U.S. SMALL BUSINESS ADMINISTRATION
PORTLAND DISTRICT OFFICE
0000 X.X. FIFTH XXXXXX, XXXXX 0000
XXXXXXXX, XXXXXX 97201-5494
AUTHORIZATION AND LOAN AGREEMENT
(GUARANTY LOANS)
Xxxxxx First Capital Corp.
00000 XX Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Your request received May 1, 1997 for SBA to guarantee 75.00% of a loan in the
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amount of $900,000.00 to be made by Lender to:
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The Oregon Baking Company, Inc.
dba Xxxxxx Baking
P.O. Box 25776
Portland, OR 97225
is hereby approved pursuant to Section 7(a) of the Small Business Act as
amended.
1. The following forms are herewith enclosed:
(a) One blank SBA Note for your completion and execution by the Borrower.
The original copy of this authorization shall be executed prior to
first disbursement and retained in loan file by the Lender. (A copy of
the Note and all other documents should be given to the borrower.)
(b) Copies of the SBA Settlement Sheet (Form 1050) are to be completed and
executed by Xxxxxx and Borrower to reflect each disbursement. Lender
to keep yellow and pink copy in its Lender's loan file, and blue copy
should be provided to Borrower.
(c) Compensation Agreements (Form 159) shall be executed by Xxxxxxxx,
Xxxxxxxx's representative(s) if Xxxxxxxx has employed an attorney,
accountant or other representative(s), or if Borrower is charged fees
for services by Xxxxxx or an associate of Lender. If no such fees have
been charged, please write "None" prior to execution by Xxxxxxxx and
Xxxxxx. The form shall be returned to SBA only if the total amount of
all such fees exceed $1,000.00.
(d) A guaranty fee shall be paid by Xxxxxx to SBA within 90 days of the
date of this Authorization and may be charged to Borrower only after
Xxxxxx has paid fee to SBA, and initial disbursement made to Borrower.
The guaranty fee due Lender from the Borrower is as follows:
(ii) If the loan amount exceeds $100,000.00 the following rate
schedule applies:
(1) Three percent (3%) on the first $250,000.00 GUARANTEED
portion
PLUS
Borrower Name: The Oregon Baking Company, Inc.
Page 2
(2) Three & one-half (3.5%) of the next $250,000.00 GUARANTEED
portion, up to $500,000.00
PLUS
(3) Three & seven-eights (3.875%) of the GUARANTEED portion
greater than $500,000.00 up to the maximum guaranty of
$750,000.00.
This guarantee fee must be sent to "SBA, Attn: Collection Activities
Branch; Denver, CO 8025911 (with SBA loan number on payment).
(e) The original copy of this Authorization shall be executed prior to
first disbursement and retained in loan file by the Lender. (A copy of
the Authorization and any amendments should be given to Borrower.)
2. This Authorization is subject to:
(a) Provisions of the Guaranty Agreement between Lender and SBA, dated
February 20, 1992.
(b) First disbursement of the Loan being made not later than six (6)
months, and no disbursement being made later than twelve (12) months,
from the date of this Authorization, unless such time is extended
pursuant to prior written consent by SBA.
(c) Receipt by Lender of evidence satisfactory to it in its sole
discretion, that there has been no unremedied adverse change since the
date of the Application, or since any of the preceding disbursements,
in the financial or any other condition of Borrower, which would
warrant withholding or not making any such disbursement or any further
disbursement. This shall include receipt and review of current (within
90 days of closing) business and personal financial statements.
(d) The representations made by Borrower in its loan application, the
requirements or conditions set froth in Lender's application form,
including the supporting documents thereto, the conditions set forth
in Lender's application form, including the supporting documents
thereto, the conditions set forth herein and any future conditions
imposed by Xxxxxx (with prior SBA approval).
(e) Prior to first disbursement, Lender shall obtain verification from
Internal Revenue Service (IRS) that tax returns submitted by Borrower
with the application for this loan conform to the returns filed with
IRS and/or business financial statements. Any discrepancy shall be
considered to be an adverse change, no disbursements will be made, and
SBA shall be promptly notified.
(f) Lender is permitted to use computer-generated replications of mandated
SBA Forms, as long as they are exact reproductions of these SBA Forms.
Xxxxxx will be held responsible for any errors or omissions.
Borrower Name: The Oregon Baking Company, Inc.
Page 3
(g) Xxxxxx agrees to pay an ongoing guaranty fee equal to one-half of one
percent (0.5%) per annum on the guaranteed portion of the outstanding
balance. This fee shall be paid by the lender following the receipt of
a payment from borrower. The fee may not be charged to the borrower
and shall be received by the SBA-designated fiscal and transfer agent
by the third day of the month (or the next business day thereafter, if
the third is not a business day), following receipt of a scheduled
payment. There is a two business day grace period after the due date.
Xxxxxx agrees to report the status of all of its SBA guaranteed loans
on a monthly basis using SBA Form 1502 or an acceptable electronic
format.
3. Terms of Loan:
(a) Repayment term, interest(s), and maturity.
(1) Installments, including principal and interest, each in the amount of
FIFTEEN THOUSAND FIVE HUNDRED TWENTY NINE dollars ($15,529.00),
commencing SEVEN months from the first day of the month following
first disbursement and continuing due and payable monthly thereafter
until SEVEN years and SIX months from date of Note when the full
unpaid balance of principal and interest shall become due and payable.
Each installment shall be applied to interest accrued as of date of
receipt and the balance, if any, to principal.
In addition to the foregoing payments, monthly payments of interest
only shall be made, beginning one month from date of Note, and
continuing for SIX months.
(2) THIS IS A VARIABLE INTEREST RATE NOTE. Interest on unpaid principal
shall accrue at the initial rate of ELEVEN AND ONE-QUARTER percent
(11.25%) per annum. Commencing on the first calendar day of the
calendar month following first disbursement, and monthly thereafter,
the interest rate shall increase or decrease to TWO AND THREE-QUARTERS
percent (2.75%) above the Prime Rate in effect on the first business
day of the month, as published in the Money Rates Section of THE WALL
STREET JOURNAL.
(3) NOTE: The amount of the monthly payment shown above is based upon the
prime interest rate as of the date of the receipt of the loan
application by SBA of EIGHT AND ONE-HALF percent (8.50%) plus a spread
of TWO AND THREE-QUARTERS percent (2.75%).
(4) Holder should give written notice to the Borrower of each increase or
decrease in the interest rate and the reamortized installment payment
amount within thirty (30) days after the effective date of each rate
adjustment; however, the fluctuation of the interest rate is not
contingent on whether the notice is given.
(5) If the Borrower shall be in default in payment due on the indebtedness
at the time the Small Business Administration (SBA) purchases its
guaranteed portion of said indebtedness, the rate of interest on both
the guaranteed and unguaranteed portions herein shall become fixed at
the rate in effect as of the date of default. If the Borrower shall
not be in default in payment when SBA purchases its guaranteed
portion, the rate of interest on both the guaranteed and unguaranteed
portion herein shall be fixed at the rate I effect as of the date of
purchase by SBA.
Borrower Name: The Oregon Baking Company, Inc.
Page 4
(6) Borrower shall provide Lender with written notice of intent to prepay
part or all the loan at least three (3) weeks prior to the anticipated
prepayment date. A prepayment is any payment made ahead of schedule
that exceeds twenty (20) percent of the then outstanding principal
balance. If Xxxxxxxx makes a prepayment and fails to give at least
three weeks advance notice of intent to prepay, then, notwithstanding
any other provision to the contrary in this Authorization, Borrower
shall be required to pay Lender three weeks interest on the unpaid
principal as of the date of such prepayment.
(7) If the collateral securing the Note is sold or transferred
voluntarily, involuntarily or by operation of law without the prior
written consent of the holder, the holder may at its option declare
the entire unpaid principal and interest of the note secured hereby
immediately due and payable. Acceptance by the holder of any payments
after any sale or transfer shall not constitute a waiver of the
provisions of this paragraph and the provisions hereof shall apply to
each sale and transfer.
(8) Xxxxxxxx further agrees to pay a late charge not to exceed 5% of the
payment amount due if such payment is not received within 15 days of
the due date for an Oregon based loan or within 10 days of the due
date for a Washington based loan. Funds paid by the borrower will be
applied first to bring the loan current, including accrued interest,
and then to the late fee.
(b) Use of proceeds of loan as follows (specific uses for which loan is
authorized):
(1) Approximately $455,000.00 for payment in full for purchase of
machinery and equipment.
(2) Approximately $270,000.00 for refinance SBA debt, Loan Numbers
GP825643002PTD, GP 5171973005PTD and GP 5595063007PTD
(3) Approximately $150,000.00 for working capital.
(4) Approximately $25,000.00 for closing costs.
(5) Balance, if any, to be used solely for operating expenses of
Borrower. If any funds are to be used for payment of payroll,
Lender is to be assured of timely deposit of all withheld taxes.
(6) Disbursement pursuant to paragraph 3(B)(1) to be made against
paid receipts or by joint payee checks against invoices.
(7) The borrower agrees, to the extent feasible, to purchase only
American-made equipment and products with the proceeds of this
loan.
Borrower Name: The Oregon Baking Company, Inc.
Page 5
(c) Collateral:
(1) Perfected first security interest in all machinery and equipment
(EXCLUDING titled motor vehicles), furniture, and proceeds
thereof, now owned by Borrower, and hereafter acquired, located
at all business locations including but not limited to those
items described in listing attached to Loan Application. UCC
search required from Secretary of State, after recording of
Lender financing statement.
(2) Perfected security interest covering all inventory, general
intangibles, accounts, and proceeds thereof, now owned by
Borrower and hereafter acquired, located at all business
locations. Such security interest may be subject only to the
prior lien of TO BE DETERMINED as security for a debt not in
excess of $TO BE DETERMINED secured by accounts and inventory.
UCC search required from Secretary of State, after recording of
Lender financing statement.
(3) Purchase money security interest to be taken by Financing
Statement and Security Agreement in all personal property
acquired with loan proceeds. Lender shall file a Financing
Statement prior to disbursing loan proceeds, notify all senior
creditors if inventory is being acquired, and clearly identify
each item of personal property acquired with loan proceeds.
(4) Recorded Assignment with right of reassignment of all Borrower's
rights and interest in and to a certain lease between Borrower,
as Lessee and LESSOR covering premises for ALL BUSINESS LOCATIONS
which lease shall have an unexpired term, including options to
renew, of approximately SEVEN YEARS AND SIX MONTHS and contain
such other provisions and conditions as are satisfactory to
Lender.
Consent by Lessor to assignment and to right of reassignment by
Xxxxxx/SBA. Written agreement that so long as Lender/SBA has not
entered into possession of the premises covered by said lease for
the purpose of operating a business it shall not be liable for
rent or any other obligations of Lessee; in the event of default
under subject lease, Lessor will not take any action to terminate
the lease without giving 60 days prior written notice to
Lender/SBA and will grant Lender/SBA the right to cure such
default within said period; and, the Lessor disclaims all right,
title and interest in and to all leasehold improvements,
buildings, fixtures, personal property, and appurtenance placed
by Xxxxxx on the premises during the aforementioned lease period
and waives any rights of landlord's distraint.
(5) Guaranty on SBA Form executed by Xxxxxx X. Xxxxxxxxx and Xxxxxxxx
X. Xxxx, securing the Note with second Deed of Trust or Mortgage
to be executed by Guarantor on real estate located at 0000 XX
000xx Xxxxxx, Xxxxxxxx, XX 00000. Such Deed of Trust or Mortgage
may be subject only to the interest of Great Western Bank as
security for a debt not in excess of $327,658. Affidavit of
Title, Lot Book Report or similar report satisfactory to Lender,
is required.
Borrower Name: The Oregon Baking Company, Inc.
Page 6
(6) Guaranty on SBA Form 148 executed by Xxxxxxxx X. Xxxx, modified
to provide that the liability under the Guaranty of said
Guarantor(s) shall be limited to HER legal or equitable interest
in the real property security located at 0000 XX 000xx Xxxxxx,
Xxxxxxxx, XX 00000.
(7) Guaranty on SBA Form executed by Xxxxxx Xxxxxxxxxx & Xxxxxx X.
Xxxxxxxxxx, security the Note with second Deed of Trust or
Mortgage to be executed by Guarantor on real estate located at
0000 XX 00xx Xxxxxx, Xxxxxxxx, XX 00000. Such Deed of Trust or
Mortgage may be subject only to the interest of Great Western
Bank as security for a debt not in excess of $164,470.00.
Affidavit of Title, Lot Book Report or similar report
satisfactory to Lender, is required.
(8) Guaranty on SBA Form 148 executed by Xxxxxx X. Xxxxxxxxxx,
modified to provide that the liability under the Guaranty of said
Guarantor(s) shall be limited to HER legal or equitable interest
in the real property security located at 0000 XX 00xx Xxxxxx,
Xxxxxxxx, XX 00000.
(9) Tax realty service (annual tax status reporting service) will be
provided Lender for the term of the Loan covering all pledged
real property.
4. To further induce Lender to make and SBA to guarantee this Loan, Xxxxxx and
SBA impose the following conditions:
(a) Execution of all documents required in Item 1 above.
(b) Reimbursable Expenses. Borrower will, on demand, reimburse Lender for
any and all expenses incurred, or which may be hereafter incurred, by
Xxxxxx from time to time in connection with or by reason of Xxxxxxxx's
application for, and the making and administration of the Loan.
(c) Books, Records, and Reports. Borrower will at all times keep proper
books of account in a manner satisfactory to Lender and/or SBA.
Borrower hereby authorizes Lender or SBA to make or cause to be made,
at Borrower Is expense and in such manner and at such times as Lender
or SBA may require, (a) inspections and audits of any books, records
and papers in the custody of control of Borrower or others, relating
to Borrower's financial or business conditions, including the making
of copies thereof and extracts therefrom, and (b) inspections and
appraisals of any of Borrower's assets. Borrower will furnish to
Lender and SBA for the TWELVE (12) month period ending 12/31/97, and
ANNUALLY thereafter (no later than 90 days following the expiration of
any such period) and at such other times and in such form as Lender
may prescribe, Xxxxxxxx's financial and operating statements. Xxxxxxxx
hereby authorizes all Federal, State and municipal authorities to
furnish reports of examinations, records, and other information
relating to the conditions and affairs of Borrower and any desired
information from reports, returns, files, and records of such
authorities upon request therefor by Xxxxxx or SBA.
(d) Borrower shall not execute any contracts for management consulting
services without prior approval of Lender and SBA.
Borrower Name: The Oregon Baking Company, Inc.
Page 7
(e) Distributions and Compensation. Borrower will not, without the prior
written consent of Lender or SBA (a) if borrower is a corporation,
declare or pay any dividend or make any distribution upon its capital
stock, or purchase or retire any of its capital stock, or consolidate,
or merge with any other company, or give any preferential treatment,
make any advance, directly or indirectly, by way of loan, gift, bonus,
or otherwise, to any company directly or indirectly controlling or
affiliated with or controlled by Borrower, or any other company, or to
any officer, director or employee of Borrower, or of any such company,
(b) if Borrower is a partnership or individual, make any distribution
of assets of the business of Borrower, other than reasonable
compensation for services, or give any preferential treatment, make
any advance, directly or indirectly, by way of loan, gift, bonus, or
otherwise, to any partner or any of its employees, or to any company
directly or indirectly controlling or affiliated with or controlled by
Borrower, or any other company.
(f) Other provisions:
(1) Borrower shall provide and maintain hazard insurance (fire and
extended coverage) for the full replacement value on ALL PLEDGED
ASSETS. Fire and extended coverage insurance must contain a mortgagee
clause for Lender similar in character to New York Standard Mortgagee
Clause and a clause naming Lender as loss payee. General Public
Liability Insurance in an amount satisfactory to Lender is required.
Lender shall be named a loss payee, except for public liability.
(2) Prior to first disbursement, the Lender must be in receipt of evidence
of the kind described below from an independent authoritative source
which is sufficient to indicate to the Lender that the property is not
in a special flood hazard area (SFHA). Property is defined as the
asset(s) financed as a part of the SBA financial assistance and/or
other collateral deemed necessary by the field office. If such
evidence is not provided to the Lender, the Borrower must obtain, and
maintain, a Standard Flood Insurance Policy (SFIP) or other
appropriate special flood hazard insurance in amounts and coverages
equal to the lesser of (1) the insurable value of the property or (2)
the maximum amount of coverage available Borrower can show that
special flood hazard insurance has been acquired by submitting a copy
of the policy or providing evidence of premium payment for the
appropriate coverage to a licensed insurance agent. Borrower will not
be eligible for either any future disaster assistance or SBA business
loan assistance if the special flood hazard insurance is not
maintained as stipulated herein throughout the entire term of this
loan.
As evidence that property is not located within a special flood hazard
area subject to flooding, mudslides or erosions, the Lender may rely
on a determination of special flood hazard area status by the
Borrower's property and casualty insurance company, real estate
appraiser, title insurance company, a local government agency or other
authoritative source acceptable to SBA which would ordinarily have
knowledge of the special flood hazard area status for the property.
(3) Resolution of Board of Directors, of Borrower corporation, authorizing
the corporation to obtain the loan and given collateral to secure it.
Borrower Name: The Oregon Baking Company, Inc.
Page 8
(4) Prior to any disbursement, Lender must be in receipt of evidence
satisfactory to it that Borrower and/or corporate guarantor is a
registered corporation listed in good standing with the Corporate
Commissioner of the State of Oregon. Loan documentation must reflect
correct spelling of corporate name.
BORROWER COVENANTS AND WARRANTS THAT:
(1) Borrower is in compliance with all applicable Federal and State
environmental laws and regulations, and that they will continue to
comply with all such laws and regulations in the future; no
proceedings alleging violations of environmental laws are pending, on
property owned or property to be purchased, leased or rented by
Xxxxxxxx; Borrower has no knowledge of hazardous waste contamination
on property owned or property to be purchased, leased or rented by
Borrower; and Borrower assumes all responsibility and all liability
for toxic substance cleanup resulting from any violations, past,
present or future, and agrees to indemnify the Lender and SBA for any
and all resulting liabilities or costs.
(2) Prior to any disbursement, Xxxxxx must be in receipt of evidence
satisfactory to it that the registration of Xxxxxxxx's assumed
business name is active on the records of the Corporation Division of
the Oregon Secretary of State.
(3) Borrower certifies that no principal who owns at least 50% of the
voting interest of the company is delinquent more than 60 days under
the terms of any (a) administrative order, (b) court order, or (c)
repayment agreement that requires payment of child support.
(4) Prior to first disbursement, Borrower must furnish to Lender a copy of
a lease for all business locations, with terms satisfactory to Lender.
(5) Prior to any further expansion, Borrower shall obtain written approval
of Lender. Lender shall insure the profitability of the operations
before granting approval for further expansion.
5. Parties Affected. This Agreement shall be binding upon Xxxxxxxx and
Xxxxxxxx's successors and assigns. No provision stated herein shall be
waived without the prior written consent of SBA. The Loan shall be
administered as provided in the Guaranty Agreement.
XXXX XXXXXXX
ADMINISTRATOR
By: /s/Xxxxx X. Xxxxxx May 16, 1997
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Xxxxx X. Xxxxxx, Acting Deputy District Director Date
CERTIFICATION
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Xxxxxxxx has read and understands the action SBA can take in the event of
failure to meet scheduled payments in accordance with the terms and conditions
of the agreements.
Borrower Name: The Oregon Baking Company, Inc.
Page 9
Xxxxxxxx hereby agrees to the conditions imposed herein and further acknowledges
that this Authorization and Loan Agreement (Guaranty Loans) does not create a
commitment by Xxxxxx to disburse any funds pursuant hereto. Xxxxxxxx further
agrees that the terms and conditions herein are for the benefit of, and may be
enforced by, Xxxxxx as well as SBA and this Authorization and all amendments
constitute the Loan Agreement between Xxxxxx and Borrower.
LENDER
Name: Xxxxxx First Capital Corp.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, Senior Vice President
By: /s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Credit Manager
Date: 6/20/97
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BORROWER
Name: The Oregon Baking Company, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx, President
By: /s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx, CEO
Date: 6/20/97
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GUARANTORS (INDIVIDUAL)
/s/ Xxxxxx X. Xxxxxxxxx
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Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxxx X. Xxxx
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Xxxxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Date: 6/30/97
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