIANCE. As the result of a comprehensive review and
assessment undertaken by Borrower of Borrower's computer systems, software and
applications and after due inquiry made of Borrower's material suppliers,
vendors and customers Borrower represents and warrants that the Year 2000
problem will not result in a Material Adverse Effect.
11
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
7. RECEIVABLES AND COLLECTIONS.
7.1 REPRESENTATIONS RELATING TO RECEIVABLES AND COLLECTIONS. Borrower
represents and warrants to Coast as follows: Each Receivable and all Advances
with respect to which Loans are requested by Borrower shall, on the date each
Loan is requested and made, represent an undisputed bona fide existing
unconditional obligation and collection of the Account Debtor created by the
sale, delivery and acceptance of goods or the rendition of services in the
ordinary course of Borrower's business.
7.2 REPRESENTATIONS RELATING TO DOCUMENTS AND LEGAL COMPLIANCE. Borrower
represents and warrants to Coast as follows: All statements made and all unpaid
balances appearing in all invoices, instruments and other documents evidencing
the Receivables and Collections are and shall be true and correct and all such
invoices, instruments and other documents and all of Borrower's books and
records are and shall be genuine and in all respects what they purport to be.
All sales and other transactions underlying or giving rise to each Receivable
and Collection shall fully comply with all applicable laws and governmental
rules and regulations. All signatures and endorsements on all documents,
instruments, and agreements relating to all Receivables and Collections are and
shall be genuine, and all such documents, instruments and agreements are and
shall be legally enforceable in accordance with their terms.
7.3 SCHEDULES AND DOCUMENTS RELATING TO RECEIVABLES AND COLLECTIONS.
Borrower shall deliver to Coast via facsimile, unless otherwise directed by
Coast, at such locations and at such intervals as Coast may request, transaction
reports and loan requests, schedules of Receivables, and schedules of
Collections, all on Coast's standard forms; provided, however, that Borrower's
failure to execute and deliver the same shall not affect or limit Coast's
security interest and other rights in all of Borrower's Receivables and
Collections, nor shall Coast's failure to advance or lend against a specific
Receivable or Collection affect or limit Coast's security interest and
other rights therein. Loan requests received after lO:30 A.M. Los Angeles,
California time, will not be considered by Coast until the next Business Day.
Together with each such schedule, or later if requested by Coast, Borrower shall
furnish Coast with copies (or, at Coast's request, originals) of all contracts,
orders, invoices, and other similar documents, and all original shipping
instructions, delivery receipts, bills of lading, and other evidence of
delivery, for any goods the sale or disposition of which gave rise to such
Receivables or Collections, and Borrower warrants the genuineness of all of the
foregoing. Borrower shall also furnish to Coast an aged accounts receivable
trial balance in such form and at such intervals as Coast shall request. In
addition, Borrower shall deliver to Coast the originals of all instruments,
chattel paper, security agreements, guarantees and other documents and property
evidencing or securing any Receivables or Collections, upon receipt thereof and
in the same form as received, with all necessary endorsements, all of which
shall be with recourse. Borrower shall also provide Coast with copies of all
credit memos as and when requested by Coast.
7.4 COLLECTION OF RECEIVABLES AND COLLECTIONS. Borrower shall have the
right to collect all Receivables and Collections, unless and until an Event of
Default has occurred. Borrower shall hold all payments on, and proceeds of,
Receivables and Collections in trust for Coast, and Borrower shall deliver all
such payments and proceeds to Coast within one (1) Business Day after receipt
by Borrower, in their original form, duly endorsed to Coast, to be applied to
the Obligations in such order as Coast shall determine. Coast may, in its
discretion, require that all proceeds of Collateral be deposited by Borrower
into a lockbox account, or such other "blocked account" as Coast may specify,
pursuant to a blocked account agreement in such form as Coast may specify. Coast
or its designee may, at any time, notify Account Debtors that Coast has been
granted a security interest in the Receivables and Collections.
7.5 REMITTANCE OF PROCEEDS. All proceeds arising from the disposition of
any Collateral shall be delivered to Coast within one (1) Business Day after
receipt by Borrower, in their original form, duly endorsed to Coast, to be
applied to the Obligations in such order as Coast shall determine. Borrower
agrees that it will not commingle proceeds of Collateral with any of Borrower's
other funds or property, but will hold such proceeds separate and apart from
such other funds and property and in an express trust for Coast. Nothing in this
Section limits the restrictions on
12
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
disposition of Collateral set forth elsewhere in this Agreement.
7.6 DISPUTES. Borrower shall notify Coast promptly of all disputes or
claims relating to Receivables or Collections. Borrower shall not forgive
(completely or partially), compromise or settle any Receivable or Collection for
less than payment in full, or agree to do any of the foregoing, except that
Borrower may do so, provided that: (a) Borrower does so in good faith, in a
commercially reasonable manner, in the ordinary course of business, and in arm's
length transactions, which are reported to Coast on the regular reports provided
to Coast; (b) no Default or Event of Default has occurred and is continuing; and
(c) taking into account all such discounts settlements and forgiveness, the
total outstanding Loans will not exceed the Credit Limit. Coast may, at any time
after the occurrence of an Event of Default, settle or adjust disputes or claims
directly with Account Debtors for amounts and upon terms which Coast considers
advisable in its reasonable credit judgment and, in all cases, Coast shall
credit Borrower's Loan account with only the net amounts received by Coast in
payment of any Receivables or Collection.
7.7 RETURNS. Provided no Event of Default has occurred and is continuing,
if any Account Debtor returns any Inventory to Borrower in the ordinary course
of its business, Borrower shall promptly determine the reason for such return
and promptly issue a credit memorandum to the Account Debtor in the appropriate
amount. In the event any attempted return occurs after the occurrence of any
Event of Default, Borrower shall (a) hold the returned Inventory in trust for
Coast, (b) segregate all returned Inventory from all of Borrower's other
property, (c) conspicuously label the returned Inventory as subject to Coast's
security interest, and (d) immediately notify Coast of the return of any
Inventory, specifying the reason for such return, the location and condition of
the returned Inventory, and on Coast's request deliver such returned Inventory
to Coast.
7.8 VERIFICATION. Coast may, from time to time, verify directly with the
respective Account Debtors the validity, amount and other matters relating to
the Receivables and Collections, by means of mail, telephone or otherwise,
either in the name of Borrower or Coast or such other name as Coast may choose.
7.9 NO LIABILITY. Coast shall not under any circumstances be responsible or
liable for any shortage or discrepancy in, damage to, or loss or destruction of,
any goods, the sale or other disposition of which gives rise to a Receivable or
Collection, or for any error, act, omission or delay of any kind occurring in
the settlement, failure to settle, collection or failure to collect any
Receivable or Collection, or for settling any Receivable or Collection in good
faith for less than the full amount thereof, nor shall Coast be deemed to be
responsible for any of Borrower's obligations under any contract or agreement
giving rise to a Receivable or Collection. Nothing herein shall, however,
relieve Coast from liability for its own gross negligence or willful misconduct.
8. ADDITIONAL DUTIES OF THE BORROWER.
8.1 FINANCIAL AND 0THER COVENANTS. Borrower shall at all times comply with
the financial and other covenants set forth in the Schedule.
8.2 INSURANCE. Borrower shall, at all times insure all of the tangible
personal property Collateral and carry such other business insurance, with
insurers reasonably acceptable to Coast, in such form and amounts as Coast may
reasonably require, and Borrower shall provide evidence of such insurance to
Coast, so that Coast is satisfied that such insurance is, at all times, in full
force and effect. All liability insurance policies of Borrower shall name Coast
as an additional insured, and all property casualty and related insurance
policies of Borrower shall name Coast as a loss payee thereon and Borrower shall
cause a lender's loss payee endorsement in form reasonably acceptable to Coast.
Upon receipt of the proceeds of any such insurance, Coast shall apply such
proceeds in reduction of the Obligations as Coast shall determine in its sole
discretion, except that, provided no Default or Event of Default has occurred
and is continuing, Coast shall release to Borrower insurance proceeds with
respect to Equipment totaling less than the amount set forth in Section 8 of the
Schedule, which shall be utilized by Borrower for the replacement of the
Equipment with respect to which the insurance proceeds were paid. Coast may
require reasonable assurance that the insurance proceeds so released will be so
used. If Borrower fails to provide or pay for any insurance, Coast may, but is
not obligated to, obtain the same at Borrower's expense. Borrower shall promptly
deliver to
13
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
Coast copies of all reports made to insurance companies.
8.3 REPORTS. Borrower, at its expense, shall provide Coast with the
written reports set forth in Section 8 of the Schedule; and such other written
reports with respect to Borrower (including budgets, sales projections,
operating plans and other financial documentation), as Coast shall from time to
time reasonably specify.
8.4 ACCESS TO COLLATERAL BOOKS AND RECORDS. At reasonable times but not
less frequently than quarterly and on one (1) Business Day's notice, Coast, or
its agents, shall have the right to perform Audits. Coast shall take reasonable
steps to keep confidential all confidential information obtained in any Audit,
but Coast shall have the right to disclose any such information to its auditors,
regulatory agencies, and attorneys, and pursuant to any subpoena or other legal
process. The Audits shall be at Borrower's expense and the charge for the Audits
shall be Seven Hundred Fifty Dollars ($750) per person per day (or such higher
amount as shall represent Coast's then current standard charge for the same),
plus reasonable out-of-pocket expenses. Borrower will not enter into any
agreement with any accounting firm, service bureau or third party to store
Borrower's books or records at any location other than Borrower's Address,
without first notifying Coast of the same and obtaining the written agreement
from such accounting firm, service bureau or other third party to give Coast the
same rights with respect to access to books and records and related rights as
Coast has under this Loan Agreement. Borrower shall also take all necessary
steps to assure that its material accounting and software, systems and
applications, and those of its accounting firm, service bureau or any other
third party vendor or supplier, will, on a timely basis, adequately and
completely address the Year 2000 Problem in all material respects.
8.5 NEGATIVE COVENANTS. Borrower shall not, without Coast's prior written
consent, do any of the following:
(a) merge or consolidate with another entity, except in a transaction
in which (i) the owners of the Borrower hold at least fifty percent (50%) of the
ownership interest in the surviving entity immediately after such merger or
consolidation, and (ii) the Borrower is the surviving entity;
(b) acquire any assets, except (i) in the ordinary course of business,
or (ii) in a transaction or a series of transactions not involving the payment
of an aggregate amount in excess of the amount set forth in Section 8 of the
Schedule;
(c) enter into any other transaction outside the ordinary course of
business;
(d) sell or transfer any Collateral, except for the sale of finished
Inventory in the ordinary course of Borrower's business, and except for the sale
of obsolete or unneeded Equipment in the ordinary course of business;
(e) store any Inventory or other Collateral with any warehouseman or
other third party;
(f) sell any Inventory on a sale-or-return, guaranteed sale,
consignment, or other contingent basis;
(g) make any loans of any money or other assets, except (i) advances
to customers or suppliers in the ordinary course of business, (ii) travel
advances, employee relocation loans and other employee loans and advances in the
ordinary course of business, and (iii) loans to employees, officers and
directors for the purpose of purchasing equity securities of the Borrower;
(h) incur any debts, outside the ordinary course of business, which
would have a Material Adverse Effect;
(i) guarantee or otherwise become liable with respect to the
obligations of another party or entity;
(j) pay or declare any dividends or distributions on the ownership
interests in Borrower (except for dividends or distributions payable solely in
stock form of ownership interests in Borrower);
(k) make any change in Borrower's capital structure which would have a
Material Adverse Effect;
(1) dissolve or elect to dissolve;
14
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
(m) transfer any funds to any Affiliate or Subsidiary except for rent
payments in an amount not to exceed $60,000 per month; or
(n) transfer or upstream any funds to Borrowers' parent Humascan Inc.
except to the extent needed to pay for Humascan's: (i) SEC filings and, (ii)
necessary administrative costs approved by Coast in its sole discretion;
(o) modify, amend, waive or release any of the terms of its documents
with Paymentech Merchant Services, Inc. (fka First USA Merchant Services, Inc.)
without the prior written consent of Coast.
Transactions permitted by the foregoing provisions of this Section are
only permitted if no Default or Event of Default is continuing or would occur as
a result of such transaction.
8.6 LITIGATION COOPERATION. Should any third party suit or proceeding be
instituted by or against Coast with respect to any Collateral or relating to
Borrower, Borrower shall, without expense to Coast, make available Borrower and
its officers, employees and agents and Borrower's books and records, to the
extent that Coast may deem them reasonably necessary in order to prosecute or
defend any such suit or proceeding.
8.7 FURTHER ASSURANCES. Borrower agrees, at its expense, on request by
Coast, to execute all documents and take all actions, as Coast, may deem
reasonably necessary or useful in order to perfect and maintain Coast's
perfected security interest in the Collateral, and in order to fully consummate
the transactions contemplated by this Agreement.
9. TERM.
9.1 MATURITY DATE. This Agreement shall continue in effect until the
Maturity Date; provided that the Maturity Date shall automatically be extended,
and this Agreement shall automatically and continuously renew, for successive
additional terms of one year each, unless one party gives written notice to the
other, not less than one hundred twenty (120) days prior to the Maturity Date or
the next Renewal Date, that such party elects to terminate this Agreement
effective on the Maturity Date or such next Renewal Date. If this Agreement is
renewed under this Section 9.1, Borrower shall pay to Coast a Renewal Fee in the
amount shown in Section 3 of the Schedule. The Renewal Fee shall be due and
payable on the Renewal Date and thereafter shall bear interest at a rate equal
to the rate applicable to the Receivable Loans.
9.2 EARLY TERMINATION. This Agreement maybe terminated prior to the
Maturity Date as follows: (a) by Borrower, effective three (3) Business Days
after written notice of termination is given to Coast; or (b) by Coast at any
time after the occurrence of an Event of Default, without notice, effective
immediately. If this Agreement is terminated by Borrower or by Coast under this
Section 9.2, Borrower shall pay to Coast an Early Termination Fee in the amount
shown in Section 3 of the Schedule. The Early Termination Fee shall be due and
payable on the effective date of termination and thereafter shall bear interest
at a rate equal to the rate applicable to the Receivable Loans.
9.3 PAYMENT OF OBLIGATIONS. On the Maturity Date or on any earlier
effective date of termination, Borrower shall pay and perform in full all
Obligations, whether evidenced by installment notes or otherwise, and whether or
not all or any part of such Obligations are otherwise then due and payable.
Notwithstanding any termination of this Agreement, all of Coast's security
interests in all of the Collateral and all of the terms and provisions of this
Agreement shall continue in full force and effect until all Obligations have
been paid and performed in full; provided that, without limiting the fact that
Loans are subject to the discretion of Coast, Coast may, in its sole discretion,
refuse to make any further Loans after termination. No termination shall in any
way affect or impair any right or remedy of Coast, nor shall any such
termination relieve Borrower of any Obligation to Coast, until all of the
Obligations have been paid and performed in full. Upon payment and performance
in full of all the Obligations and termination of this Agreement, Coast shall
promptly deliver to Borrower termination statements, requests for reconveyances
and such other documents as may be required to fully terminate Coast's security
interests.
10. EVENTS OF DEFAULT AND REMEDIES.
10.1 EVENTS OF DEFAULT The occurrence of any of the following events shall
constitute an "Event of
15
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
Default" under this Agreement, and Borrower shall give Coast immediate written
notice thereof:
(a) Any warranty, representation, statement, report or certificate
made or delivered to Coast by Borrower or any of Borrower's officers, employees
or agents, now or in the future, shall be untrue or misleading and results in a
Material Adverse Effect; or
(b) Borrower shall fail to pay when due any Loan or any interest
thereon or any other monetary Obligation; or
(c) the total Loans and other Obligations outstanding at any time
shall exceed the Credit Limit; or
(d) Borrower shall fail to deliver the proceeds of Collateral to Coast
as provided in Section 7.5 above, or shall fail to give Coast access to its
books and records or Collateral as provided in Section 8.4 above, or shall
breach any negative covenant set forth in Section 8.5 above; or
(e) Borrower shall fail to comply with the financial covenants (if
any) set forth in the Schedule or shall fail to perform any other non-monetary
Obligation which by its nature cannot be cured; or
(f) Borrower shall fail to perform any other non-monetary Obligation,
which failure is not cured within five (5) Business Days after the date due; or
(g) Any levy, assessment, attachment, seizure, lien or encumbrance
(other than a Permitted Lien) is made on all or any part of the Collateral which
is not cured within ten (10) days after the occurrence of the same; or
(h) any default or event of default occurs under any obligation
secured by a Permitted Lien, which is not cured within any applicable cure
period or waived in writing by the holder of the Permitted Lien; or
(i) Borrower breaches any material contract or obligation, which has
or may reasonably be expected to have a Material Adverse Effect; or
(j) Dissolution, termination of existence, insolvency or business
failure of Borrower or any guarantor of any of the Obligations; or appointment
of a receiver, trustee or custodian, for all or any part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding by Borrower or any guarantor of any of the Obligations under any
reorganization, bankruptcy, insolvency, arrangement, readjustment of debt,
dissolution or liquidation law or statute of any jurisdiction, now or in the
future in effect; or
(k) the commencement of any proceeding against Borrower or any
guarantor of any of the Obligations under any reorganization, bankruptcy,
insolvency, arrangement, readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, now or in the future in effect, which is (i) not
timely controverted, or (ii) not cured by the dismissal thereof within thirty
(30) days after the date commenced; or
(l) revocation or termination of, or limitation or denial of liability
upon, any guaranty of the Obligations or any attempt to do any of the foregoing,
or commencement of proceedings by any guarantor of any of the Obligations under
any bankruptcy or insolvency law; or
(m) revocation or termination of, or limitation or denial of liability
upon, any pledge of any certificate of deposit, securities or other property or
asset of any kind pledged by any third party to secure any or all of the
Obligations, or any attempt to do any of the foregoing, or commencement of
proceedings by or against any such third party under any bankruptcy or
insolvency law; or
(n) Borrower or any guarantor of any of the Obligations makes any
payment on account of any indebtedness or obligation which has been subordinated
to the 0bligations, other than as permitted in the applicable subordination
agreement, or if any Person who has subordinated such indebtedness or
obligations terminates or in any way limits his subordination agreement; or
(o) Except as permitted under Section 8.5(a), Borrower shall suffer
or experience any Change of Control without Coast's prior written consent, which
consent shall be in the discretion of
16
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
Coast in the exercise of its reasonable business judgment; or
(o) Borrower shall generally not pay its debts as they become due, or
Borrower shall conceal, remove or transfer any part of its property, with intent
to hinder, delay or defraud its creditors, or make or suffer any transfer of any
of its property which may be fraudulent under any bankruptcy, fraudulent
conveyance or similar law; or
(p) there shall be any Material Adverse Effect.
Coast may cease making any Loans or extending any credit hereunder during any of
the above cure periods.
10.2 REMEDIES. Upon the occurrence, and during the continuance, of any
Event of Default, Coast, at its option, and without notice or demand of any kind
(all of which are hereby expressly waived by Borrower), may do any one or more
of the following:
(a) Cease making Loans or otherwise extending credit to Borrower under
this Agreement or any other document or agreement;
(b) Accelerate and declare all or any part of the Obligations to be
immediately due, payable and performable, notwithstanding any deferred or
installment payments allowed by any instrument evidencing or relating to any
Obligation;
(c) Take possession of any or all of the Collateral wherever it may be
found, and for that purpose Borrower hereby authorizes Coast without judicial
process to enter onto any of Borrower's premises without interference to search
for, take possession of, keep, store or remove any of the Collateral, and remain
on the premises or cause a custodian to remain on the premises in exclusive
control thereof, without charge for so long as Coast deems it reasonably
necessary in order to complete the enforcement of its rights under this
Agreement or any other agreement; provided, however, that should Coast seek to
take possession of any of the Collateral by Court process, Borrower hereby
irrevocably waives:
(i) any bond and any surety or security relating thereto required
by any statute, court rule or otherwise as an incident to such
possession;
(ii) any demand for possession prior to the commencement of any
suit or action to recover possession thereof; and
(iii) any requirement that coast retain possession of, and not
dispose of, any such Collateral until after trial or final judgment;
(d) Require Borrower to assemble any or all of the Collateral and make
it available to Coast at places designated by Coast which are reasonably
convenient to Coast and Borrower, and to remove the Collateral to such locations
as Coast may deem advisable;
(e) Complete the processing, manufacturing or repair of any Collateral
prior to a disposition thereof and, for such purpose and for the purpose of
removal, Coast shall have the right to use Borrower's premises, vehicles,
hoists, lifts, cranes, equipment and all other property without charge. Coast is
hereby granted a license or other right to use, without charge, Borrower's
labels, patents, copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any property of a
similar nature, as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and Borrower's rights under all
licenses and all franchise agreements shall inure to Coast's benefit;
(f) Sell, lease or otherwise dispose of any of the Collateral, in its
condition at the time Coast obtains possession of it or after further
manufacturing, processing or repair, at one or more public and/or private sales,
in lots or in bulk, for cash, exchange or other property, or on credit, and to
adjourn any such sale from time to time without notice other than oral
announcement at the time scheduled for sale. Coast shall have the right to
conduct such disposition on Borrower's premises without charge, for such time or
times as Coast deems reasonable, or on Coast's premises, or elsewhere and the
Collateral need not be located at the place of disposition. Coast may directly
or through any affiliated company purchase or lease any Collateral at any such
public disposition, and if permissible under applicable law, at any private
17
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
disposition. Any sale or other disposition of Collateral shall not relieve
Borrower of any liability Borrower may have if any Collateral is defective as to
title or physical condition or otherwise at the time of sale;
(g) Demand payment of, and collect any Receivables, Collections and
General Intangibles comprising Collateral and, in connection therewith, Borrower
irrevocably authorizes Coast to endorse or sign Borrower's name on all
Collections, receipts, instruments and other documents, to take possession of
and open mail addressed to Borrower and remove therefrom payments made with
respect to any item of the Collateral or proceeds thereof, and, in Coast's sole
discretion, to grant extensions of time to pay, compromise claims and settle
Receivables and the like for less than face value; and
(h) Demand and receive possession of any of Borrower's federal and
state income tax returns and the books and records utilized in the preparation
thereof or referring thereto.
All attorneys' fees, expenses, costs, liabilities and obligations
incurred by Coast (including attorneys' fees and expenses incurred in connection
with bankruptcy) with respect to the foregoing shall be due from the Borrower to
Coast on demand. Coast may charge the same to Borrower's loan account, and the
same shall thereafter bear interest at the same rate as is applicable to the
Receivable Loans and Advances. Without limiting any of Coast's rights and
remedies, from and after the occurrence of any Event of Default, the interest
rate applicable to the Obligations shall be increased by an additional three
percent per annum.
10.3 STANDARDS FOR DETERMINING COMMERCIAL REASONABLENESS. Borrower and
Coast agree that a sale or other disposition (collectively, "sale") of any
Collateral which complies with the following standards will conclusively be
deemed to be commercially reasonable:
(a) Notice of the sale is given to Borrower at least seven (7) days
prior to the sale, and, in the case of a public sale, notice of the sale is
published at least seven (7) days before the sale in a newspaper of general
circulation in the county where the sale is to be conducted;
(b) Notice of the sale describes the collateral in general,
non-specific terms;
(c) The sale is conducted at a place designated by Coast, with or
without the Collateral being present;
(d) The sale commences at any time between 8:00 a.m. and 6:00 p.m. Los
Angeles, California time;
(e) Payment of the purchase price in cash or by cashier's check or
wire transfer is required; and
(f) With respect to any sale of any of the Collateral, Coast may (but
is not obligated to) direct any prospective purchaser to ascertain directly from
Borrower any and all information concerning the same.
Coast shall be free to employ other methods of noticing and selling
the Collateral, in its discretion, if they are commercially reasonable.
10.4 POWER OF ATTORNEY. Borrower grants to Coast an irrevocable power of
attorney coupled with an interest, authorizing and permitting Coast (acting
through any of its employees, attorneys or agents) at any time, at its option,
but without obligation, with or without notice to Borrower, and at Borrower's
expense, to do any or all of the following, in Borrower's name or otherwise, but
Coast agrees to exercise the following powers in a commercially reasonable
manner:
(a) Execute on behalf of Borrower any documents that Coast may, in its
sole discretion, deem advisable in order to perfect and maintain Coast's
security interest in the Collateral, or in order to exercise a right of Borrower
or Coast, or in order to fully consummate all the transactions contemplated
under this Agreement, and all other present and future agreements;
(b) Execute on behalf of Borrower any document exercising,
transferring or assigning any option to purchase, sell or otherwise dispose of
or to lease (as lessor or lessee) any real or personal property which is part of
Coast's Collateral or in which Coast has an interest;
18
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
(c) Execute on behalf of Borrower, any invoices relating to any
Receivable or Collection, any draft against any Account Debtor and any notice to
any Account Debtor, any proof of claim in bankruptcy, any Notice of Lien, claim
of mechanic's, materialman's or other lien, or assignment or satisfaction of
mechanic's, materialman's or other lien;
(d) Take control in any manner of any cash or non-cash items of
payment or proceeds of Collateral; endorse the name of Borrower upon any
instruments, or documents, evidence of payment or Collateral that may come into
Coast's possession;
(e) Endorse all checks and other forms of remittances received by
Coast;
(f) Pay, contest or settle any lien, charge, encumbrance, security
interest and adverse claim in or to any of the Collateral, or any judgment based
thereon, or otherwise take any action to terminate or discharge the same;
(g) Grant extensions of time to pay, compromise claims and settle
Receivables, Collections and General Intangibles for less than face value and
execute all releases and other documents in connection therewith;
(h) Pay any sums required on account of Borrower's taxes or to secure
the release of any liens therefor, or both;
(i) Settle and adjust, and give releases of, any insurance claim that
relates to any of the Collateral and obtain payment therefor;
(j) Instruct any third party having custody or control of any books or
records belonging to, or relating to, Borrower to give Coast the same rights of
access and other rights with respect thereto as Coast has under this Agreement;
and
(k) Take any action or pay any sum required of Borrower pursuant to
this Agreement and any other present or future agreements.
Any and all sums paid and any and all costs, expenses, liabilities,
obligations and attorneys' fees incurred by Coast (including attorneys' fees and
expenses incurred pursuant to bankruptcy) with respect to the foregoing shall be
added to and become part of the Obligations, and shall be payable on demand.
Coast may charge the foregoing to Borrower's loan account and the foregoing
shall thereafter bear interest at the same rate applicable to the Receivable
Loans and Advances. In no event shall Coast's rights under the foregoing power
of attorney or any of Coast's other rights under this Agreement be deemed to
indicate that Coast is in control of the business, management or properties of
Borrower. Borrower shall pay, indemnify, defend, and hold Coast and each of its
officers, directors, employees, counsel, agents, and attorneys-in-fact (each, an
"Indemnified Person") harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions, investigations,
proceedings, and damages, and all attorneys fees and disbursements and other
costs and expenses actually incurred in connection therewith (as and when they
are incurred and irrespective of whether suit is brought), at any time asserted
against, imposed upon, or incurred by any of them in connection with or as a
result of or related to the execution, delivery, enforcement, performance, and
administration of this Agreement and any other Loan Documents or the
transactions contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event
or circumstance in any manner related thereto (ail the foregoing, collectively,
the "Indemnified Liabilities"). Borrower shall have no obligation to any
Indemnified Person hereunder with respect to any Indemnified Liability that a
court of competent jurisdiction finally determines to have resulted from the
gross negligence or willful misconduct of such Indemnified Person. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations.
10.5 Application of Proceeds. All proceeds realized as the result of any
sale of the Collateral shall be applied by Coast first to the costs, expenses,
liabilities, obligations and attorneys' fees incurred by Coast in the exercise
of its rights under this Agreement, second to the interest due upon any of the
Obligations, and third to the principal of the Obligations, in such order as
Coast shall determine in its sole discretion. Any surplus shall be paid to
Borrower or other persons
19
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
legally entitled thereto; Borrower shall remain liable to Coast for any
deficiency. If, Coast, in its sole discretion, directly or indirectly enters
into a deferred payment or other credit transaction with any purchaser at any
sale of Collateral, Coast shall have the option, exercisable at any time, in its
sole discretion, of either reducing the Obligations by the principal amount of
purchase price or deferring the reduction of the Obligations until the actual
receipt by Coast of the cash therefor.
10.6 REMEDIES CUMULATIVE. In addition to the rights and remedies set forth
in this Agreement, Coast shall have all the other rights and remedies accorded a
secured party in equity, under the Code, and under all other applicable laws,
and under any other instrument or agreement now or in the future entered into
between Coast and Borrower, and all of such rights and remedies are cumulative
and none is exclusive. Exercise or partial exercise by Coast of one or more of
its rights or remedies shall not be deemed an election, nor bar Coast from
subsequent exercise or partial exercise of any other rights or remedies. The
failure or delay of Coast to exercise any rights or remedies shall not operate
as a waiver thereof, but all rights and remedies shall continue in full force
and effect until all of the Obligations have been indefeasibly paid and
performed.
11. GENERAL PROVISIONS.
11.1 INTEREST COMPUTATION. In computing interest on the Obligations, all
checks, wire transfers and other items of payment received by Coast (including
proceeds of Receivables and Collections and payment of the Obligations in full)
shall be deemed applied by Coast on account of the Obligations three (3)
Business Days after receipt by Coast of immediately available funds, and, for
purposes of the foregoing, any such funds received after 10:30 AM Los Angeles,
California time, on any day shall be deemed received on the next Business Day.
Coast shall be entitled to charge Borrower's account for such three (3) Business
Days of "clearance" or "float" at the rate(s) set forth in Section 3 of the
Schedule on all checks, wire transfers and other items received by Coast,
regardless of whether such three (3) Business Days of "clearance" or "float"
actually occur, and shall be deemed to be the equivalent of charging three (3)
Business Days of interest on such collections. This across-the-board three (3)
Business Day clearance or float charge on all collections is acknowledged by the
parties to constitute an integral aspect of the pricing of Coast's financing of
Borrower. Coast shall not, however, be required to credit Borrower's account for
the amount of any item of payment which is unsatisfactory to Coast in its sole
discretion, and Coast may charge Borrower's loan account for the amount of any
item of payment which is returned to Coast unpaid.
11.2 APPLICATION OF PAYMENTS. Subject to Section 7.5 hereof, all payments
with respect to the Obligations may be applied, and in Coast's sole discretion
reversed and re-applied, to the Obligations, in such order and manner as Coast
shall determine in its sole discretion.
11.3 CHARGES TO ACCOUNTS. Coast may, in its discretion, require that
Borrower pay monetary Obligations in cash to Coast, or charge them to Borrower's
Loan account, in which event they will bear interest from the date due to the
date paid at the same rate applicable to the Loans.
11.4 MONTHLY ACCOUNTINGS. Coast shall provide Borrower monthly with an
account of advances, charges, expenses and payments made pursuant to this
Agreement. Such account shall be deemed correct, accurate and binding on
Borrower and an account stated (except for reverses and reapplications of
payments made and corrections of errors discovered by Coast), unless Borrower
notifies Coast in writing to the contrary within thirty (30) days after each
account is rendered, describing the nature of any alleged errors or omissions.
11.5 NOTICES. All notices to be given under this Agreement shall be in
writing and shall be given either personally or by reputable private delivery
service or by regular first-class mail, facsimile or certified mail return
receipt requested, addressed to Coast or Borrower at the addresses shown in the
heading to this Agreement, or at any other address designated in writing by one
party to the other party. Notices to Coast shall be directed to the Commercial
Finance Division, to the attention of the Division Manager or the Division
Credit Manager. All notices shall be deemed to have been given upon delivery in
the case of notices personally delivered, faxed (at time of confirmation of
transmission), or at the expiration of one (1) Business
20
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
Day following delivery to the private delivery service, or two (2) Business Days
following the deposit thereof in the United States mail, with postage prepaid.
11.6 SEVERABILITY. Should any provision of this Agreement be held by any
court of competent jurisdiction to be void or unenforceable, such defect shall
not affect the remainder of this Agreement, which shall continue in full force
and effect.
11.7 INTEGRATION. This Agreement and such other written agreements,
documents and instruments as may be executed in connection herewith are the
final, entire and complete agreement between Borrower and Coast and supersede
all prior and contemporaneous negotiations and oral representations and
agreements, all of which are merged and integrated in this Agreement. There are
no oral understandings, representations or agreements between the parties which
are not set forth in this Agreement or in other written agreements signed by the
parties in connection herewith.
11.8 WAIVERS. The failure of Coast at any time or times to require Borrower
to strictly comply with any of the provisions of this Agreement or any other
present or future agreement between Borrower and Coast shall not waive or
diminish any right of Coast later to demand and receive strict compliance
therewith. Any waiver of any Default shall not waive or affect any other
Default, whether prior or subsequent, and whether or not similar. None of the
provisions of this Agreement or any other agreement now or in the future
executed by Borrower and delivered to Coast shall be deemed to have been waived
by any act or knowledge of Coast or its agents or employees, but only by a
specific written waiver signed by an authorized officer of Coast and delivered
to Borrower. Borrower waives demand, protest, notice of protest and notice of
default or dishonor, notice of payment and nonpayment, release, compromise,
settlement, extension or renewal of any commercial paper, instrument, account,
General Intangible, document or guaranty at any time held by Coast on which
Borrower is or may in any way be liable, and notice of any action taken by
Coast, unless expressly required by this Agreement.
11.9 NO LIABILITY FOR ORDINARY NEGLIGENCE. Neither Coast, nor any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Coast shall be liable for any claims, demands, losses or
damages, of any kind whatsoever, made, claimed, incurred or suffered by Borrower
or any other party through the ordinary negligence of Coast, or any of its
directors, officers, employees, agents, attorneys or any other Person affiliated
with or representing Coast, but nothing herein shall relieve Coast from
liability for its own gross negligence or willful misconduct.
11.10 AMENDMENT. The terms and provisions of this Agreement may not be
waived or amended, except in a writing executed by Borrower and a duly
authorized officer of Coast.
11.11 TIME OF ESSENCE. Time is of the essence in the performance by
Borrower of each and every obligation under this Agreement.
11.12 ATTORNEYS FEES, COSTS AND CHARGES. Borrower shall reimburse Coast for
all attorneys' fees (including attorneys' fees and expenses incurred pursuant to
bankruptcy) and all filing, recording, search, title insurance, appraisal,
audit, and other costs incurred by Coast, pursuant to, or in connection with, or
relating to this Agreement (whether or not a lawsuit is filed), including, but
not limited to, any attorneys fees and costs (including attorneys' fees and
expenses incurred pursuant to bankruptcy) Coast incurs in order to do the
following: prepare and negotiate this Agreement and the documents relating to
this Agreement; obtain legal advice in connection with this Agreement or
Borrower; enforce, or seek to enforce, any of its rights; prosecute actions
against, or defend actions by, Account Debtors; commence, intervene in, or
defend any action or proceeding; initiate any complaint to be relieved of the
automatic stay in bankruptcy; file or prosecute any probate claim, bankruptcy
claim, third-party claim, or other claim; examine, audit, copy, and inspect any
of the Collateral or any of Borrower's books and records; protect, obtain
possession of, lease, dispose of, or otherwise enforce Coast's security interest
in, the Collateral; and otherwise represent Coast in any litigation relating to
Borrower. If either Coast or Borrower files any lawsuit against the other
predicated on a breach of this Agreement, the prevailing party in such action
shall be entitled to recover its costs and attorneys' fees (including attorneys'
fees and expenses incurred pursuant to bankruptcy), including (but not limited
to)
21
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
attorneys' fees and costs incurred in the enforcement of, execution upon or
defense of any order, decree, award or judgment. Borrower shall also pay Coast's
standard charges for returned checks and for wire transfers, in effect from time
to time. All attorneys' fees, costs and charges (including attorneys' fees and
expenses incurred pursuant to bankruptcy) and other fees, costs and charges to
which Coast may be entitled pursuant to this Agreement may be charged by Coast
to Borrower's loan account and shall thereafter bear interest at the same rate
as the Receivable Loans and Advances.
11.13 BENEFIT OF AGREEMENT. The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors, assigns,
heirs, beneficiaries and representatives of Borrower and Coast; provided,
however, that Borrower may not assign or transfer any of its rights under this
Agreement without the prior written consent of Coast, and any prohibited
assignment shall be void. No consent by Coast to any assignment shall release
Borrower from its liability for the Obligations. Coast may assign its rights and
delegate its duties hereunder without the consent of Borrower. Coast reserves
the right to syndicate all or a portion of the transaction created herein or
sell, assign, transfer, negotiate, or grant participations in all or any part
of, or any interest in Coast's rights and benefits hereunder. In connection with
any such syndication, assignment or participation, Coast may disclose all
documents and information which Coast now or hereafter may have relating to
Borrower or Borrower's business. To the extent that Coast assigns its rights and
obligations hereunder to a third Person, Coast thereafter shall be released from
such assigned obligations to Borrower.
11.14 PUBLICITY. Coast is hereby authorized, at its expense, to issue
appropriate press releases and to cause a tombstone to be published announcing
the consummation of this transaction and the aggregate amount thereof.
11.15 PARAGRAPH HEADINGS; CONSTRUCTION. Paragraph headings are only used in
this Agreement for convenience. Borrower and Coast acknowledge that the headings
may not describe completely the subject matter of the applicable paragraph, and
the headings shall not be used in any manner to construe, limit, define or
interpret any term or provision of this Agreement. The term "including",
whenever used in this Agreement, shall mean "including (but not limited to)".
This Agreement has been fully reviewed and negotiated between the parties and no
uncertainty or ambiguity in any term or provision of this Agreement shall be
construed strictly against Coast or Borrower under any rule of construction or
otherwise.
11.16 GOVERNING LAW; JURISDICTION; VENUE. This Agreement and all acts and
transactions hereunder and all rights and obligations of Coast and Borrower
shall be governed by the internal laws of the State of California, without
regard to its conflicts of law principles. As a material part of the
consideration to Coast to enter into this Agreement, Borrower (a) agrees that
all actions and proceedings relating directly or indirectly to this Agreement
shall, at Coast's option, be litigated in courts located within California, and
that the exclusive venue therefor shall be Los Angeles County; (b) consents to
the jurisdiction and venue of any such court and consents to service of process
in any Such action or proceeding by personal delivery or any other method
permitted by law; and (c) waives any and all rights Borrower may have to object
to the jurisdiction of any such court, or to transfer or change the venue of any
such action or proceeding.
11.17 MUTUAL WAIVER OF JURY TRIAL. BORROWER AND COAST EACH HEREBY WAIVE THE
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF,
OR IN ANY WAY RELATING TO, THIS AGREEMENT OR ANY OTHER PRESENT OR FUTURE
INSTRUMENT OR AGREEMENT BETWEEN COAST AND BORROWER, OR ANY CONDUCT, ACTS OR
OMISSIONS OF COAST OR BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES,
AGENTS, ATTORNEYS OR ANY OTHER PERSONS AFFILIATED WITH COAST OR BORROWER, IN ALL
OF THE FOREGOING CASES, WHETHER
22
Coast Business Credit Loan and Security Agreement
--------------------------------------------------------------------------------
SOUNDING IN CONTRACT OR TORT OR
OTHERWISE.
BORROWER:
THE NEW ALGAE COMPANY
dba Cell Tech,
an Oregon corporation
By /s/ XXXXX X. XXXXXXX
---------------------------------
President or Vice President
By
----------------------------------
Secretary or Ass't Secretary
THE NEW EARTH COMPANY,
an Oregon corporation
By /s/ XXXXX X. XXXXXXX
---------------------------------
President or Vice President
By
---------------------------------
Secretary or Ass't Secretary
COAST:
COAST BUSINESS CREDIT,
a division of Southern Pacific Bank
By /s/ [SIGNATURE]
---------------------------------
Title: Vice President
23
--------------------------------------------------------------------------------
Coast
SCHEDULE TO
LOAN AND SECURITY AGREEMENT
BORROWER: THE NEW ALGAE COMPANY DBA CELL TECH,
AN OREGON CORPORATION
ADDRESS: 0000 XXXX XX.
XXXXXXX XXXXX, XXXXXX 00000
BORROWER: THE NEW EARTH COMPANY, AN OREGON CORPORATION
ADDRESS: 0000 XXXX XX.
XXXXXXX XXXXX, XXXXXX 00000
DATE: JUNE 21, 1999
This Schedule forms an integral part of the Loan and Security Agreement
between Coast Business Credit, a division of Southern Pacific Bank, a California
corporation, and the above-borrower of even date.
================================================================================
SECTION 2 - CREDIT FACILITIES
SECTION 2.1 - CREDIT LIMIT:
Loans in a total amount at any time
outstanding not to exceed the
lesser of a total of Fifteen
Million Dollars ($15,000,000) at
any one time outstanding (the
"Maximum Dollar Amount"), or the
sum of (a) - (e) below:
(a) Receivable Loans in an amount not
to exceed 80% of the amount of
Borrower's Eligible Wholesale
Receivables (as defined in Section
1 of the Agreement), plus
(b) Advances in an amount not to exceed
at any time three (3) times*
recurring monthly Net Collections,
based on a
24
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
trailing three (3) month moving
average however, these Advances
shall not exceed the lesser of:
(1) Six Million Four Hundred
Thousand Dollars ($6,400,000)
with said amount to be
indefinitely reduced by
Fifty-Three Thousand Dollars
($53,000) per month commencing
one month from the Closing
Date; or
(2) Fifty percent (50%) of the
appraised fair market value of
the Real Property securing
Borrower's Obligations to
Coast, with said appraised
fair market value to be
determined by an appraiser
acceptable to Coast in its
sole and absolute discretion;
or
(3) Three (3) times annualized
EBITDA, based on a trailing 3
month moving average;
provided, however, Coast shall
have the right, at its sole
discretion to reduce the multiple
in section (b) in the event that
one month's Gross Collections,
decline by more than 25% from the
previous month's Gross
Collections, plus
[* Commencing six months after the
Closing Date, the multiple of 3
shall reduce by .1 per month until
the multiple reaches 1]
(c) Inventory Loans in an amount not
to exceed the lesser of:
(1) Three Million Dollars
($3,000,000), or
(2) 25% of the value of Borrower's
"Freeze Dried Algae" Eligible
Inventory that has been
processed within the previous
30 months, [calculated at the
lower of cost or market value
and determined on a first-in,
first-out basis], plus
(3) 40% of the value of Borrower's
"Pet Quality Algae" Eligible
Inventory, [calculated at the
lower of cost or market value
and determined on a first-in,
first-out basis], plus
(4) 35% of the value of Borrower's
"Bulk Capsules and Tablet"
Eligible Inventory,
[calculated at the lower of
cost or market value and
determined on a first-in,
first-out basis], plus
25
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
(5) 55% of the value of Borrower's
finished goods Eligible
Inventory located in the
United States, [calculated at
the lower of cost or market
value and determined on a
first-in, first-out basis],
plus
Provided, however, Coast shall
have the right to blend or
adjust any of the above
advance rates against Eligible
Inventory from time to time in
its sole and absolute
discretion at any time.
(d) Term Loan in the original
principal amount not to exceed
the lesser of:
(1) Two Million Four Hundred
Thousand Dollars ($2,400,000);
or
(2) Eighty percent (80%) of the
appraised auction value of
Borrower's existing Equipment,
with said auction value to be
determined by an appraiser
acceptable to Coast in its
sole and absolute discretion.
The Term Loan will be
repayable in sixty (60) equal
monthly installments of
principal, commencing one (1)
month after the Closing Date,
plus
(e) Equipment Acquisition Loans, to be
drawn within eighteen (18) months
from the Closing Date, in minimum
advances of One Hundred Thousand
Dollars ($100,000) in a total
amount not to exceed the lesser
of:
(1) Two Million Dollars
($2,000,000); or
(2) Seventy percent (70%) of the
cost of new Equipment acquired
by Borrower (after subtracting
taxes and installation
charges).
The Equipment Acquisition Loans
will be repayable in sixty (60)
monthly installments of principal
and interest. Borrower's ability
to obtain these Equipment
Acquisition Loans is subject to
Borrower's maintenance of a Debt
Service Coverage Ratio of at least
1.25 to 1.00 for a trailing three
(3) month period, to be determined
by Coast in its sole discretion.
================================================================================
SECTION 3 - INTEREST AND FEES
SECTION 3.1 - INTEREST RATE: The Interest Rate on the Receivable
Loans, Advances and the Inventory Loan
will be a rate equal to the Prime Rate
plus 2.5%
26
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
per annum, calculated on the basis of a
360-day year for the actual number of
days elapsed. The Interest Rate on the
Term Loans and the Equipment Acquisition
Loans will be a rate equal to the Prime
Rate plus 2.75% per annum, calculated on
the basis of a 360-day year for the
actual number of days elapsed. The
interest rate applicable to all Loans
shall be adjusted monthly as of the
first day of each month, and the
interest to be charged for each month
shall be based on the highest Prime Rate
in effect during the prior month, but in
no event shall the rate of interest
charged on any Loans in any month be
less than 9% per annum.
SECTION 3.1 - MINIMUM MONTHLY
INTEREST: An amount equal to the interest that
would have accrued had the daily
aggregate outstanding balance of all
Loans been equal to forty percent (40%)
of the Maximum Dollar Amount.
SECTION 3.2 - LOAN FEE: 3% of the Maximum Dollar Amount payable
on the Closing Date with an additional
.50% of the Maximum Dollar Amount to be
paid on each yearly anniversary of the
Closing Date, thereafter with all said
fees to be fully earned on the Closing
Date. The fees payable pursuant to this
provision will survive notwithstanding
an Early Termination of this Agreement
pursuant to Section 9.2 of this
Agreement.
SECTION 9.1 - RENEWAL FEE: One-half percent (.50%) of the Maximum
Dollar Amount per year.
SECTION 9.2 - EARLY TERMINATION
FEE: An amount equal to five percent (5%) of
the Maximum Dollar Amount (as defined in
the Schedule), if termination occurs on
or before the first anniversary of the
effective date of this Agreement; four
percent (4%) of the Maximum Dollar
Amount, if termination occurs after the
first anniversary and on or before the
second anniversary of the effective date
of this Agreement; and three percent
(3%) of the Maximum Dollar Amount, if
termination occurs after the second
anniversary and before the Maturity
Date.
================================================================================
SECTION 5 - CONDITIONS PRECEDENT
SECTION 5.2 - MINIMUM
AVAILABILITY: $500,000
SECTION 5.14 - OTHER DOCUMENTS
AND AGREEMENTS: 1. Joint and Several Borrower Rider;
2. Continuing Guaranty of Xxxxx X.
Xxxxxxx;
27
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
3. Continuing Guaranty of Xxxxx X.
Xxxxxxx;
4. Continuing Guaranty of Klamath;
5. Continuing Guaranty of Humascan;
6. UCC-1 financing statements, fixture
filings and termination statements;
7. Security Agreements (including those
covering copyrights, patents and
trademarks);
8. Secured Term Promissory Note (Term
Loan);
9. Secured Promissory Note (Equipment
Acquisition Loans);
10. Deeds of Trust on the Real Property
(and related documentation);
11. Landlord Waivers;
12. Opinion of Borrower's, Guarantors',
Klamath's and Humascan's Counsel;
13. Debt Subordination Agreement from
the Internal Revenue Service with
respect to Xxxxx X. Xxxxxxx, Xxxxx X.
Xxxxxxx and Borrower;
14. Blocked Account Agreements;
15. Certificates of Title reflecting
Coast's lien on vehicles; and
16. Intercreditor Agreement from The
Nature Conservancy.
17. Subordination Agreement from Xxxxx
X. Xxxxxxx and Xxxxx X. Xxxxxxx
respecting real property located at
1340, 1350 and 0000 X. 0xx Xxxxxx,
Xxxxxxx Xxxxx, Xxxxxx;
18. Collateral Assignment of Lease with
respect to canal lease;
19. Collateral Assignment of License
with respect to canal license;
20. Consent to Assignment of License
with respect to canal license; and
21. Bailee letters from processors.
28
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
SECTION 6 - REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 6.2 - PRIOR NAMES OF
BORROWER: None.
SECTION 6.2 - PRIOR TRADE NAMES
OF BORROWER: None.
SECTION 6.2 - EXISTING TRADE NAMES
OF BORROWER: Cell Tech.
SECTION 6.3 - OTHER LOCATIONS AND
ADDRESSES: To be provided by Borrower.
SECTION 6.10 - MATERIAL ADVERSE
LITIGATION: To be provided by Borrower.
SECTION 6.10 - FUTURE CLAIMS AND
LITIGATION: Borrower will promptly inform
Coast in writing of any claim,
proceeding, litigation or
investigation in the future
threatened or instituted by or
against Borrower involving any
single claim of One Hundred
Thousand Dollars ($100,000) or
more.
================================================================================
SECTION 8 - ADDITIONAL DUTIES OF BORROWER
SECTION 8.1 - OTHER PROVISIONS: Borrower's ongoing Tangible Net
Worth shall be no less than
Twenty Seven Million Dollars
($27,000,000) at any time
provided, however, that this
amount will be increased
quarterly in an amount equal to
80% of Borrower's net profit
after tax.
Coast agrees to temporarily waive
for a period of 120 days
commencing on the Closing Date,
the operation of the EBITDA
lender imposed against Advances
on recurring monthly Net
Collections, as described in
Section 2.1 of this Schedule,
provided, however, that if at the
end of said period Borrower is
not in compliance with said
EBITDA lender, Coast will be
entitled to (i) declare an Event
of Default, and (ii)
retroactively to the Closing
Date, increase the interest rate
applicable to the Obligations by
an additional three percent (3%).
SECTION 8.2 - INSURANCE: Subject to the limitations set
forth in Section 8.2 of the
Agreement, Coast shall release to
Borrower insurance proceeds with
respect to Equipment totaling
less than Fifty Thousand Dollars
($50,000).
SECTION 8.3 - REPORTING: Borrower shall provide Coast with
the following:
1. Monthly Receivable agings of
wholesale customers, aged by
invoice date, within ten (10)
days after the end of each
month.
2. Monthly accounts payable
agings, aged by invoice date,
and outstanding or held check
registers within ten (10) days
after the end of each month.
29
Coast Business Credit Schedule to Loan and Security Agreement
--------------------------------------------------------------------------------
3. Monthly perpetual inventory
reports for the Inventory
valued on a first-in,
first-out basis at the lower
of cost or market (in
accordance with GAAP), monthly
reports for the Inventory
which includes information by
category and location, and
such other inventory reports
as are reasonably requested by
Coast, all within ten (10)
days after the end of each
month.
4. Monthly internally prepared
financial statements, as soon
as available, and in any event
within thirty (30) days after
the end of each month.
5. Quarterly internally prepared
financial statements, as soon
as available, and in any event
within forty-five (45) days
after the end of each fiscal
quarter of Borrower.
6. Quarterly customer lists,
including customer name,
address, and phone number.
7. Annual financial statements,
as soon as available, and in
any event within ninety (90)
days following the end of
Borrower's fiscal year,
containing the unqualified
opinion of, and certified by,
an independent certified
public accountant acceptable
to Coast.
8. Ongoing proof that income
taxes payable by Borrower,
Guarantors and Borrower's
shareholders are being paid
quarterly, in form and
substance acceptable to Coast
in its sole and absolute
discretion.
9. Annual updated financial
statements of Guarantors, in
form and substance acceptable
to Coast in its sole and
absolute discretion.
SECTION 8.5 - NEGATIVE COVENANTS
(ACQUIRED ASSETS): Fifty Thousand Dollars
($50,000).
================================================================================
SECTION 9 - TERM
SECTION 9.1 - MATURITY DATE: The last Business Day of the
month three (3) years from the
Closing Date, subject to
automatic renewal as provided
in Section 9.1 of the
Agreement, and early
termination as provided in
Section 9.2 of the Agreement.
30
SCHEDULE 6.10
The New Algae Company x. Xxxxxxx (defamation and trade liable)
The New Algae Company v. Class Development, Inc. (declaratory relief)
Oregon Freeze Dry, Inc. v. The New Algae Company (breach of contract with
counterclaims by The New Algae Company against Oregon Freeze Dry)
Xxxxxxx, et al. v. Cell Tech
SCHEDULE 6.3
0000 Xxxxx Xxxxx Xxxxxx
0000 Xxxxx Xxxx Xxxxxx
0000 Xxxxxxx Xxxxx
000 Xxxxxxxxx
0000 Xxxx Xxxxxx
000 Xxxxxxxx Xxxxxxx & Vacant Lots
000 Xxxx Xxxxxx
662 Spring Xxxxxx/000 Xxxxxx Xxxxxx
0000 Xxxxxxx Avenue
000 Xxxxxx Xxxxxx/000 Xxxxxx Xxxxxx
0000 Xxxxx Xxxxx Xxxxxx
0000 Xxxxx Xxxxx Xxxxxx
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Lot by OIT
Xxxx Lot
0000 Xxxx Xxxxxx
7869 Short Road
