[LETTERHEAD OF SEAFIRST APPEARS HERE]
EXHIBIT 10.7
XXXXXXXXX X. XXXXXXXXXX
Vice President
Eastside Commercial Banking
April 28, 1998
Xx. Xxxxx Xxxxxxxxx
CFO
COST-U-LESS, INC.
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
Dear Xxxxx:
Bank of America NT & SA dba Seafirst Bank ("Bank") is pleased to make available
to COST-U-LESS, INC. the following credit facilities based upon the terms and
conditions specifically noted below:
Borrower: COST-U-LESS
Corporation
Guarantor: NONE
FACILITY #1
-----------
Credit Line: $7,000,000 aggregate line of credit, which is subject to the
following limitations:
. $5,895,390 maximum for advances.
. $1,104,660 maximum for standby letters of credit
Loan Purpose: Revolving line of credit for operating needs including
advances and standby letters of credit.
Interest Rate: 30, 60, 90, 120, 180 day LIBOR option plus 150 basis points;
or Bank's reference rate (prime rate) fully floating.
Loan Fee: As consideration for Bank issuance of this Commitment,
Borrower shall pay Bank a loan fee of $7,369 upon closing
which is fully earned and not refundable. In addition, a 1%
annual fee will be charged for the standby letter of credit.
Loan fee is 1/8% of revolving portion of line.
Compensating
Balances: None.
Repayment: Principal due on maturity; interest payment monthly.
Security: First lien security interest on domestic inventory.
Assignment of CULNEV note and security interest in foreign
inventory. Loan to be cross-collateralized with other debt
at Bank.
SEAFIRST BANK 00000 Xxxxxxxxx Xxxxxx Xxxxxx/Xxxxx 000/Post Office Box
3217/Bellevue, Washington 98009
Telephone (000) 000-0000 FAX (000) 000-0000
Xx. Xxxxx Xxxxxxxxx
Chief Executive Officer
COST-U-LESS, INC.
April 28, 1998
Page 2
Expiration: This revolving facility is available for advances until
May 1, 1999. If, however, advances are made and/or new
promissory notes executed after this date, such advances
will extend and be subject to this commitment until repaid
in full, unless a written statement signed by the Bank and
Borrower provides otherwise, or a subsequent mutually
satisfactory loan agreement is executed.
OTHER TERMS AND CONDITIONS
Before any advance is made, and from time to time as Bank may request
and/or as deemed under this agreement, you agree to negotiate, execute and
deliver a loan agreement and such other documents in a form and substance
such as Bank shall reasonably request.
Financial Information: You will provide to us the following financial
----------------------
exhibits at the following times:
. Annual unqualified financial statements within 90 days of year-end.
. Quarterly interim financial statements within 30 days of quarter end
to include breakdown by store location showing sales, cost of goods
sold, inventory.
Financial Standards: You agree to maintain the following, with
--------------------
compliance to be maintained on a quarterly basis:
. Minimum tangible net worth: $9,700,000; $10,500,000 FY '98.
. Minimum current ratio: 1.2 interim.
. Maximum debt to tangible net worth: 2.0:1.
. Quarterly cash flow coverage ratio of at least 1.20 times calculated
as follows:
EBITDA + Non Cash Adj. & Step Rent
----------------------------------
Int. Exp. & CPLTD
Other
-----
. Capital expenditures for 1998 not to exceed $5,000,000 without prior
written consent of Bank.
DEFAULT
If any of the following events should occur, Bank may cancel this
Commitment, retain the commitment fee and declare immediately due and
payable all principal, interest and other sums payable under the loan
documents and this Commitment and exercise any and all other rights
provided for by the loan documents:
1) If there shall be any material adverse change in the financial
conditions of, or bankruptcy of COST-U-LESS. You agree to notify Bank
of any material adverse change in financial condition, and to provide,
whether or not such notification is given, up-to-date financial
condition (certified by you) as requested by Bank to determine if
material adverse change has occurred.
2) If there is any default under any of the loan documents, or failure to
meet any of the conditions of this Commitment.
3) COST-U-LESS, INC. ceases to exist as a going concern.
This commitment may not be assigned without Bank's prior written
consent.
Xx. Xxxxx Xxxxxxxxx
Chief Executive Officer
COST-U-LESS, INC.
April 28, 1998
Page 3
ENTIRE AGREEMENT, STATUTE OF FRAUDS AND ACKNOWLEDGMENT
The Commitment contains the entire agreement between us and may not be
amended except in writing executed by both of us. This Commitment
supersedes all oral negotiation/and oral agreements between us with respect
to the subject matter hereof. No waiver of any provision hereof shall be
effective unless in writing and then only in the specific instance and for
the specific purpose specified.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
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FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
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WASHINGTON LAW.
---------------
Please acknowledge your approval by signing below.
Sincerely,
/s/ Xxxxxxxxx X. Xxxxxxxxxx
XXXXXXXXX X. XXXXXXXXXX
Vice President
Bank of America NT & SA dba Seafirst Bank
Approved and accepted this ______ day of April, 1998.
COST-U-LESS, INC.
By: /s/ Xxxxx Xxxxxxxxx
---------------------------
Xxxxx Xxxxxxxxx
CFO
CB:jl
[LOGO OF SEAFIRST BANK APPEARS HERE] LOAN MODIFICATION
(R) AGREEMENT
--------------------------------------------------------------------------------
This agreement amends the REVOLVING NOTE dated APRIL 19, 1995 ("Note")
executed by COST-U-LESS, INC. ("Borrower") in favor of Bank of America National
Trust & Savings Association, doing business as SEAFIRST BANK, successor by name
change to Seattle-First National Bank ("Bank"), regarding a loan in the maximum
principal amount of $3,200,000.00 (the "Loan"), which currently has a maximum
principal amount of $6,000,000.00. For mutual consideration, Borrower and Bank
agree to amend the above loan documents as follows:
1. Credit Limit. The maximum principal amount of Borrower's line of
------------
credit is hereby changed to $7,000,000.00, and Borrower's maximum liability for
principal under the Note is also changed to $7,000,000.00.
2. Maturity Date. The maturity date of the Note is changed to MAY 1,
-------------
1999. Bank's commitment to make advances to Borrower under its line of credit is
also extended to MAY 1, 1999.
3. Other Terms. Except as specifically amended by this agreement or any
-----------
prior amendment, all other terms, conditions, and definitions of the Note and
all other security agreements, guaranties, deeds of trust, mortgages, and other
instruments or agreements entered into with regard to the Loan shall remain in
full force and effect.
DATED APRIL 22, 1998.
Bank: Borrower:
SEAFIRST BANK COST-U-LESS, INC.
By /s/ Xxxxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxx Xxxxxxxxx
------------------------------- ----------------------------------
Title V.P. XXXXX XXXXXXXXX, V.P. CFO
---------------------------
Loan Modification Agreement (COST-U-LESS, INC.; R/C No. 68601/CA0421CU)
---------------------------
AFS No. 1881931402
[LOGO OF SEAFIRST BANK APPEARS HERE]
BUSINESS LOAN AGREEMENT
This Business Loan Agreement ("Agreement") is made between Bank of America NT&SA
doing business as Seafirst Bank ("Bank") and Cost U Less ("Borrower") with
-----------
respect to the following:
PART A
TERM LOAN # N/A, Subject to the terms of this Agreement, Bank agrees to
---
lend to Borrower as follows:
(A) AMOUNT: $N/A.
---
(B) [_] This loan must be closed by (date) N/A.
---
[_] This loan matures on (date) N/A.
---
(C) INTEREST RATE:
[_] Bank's publicly announced Reference rate plus N/A percent of
---
principal per annum. "Reference Rate" means the rate of interest
publicly announced from time to time by Bank in San Francisco,
California as its "Reference Rate." The Reference Rate is set
based on various factors, including Bank's costs and desired
return, general economic conditions, and other factors, and is
used as a reference point for pricing some loans. Bank may price
loans to its customers at, above, or below the Reference Rate. Any
change in the Reference Rate shall take effect at the opening of
business on the day specified in the public announcement of a
change in the Reference Rate.
[_] N/A.
---
(D) INTEREST RATE BASIS: All interest will be calculated at the per annum
interest rate based on a 360-day year and applied to the actual number
of days elapsed.
(E) REPAYMENT: At the times and in amounts as set forth in note(s) required
under Part B Article 1 of this Agreement.
(F) LOAN FEE: $N/A payable on N/A. Loan fee is fully earned and
--- ---
non-refundable upon execution of this Agreement.
(G) OTHER FEES (IDENTIFY): N/A.
---
(H) COLLATERAL. This term loan shall be secured by a security interest,
which is hereby granted, in favor of Bank on the following collateral:
N/A.
---
Also, collateral securing other loans with Bank may secure this loan.
LINE OF CREDIT #75. Subject to the terms of this Agreement, Bank will make
--
loans to Borrower under a [x] revolving [_]non-revolving line of credit as
follows:
(A) TOTAL AMOUNT AVAILABLE: $7,000,000.
---------
[_] Subject to the provisions of any accounts receivable and/or
inventory borrowing plan required herein; it is expressly
understood that collateral ineligible for borrowing purposes is
determined solely by Bank.
[_] Subject to (describe): N/A.
---
(B) AVAILABILITY PERIOD: 5/1/98 through 5/1/99. However, if loans are made
------ ------
and/or new promissory notes executed after the last date, such
advances will be subject to the terms of this Agreement until repaid
in full unless a written statement signed by the Bank and Borrower
provides otherwise, or a replacement loan agreement is executed. The
making of such additional advances alone, however, does not constitute
a commitment by the Bank to make any further advances or extend the
availability period.
(C) INTEREST RATE:
[X] Bank's publicly announced Reference Rate plus -0- percent of the
---
principal per annum. "Reference Rate" means the rate of interest
publicly announced from time to time by Bank in San Francisco,
California as its "Reference Rate." The Reference Rate is set
based on various factors including Bank's cost and desired
return, general economic conditions, and other factors, and is
used as a reference point for pricing some loans. Bank may price
loans to its customers at, above, or below the Reference Rate.
Any change in the Reference Rate shall take effect at the opening
of business on the day specified in the public announcement of a
change in the Reference Rate.
[X] or 30, 60, 90, 120 and 180 day LIBOR + 150 bps.
----------------------------------------------
(D) INTEREST RATE BASIS: All interest will be calculated at the per annum
interest rate based on a 360-day year and applied to the actual number
of days elapsed.
(E) REPAYMENT: At the times and in amounts as set forth in note(s)
required under Part B Article 1 of this Agreement.
(F) LOAN FEE: $7,369 payable on at closing.
----- ----------
(G) FEE ON UNUTILIZED PORTION OF LINE: On N/A, and every N/A, thereafter,
--- ---
Borrower shall pay a fee based upon the average daily unused portion
of the line of credit. This fee will be calculated as follows: N/A.
---
(H) OTHER FEE(S) (Identify): N/A.
---
(I) COLLATERAL. This line of credit shall be secured by a security
interest, which is hereby granted, in favor of Bank on the following
collateral:Domestic inventory, assignment of Cul Nev note and
--------------------------------------------------
security interest in foreign inventory. Also, collateral securing
--------------------------------------
other loans with Bank secures this loan.
1
[LOGO OF SEAFIRST BANK]
BUSINESS LOAN AGREEMENT
PART B
1. PROMISSORY NOTE(S). All loans shall be evidenced by promissory notes in a
form and substance satisfactory to Bank.
2. CONDITIONS TO AVAILABILITY OF LOAN/LINE OF CREDIT. Before Bank is obligated
to disburse/make any advance, or at any time thereafter which Bank deems
necessary and appropriate, Bank must receive all of the following, each of
which must be in form and substance satisfactory to Bank ("loan documents");
2.1 Original, executed promissory note(s);
2.2 Original executed security agreement(s) and/or deed(s) of trust
covering the collateral described in Part A;
2.3 All collateral described in Part A in which Bank wishes to have a
possessory security interest;
2.4 Financing statement(s) executed by Xxxxxxxx;
2.5 Such evidence that Bank may deem appropriate that the security
interests and liens in favor of Bank are valid, enforceable, and prior
to the rights and interests of others except those consented to in
writing by Bank;
+2.6 The following guaranty(ies) in favor of the Bank: N/A;
+2.7 Subordination agreement(s) in favor of Bank executed by: N/A;
2.8 Evidence that the execution, delivery, and performance by Borrower of
this Agreement and the execution, delivery, and performance by
Xxxxxxxx and any corporate guarantor or corporate subordinating
creditor of any instrument or agreement required under this Agreement,
as appropriate, have been duly authorized;
2.9 Any other document which is deemed by the Bank to be required from
time to time to evidence loans or to effect the provisions of this
Agreement;
2.10 If requested by Bank, a written legal opinion expressed to Bank, of
counsel for Xxxxxxxx as to the matters set forth in sections 3.1 and
3.2, and to the best of such counsel's knowledge after reasonable
investigation, the matters set forth in sections 3.3, 3.5, 3.6, 3.7,
3.9 and such other matters as the Bank may reasonably request;
2.11 Pay or reimburse Bank for any out-of-pocket expenses expended in
making or administering the loans made hereunder including without
limitation attorney's fees (including allocated costs of in-house
counsel); and
+2.12 Other (describe): N/A.
3. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Bank,
except as Xxxxxxxx has disclosed to Bank in writing, as of the date of this
Agreement and hereafter so long as credit granted under this Agreement is
available and until full and final payment of all sums outstanding under
this Agreement and promissory notes that:
+3.1 Borrower is duly organized and existing under the laws of the state of
its organization as a;
General Limited Sole
[X] Corporation [ ] Partnership [ ] Partnership [ ] Proprietorship dba ___.
[ ] LLC with Duration of ___.
Borrower is properly licensed and in good standing in each state in
which Borrower is doing business and Borrower has qualified under, and
complied with, where required, the fictitious trade name statutes of
each state in which Borrower is doing business, and Borrower has
obtained all necessary government approvals for its business
activities; the execution, delivery, and performance of this Agreement
and such notes and other instruments required herein are within
Borrower's powers, have been duly authorized, and, as to Borrower and
any guarantor, are not in conflict with the terms of any charter,
bylaw, or other organization papers of Borrower, and this Agreement,
such notes and the loan documents are valid and enforceable according
to their terms;
3.2 The execution, delivery, and performance of this Agreement, the loan
documents and any other instruments are not in conflict with any law
or any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower is bound or affected;
3.3 Borrower has title to each of the properties and assets as reflected
in its financial statements (except such assets which have been sold
or otherwise disposed of in the ordinary course of business), and no
assets or revenues of the Borrower are subject to any lien except as
required or permitted by this Agreement, disclosed in its financial
statements or otherwise previously disclosed to Bank in writing;
3.4 All financial information, statements as to ownership of Xxxxxxxx and
all other statements submitted by Borrower to Bank, whether previously
or in the future, are and will be true and correct in all material
respects upon submission and are and will be complete upon submission
insofar as may be necessary to give Bank a true and accurate knowledge
of the subject matter thereof;
3.5 Borrower has filed all tax returns and reports as required by law to
be filed and has paid all taxes and assessments applicable to Borrower
or to its properties which are presently due and payable, except those
being contested in good faith;
2
3.6 There are no proceedings, litigation or claims (including unpaid
taxes) against Borrower pending or, to the knowledge of the Borrower,
threatened, before any court or government agency, and no other event
has occurred which may have a material adverse effect on Borrower's
financial condition;
3.7 There is no event which is, or with notice or lapse of time, or both,
would be, an Event of Default (as defined in Section 7) under this
Agreement;
+3.8 Year 2000 Compliance - WAIVED
3.9 Borrower has exercised due diligence in inspecting Borrower's
properties for hazardous wastes and hazardous substances. Except as
otherwise previously disclosed and acknowledged to Bank in writing:
(a) during the period of Borrower's ownership of Borrower's
properties, there has been no use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous
waste or hazardous substance by any person in, on, under or about any
of Borrower's properties; (b) Borrower has no actual or constructive
knowledge that there has been any use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any
hazardous waste or hazardous substance by any person in, on, under or
about any of Borrower's properties by any prior owner or occupant of
any of Borrower's properties; and (c) Borrower has no actual or
constructive notice of any actual or threatened litigation or claims
of any kind by any person relating to such matters. The terms
"hazardous waste(s)," hazardous substance(s)," "disposal," "release,"
and "threatened release" as used in this Agreement shall have the same
meanings as set forth in the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9801, et seq., the Superfund Amendments and Reauthorization Act of
1986, as amended, Pub. L. No. 99-499, the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Section 1801, et seq., the
Resource Conservation and Recovery Act, as amended, 49 U.S.C. Section
6901, et seq., or other applicable state or federal laws, rules or
regulations adopted pursuant to any of the foregoing; and
+3.10 Each chief place of business of Borrower, and the office or offices
where Borrower keeps its records concerning any of the collateral, is
located at: 00000 XX 00xx Xx., Xxxxxxxx, XX 00000.
4. Affirmative Covenants. So long as credit granted under this Agreement is
available and until full and final payment of all sums outstanding under
this Agreement and promissory note(s) Borrower will:
+4.1 Use the proceeds of the loans covered by this Agreement only in
connection with Xxxxxxxx's business activities and exclusively for the
following purposes: Operating needs;
+4.2 Maintain current assets in an amount at least equal to 1.2 times
current liabilities, and not less than $N/A. Current assets and
current liabilities shall be determined in accordance with generally
accepted accounting principles and practices, consistently applied;
+4.3 Maintain a tangible net worth of at least $9,700,000 and not permit
Xxxxxxxx's total indebtedness which is not subordinated in a manner
satisfactory to Bank to exceed 2.0 times Xxxxxxxx's tangible net
worth. "Tangible net worth" means the excess of total assets over
total liabilities, excluding, however, from the determination of total
assets (a) all assets which should be classified as intangible assets
such as goodwill, patents, trademarks, copyrights, franchises, and
deferred charges (including unamortized debt discount and research and
development costs), (b) treasury stock, (c) cash held in a sinking or
other similar fund established for the purpose of redemption or other
retirement of capital stock, (d) to the extent not already deducted
from total assets, reserves for depreciation, depletion, obsolescence
or amortization of properties and other reserves or appropriations of
retained earnings which have been or should be established in
connection with the business conducted by the relevant corporation,
and (e) any revaluation or other write-up in book value of assets
subsequent to the fiscal year of such corporation last ended at the
date of this Agreement;
+4.4 Upon request Xxxxxxxx agrees to insure and to furnish Bank with
evidence of insurance covering the life of Xxxxxxxx (if an individual)
or the lives of designated partners or officers of Borrower (if a
partnership or corporation) in the amounts stated below. Borrower
shall take such actions as are reasonably requested by Bank, such as
assigning the insurance policies to Bank or naming Bank as beneficiary
and obtaining the insurer's acknowledgment thereof, to provide that in
the event of the death of any of the named insureds the policy
proceeds will be applied to payment of Xxxxxxxx's obligations owing to
Bank:
Name: N/A Amount: $N/A.
Name: N/A Amount: $N/A.
+4.5 Promptly give written notice to Bank of: (a) all litigation and claims
made or threatened affecting Borrower where the amount is $50,000 or
more; (b) any substantial dispute which may exist between Borrower and
any governmental regulatory body or law enforcement authority; (c) any
Event of Default under this Agreement or any other agreement with Bank
or any other creditor or any event which become an Event of Default;
and (d) any other matter which has resulted or might result in a
material adverse change in Borrower's financial condition or
operations;
+4.6 Borrower shall as soon as available, but in any event within 90 days
following the end of each Borrower's fiscal years and within 30 days
following the end of each quarter provide to Bank, in a form
satisfactory to Bank (including audited statements if required at any
time by Bank), such financial statements and other information
respecting the financial condition and operations of Borrower as Bank
may reasonably request;
4.7 Borrower will maintain in effect insurance with responsible insurance
companies in such amounts and against such risks as is customarily
maintained by persons engaged in business similar to that of Borrower
and all policies
3
covering property given as security for the loans shall have loss
payable clauses in favor of Bank. Xxxxxxxx agrees to deliver to Bank
such evidence of insurance as Bank may reasonably require and, within
thirty (30) days after notice from Bank, to obtain such additional
insurance with an insurer satisfactory to the Bank;
4.8 Borrower will pay all indebtedness taxes and other obligations for
which the Borrower is liable or to which its income or property is
subject before they shall become deliquent, except any which is being
contested by the Borrower in good faith;
4.9 Borrower will continue to conduct its business as presently
constituted, and will maintain and preserve all rights, privileges and
franchises now enjoyed, conduct Borrower's business in an orderly,
efficient and customary manner, keep all Borrowers properties in good
working order and condition, and from time to time make all needed
repairs, renewals or replacements so that the efficiency of Borrower's
properties shall be fully maintained and preserved;
4.10 Borrower will maintain adequate books, accounts and records and
prepare all financial statements required hereunder in accordance with
generally accepted accounting principles and practices consistently
applied, and in compliance with the regulations of any governmental
regulatory body having jurisdiction over Borrower or Xxxxxxxx's
business;
4.11 Borrower will permit representatives of Bank to examine and make
copies of the books and records of Xxxxxxxx and to examine the
collateral of the Borrower at reasonable times;
4.12 Borrower will perform, on request of Bank, such acts as may be
necessary or advisable to perfect any lien or security interest
provided for herein or otherwise carry out the intent of this
Agreement;
4.13 Borrower will comply with all applicable federal, state and municipal
laws, ordinances, rules and regulations relating to its properties,
charters, businesses and operations, including compliance with all
minimum funding and other requirements related to any of Borrower's
employee benefit plans;
4.14 Borrower will permit representatives of Bank to enter onto Borrower's
properties to inspect and test Xxxxxxxx's properties as Bank, in its
sole discretion, may deem appropriate to determine Borrower's
compliance with section 5.8 of this Agreement; provided however, that
any such inspections and tests shall be for Bank's sole benefit and
shall not be construed to create any responsibility or liability on
the part of Bank to Borrower or to any third party.
5. NEGATIVE COVENANTS. So long as credit granted under this Agreement is
available and until full and final payment of all sums outstanding under this
Agreement and promissory note(s):
+5.1 Borrower will not, during any fiscal year, expend or incur in the
aggregate more than $5,000,000 for fixed assets, nor more than $N/A
--------- ---
for any single fixed asset whether or not payable that fiscal year or
later under any purchase agreement or lease;
5.2 Borrower will not, without the prior written consent of Bank, purchase
or lease under an agreement for acquisition, incur any other
indebtedness for borrowed money, mortgage, assign, or otherwise
encumber any of Borrower's assets, nor sell, transfer or otherwise
hypothecate any such assets except in the ordinary course of business.
Borrower shall not guaranty, endorse, co-sign, or otherwise become
liable upon the obligations of others, except by the endorsement of
negotiable instruments for deposit or collection in the ordinary
course of business. For purposes of this paragraph, the sale or
assignment of accounts receivable, or the granting of a security
interest therein, shall be deemed the incurring of indebtedness for
borrowed money;
+5.3 The total of salaries, withdrawals, or other forms of compensation,
whether paid in cash or otherwise, by Borrower shall not exceed the
following amounts for the persons indicated, nor will amounts in
excess of such limits be paid to any other person:
Name: N/A Monthly/Yearly Amount: $N/A.
--- ----
Name: N/A Monthly/Yearly Amount: $N/A.
--- ----
5.4 Borrower will not, without Bank's prior written consent, declare any
dividends on shares of its capital stock, or apply any of its assets
to the purchase, redemption or other retirement of such shares, or
otherwise amend its capital structure;
+5.5 Borrower will not make any loan or advance to any person(s) or
purchase or otherwise acquire the capital stock, assets or obligations
of, or any interest in, any person, except:
(a) commercial bank time deposits maturing within one year,
(b) marketable general obligations of the United States or a State,
or marketable obligations fully guarantied by the United States,
(c) short-term commercial paper with the highest rating of a
generally recognized rating service, and
(d) other investments related to the Borrower's business which,
together with such other investments now outstanding, do not in
the aggregate exceed the sum of $N/A at any time;
---
5.6 Borrower will not liquidate or dissolve or enter into any
consolidation, merger, pool, joint venture, syndicate or other
combination, or sell, lease, or dispose of Borrower's business assets
as a whole or such as in the opinion of Bank constitute a substantial
portion of Borrower's business or assets;
5.7 Borrower will not engage in any business activities or operations
substantially different from or unrelated to present business
activities or operations; and/or
5.8 Borrower, and Xxxxxxxx's tenants, contractors, agents or other parties
authorized to use any of Borrower's properties, will not use,
generate, manufacture, store, treat, dispose of, or release any
hazardous substance or hazardous waste in, on, under or about any of
Borrower's properties except as previously disclosed to Bank in
4
writing as provided in section 3.9; and any such activity shall
be conducted in compliance with all applicable federal, state and
local laws, regulations and ordinances, including without
limitation those described in section 3.9.
6. WAIVER, RELEASE AND INDEMNIFICATION. BORROWER HEREBY:
(a) releases and waives any claims against Bank for indemnity or
contribution in the event Borrower becomes liable for cleanup or
other costs under any of the applicable federal, state or local laws,
regulations or ordinances, including without limitation those
described in section 3.9, and (b) agrees to indemnify and hold Bank
harmless from and against any and all claims, losses, liabilities,
damages, penalties and expenses which Bank may directly or indirectly
sustain or suffer resulting from a breach of (i) any of Borrower's
representations and warranties with respect to hazardous wastes and
hazardous substances contained in section 3.9, or (ii) section 5.8.
The provisions of this section 6 shall survive the full and final
payment of all sums outstanding under this Agreement and promissory
notes and shall not be affected by Bank's acquisition of any interest
in any of the Borrower's properties, whether by foreclosure or
otherwise.
7. EVENTS OF DEFAULT. The occurrence of any of the following events ("Events
of Default") shall terminate any and all obligations on the part of Bank to
make or continue the loan and/or line of credit and, at the option of Bank,
shall make all sums of interest and principal outstanding under the loan
and/or line of credit immediately due and payable, without notice of
default, presentment or demand for payment, protest or notice of non
payment or dishonor, or other notices or demands of any kind or character,
all of which are waived by Xxxxxxxx, and Bank may proceed with collection
of such obligations and enforcement and realization upon all security which
it may hold and to the enforcement of all rights hereunder or at law:
7.1 The Borrower shall fail to pay when due any amount payable by it
hereunder on any loans or notes executed in connection herewith;
7.2 Borrower shall fail to comply with the provisions of any other
covenant, obligation or term of this Agreement for a period of
fifteen (15) days after the earlier of written notice thereof
shall have been given to the Borrower by Bank or Borrower or any
Guarantor has knowledge of an Event of Default or an event that
can become an Event of Default;
7.3 Borrower shall fail to pay when due any other obligation for
borrowed money, or to perform any term or covenant on its part to
be performed under any agreement relating to such obligation or
any such other debt shall be declared to be due and payable and
such failure shall continue after the applicable grace period;
7.4 Any representation or warranty made by Borrower in this Agreement
or in any other statement to Bank shall prove to have been false
or misleading in any material respect when made;
7.5 Borrower makes an assignment for the benefit of creditors, files
a petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions to any court for a receiver or trustee for Borrower or
any substantial part of its property, commences any proceeding
relating to the arrangement, readjustment, reorganization or
liquidation under any bankruptcy or similar laws, or if there is
commenced against Borrower any such proceedings which remain
undismissed for a period of thirty (30) days or, if Borrower by
any act indicates its consent or acquiescence in any such
proceeding or the appointment of any such trustee or receiver;
+7.6 Any judgment attaches against Borrower or any of its properties
for an amount in excess of $50,000 which remains unpaid, unstayed
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on appeal, unbonded, or undismissed for a period of thirty (30)
days;
7.7 Loss of any required government approvals, and/or any
governmental regulatory authority takes or institutes action
which, in the opinion of Bank, will adversely affect Borrower's
condition, operations or ability to repay the loan and/or line of
credit;
7.8 Failure of Bank to have a legal, valid and binding first lien on,
or a valid and enforceable prior perfected security interest in,
any property covered by any deed of trust or security agreement
required under this Agreement;
7.9 Borrower dies, becomes incompetent, or ceases to exist as a going
concern;
7.10 Occurrence of an extraordinary situation which gives Bank
reasonable grounds to believe that Borrower may not, or will be
unable to, perform its obligations under this or any other
agreement between Bank and Borrower; or
7.11 Any of the preceding events occur with respect to any guarantor
of credit under this Agreement, or such guarantor dies or becomes
incompetent, unless the obligations arising under the guaranty
and related agreements have been unconditionally assumed by the
guarantor's estate in a manner satisfactory to Bank.
8. SUCCESSORS; WAIVERS. Notwithstanding the Events of Default above, this
Agreement shall be binding upon and inure to the benefit of Borrower and
Bank, their respective successors and assigns, except that Borrower may not
assign its rights hereunder. No consent or waiver under this Agreement
shall be effective unless in writing and signed by the Bank and shall not
waive or affect any other default, whether prior or subsequent thereto, and
whether of the same or different type. No delay or omission on the part of
the Bank in exercising any right shall operate as a waiver of such right or
any other right.
9. ARBITRATION.
9.1 At the request of either Bank or Borrower any controversy or
claim between the Bank and Borrower, arising from or relating to
this Agreement or any loan document executed in connection with
this Agreement or arising from any alleged tort shall be settled
by arbitration in Seattle, Washington. The United States
Arbitration Act will apply to the arbitration proceedings which
will be administered by the American Arbitration Association
under its commercial rules of arbitration except that unless the
amount of the claim(s) being arbitrated exceeds $5,000,000 there
shall be only one arbitrator. Any controversy over whether an
issue is arbitrable shall be determined by the arbitrator(s).
5
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of any action for
judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of either party, including
plaintiff, to submit the controversy or claim to arbitration if such
action for judicial relief is contested.
9.2 For purposes of the application of the statute of limitations the
filing of an arbitration as provided herein is the equivalent of
filing a lawsuit and the arbitrator(s) will have the authority to
decide whether any claim or controversy is barred by the statute of
limitations, and if so, to dismiss the arbitration on that basis. The
parties consent to the joinder in the arbitration proceedings of any
guarantor, hypothecator or other party having an interest related to
the claim or controversy being arbitrated.
9.3 Notwithstanding the provisions of Section 9.1, no controversy or
claim shall be submitted to arbitration without the consent of all
parties if at the time of the proposed submission, such controversy or
claim arises from or relates to an obligation secured by real property
or by a marine vessel;
9.4 No provision of this Section 9 shall limit the right of the Borrower
or the Bank to exercise self-help remedies such as setoff, foreclosure
or sale of any collateral, or obtaining any ancillary provisional or
interim remedies from a court of competent jurisdiction before, after
or during the pendency of any arbitration proceeding. The exercise of
any such remedy does not waive the right of either party to request
arbitration. At Bank's option foreclosure under any deed of trust may
be accomplished by exercise of the power of sale under the deed of
trust or judicial foreclosure as a mortgage.
10. COLLECTION ACTIVITIES, LAWSUITS AND GOVERNING LAW. Xxxxxxxx agrees to pay
Bank all of Bank's costs and expenses (including reasonable attorney's fees
and the allocated cost for in-house legal services incurred by Bank),
incurred in the documentation and administration of this Agreement and the
loans reflected herein. The nonprevailing party shall, upon demand by the
prevailing party, reimburse the prevailing party of all of its costs,
expenses and reasonable attorneys' fees (including the allocated cost of
in-house counsel) incurred in connection with any controversy or claim
between said parties relating to this Agreement or any of the loan
documents, or to an alleged tort arising out of the transactions evidence
by this agreement or any of the loan documents, including those incurred in
any action, bankruptcy proceeding, arbitration or other alternative dispute
resolution proceeding, or appeal, or in the course of exercising any
judicial or nonjudicial remedies. If suit is instituted by Bank to enforce
this Agreement or any of the loan documents, Borrower consents to the
personal jurisdiction of the courts of the State of Washington and Federal
Courts located in the State of Washington. Borrower further consents to the
venue of such suit being lain in Seattle, Washington. This Agreement and
any notes, security agreements and other loan documents entered into
pursuant to this Agreement shall be construed in accordance with the laws
of the State of Washington.
11. ADDITIONAL PROVISIONS. Xxxxxxxx agrees to the additional provisions set
forth immediately following this Section 11 or on any "Exhibit A*" attached
to and hereby incorporated into Agreement. This Agreement supersedes all
oral negotiations or agreements between Bank and Borrower with respect to
the subject matter hereof and constitutes the entire understanding and
Agreement of the matters set forth in this Agreement.
12. MISCELLANEOUS. If any provision of this Agreement is held to be invalid or
unenforceable, then (a) such provision shall be deemed modified if
possible, or if not possible, such provision shall be deemed stricken, and
(b) all other provisions shall remain in full force and effect.
12.1 If the imposition of or any change in any law, rule, or regulation
guideline or the interpretation or application of any thereof by any
court of administrative or governmental authority (including any
request or policy whether or not having the force of law) shall impose
or modify any taxes (except U.S. federal, state or local income or
franchise taxes imposed on Bank), reserve requirements, capital
adequacy requirements or other obligations which would: (a) increase
the cost to Bank for extending or maintaining any loans and/or line of
credit to which this Agreement relates, (b) reduce the amounts payable
to Bank under this Agreement, such notes and other instruments, or (c)
reduce the rate of return on Bank's capital as a consequence of Bank's
obligations with respect to any loan and/or line of credit to which
this Agreement relates, then Borrower agrees to pay Bank such
additional amounts as will compensate Bank therefor, within five (5)
days after Bank's written demand for such payment, which demand shall
be accompanied by an explanation of such imposition or charge and a
calculation in reasonable detail of the additional amounts payable by
Borrower, which explanation and calculations shall be conclusive,
absent manifest error.
12.2 Bank may sell participations in or assign this loan in whole or in
part without notice to Borrower and Bank may provide information
regarding the Borrower and this Agreement to any prospective
participant or assignee. If a participation is sold or the loan is
assigned the purchaser will have the right of set off against the
Borrower and may enforce its interest in the Loan irrespective of any
claims or defenses the Borrower may have against the Bank.
13. NOTICES. Any notices shall be given in writing to the opposite party's
signature below or as that party may otherwise specify in writing.
14. ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
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FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
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WASHINGTON LAW.
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*Exhibit A refers to commitment letter dated 4/28/98.
6
This Business Loan Agreement (Parts A and B) executed by the parties on 4/28/98
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(date) Borrower acknowledges having read all of the provisions of this Agreement
and Borrower agrees to its terms.
Bank of America NT&SA, D.B.A, Seafirst Western Commercial Banking Team 1.
----------------------------------
(Branch/Office)
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx Title: Vice President.
-------------------------- ---------------
Xxxxx Xxxxxxxxxx
Address: 00000 XX 0xx, Xxxxx 000 Xxxx, Xxxxx, Xxx: Bellevue, Washington
------------------------- --------------------
98004.
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Phone: (000) 000-0000 Fax: (000) 000-0000.
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COST U LESS.
------------
(Borrower Name)
By: /s/ Xxxxx Xxxxxxxxx Title: VP-CFO
--------------------- --------------------
By: Title:
--------------------- --------------------
Address: 00000 XX 00xx Xxxxxx Xxxx, Xxxxx, Xxx: Xxxxxxxx, XX 00000
--------------------- --------------------
Phone: (000) 000-0000 Fax: (000) 000-0000
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