1
Exhibit 10.9
COMMERCIAL SECURITY AGREEMENT
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PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 01-05-1998 07-31-1998 9003 Y 7420 7057008 11049
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References in the shaded area are for Lender"s use only and do not limit the applicability of this document
to any particular loan or item.
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BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
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THIS COMMERCIAL SECURITY AGREEMENT is entered into between 1-800 CONTACTS, INC.
(referred lo below as "Grantor"); and ZIONS FIRST NATIONAL BANK (referred to
below as "Lender"). For valuable consideration, Grantor grants to Lender a
security Interest In the Collateral to secure the Indebtedness and agrees that
Lender shall have the rights stated in this Agreement with respect to the
Collateral, in addition to all other rights which Lender may have by law.
DEFINITIONS. The following words shall have the following meanings when used
in this Agreement. Terms not otherwise defined in this Agreement shall have
the meanings attributed to such terms In the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Commercial Security Agreement,
as this Commercial Security Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Commercial Security Agreement from time to time.
Collateral. The word "Collateral" means the following described property of
Grantor, whether now owned or hereafter acquired, whether now existing or
hereafter arising, and wherever located:
All Inventory, chattel paper, accounts, equipment and general intangibles
In addition, the word "Collateral" includes all the following, whether now
owned or hereafter acquired, whether now existing or hereafter arising, and
wherever located:
(a) All attachments, accessions, accessories, tools, parts, supplies,
increases, and additions to and all replacements of and substitutions for
any property described above.
(b) All products and produce of any of the property described in this
Collateral section.
(c) All accounts, general Intangibles, instruments, rents, monies,
payments, and all other rights, arising out of a sale, lease, or other
disposition of any of the property described In this Collateral section.
(d) All proceeds (Including insurance proceeds) from the sale,
destruction, loss, or other disposition of any of the property described
In this Collateral section.
(e) All records and data relating to any of the property described In
this Collateral section, whether in the form of a writing, photograph,
microffim. microfiche, or electron media, together with all of Grantor's
right, file, and interest in and to all computer software required to
utilize, create, maintain, and process any such records or data on
electronic media.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below In the section
titled "Events of Default."
Grantor. The word "Grantor" means 1-800 CONTACTS, INC., its successors and
assigns
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with the Indebtedness.
Indebtedness. The word "Indebtedness" means the Indebtedness evidenced by
the Note, including all principal and interest, together with all other
Indebtedness and costs and expenses for which Grantor is responsible under
this Agreement or under any of the Related Documents. In addition, the word
"Indebtedness" includes all other obligations, debts and liabilities, plus
interest thereon, of Grantor, or any one or more of them, to Lender, as well
as all claims by Lender against Grantor, or any one or more of them, whether
existing now or later, whether they are voluntary or Involuntary, due or not
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due, direct or Indirect, absolute or contingent, liquidated or unliquidated;
whether Grantor may be liable individually or jointly with others; whether
Grantor may be obligated as guarantor, surety, accommodation party or
otherwise; whether recovery upon such Indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such indebtedness may
be or hereafter may become otherwise unenforceable,
Lender. The word "Lender" means ZIONS FIRST NATIONAL BANK, its successors
and assigns.
Note. The word "Note" means the note or credit agreement dated January 6,
1998, In the principal amount of $3,000,000.00 from I-800 CONTACTS, INC.
to Lender, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of and substilutions for the note or
credit agreement.
Related Documents. The words "Related Documents" mean and Include without
Initiation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other Instruments, agreements and documents,
whether now or hereafter existing, executed In connection with the
Indebtedness.
RIGHT OF SETOFF. Grantor hereby grants Lender a contractual possessory
security interest in and hereby assigns, conveys, delivers, pledges, and
transfers all of Grantor's right, title and interest in and to Grantor's
accounts with Lender (whether checking, savings, or some other account),
including all accounts held jointly with someone else and all accounts Grantor
may open in the future, excluding, however, all XXX and Xxxxx accounts, and all
trust accounts for which the grant of a security interest would be prohibited
by law. Grantor authorizes Lender, to the extent permitted by applicable law,
to charge or setoff all Indebtedness against any and all such accounts.
OBLIGATIONS OF GRANTOR. Grantor warrants and covenants to Lender as follows:
Perfection of Security Interest. Grantor agrees to execute such financing
statements and to take whatever other actions are requested by Lender to
perfect and continue Lender's security interest in the Collateral. Upon
request of Lender, Grantor will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Grantor will note
Lendees Interest upon any and all chattel paper if not delivered to Lender
for possession by Lender. Grantor hereby appoints Lender as Its
Irrevocable attorney-in-fact for the purpose of executing any documents
necessary to Perfect or to continue the security Interest granted in this
Agreement. Lender may at any time, and without further authorization from
Grantor, file a carbon, photographic or other reproduction of any
financing statement or of this Agreement for use as a financing statement.
Grantor will reimburse Lender for all expenses for the perfection and the
continuation of the perfection of Lender's security interest in the
Collateral. Grantor promptly will notify Lender before any change in
Grantor's name including any change to the assumed business names of
Grantor. This is a continuing Security Agreement and will continue in
effect even though all or any part of the Indebtedness is paid in full and
even though for a period of time Grantor may not be indebted to Lender.
No Violation. The execution and delivery of this Agreement will not
violate any law or agreement governing Grantor or to which Grantor is a
party, and its certificate or articles of incorporation and bylaws do not
prohibit any term or condition of this Agreement.
Enforceability of Collateral. To the extent the Collateral consists of
accounts, chattel paper, or general intangibles, the Collateral is
enforceable in accordance with its terms, is genuine, and complies with
applicable laws concerning form, content and manner of preparation and
execution, and all persons appearing to be obligated on the Collateral
have authority and capacity to contract and are in fact obligated as they
appear to be on the Collateral. At the time any account becomes subject
to a security interest in favor of Lender, the account shall be a good and
valid account representing an undisputed, bona fide indebtedness incurred
by the account debtor, for merchandise held subject to delivery
instructions or theretofore shipped or delivered pursuant to a contract of
sale, or for services theretofore performed by Grantor with or for the
account debtor; there shall be no setoffs or counterclaims against any
such account; and no agreement under which any deductions or discounts may
be claimed shall have been made with the account debtor except those
disclosed to Lender in writing.
Location of Collateral. Grantor, upon request of Lender, will deliver to
Lender in form satisfactory to Lender a schedule of real properties and
Collateral locations relating to Grantor's operations, including, without
limitation the following: (a) all real property owned or being purchased
by Grantor; (b) all real property being rented or leased by Grantor; (c)
all storage facilities owned, rented, leased, or being used by Grantor;
and (d) all other properties where Collateral is or may be located.
Except in the ordinary course of its business, Grantor shall not remove
the Collateral from its existing locations without the prior written
consent of Lender.
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Transactions Involving Collateral. Except for inventory sold or accounts
collected in the ordinary course of Grantor's business, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
While Grantor is not in default under this Agreement, Grantor may sell
inventory, but only in the ordinary course of its business and only to
buyers who qualify as a buyer in the ordinary course of business. A sale
in the ordinary course of Grantor's business does not include a transfer
in partial or total satisfaction of a debt or any bulk sale. Grantor
shall not pledge, mortgage, encumber or otherwise permit the Collateral to
be subject to any lien, security interest, encumbrance, or charge, other
than the security interest provided for in this Agreement, without the
prior written consent of Lender. This includes security interests even if
junior in right to the security interests granted under this Agreement.
Unless waived by Lender, all proceeds from any disposition of the
Collateral other than in the normal course of business (for whatever
reason) shall be held in trust for Lender and shall not be commingled with
any other funds; provided however, this requirement shall not constitute
consent by Lender to any sale or other disposition. Upon receipt, Grantor
shall immediately deliver any such proceeds to Lender.
Title. Grantor represents and warrants to Lender that it holds good and
marketable title to the Collateral, free and clear of all liens and
encumbrances except for the lien of this Agreement. No financing
statement covering any of the Collateral is on file in any public office
other than those which reflect the security interest created by this
Agreement or to which Lender has specifically consented. Grantor shall
defend Lender's rights in the Collateral against the claims and demands of
all other persons.
Collateral Schedules and Locations. As often as Lender shall require, and
insofar as the Collateral consists of accounts and general intangibles,
Grantor shall deliver to Lender schedules of such Collateral, including
such information as Lender may require, including without limitation names
and addresses of account debtors and agings of accounts and general
intangibles. Insofar as the Collateral consists of inventory and
equipment, Grantor shall deliver to Lender, as often as Lender shall
require, such lists, descriptions, and designations of such Collateral as
Lender may require to identify the nature, extent, and location of such
Collateral. Such information shall be submitted for Grantor and each of
its subsidiaries or related companies.
Maintenance and Inspection of Collateral. Grantor shall maintain all
tangible Collateral in good condition and repair. Grantor will not commit
or permit damage to or destruction of the Collateral or any part of the
Collateral. Lender and its designated representatives and agents shall
have the right at all reasonable times to examine, inspect, and audit the
Collateral wherever located. Grantor shall immediately notify Lender of
all cases involving the return, rejection, repossession, loss or damage of
or to any Collateral, of any request for credit or adjustment or of any
other dispute arising with respect to the Collateral; and generally of all
happenings and events affecting the Collateral or the value or the amount
of the Collateral; except such happenings and events which occur in the
normal course of business.
Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness,
or upon any of the other Related Documents. Grantor may withhold any such
payment or may elect to contest any lien if Grantor is in good faith
conducting an appropriate proceeding to contest the obligation to pay and
so long as Lender's Interest in the Collateral is not jeopardized in
Lender's sole opinion. If the Collateral is subjected to a lien which is
not discharged within fifteen (15) days, Grantor shall deposit with Lender
cash, a sufficient corporate surety bond or other security satisfactory to
lender in an amount adequate to provide for the discharge of the lien plus
any interest, costs, reasonable attorneys' fees or other charges that
could accrue as a result of foreclosure or sale of the Collateral. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall
name Lender as an additional obligee under any surety bond furnished in
the contest proceedings.
Compliance With Governmental Requirements. Grantor shall comply promptly
with all laws, ordinances, rules and regulations of all governmental
authorities, now or hereafter in effect, applicable to the ownership,
production, disposition, or use of the Collateral. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance
during any proceeding, including appropriate appeals, so long as Lender's
interest in the Collateral, in Lender's opinion, is not jeopardized.
Hazardous Substances. Grantor represents and warrants that the Collateral
never has been, and never will be so long as this Agreement remains a lien
on the Collateral, used for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
hazardous waste or substance, as those terms are defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499
("XXXX"), the Hazardous Materials Transportation Act, 49 U.S.C. Section
1801, et seq., the Resource Conservation and
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Recovery Act, 42 U.S.C. Section 6901, et seq., or other applicable state
or Federal laws, rules, or regulations adopted pursuant to any of the
foregoing. The terms "hazardous waste" and "hazardous substance" shall
also include, without limitation, petroleum and petroleum by-products or
any fraction thereof and asbestos. The representations and warranties
contained herein are based on Grantor's due diligence in investigating the
Collateral for hazardous wastes and substances. Grantor hereby (a)
releases and waives any future claims against Lender for indemnity or
contribution in the event Grantor becomes liable for cleanup or other
costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims and losses resulting from a breach of
this provision of this Agreement. This obligation to indemnify shall
survive the paymentof the indebtedness and the satisfaction of this
Agreement.
Maintenance of Casualty Insurance. Grantor shall procure and maintain all
risks insurance, including without limitation fire, theft and liability
coverage together with such other insurance as Lender may require with
respect to the Collateral, in form, amounts, coverages and basis
reasonably acceptable to Lender and issued by a company or companies
reasonably acceptable to Lender. Grantor, upon request of Lender, will
deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that
coverages will not be canceled or diminished without at least ten (10)
days'" prior written notice to Lender and not including any disclaimer of
the insurer's liability for failure to give such a notice. Each insurance
policy also shall include an endorsement providing that coverage in favor
of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest, Grantor
will provide Lender with such loss payable or other endorsements as Lender
may require. If Grantor at any time fails to obtain or maintain any
insurance as required under this Agreement, Lender may (but shall not be
obligated to) obtain such insurance as Lender deems appropriate, irduding
if it so chooses "single interest insurance," which will cover only
Lendees interest in the Collateral.
Application of Insurance Proceeds. Grantor shall promptly notify Lender
of any loss or damage to the Collateral. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All
proceeds of any insurance on the Collateral, including accrued proceeds
thereon, shall be held by Lender as part of the Collateral. If Lender
consents to repair or replacement of the damaged or destroyed Collateral,
Lender shall, upon satisfactory proof of expenditure, pay or reimburse
Grantor from the proceeds for the reasonable cost of repair or
restoration. If Lender does not consent to repair or replacement of the
Collateral, Lender shall retain a sufficient amount of the proceeds to pay
all of the Indebtedness, and shall pay the balance to Grantor. Any
proceeds which have not been disbursed within six (6) months after their
receipt and which Grantor has not committed to the repair or restoration
of the Collateral shall be used to prepay the indebtedness.
Insurance Reserves. Lender may require Grantor to maintain with Lender
reserves for payment of insurance premiums, which reserves shall be
created by monthly payments from Grantor of a sum estimated by Lender to
be sufficient to produce, at least fifteen (15) days before the premium
due date, amounts at least equal to the insurance premiums to be paid. If
fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall
constitute a non-interest-bearing account which Lender may satisfy by
payment of the Insurance premiums required to be paid by Grantor as they
become due. Lender does not hold the reserve funds In trust for Grantor,
and Lender Is not the agent of Grantor for payment of the Insurance
premiums required to be paid by Grantor. The responsibility for the
payment of premiums shall remain Grantors sole responsibility.
Insurance Reports. Grantor, upon request of Lender, shall furnish to
Lender reports on each existing policy of insurance showing such
information as Lender may reasonably request Including the following: (a)
the name of the Insurer, (b) the risks insured; (c) the amount of the
policy; (d) the property insured; (e) the then current value on the basis
of which insurance has been obtained and the manner of determining that
value; and (f) the expiration date of the policy. In addition, Grantor
shall upon request by Lender (however not more often than annually) have
an independent appraiser satisfactory to Lender determine, as applicable,
the cash value or replacement cost of the Collateral.
GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS. Until default and
except as otherwise provided below with respect to accounts, Grantor may have
possession of the tangible personal property and beneficial use of all the
Collateral and may use it in any lawful manner not inconsistent with this
Agreement or the Related Documents, provided that Grantor's right to possession
and beneficial use shall not apply to any Collateral where possession of the
Collateral by Lender is required by law to perfect Lender's security interest
in such Collateral. Until otherwise notified by Lender, Grantor may collect
any of the Collateral consisting of accounts. At any time and even though no
Event of Default exists, Lender may exercise Rs rights to called the accounts
and to notify account debtors to make payments directly to Lender for
application to the Indebtedness. If Lender at any time has possession of any
Collateral, whether before or after an Event of Default, Lender shall be deemed
to
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to have exercised reasonable care in the custody and preservation of the
Collateral if Lender takes such action for that purpose as Grantor shall
request or as Lender, in Lender's sole discretion, shall deem appropriate under
the circumstances, but failure to honor any request by Grantor shall not of
Itself be deemed to be a failure to exercise reasonable care. Lender shall not
be required to take any steps necessary to preserve any rights In the
Collateral against prior parties, nor to protect, preserve or maintain any
security interest given to secure the Indebtedness.
EXPENDITURES BY LENDER. If not discharged or paid when due, Lender may (but
shall not be obligated to) discharge or pay any amounts required to be
discharged or paid by Grantor under this Agreement, including without
limitation all taxes, liens, security Interests, encumbrances, and other
claims, at any time levied or placed on the Collateral. Lender also may (but
shall not be obligated to) pay all costs for Insuring, maintaining and
preserving the Collateral. All such expenditures incurred or paid by Lender
for such purposes seat then bear Interest at the rate charged under the Note
from the date Incurred or paid by Lender to the date of repayment by Grantor.
All such expenses shall become a part of the Indebtedness and, at Lendees
option, will (a) be payable on demand, (b) be added to the balance of the Note
and be apportioned among and be payable with any Installment payments to become
due during either (i) the term of any applicable Insurance policy or (iii) the
remaining term of the Note, or (c) be treated as a balloon payment which will
be due and payable at the Note's maturity. This Agreement also will secure
payment of these amounts. Such right shall be in addition to all other rights
and remedies to which Lender may be entitled upon the occurrence of an Event of
Default.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
Default on Indebtedness. Failure of Grantor to make any payment when due
on the Indebtedness.
Other Defaults. Failure of Grantor to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or in any other agreement between Lender and
Grantor.
Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, In favor of any other creditor or
person that may materially affect any of Borrower's property or Borrower's
or any Grantors ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Grantor under this Agreement, the
Note or the Related Documents Is false or misleading in any material
respect, either now or at the time made or furnished.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral documents to create a valid and perfected security interest or
lien) at any time and for any reason.
Insolvency. The dissolution or termination of Grantor's existence as a
going business, the insolvency of Grantor, the appointment of a receiver
for any part of Grantors property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Grantor.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Grantor or by any
governmental agency against the Collateral or any other collateral
securing the Indebtedness. This includes a garnishment of any of
Grantor's deposit accounts with Lender. However, this Event of Default
shall not apply if there Is a good faith dispute by Grantor as to the
validity or reasonableness of the claim which is the basis of the creditor
or forfeiture proceeding and If Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in is sole discretion, as being an adequate reserve
or bond for thedispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or such Guarantor dies
or becomes incompetent. Lender, at its option, may, but shall not be
required to, permit the Guarantor's estate to assume unconditionally the
obligations arising under the guaranty in a manner satisfactory to Lender,
and, in doing so, cure the Event of Default.
Adverse Change. A material adverse change occurs in Grantor's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
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Cumulative Remedies. All of Lender's rights and remedies, whether
evidenced by this Agreement or the Related Documents or by any other
writing, shall be cumulative and may be exercised singularity or
concurrently. Election by Lender to pursue any remedy shall not exclude
pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Grantor under this Agreement,
after Grantor's failure to perform, shall not affect Lender's right to
declare a default and to exercise its remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted
by Lender in the State of Utah. If there is a lawsuit, Grantor agrees
upon Lender's request to submit to the jurisdiction of the courts of the
State of Utah. Subject to the provisions on arbitration, this Agreement
shall be governed by and construed in accordance with the laws of the
State of Utah.
ARBITRATION DISCLOSURES:
1. AS USED IN THIS ARBITRATION SECTION, THE TERM
"PARTIES" MEANS THE LENDER, ANY OTHER SIGNERS HERETO AND
PERMITTED SUCCESSORS AND ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE
PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED
AND DIFFERENT FROM COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE
FACTUAL FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO
APPEAL OR TO SEEK MODIFICATION OF RULINGS BY ARBITRATORS IS
STRICTLY LIMITED.
6. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR
WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR
ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION.
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, including but not
limited to those arising out of or relating to this Agreement or any
agreements or instruments relating hereto or delivered in connection
herewith, and including but not limited to a claim based on or arising from
an alleged tort, shall at the request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted In Salt Lake City, Utah. The arbitrators) shall have the
qualifications set forth In subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action brought
by a party shall apply to any arbitration or reference proceedings
hereunder.
(b) In any judicial action or proceeding arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered In
connection herewith, including but not limited to a claim based on or
arising from an alleged tort, if the controversy or claim is not submitted
to arbitration as provided and limited In subparagraph (a) hereto, all
decisions of fact and law shall be determined by a reference in accordance
with Rule 63 of the Federal Rules of Civil Procedure or Rule 63 of the Utah
Rules of Civil Procedure or other comparable, applicable reference
procedure. The parties shall designate to ft court the referee(s) selected
under the auspices of the American Arbitration Association in the same
manner as arbitrators are selected In Association-sponsored arbitration
proceedings. The referee(s) shall have the qualifications set forth In
subparagraph (c) hereto.
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(c) The arbitrators) or rateree(s) shall be selected In accordance with the
rules of the American Arbitration Association from panels maintained by the
Association. A single arbitrator or referee shall be knowledgeable in the
subject matter of the dispute. Where three arbitrators or referees conduct
an arbitration or reference proceeding, the claim shah be decided by a
majority vote of the three arbitrators or referees, at least one of whom
must be knowledgeable In the subject matter of the dispute and at least one
of whom must be a practicing attorney. The arbitrator(s) or referee(s)
shall award recovery of all costs and fees (including reasonable Attorneys'
fees, administrative fees, arbitrators" fees, and court costs). The
arbitrator(s) or referee(s) also may grant provisional or ancillary remedies
such as, for example, injunctive relief, attachment, or the appointment of a
receiver, either during the pendency of the arbitration or reference
proceeding or as part of the arbitration or reference award.
(d) Judgment upon an arbitration or reference award may be entered in any
court having jurisdiction, subject to the following Initiation: the
arbitration or reference award Is binding upon the parties only if the
amount does not exceed Four Million Dollars ($4,000,000.00); If the award
exceeds that limit, either party may commence legal action for a court trial
de novo. Such legal action must be filed within thirty (30) days following
the date of the arbitration or reference award; if such legal action is not
filed within that time period, the amount of the arbitration or reference
award shall be binding. The computation of the total amount of an
arbitration or reference award shah include amounts awarded for arbitration
loan, attorneys' fees, interest, and all other related costs.
(e) At the Lender's option, foreclosure under a dead of trust or mortgage
may be accomplished either by exercise of a power of sale under the deed of
trust or by judicial foreclosure. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration If any other
party contests such action for judicial relief.
(f) Notwithstanding the applicability of other law to any other provision of
this Agreement, the Federal Arbitration Act, 9 U.S.C. Section I et seq.,
shall apply to the construction and Interpretation of this arbitration
paragraph.
Attorneys' Fees; Expenses. Grantor agrees to pay upon demand all of Lender's
costs and expenses, including reasonable attorneys' fees and Lender's legal
expenses, incurred in connection with the enforcement of this Agreement.
Lender may pay someone else to help enforce this Agreement, and Grantor shall
pay the costs and expenses of such enforcement. Costs and expenses include
Lender's reasonable attorneys' fees and legal expertises whether or not a
salaried employee of Lender and whether or not there is a lawsuit, including
reasonable attorneys' fees and legal expenses for bankruptcy proceedings (and
Including efforts to modify or vacate any automatic stay or injunction),
appeals, and any anticipated post-judgment collection services. Grantor also
shall pay all court costs and such additional fees as may be directed by the
Court.
Caption Headings. Caption headings In this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
Multiple Parties; Corporate Authority. All obligations of Grantor under this
Agreement shall be joint and several, and all references to Grantor shall mean
each and every Grantor. This means that each of the persons signing below is
responsible for all obligations in this Agreement.
Notices. All notices required to be given under this Agreement shall be given
in writing, may be sent by telefacsimile (unless otherwise required by law),
and shall be effective when actually delivered or when deposited with a
nationally recognized overnight courier or deposited in the United States mail,
first class, postage prepaid, addressed to the party to whom the notice Is to
be given at the address shown above. Any party may change its address for
notices under this Agreement by giving formal written notice to the other
parties, specifying that the purpose of the notice is to change the party"s
address. To the extent permitted by applicable law, if there is more than one
Grantor, notice to any Grantor will constitute notice to all Grantors. For
notice purposes, Grantor wig keep Lender informed at all times of Grantors
current addresses).
Power of Attorney. Grantor hereby appoints Lender as its true and lawful
attorney-in-fact, irrevocably, with full power of substitution to do the
following: (a) to demand, cow, receive, receipt for, xxx and r9oover all sums
of money or other property which may now or hereafter become due, owing or
payable from the Collateral; (b) to execute, sign and endorse any and al
claims, instruments, receipts, checks, drafts or warrants Issued in payment for
the Collateral; (c) to settle or compromise any and all claims arising under
the Collateral, and, in the place and stead of Grantor, to execute and deliver
its release and settlement for the claim; and (d) to file any claim or claims
or to take any action or institute or take part In any proceedings, either in
its own name or in the name of Grantor, or otherwise, which in the discretion
of Lender may seem to be necessary or advisable. This power is given as
security for the Indebtedness, and the authority hereby conferred Is and shall
be Irrevocable and shall remain In full force and effect unfit renounced by
Lender.
8
01-05-1998 COMMERCIAL SECURITY AGREEMENT Page 9
(Continued)
================================================================================
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstances such
finding shall not render that provision invalid or unenforceable as to any
other persons or circumstances. If feasible, any such offending provision
shall be deemed to be modified to be within the limits of enforceability or
validity; however, if the offending provision cannot be so modified, it shall
be stricken and all other provisions of this Agreement In all other respects
shall remain valid and enforceable.
Successor Interests. Subject to the limitations set forth above on transfer of
the Collateral, this Agreement shall be binding upon and inure to the benefit
of the parties, their successors and assigns.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by Lender, nor any
course of dealing between Lender and Grantor, shall constitute a waiver of
any of Lender's rights or of any of Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall not
constitute continuing consent of subsequent instances where such consent is
required and in all cases such consent may be granted or withheld in the
sole discretion of Lender.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT, AND GRANTOR AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
JANUARY 5, 1998.
BORROWER:
1-800 CONTACTS, INC.
By: /s/ Xxxxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxx
-------------------------------- -----------------------------------
XXXXXXXX X. XXXX, PRESIDENT XXXX XXXXXXX, VICE PRESIDENT
9
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement (the "Amendment") is executed this
5th day of January, 1998, by and between 1-800 CONTACTS, INC., formerly known
as 1-800-LENS NOW, INC., (the "Borrower") and ZIONS FIRST NATIONAL BANK (the
"Lender").
WHEREAS, Borrower and Lender entered into that certain Loan Agreement
dated October 1, 1997, which provided, among others things for Lender to
provide a Revolving Line of Credit in the principal amount of One Million
Dollars (1,000,000.00) (The "Loan Agreement"); and
WHEREAS, Borrower has requested Lender to renew and Increase the
outstanding Revolving Line of Credit to Three Million Dollars (3,000,00.00).
WHEREAS, Lender has agreed to such request provided, among other things,
Borrower executes and delivers this Amendment.
NOW THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Loan Agreement is hereby amended as follows:
(all capitalized terms not otherwise defined have the same meaning as provided
in the Loan Agreement).
1. The Section entitled BORROWING BASE, is hereby deleted in Rs entirety and
replaced as follows:
BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (a) $3,000,000.00 until January 31, 1998,
$2,750,000.00 on February 28, 1998 to $2,225,000.00 on March 31, 1998 to
$1,750,000.00 and on April 30, 1998 to $1,000,000.00. If initial public
offering is completed for at least $10,000,000.00 the line of credit may
remain at $1,500,000.00 on April 30, 1998 and thereafter; or (b) 50.000%
of the aggregate amount of Eligible Inventory.
2. The Section entitled INVENTORY REPORT is hereby deleted in its entirety
and replaced as follows:
INVENTORY REPORT. Borrower shall furnish to Lender a weekly inventory
report as requested within (1) day from week end, but no later than the
Monday of each week for the prior week.
3. A New Section entitled MONTHLY FINANCIAL STATEMENTS is hereby added to
the Loan Agreement:
MONTHLY FINANCIAL STATEMENTS. Until such time as the Initial Public
Offering is completed, Borrower shall provide Borrowers balance sheet and
profit loss statement monthly within forty five (45) days of the end of
each month.
10
4. The Section entitled COLLATERAL RECORDS is hereby deleted in its entirety
and replaced as follows:
COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or Lender's representative upon demand for
inspection and copying at any reasonable time. With respect to the
Inventory, Borrower agrees to keep and maintain such records as Lender may
require, including without limitation information concerning Eligible
Inventory and records itemizing and describing the kind, type, quality, and
quantity of Inventory, Borrowers Inventory costs and selling prices, and the
daily withdrawals and additions to Inventory. The following is an accurate
and complete list of all locations at which Borrower keeps or maintains
business records concerning Borrower"s Inventory: 00000 Xxxxx Xxxxxxxxx Xxxx
Xxxxx, Xxxxxxxx X, Xxxxx 000, Xxxxxx, XX. and 00 Xxxx 00000 Xxxxx, Xxxxxx,
XX 00000.
5. The Section entitled INSECURITY is hereby deleted in its entirety.
Except as amended herein, all other terms and conditions of the Loan
Agreement remain in full force and effect and are applicable to this Amendment.
IN WITNESS WHEREOF, Borrower and Lender have executed this Amendment as of
the date and year first above written.
1-800 CONTACTS, INC. ZIONS FIRST NATIONAL BANK
By: /s/ Xxxxxxxx X. Xxxx By: /s/ Xxxxx Xxxxxxx
-------------------------- ---------------------------
Xxxxxxxx X. Xxxx Xxxxx Xxxxxxx
Its: President Its: Vice President
11
SIDE LETTER TO LINE OF CREDIT AGREEMENTS
Whereas as 1-800 CONTACTS, Inc. ("Borrower") and Zions First National Bank
("Lender") have entered into various agreements related to a line of credit
extended by Lender to Borrower, including but not limited to a Loan Agreement,
as amended, Promissory Note, Commercial Security Agreement, and various
Commercial Guaranty agreements ("LOC Agreements"), all of even or approximate
date herewith;
Borrower and Lender desire to memorialize their understanding with regard to
certain matters pertaining to such LOT Agreements, as follows:
The parties acknowledge that Borrower is in the process of issuing its stock to
the public via an Initial Public Offering ("IPO"). Pursuant to such issuance,
Borrower filed on November 26, 1997 a Form S-1 Registration Statement with the
Securities and Exchange Commission ("SEC"), a complete copy of which has been
provided to Lender.
Notwithstanding any representations, warranties, covenants and other assertions
made by Borrower in the LOT Agreements, Lender acknowledges and is fully aware
that Borrower may not be in compliance with certain laws, regulations, and so
forth. Under is also aware of Borrower"s disclosures regarding the same in its
Form S-1 Registration Statement filed with the SEC.
Notwithstanding any representations, warranties, covenants and other assertions
made by Borrower in the LOT Agreements, Lender acknowledges and is fully aware
that just prior to the completion of Borrower's IPO and simultaneous with or
subsequent to Borrower's IPO, certain transactions related to ownership,
corporate status, distributions, and so forth are anticipated. Lender is also
aware of Borrower's disclosures regarding the same in its Form S-1 Registration
Statement filed with the SEC. Additionally, Lender acknowledges and is fully
aware that certain of the reporting requirements, covenants, and so forth
contained in the LOT Agreements will need to be adjusted upon successful
completion of Borrower's IP0.
Notwithstanding any representations, warranties, covenants and other assertions
made by Borrower in the LOT Agreements, Lender acknowledges and is fully aware
that Borrower intends to repay its debt outstanding to the subordinated
creditor, Xxxxxx X. Xxxxxxxx, with proceeds from its IPO. After repayment of
the Yacktman debt, Borrower's line of credit from Lender may continue to be
outstanding.
Lender acknowledges that information provided to Lender by Borrower pursuant to
the LOT Agreements is confidential; and, Lender agrees to keep such information
strictly confidential unless it has prior written consent from Borrower to do
otherwise.
Acknowledged, Agreed and Accepted:
Lender: Borrower:
Zions First National Bank 1-800 CONTACTS, Inc.
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxxxxx Xxxx
------------------------- -------------------------------
Authorized Officer Authorized Officer
Date: 1/7/98 Date. 1/6/98
------------- ---------------
12
PROMISSORY NOTE
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 01-05-1998 07-31-1998 9003 Y 7420 7057008 11049
==============================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
------------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
==============================================================================================================================
Principal Amount: $3,000,000.00 Initial Rate: 10.000% Date of Note: January 5, 1998
PROMISE TO PAY. 1-800 CONTACTS, INC. (Borrower") promises to pay to ZIONS FIRST
NATIONAL BANK ("Lender"), or order, In lawful money of the United States of
America, the principal amount of Three Million & 00/100 Dollars ($3,OOO,000.00)
or so much as may be outstanding, together with Interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance.
PAYMENT. Borrower will pay this low In one payment of all outstanding
principal plus all accrued unpaid Interest on July 31, 1998. In addition,
Borrower will pay regular monthly payments of accrued unpaid Interest beginning
February 1, 1998, and all subsequent Interest payments are due on the same day
of each month after that. The annual Interest rate for this Note Is computed
on a 365/360 basis; that Is, by applying the ratio of the annual Interest rate
over a year of 360 days, multiplied by the outstanding principal balance,
multiplied by the actual number of days the principal balance is outstanding.
Borrower will pay Lender at Lender"s address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to any unpaid collection costs
and any late charges, then to any unpaid interest, and any remaining amount to
principal.
VARIABLE INTEREST RATE. The Interest rate on this Note is subject to change
from time to time based on -changes In an Index which is the ZIONS FIRST
NATIONAL BANK PRIME RATE (the "Index). "PRIME RATE" MEANS AN INDEX WHICH IS
DETERMINED DAILY BY THE PUBLISHED COMMERCIAL LOAN VARIABLE RATE INDEX HELD BY
ANY TWO OF THE FOLLOWING BANKS: CHASE MANHATTAN BANK, XXXXX FARGO BANK N.A.,
AND BANK OF AMERICA N.T. & S.A. IN THE EVENT NO TWO OF THE ABOVE BANKS HAVE
THE SAME PUBLISHED RATE, THE BANK HAVING THE MEDIAN RATE WILL ESTABLISH
LENDERS" PRIME RATE. IF, FOR ANY REASON BEYOND THE CONTROL OF LENDER, ANY OF
THE AFOREMENTIONED BANKS BECOMES UNACCEPTABLE AS A REFERENCE FOR THE PURPOSE OF
DETERMINING THE PRIME RATE USED HEREIN, LENDER MAY, FIVE DAYS AFTER POSTING
NOTICE IN LENDERS OFFICES, SUBSTITUTE ANOTHER COMPARABLE BANK FOR THE ONE
DETERMINED UNACCEPTABLE. AS USED IN THIS PARAGRAPH, "COMPARABLE BANK" SHALL
MEAN ONE OF THE TEN LARGEST COMMERCIAL BANKS HEADQUARTERED IN THE UNITED STATES
OF AMERICA. THIS DEFINITION OF PRIME RATE IS TO BE STRICTLY INTERPRETED AND IS
NOT INTENDED TO SERVE ANY PURPOSE OTHER THAN PROVIDING AN INDEX TO DETERMINE
THE VARIABLE INTEREST RATE USED HEREIN. IT IS NOT THE LOWEST RATE AT WHICH
LENDER MAY MAKE LOANS TO ANY OF ITS CUSTOMERS, EITHER NOW OR IN THE FUTURE.
Lender will tell Borrower the current Index rate upon Borrower's request.
Borrower understands that Lender may make loans based on other rates as well.
The Interest rate change will not occur more often than each DAY. The Index
currently Is 8.500% per annum. The Interest rate to be applied to the unpaid
principal balance of this Note will be at a rate of 1.500 percentage points
over the Index, resulting in an Initial rate of 10.000% per annum. NOTICE:
Under no circumstances will the interest rate on this Note be more than the
maximum rate allowed by applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject to
refund upon early payment (whether voluntary or as a result of default), except
as otherwise required by law. Except for the foregoing, Borrower may pay
without penalty all or a portion of the amount owed earlier than It Is due.
Early payments will not, unless agreed to by Lender In writing, relieve
Borrower of Borrower"s obligation to continue to make payments of accrued
unpaid Interest Rather, they will reduce the principal balance due.
DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower falls to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower falls to comply with or to perform
when due any other term, obligation, covenant, or condition contained In this
Note or any agreement related to this Note, or in any other agreement or loan
Borrower has with Lender. (c) Borrower defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other
agreement, In favor of any other creditor or person that may materially affect
any of Borrower"s property or Borrower"s ability to repay this Note or perform
Borrower"s obligations under this Note or any of the Related Documents. (d)
Any representation or statement made or furnished to Lender by Borrower or on
Borrower"s behalf Is false or
13
01-05-1998 PROMISSORY NOTE Page 2
(Continued)
================================================================================
misleading in any material respect either now or at the time made or furnished.
(e) Borrower becomes Insolvent, a receiver is appointed for any part of
Borrower's property, Borrower makes an assignment for the benefit of creditors,
or any proceeding Is
commenced either by Borrower or against Borrower under policy or Insolvency
laws. (f) Any creditor hiss to take any of Borrowees property on or In which
Lender has a Men or security Interest. This garnishment of any of Borrower"s
accounts with Lender. (g) Any guarantor dies or any of the other events
described In this default section h respect to any guarantor of this Note. (h)
A material adverse change occurs in Borrower"s financial condition.
If any default, other than a default In payment, is curable and if Borrower has
not been given a notice of a breach of the same provision of this Note within
the preceding twelve (12) months, it may be cured (and no event of default will
have occurred) If Borrower. after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (16) days;
or (b) If the cure requires more than fifteen (15) days, Immediately Initiates
steps which Lender deems In Lender's sole discretion to be sufficient to cure
the default and thereafter continues and completes an reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid Interest Immediately due, without
notice, and then Borrower will pay that amount. Upon default, Including
failure to pay upon final maturity, Lender, at Its option, may also, If
permitted under applicable law, Increase the variable interest rate on this
Note to 4.500 percentage points over the Index. The interest rate Will not
exceed the maximum rate permitted by applicable law. Lender may hire or pay
someone else to help collect this Note if Borrower does not pay. Borrower also
will pay Lender that amount. This includes, subject to any limits under
applicable law, Lender's reasonable attorneys" fees and Lendees legal expenses
whether or not there Is a lawsuit, Including reasonable attorneys' fees and
legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, In addition to all other sums provided
by law. This Note has been delivered to Lender and accepted by Lender In the
State of Utah. If there Is a lawsuit, Borrower agrees upon Lender"s request to
submit to the jurisdiction of the courts of SALT LAKE County, the State of
Utah. Subject to the provisions on arbitration, this Note shall be governed by
and construed In accordance with the laws of the State of Utah.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest In, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower"s right, title and Interest In and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), Including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open In the future, excluding however all XXX and Xxxxx accounts,
and all trust accounts for which the grant of a security Interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.
COLLATERAL. This Note is secured by A COMMERCIAL SECURITY AGREEMENT OF EVEN
DATE.
LINE OF CREDIT. This Note evidences a revolving line of credit. Advances
under this Note may be requested orally by Borrower or by an authorized person.
Lender may, but need not, require that all oral requests be confirmed in
writing. All communications, instructions, or directions by telephone or
otherwise to Lender are to be directed to Lender's office shown above. The
following party or parties are authorized to request advances under the line of
credit until Lender receives from Borrower at Lender's address shown above
written notice of revocation of their authority: XXXXXXXX X. XXXX, PRESIDENT;
XXXX XXXXXXX, VICE PRESIDENT; AND XXXXX XXXXXX, CHIEF FINANCIAL OFFICER.
Borrower agrees to be liable for all sums either: (a) advanced in accordance
with the instructions of an authorized person or (b) credited to any of
Borrower's accounts with Lender. The unpaid principal balance owing on this
Note at any time may be evidenced by endorsements on this Note or by Lender's
internal records, including daily computer print-outs. Lender will have no
obligation to advance funds under this Note if:; (a) Borrower or any guarantor
is in default under the terms of this Note or any agreement that Borrower or
any guarantor has with Lender, including any agreement made in connection with
the signing of this Note; (b) Borrower or any guarantor ceases doing business
or is insolvent; (c) any guarantor seeks, claims or otherwise attempts to
limit, modify or revoke such guarantor's guarantee of this Note or any other
loan with Lender; (d) Borrower has applied funds provided pursuant to this Note
for purposes other than those authorized by Lender; or (e) Lender in good xxxxx
xxxxx itself insecure under this Note or any other agreement between Lender and
Borrower.
ARBITRATION DISCLOSURES
1. AS USED IN THIS ARBITRATION SECTION, THE TERM "PARTIES" MEANS
THE LENDER, ANY OTHER SIGNERS HERETO AND PERMITTED SUCCESSORS AND
ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE PARTIES AND
SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.
14
01-05-1998 PROMISSORY NOTE Page 3
(Continued)
================================================================================
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT,
INCLUDING THEIR RIGHT TO A JURY TRIAL.
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND
DIFFERENT FROM COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE FACTUAL
FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO
SEEK MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED.
6. A PANEL OR ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR
WAS AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY
OR THE AMERICAN ARBITRATION ASSOCIATION.
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, including but
not limited to those arising out of or relating to this Agreement or any
agreements or instruments relating hereto or delivered in connection
herewith, and including but not limited to a claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted in Salt Lake City, Utah. The arbitrator(s) shall have the
qualifications set forth in subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action
brought by a party shall apply to any arbitration or reference proceedings
hereunder.
(b) In any judicial action or proceeding arising out of or relating to
this Agreement or any agreements or instruments relating hereto or
delivered in connection herewith, including but not limited to a claim
based on or arising from an alleged tort, if the controversy or claim is
not submitted to arbitration as provided and limited in subparagraph (a)
hereto, all decisions of fact and law shall be determined by a reference
in accordance with Rule 53 of the Federal Rules of Civil Procedure or Rule
53 of the Utah Rules of Civil Procedure or other comparable, applicable
reference procedure. The parties shall designate to the court the
referee(s) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored arbitration proceedings. The referee(s) shall have
the qualifications set forth in subparagraph (c) hereto.
(c) The arbitrator(s) or referee(s) shall be selected in accordance with
the rules of the American Arbitration Association from panels maintained
by the Association. A single arbitrator or referee shall be knowledgeable
in the subject matter of the dispute. Where three arbitrators or referees
conduct an arbitration or reference proceeding, the claim shall be decided
by a majority vote of the three arbitrators or referees, at least one of
whom must be knowledgeable in the subject matter of the dispute and at
least one of whom must be a practicing attorney. The arbitrator(s) or
referee(s) shall award recovery of all costs and fees (including
reasonable attorneys' fees, administrative fees, arbitrators' fees, and
court costs). The arbitrator(s) or referee(s) also may grant provisional
or ancillary remedies such as, for example, injunctive relief, attachment,
or the appointment of a receiver, either during the pendency of the
arbitration or reference proceeding or as part of the arbitration or
reference award.
(d) Judgment upon an arbitration or reference award may be entered in any
court having jurisdiction, subject to the following limitation: the
arbitration or reference award is binding upon the parties only if the
amount does not exceed Four Million Dollars ($4,000,000.00); if the award
exceeds that limit, either party may commence legal action for a court
trial de novo. Such legal action must be filed within thirty (30) days
following the date of the arbitration or reference award; if such legal
action is not filed within that time period, the amount of the arbitration
or reference award shall be binding. The computation of the total amount
of an arbitration or reference award shall include amounts awarded for
arbitration fees, attorneys' fees, interest, and all other related costs.
(e) At the Lender's option, foreclosure under a deed of trustor mortgage
may be accomplished either by exercise of a power of sale under the deed
of trust or by judicial foreclosure. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary
remedy shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the controversy or claim to arbitration if any
other party contests such action for judicial relief.
15
01-05-1998 PROMISSORY NOTE Page 4
(Continued)
================================================================================
(f) Notwithstanding the applicability of other law to any other provision
of this Agreement, the Federal Arbitration Act, 9 U.S.C. Section 1 et
seq., shall apply to the construction and interpretation of this
arbitration paragraph.
LINE OF CREDIT REDUCTION. THE REVOLVING LINE OF CREDIT IN THE AMOUNT OF
$3,000,000.00 WILL BE REDUCED ON JANUARY 31, 1998 TO $2,750,000.00, ON FEBRUARY
28, 1998 TO $2,250,000.00, ON MARCH 31, 1998 TO $1,750,000.00, AND ON APRIL 30,
1998 TO $1,000,000.00. IF THE INITIAL PUBLIC OFFERING IS COMPLETED FOR AT
LEAST $10,000,000.00, THE LINE OF CREDIT MAY REMAIN AT $1,500,000.00 ON APRIL
30, 1998 AND THEREAFTER.
PRIOR NOTE. THE PROMISSORY NOTE FROM 1-800 LENS-NOW, INC. DBA 1-800 CONTACTS,
INC. TO LENDER DATED OCTOBER 1, 1997 IN THE ORIGINAL PRINCIPAL AMOUNT OF
$1,000,000.00.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change In the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from lability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time) this loan, or release any party or guarantor or collateral; or Impair,
fail to realize upon or perfect Lender's security Interest In the collateral;
and take any other action deemed necessary by Lender without the consent of or
notice to anyone. All such parties also agree that Lender may modify this loan
without the consent of or notice to anyone other than the party with whom the
modification is made.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE NOTE.
BORROWER:
I-800 CONTACTS, INC.
By: /s/ Xxxxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxx
-------------------------------- ------------------------------
XXXXXXXX X. XXXX, PRESIDENT XXXX XXXXXXX, VICE PRESIDENT
================================================================================
16
DISBURSEMENT REQUEST AND AUTHORIZATION
-----------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 01-05-1998 07-31-1998 9003 Y 7420 7057008 11049
=============================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
-----------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
================================================================================
LOAN TYPE. This is a Variable Rate (1.500% over ZIONS FIRST NATIONAL BANK
PRIME RATE, making an initial rate of 10-000%), Revolving Line of Credit Loan
to a Corporation for $3,000,000.00 due on July 31, 1998. This is a secured
renewal of the following described indebtedness: THE PROMISSORY NOTE FROM 1-800
LENS-NOW, INC. DBA I-800 CONTACTS, INC. TO LENDER DATED OCTOBER 1, 1997 IN
THE ORIGINAL PRINCIPAL AMOUNT OF $1,000,000.00.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan Is for:
[ ] Personal, Family, or Household Purposes or Personal Investment.
[X] Business (including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan Is: TO RENEW AND INCREASE
REVOLVING LINE OF CREDIT USED TO FINANCE THE PURCHASE OF INVENTORY.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds Will be
disbursed until all of Lender"s conditions for making the loan have been
satisfied. Please disburse the loan proceeds of $3,000,000.00 as follows:
Undisbursed Funds: $1,979,850.00
Amount paid to others on Borrower"s behalf. $1,000,000.00
$1,000,000.00 RENEW LOAN #7057008-9003
Told Financed Prepaid Finance Charges: $ 20,150.00
$20,000-00 Loan Few
$150.00 Documentation Fee
-------------
Note Principal: $3,000,000.00
FINAL AGREEMENT. Borrower understands that the loan documents signed in
connection with this loan are the final expression of the agreement between
Lender and Borrower and may not be contradicted by evidence of any alleged oral
agreement
DISBURSEMENT AUTHORIZATION. BORROWER HEREBY AUTHORizES LENDER TO DISBURSE ANY
FUNDS PURSUANT TO FACSIMILE WIRE INSTRUCTIONS WHICH BEAR THE SIGNATURE OF ANY
AUTHORIZED SIGNER.
ALLOCATION OF PROCEEDS. THE PROCEEDS OF THIS LOAN WILL BE USED TO RENEW AN
OUTSTANDING REVOLVING LINE OF CREDIT. THE CURRENT OUTSTANDING BALANCE AND THE
AMOUNT AVAILABLE ARE DESCRIBED ABOVE IN THE SECTION ENTITLED AMOUNT PAID TO
OTHERS ON BORROWER'S BEHALF.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN BORROWER"S FINANCIAL
CONDITION AS DISCLOSED IN BORROWER"S MOST RECENT FINANCIAL STATEMENT TO LENDER.
THIS AUTHORIZATION IS DATED JANUARY 6, 1998.
17
BORROWER:
1-800 CONTACTS, INC.
By: /s/ Xxxxxxxx X. Xxxx By: /s/ Xxxx X. Xxxxxxx
-------------------------------- ----------------------------
XXXXXXXX X. XXXX, PRESIDENT XXXX XXXXXXX, VICE PRESENT
18
CORPORATE RESOLUTION TO BORROW
-------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 01-05-1998 07-31-1998 9003 Y 7420 7057008 11049
===============================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
-------------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
================================================================================
I, the undersigned Secretary or Assistant Secretary of 1-800 CONTACTS, INC.
(the "Corporation"), HEREBY CERTIFY that the Corporation is organized and
existing under and by virtue of the laws of the State of Utah as a corporation
for profit, with Its principal office at 00000 XXXXX XXXXXXXXX XX XXXXX, XXXXX
X-000, XXXXXX, XX 00000, and Is duly authorized to transact business in the
State of Utah.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on December 29, 1997, at which a quorum was present and voting,
or by other duty authorized corporate action in Mu of a meeting, the following
resolutions were adopted:
BE IT RESOLVED, that any one (1) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:
NAMES POSITIONS ACTUAL SIGNATURE
----- --------- ----------------
XXXXXXXX X. XXXX PRESIDENT X /s/ Xxxxxxxx Xxxx
----------------------
XXXX XXXXXXX VICE PRESIDENT X /s/ Xxxx X. Xxxxxxx
----------------------
XXXXX XXXXXX CHIEF FINANCIAL OFFICER X /s/ Xxxxx Xxxxxx
----------------------
acting for and on behalf of the Corporation and as Its act and dead be, and
they hereby are, authorized and empowered:
Borrow Money. To borrow from time to time from ZIONS FIRST NATIONAL BANK
("Lender"), on such terms as may be agreed upon between the Corporation and
Lender, such sum or sums of money as In their judgment should be borrowed,
without limitation.
Execute Notes. To execute and deliver to Lender the promissory note or
notes, or other evidence of credit accommodations of the Corporation, on
Lendees forms, at such rates of Interest and on such liens as may be agreed
upon, evidencing the sums of money so borrowed or any indebtedness of the
Corporation to Lender, and also to execute and deliver to Lender one or more
renewals. extensions, modifications, refinancings, consolidations, or
substitutions for one or more of the notes, any portion of the notes, or any
other evIdence of credit accommodations.
Grant Security. To mortgage, pledge, transfer, endorse, hypothecate, or
otherwise encumber and deliver to Lender, as security for the payment of any
loans or credit accommodations so obtained, any promissory notes so executed
(including any amendments to or modifications, renewals, and extensions of
such promissory notes), or any other or further Indebtedness of the
Corporation to Lender at any time owing, however the same may be evidenced,
any property now or hereafter belonging to the Corporation or In which the
Corporation now or hereafter may have an Interest, including without
Imitation all real property and all personal property (tangible or
Intangible) of the Corporation. Such property may be mortgaged, pledged,
transferred, endorsed, hypothecated, or encumbered at the time such loans
are obtained or such indebtedness Is incurred, or at any other time or
times, and may be either In addition to or In lieu of any property
theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or
encumbered.
Execute Security Documents. To execute and delver to Lender the forms of
mortgage. deed of trust, pledge agreement, hypothecation agreement, and
other security agreements and financing statements which may be submitted
by Lender, and which shall evidence the terms and conditions under and
pursuant to which such liens and encumbrances, or any of them, are given;
and also to execute and deliver to Lender any other written Instruments, any
chattel paper, or any other collateral, of any kind or nature, which they
may In their discretion deem reasonably necessary or proper In connection
with or pertaining to the giving of the Bons and encumbrances.
19
01-05-1998 CORPORATE RESOLUTION TO BORROW Page 2
(Continued)
===============================================================================
Negotiate Items. To draw, endorse, and discount with Lender all drafts,
trade acceptance, promissory notes, or other evidences of indebtedness
payable to or belonging to the Corporation In which the Corporation my have
an Interest, and either to receive cash for the same or to cause such
proceeds to be credited to the account of the Corporation with Lender, or to
cause such other disposition of the proceeds dGdvGd therefrom as they may
deem advisable.
Further Acts. In the case of Ones of credit, to designate additional or
alternate Individuals as being authorized to request advances thereunder,
and In all cases, to do and perform such other acts and things, to pay any
and all fees and costs, and to execute and deliver such other documents and
agreements as they may in their designation deem reasonably necessary or
proper In order to carry Into effect the provisions of these Resolutions.
The following person or persons currently are authorized to request advances
and authorize payments under the line of credit unfit Lender receNes written
notice of revocation of their authority, XXXXXXXX X. XXXX, PRESIDENT; XXXX
XXXXXXX, VICE PRESIDENT; and XXXXX XXXXXX, CHIEF FINANCIAL OFFICER.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in fun force and
effed and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such
notice shall not affect any of the Corporation"s agreements or commitments in
effect at the time notice Is given.
BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender' address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change In the name of the Corporation, (b)
change In the assumed business name(s) of the Corporation, (c) change In the
management of the Corporation,, (d) change In ft authorized signer(s), (e)
conversion of the Corporation to a now or different type of business entity, or
(0 change In any other aspect of the Corporation that directly or Indirectly
relates to any agreements between the Corporation and Lender. No change In the
name of the Corporation will take effect until after Lender has been notified.
I FURTHER CERTIFY that the officers, employees, and agents named above are duty
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are In full force and effect and have not been modified or
revoked In any manner whatsoever. The Corporation has no corporate seal. and
therefore, no seal Is affixed to this certificate.
IN TESTIMONY WHEREOF, I have hereunto set my hand on January 5, 1998 and attest
that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED AND ATTESTED TO:
X /s/ Xxxx X. Xxxxxxx
---------------------------------------------------------------
X /s/ Xxxxx Xxxxxx
---------------------------------------------------------------
Note: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, it is advisable to have
this certificate signed by a second Officer or Director of the Corporation.
20
COMMERCIAL GUARANTY
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
Y 7420 7057008 11049
==============================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
------------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
GUARANTOR: XXXX XXXXXXX
00000 XXXXX XXXXXXXXX XXXX XX. #000
XXXXXX, XX 00000
================================================================================
AMOUNT OF GUARANTY. The amount of this Guaranty Is Three Million & 00/100
Dollars ($3,000,000.00).
CONTINUING GUARANTY. For good and valuable consideration, XXXXXXXX X. XXXX
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
ZIONS FIRST NATIONAL BANK ("Lender") or Its order, in legal tender of the
United States of America, the Indebtedness (as that term is defined below) of
I-800 CONTACTS, INC. ("Borrower") to Lender on the terms and conditions set
forth In this Guaranty. The obligations of Guarantor under this Guaranty are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
In this Guaranty:
Borrower. The word "Borrower" means 1-800 CONTACTS, INC..
Guarantor. The word "Guarantor" means XXXXXXXX X. XXXX.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated January 5, 1998.
Indebtedness. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrower's liabilities,
obligations, debts, and Indebtedness to Lender, now existing or hereinafter
Incurred or created, including, without Imitation, all loans, advances,
interest, costs, debts, overdraft indebtedness, credit card indebtedness,
lease obligations, other obligations, and liabilities of Borrower, or any of
them, and any present or future judgments against Borrower, or any of them;
and whether any such Indebtedness is voluntarily or involuntarily Incurred,
due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined; whether Borrower may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surety;
whether recovery on the Indebtedness may be or may become barred or
unenforceable against Borrower for any reason whatsoever and whether the
Indebtedness arises from transactions which may be voidable on account of
infancy, insanity, ultra xxxxx, or otherwise.
Lender. The word "Lender" means ZIONS FIRST NAT10NAL BANK, its successors
and assigns.
Related Documents. The words "Related Documents" mean and Include without
incitation all promise notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust and all other Instruments, agreements and documents, whether now or
hereafter existing, executed In connection with the Indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty
shall not exceed at any one time $3,000,000.00 plus all costs and expenses of
(a) enforcement of this Guaranty and (b) collection and sale of any collateral
securing this Guaranty.
The above limitation on liability Is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative This Guaranty shall not (unless specifically provided below
to the contrary) affect or invalidate any such other guaranties. The liability
of Guarantor will be the aggregate liability of Guarantor under the terms of
this Guaranty and any such other unterminated guaranties.
NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains In force. Guarantor
intends to guarantee at all times the performance and prompt payment when due,
whether at maturity or earlier by reason of acceleration or otherwise, of all
Indebtedness within the limits set forth in the preceding section of this
Guaranty. Accordingly, no payments made upon the Indebtedness will discharge
or diminish the continuing liability of Guarantor In connection with any
remaining portions of the Indebtedness or any of the Indebtedness which
subsequently arises or is thereafter Incurred or contracted.
21
01-05-1998 COMMERCIAL GUARANTY Page 2
(Continued)
================================================================================
DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue In full force until all Indebtedness incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed in full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantees written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
desIgnate In writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not Include Indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all Indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or modifications
of the Indebtedness An renewals, extensions, substitutions, and modifications
of the Indebtedness granted after Guarantor's revocation, are contemplated
under this Guaranty and, specifically will not be considered to be new
Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or Incapacity of
Guarantor, regardless of Lender's actual notice of Guarantor's death. Subject
to the foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty In the same manner In which
Guarantor might have terminated It and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not effect the
liability of any remaining Guarantors under this Guaranty. It Is anticipated
that fluctuations may occur In the aggregate amount of Indebtedness covered by
this Guaranty, and it is specifically acknowledged and agreed by Guarantor that
reductions in the amount of Indebtedness, even to zero dollars ($0.00), prior
to written revocation of this Guaranty by Guarantor shall not constitute a
termination of this Guaranty. This Guaranty Is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the Indebtedness guaranteed may
from time to time be zero dollars ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, without notice or demand and without
lessening Guarantor's liability under this Guaranty, from time to time: (a)
prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to after, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
including increases and decreases of the rate of Interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to xxx, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness; (f) to
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion
may determine; (g) to sell, transfer, assign, or grant participations in all or
any part of the Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guarantor; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guaranty has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no litigation, claim, investigation
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any
22
01-05-1998 COMMERCIAL GUARANTY Page 3
(Continued)
================================================================================
kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy with Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.
Guarantor also waives and agrees not to assert or take advantage of (a) any
right (including the right, if any, under Utah's one-action rule as set forth
in Utah Code Annotated, 1953, Section 78-37-1) to require Lender to proceed
against or exhaust any security held by Lender at any time or to pursue any
other remedy in Lender's power before proceeding against Guarantor; (b) the
release or surrender of any security held for the payments of the Indebtedness;
or (c) any defense based upon an election of remedies (including, if available,
an election of remedies to proceed by non-judicial foreclosure) by Lender which
destroys or otherwise impairs the subrogation rights of Guarantor or the right
of Guarantor to proceed against Borrower for reimbursement, or both.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account of
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all XXX, Xxxxx, and trust accounts.
Every such security interest and right of set off may be exercised without
demand upon or notice to Guarantor. No security interest or right of setoff
shall be deemed to have been waived by any act or conduct on the part of Lender
or by any neglect to exercise such right of setoff or to enforce such security
interest or by any delay in doing so. Every right of setoff and security shall
continue in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing
executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may nor or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of the claims of both Lender and Guarantor shall be
paid to Lender and shall be first applied by Lender to the Indebtedness of
Borrower to Lender. Guarantor does hereby assign to Lender all claims which it
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment in legal
tender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financial statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment to
this Guaranty shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Utah. If there is a lawsuit, Guarantor agrees
upon Lender's request to submit to the jurisdiction of the courts of SALT
LAKE County,
23
01-05-1998 COMMERCIAL GUARANTY Page 4
(Continued)
================================================================================
State of Utah. Subject to the provisions on arbitration, this Guaranty shall
be governed by and construed in accordance with the laws of the Stale of Utah.
ARBITRATION DISCLOSURES:
1. AS USED IN THIS ARBITRATION SECTION, THE TERM "PARTIES" MEANS THE
LENDER, ANY OTHER SIGNERS HERETO AND PERMITTED SUCCESSORS AND ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE PARTIES AND SUBJECT
TO ONLY VERY LIMITED REVIEW BY A COURT.
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING
THEIR RIGHT TO A JURY TRIAL.
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT
FROM COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK
MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED.
6. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE
AMERICAN ARBITRATION ASSOCIATION.
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, Inducting but
not limited to those arising out of or relating to this Agreement or any
agreements or Instruments relating hereto or delivered In connection
herewith, and including but not limited to a claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration In accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted in Salt Lake City, Utah. The arbitrator(s) shall have the
qualifications set forth in subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action
brought by a party shall apply to any arbitration or reference proceedings
hereunder.
(b) In any judicial action or proceeding arising out of or relating to
this Agreement or any agreements or Instruments relating hereto or
delivered in connection herewith, including but not limited to a claim
based on or arising from an alleged tort, If the controversy or claim Is
not submitted to arbitration as provided and limited in subparagraph (a)
hereto, al decisions of fact and law shall be determined by a reference in
accordance with Rule 53 of the Federal Rules of Civil Procedure or Rule 53
of the Utah Rules of Civil Procedure or other comparable, applicable
reference procedure. The parties shall designate to the court the
refers(s) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored arbitration proceedings. The referee(s) shall have
the qualifications set forth in subparagraph (c) hereto.
(c) The arbitrator(s) or referee(s) shall be selected in accordance with
the rules of the American Arbitration Association from panels maintained
by the Association. A single arbitrator or referee shall be knowledgeable
in the subject matter of the dispute. Where three arbitrators or referees
conduct an arbitration or reference proceeding, the claim shall be decided
by a majority vote of the three arbitrators or referees, at least one of
whom must be knowledgeable in the subject matter of the dispute and at
least one of whom must be a practicing attorney. The arbitrator(s) or
referee(s) shall award recovery of all costs and fees including reasonable
attorneys" fees, administrative fees, arbitrators" few, and court costs).
The arbitrator(s) or referee(s) also may grant provisional or ancillary
remedies such as, for example, injunctive relief, attachment, or the
appointment of a receivers either during the pendency of ft arbitration or
reference proceeding or as part of the arbitration or reference award.
(d) Judgment upon an arbitration or reference award may be entered in any
court having jurisdiction, subject to the following arbitration: the
arbitration or reference award is binding upon the parties only If the
amount does not exceed Four Million Dollars ($4,000,000.00); if the award
exceeds that limit. either party may commence legal action for a court
trial de novo. Such legal action must be filed within thirty (30) days
following the date of the arbitration or reference award; If such legal
action Is not filed within that time period, the amount of the arbitration
or reference award shall be binding. The computation of the total amount
of an arbitration or reference award shall include amounts awarded for
arbitration fees, attorneys' fees, interest, and all other related costs.
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01-05-1998 COMMERCIAL GUARANTY Page 5
(Continued)
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(e) At the Lender's option, foreclosure under a deed of trust or mortgage
may be accomplished either by exercise of a power of sale under the deed
of trust or by judicial foreclosure. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary
remedy shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the controversy or claim to arbitration If any
other party contests such action for judicial relief.
(f) Notwithstanding the applicability of other law to any other provision
of this Agreement, the Federal Arbitration Act, 9 U.S.C. Section 1 et
seq., shall apply to the construction and Interpretation of this
arbitration paragraph.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, including reasonable attorneys' fees and Lender's legal
expenses, incurred In connection with the enforcement of this Guaranty. Lender
may pay someone else to help enforce this Guaranty, and Guarantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lender's
reasonable attorneys' fees and legal expenses whether or not a salaried
employee of Lender and whether or not there Is a lawsuit, including reasonable
attorneys' fees and legal expenses for bankruptcy proceedings (and inducing
efforts to modify or vacate any automatic stay or injunction), appeals, and any
anticipated postjudgment collection services. Guarantor also shall pay all
court costs and such additional fees as may be directed by the Court.
Notices. All notices required to be given by either party to the other under
this Guaranty shall be in writing, may be sent by telefacsimile (unless
otherwise required by law), and, except for revocation notices by Guarantor,
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier, or when deposited In the United States mail,
first class postage prepaid, addressed to the party to whom the notice Is to be
given at the address shown above or to such other addresses as either party may
designate to the other in writing. All revocation notices by Guarantor shall
be In writing and shall be effective only upon delivery to Lender as provided
above In the section tilled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors.
For notice purposes, Guarantor agrees to keep Lender informed at all times of
Guarantor's current address.
Interpretation. In all cases where there is more than one Borrower or
Guarantor, then all words used in this Guaranty in the singular shall be deemed
to have been used in the plural where the context and construction so require;
and where there Is more khan one Borrower named in this Guaranty or when this
Guaranty is executed by more than one Guarantor, the words "Borrower, and
"Guarantor" respectively shall mean all and any one or more of them. The words
"Guarantor, "Borrower," and "Lender" include the heirs, successors, assigns,
and transferees of each of them. Caption headings in this Guaranty are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Guaranty. If a court of competent Jurisdiction finds any
provision of this Guaranty to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances, and all provisions of
this Guaranty in all other respects shall remain valid and enforceable. If any
one or more of Borrower or Guarantor are corporations or partnerships, it is
not necessary for Lender to inquire into the powers of Borrower or Guarantor or
the officers, directors, partners, or agents acting or purporting to act on
their behalf, and any Indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Guaranty shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Guaranty. No prior waiver by
Lender, nor any course of dealing between Lender and Guarantor, shall
constitute a waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Guaranty, the granting of such consent by lender in
any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
TAX RETURNS. GUARANTOR SHALL PROVIDE TO LENDER COPIES OF GUARANTOR'S ANNUAL
FEDERAL INCOME TAX RETURNS, INCLUDING ALL SCHEDULES, WITHIN 15 DAYS OF WHEN
SUCH RETURNS ARE FILED.
FINANCIAL STATEMENTS. GUARANTOR SHALL PROVIDE TO LENDER GUARANTOR'S ANNUAL
PERSONAL FINANCIAL STATEMENT WITHIN 30 DAYS OF THE END OF EACH CALENDAR YEAR,
SUCH STATEMENTS SHALL BE IN FORM AND CONTENT ACCEPTABLE TO LENDER.
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01-05-1998 COMMERCIAL GUARANTY Page 6
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EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING REAL ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED JANUARY 5, 1998.
GUARANTOR:
X /s/ Xxxx Xxxxxxx
-------------------------
XXXX XXXXXXX
26
COMMERCIAL GUARANTY
--------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
Y 7420 7057008 11049
================================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
--------------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
GUARANTOR: XXXXXXXX X. XXXX
00000 XXXXX XXXXX XXXX XXXX
XXXXXX, XX 00000
================================================================================
AMOUNT OF GUARANTY. The amount of this Guaranty Is Three Million & 00/100
Dollars ($3,000,000.00).
CONTINUING GUARANTY. For good and valuable consideration, XXXX XXXXXXX
("Guarantor") absolutely and unconditionally guarantees and promises to pay to
ZIONS FIRST NATIONAL BANK (Lender") or Its order, In legal tender of the United
States of America, the Indebtedness (as that term Is defined below) of 1-800
CONTACTS, INC. ("Borrower") to Lender on the terms and conditions set forth In
this Guaranty. The obligations of Guarantor under this Guaranty are
continuing.
DEFINITIONS. The following words shall have the following meanings when used
In this Guaranty:
Borrower. The word "Borrower" means I-800 CONTACTS, INC..
Guarantor. The word "Guarantor" means XXXX XXXXXXX.
Guaranty. The word "Guaranty" means this Guaranty made by Guarantor for the
benefit of Lender dated January 5, 1998.
Indebtedness. The word "Indebtedness" is used in its most comprehensive
sense and means and includes any and all of Borrowees liabilities,
obligations, debts, and indebtedness to Lender, now existing or hereinafter
Incurred or created, including, without limitation, all loans, advances,
interest, costs, debts, overdraft Indebtedness, credit card indebtedness,
lease obligations, other obligations, and liabilities of Borrower, or any of
them, and any present or future judgments against Borrower, or any of them;
and whether any such Indebtedness is voluntarily or involuntarily incurred,
due or not due, absolute or contingent, liquidated or unliquidated,
determined or undetermined; whether Borrower may be liable individually or
jointly with others, or primarily or secondarily, or as guarantor or surely;
whether recovery on the Indebtedness may be or may become barred or
unenforceable against Borrower for any reason whatsoever, and whether the
Indebtedness arises from transactions which may be voidable on account of
Infancy, insanity, ultra xxxxx, or otherwise.
Lender. The word "Lender" means MONS FIRST NATIONAL BANK, its successors
and assigns.
Related Documents. The words "Related Documents" mean and Include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements. guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
MAXIMUM LIABILITY. The maximum liability of Guarantor under this Guaranty
shall not exceed at any one lIne $3,000,000.00 plus all costs and expenses of
(a) enforcement of this Guaranty and (b) collection and sale of any collateral
securing this Guaranty.
The above limitation on liability Is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided
below to the contrary) affect or Invalidate any such other guaranties. The
liability of Guarantor will be the aggregate liability of Guarantor under the
term of this Guaranty and any such other unterminated guaranties.
NATURE OF GUARANTY. Guarantees liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains In force. Guarantor Intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all Indebtedness
within the limits set forth In the preceding section of this Guaranty.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter Incurred or contracted.
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1-05-1998 COMMERCIAL GUARANTY Page 2
(Continued)
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DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor
or to Borrower, and will continue In full force until all Indebtedness Incurred
or contracted before receipt by Lender of any notice of revocation shall have
been fully and finally paid and satisfied and all other obligations of
Guarantor under this Guaranty shall have been performed In full. If Guarantor
elects to revoke this Guaranty, Guarantor may only do so in writing.
Guarantees written notice of revocation must be mailed to Lender, by certified
mail, at the address of Lender listed above or such other place as Lender may
designate In writing. Written revocation of this Guaranty will apply only to
advances or new Indebtedness created after actual receipt by Lender of
Guarantor's written revocation. For this purpose and without limitation, the
term "new Indebtedness" does not include indebtedness which at the time of
notice of revocation is contingent, unliquidated, undetermined or not due and
which later becomes absolute, liquidated, determined or due. This Guaranty
will continue to bind Guarantor for all indebtedness incurred by Borrower or
committed by Lender prior to receipt of Guarantor's written notice of
revocation, Including any extensions, renewals, substitutions or modifications
of the Indebtedness. All renewals, extensions, substitutions, and modifications
of the Indebtedness granted after Guarantor's revocation, are contemplated
under this Guaranty and, specifically will not be considered to be new
Indebtedness. This Guaranty shall bind the estate of Guarantor as to
Indebtedness created both before and after the death or Incapacity of
Guarantor, regardless of Lender"s actual notice of Guarantor's death. Subject
to the foregoing, Guarantors executor or adagnistrator or other legal
representative may terminate this Guaranty In the same manner in which
Guarantor might have terminated It and with the same effect. Release of any
other guarantor or termination of any other guaranty of the Indebtedness shall
not affect the liability of Guarantor under this Guaranty. A revocation
received by Lender from any one or more Guarantors shall not affect the
liability of any remaining Guarantors under this Guaranty. It Is anticipated
that fluctuations may occur In the aggregate amount of Indebtedness covered by
this Guaranty, and it is specifically acknowledged and agreed by Guarantor that
reductions In the amount of Indebtedness, even to zero dollars ($0.00), prior
to written revocation of this Guaranty by Guarantor shall not constitute a
termination of this Guaranty. This Guaranty Is binding upon Guarantor and
Guarantor's heirs, successors and assigns so long as any of the guaranteed
Indebtedness remains unpaid and even though the indebtedness guaranteed may
from time to time be zero dollars ($0.00).
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either
before or after any revocation hereof, Without notice or demand and without
lessening Guarantor's liability under this Guaranty, from time to time: (a)
prior to revocation as set forth above, to make one or more additional secured
or unsecured loans to Borrower, to lease equipment or other goods to Borrower,
or otherwise to extend additional credit to Borrower; (b) to after, compromise,
renew, extend, accelerate, or otherwise change one or more times the time for
payment or other terms of the Indebtedness or any part of the Indebtedness,
Including Increases and decreases of the rate of interest on the Indebtedness;
extensions may be repeated and may be for longer than the original loan term;
(c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to xxx, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Lender may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness; (f) to
apply such security and direct the order or manner of sale thereof, including
without limitation, any nonjudicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its discretion
may determine; (g) to sell, transfer, assign, or grant participations in all or
any part of the Indebtedness; and (h) to assign or transfer this Guaranty in
whole or in part.
GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guarantor; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guaranty has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no litigation, claim, investigation
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis information regarding Borrower's financial condition.
Guarantor agrees to keep adequately informed from such means of any facts,
events, or circumstances which might in any way affect Guarantor's risks under
this Guaranty, and Guarantor further agrees that, absent a request for
information, Lender shall have no obligation to disclose to Guarantor any
information or documents acquired by Lender in the course of its relationship
with Borrower.
GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with
28
1-05-1998 COMMERCIAL GUARANTY Page 3
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the creation of new or additional loans or obligations; (c) to resort for
payment or to proceed directly or at once against any person, including
Borrower or any other guarantor; (d) to proceed directly against or exhaust any
collateral held by Lender from Borrower, any other guarantor, or any other
person; (e) to give notice of the terms, time, and place of any public or
private sale of personal property security held by Lender from Borrower or to
comply with any other applicable provisions of the Uniform Commercial Code; (f)
to pursue any other remedy with Lender's power; or (g) to commit any act or
omission of any kind, or at any time, with respect to any matter whatsoever.
Guarantor also waives and agrees not to assert or take advantage of (a) any
right (including the right, if any, under Utah's one-action rule as set forth
in Utah Code Annotated, 1953, Section 78-37-1) to require Lender to proceed
against or exhaust any security held by Lender at any time or to pursue any
other remedy in Lender's power before proceeding against Guarantor; (b) the
release or surrender of any security held for the payments of the Indebtedness;
or (c) any defense based upon an election of remedies (including, if available,
an election of remedies to proceed by non-judicial foreclosure) by Lender which
destroys or otherwise impairs the subrogation rights of Guarantor or the right
of Guarantor to proceed against Borrower for reimbursement, or both.
Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.
GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.
LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account of
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all XXX, Xxxxx, and trust accounts.
Every such security interest and right of set off may be exercised without
demand upon or notice to Guarantor. No security interest or right of setoff
shall be deemed to have been waived by any act or conduct on the part of Lender
or by any neglect to exercise such right of setoff or to enforce such security
interest or by any delay in doing so. Every right of setoff and security shall
continue in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing
executed by Lender.
SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may nor or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of
creditors, by voluntary liquidation, or otherwise, the assets of Borrower
applicable to the payment of the claims of both Lender and Guarantor shall be
paid to Lender and shall be first applied by Lender to the Indebtedness of
Borrower to Lender. Guarantor does hereby assign to Lender all claims which it
may have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Lender full payment in legal
tender of the Indebtedness. If Lender so requests, any notes or credit
agreements now or hereafter evidencing any debts or obligations of Borrower to
Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financial statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are part of
this Guaranty:
AMENDMENTS. This Guaranty, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Guaranty. No alteration of or amendment to
this Guaranty shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. This Guaranty has been delivered to Lender and accepted
by Lender in the State of Utah. If there is a lawsuit, Guarantor agrees
upon Lender"s request to submit to the jurisdiction of the courts of SALT
LAKE County, State of Utah. Subject to the provisions on arbitration,
this Guaranty shall be governed by and construed in accordance with the
laws of the State of Utah.
ARBITRATION DISCLOSURES:
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1-05-1998 COMMERCIAL GUARANTY Page 4
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1. AS USED IN THIS ARBITRATION SECTION, THE TERM "PARTIES" MEANS
THE LENDER, ANY OTHER SIGNERS HERETO AND PERMITTED SUCCESSORS AND
ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE PARTIES AND
SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT,
INCLUDING THEIR RIGHT TO A JURY TRIAL.
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND
DIFFERENT FROM COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE FACTUAL
FINDINGS OR LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO
SEEK MODIFICATION OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED.
6. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR
WAS AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY
OR THE AMERICAN ARBITRATION ASSOCIATION.
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, Including but
not It miled to those arising out of or retailing to this Agreement or any
agreements or instruments relating hereto or delivered In connection
herewith, and including but not limited to a claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted In Salt Lake City, Utah. The arbitrator(s) shall have the
qualifications set forth in subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable In a judicial action
brought by a party shall apply to any arbitration or reference proceedings
hereunder.
(b) In any judicial action or proceeding arising out of or relating to
this Agreement or any agreements or Instruments relating hereto or
delivered in connection herewith, including but not limited to a claim
based on or arising from an alleged tort, If the controversy or claim is
not submitted to arbitration as provided and limited In subparagraph (a)
hereto, all decisions of fact and law shall be determined by a reference
in accordance with Rule 63 of the Federal Rules of Civil Procedure or Rule
53 of the Utah Rules of Civil Procedure or other comparable, applicable
reference procedure. The parties shall designate to the court the
referee(s) selected under the auspices of the American Arbitration
Association in the same manner as arbitrators are selected in
Association-sponsored arbitration proceedings. The referee(s) shall have
the qualifications set forth in subparagraph (c) hereto.
(c) The arbitrator(s) or referee(s) shall be selected In accordance with
the rules of the American Arbitration Association from panels maintained
by the Association. A single arbitrator or referee shall be knowledgeable
In the subject matter of the dispute. Where three arbitrators or referees
conduct an arbitration or reference proceeding, the claim shall be decided
by a majority vote of the three arbitrators or referees, at least one of
whom must be knowledgeable In the subject matter of the dispute and at
least one of whom must be a practicing attorney. The arbitrator(s) or
referee(s) shall award recovery of all costs and fees (Including
reasonable attorneys" fees, administrative fees, arbitrators" fees, and
court costs). The arbitrator(s) or referee(s) also may grant provisional
or ancillary remedies such as, for example, Injunctive relief,
attachment, or the appointment of a receiver, either during the pendency
of the arbitration or reference proceeding or as part of the arbitration
or reference award.
(d) Judgment upon an arbitration or reference award may be entered In any
court having jurisdiction, subject to the following limitation: the
arbitration or reference award is binding upon the parties only if the
amount does not exceed Four Million Dollars ($4,000,000.00); If the award
exceeds that limit, either party may commence legal action for a court
trial de novo. Such legal action must be filed within thirty (30) days
following the date of the arbitration or reference award; if such legal
action is not filed within that time period, the amount of the arbitration
or reference award shall be binding. The computation of the total amount
of an arbitration or reference award shall include amounts awarded for
arbitration fees, attorneys' fees, interest, and all other related costs.
(e) At the Lendees option, foreclosure under a deed of trust or mortgage
may be accomplished either by exercise of a power of sale under the deed
of trust or by judicial foreclosure. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary
remedy shall not constitute a waiver of the right of any party, including
the plaintiff, to submit the controversy or claim to arbitration if any
other party contests such action for judicial relief.
30
1-05-1998 COMMERCIAL GUARANTY Page 5
(Continued)
================================================================================
(f) Notwithstanding the applicability of other law to any other provision
of this Agreement, the Federal Arbitration Act, 9 U.S.C. Section 1 et
seq., shall apply to the construction and interpretation of this
arbitration paragraph.
Attorneys' Fees; Expenses. Guarantor agrees to pay upon demand all of Lender's
costs and expenses, Including reasonable attorneys' fees and Lender's legal
expenses, Incurred in connection with the enforcement of this Guaranty. Lender
may pay someone else to help enforce this Guaranty, and Guarantor shall pay the
costs and expenses of such enforcement. Costs and expenses include Lender's
reasonable attorneys' fees and legal expenses whether or not a salaried
employee of Lender and whether or not there is a lawsuit, inducing reasonable
attorneys' fees and legal expenses for bankruptcy proceedings (and Including
efforts to modify or vacate any automatic stay or Injunction), appeals, and any
anticipated post-judgment collection services. Guarantor also shall pay all
court costs and such additional fees as may be directed by the court.
Notices. An notices required to be given by either party to the other under
this Guaranty shall be In writing, may be sent by telefacsimile (unless
otherwise required by law), and, except for revocation notices by Guarantor,
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier, or when deposited In the United States mail,
first class postage prepaid, addressed to the party to whom the notice is to be
given at the address shown above or to such other addresses as either party may
designate to the other In writing. All revocation notices by Guarantor shall
be in writing and shall be effective only upon delivery to Lender as provided
above in the section titled "DURATION OF GUARANTY." If there is more than one
Guarantor, notice to any Guarantor will constitute notice to all Guarantors.
For notice purposes, Guarantor agrees to keep Lender Informed at all times of
Guarantor's current address.
Interpretation. In all cases where there Is more than one Borrower or
Guarantor, then all words used In this Guaranty in the singular shall be deemed
to have been used In the plural where the context and construction so require;
and where there Is more than one Borrower named In this Guaranty or when this
Guaranty Is executed by more than one Guarantor, the words "Borrower" and
"Guarantor" respectively shall mean all and any one or more of them. The words
"Guarantor," "Borrower," and "Lender" Include the heirs, successors, assigns,
and transferees of each of them. Caption headings In this Guaranty are for
convenience purposes only and are not to be used to Interpret or define the
provisions of this Guaranty. If a court of competent jurisdiction finds any
provision of this Guaranty to be Invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision Invalid or
unenforceable as to any other persons or circumstances, and all provisions of
this Guaranty In all other respects shall remain valid and enforceable. If any
one or more of Borrower or Guarantor are corporations or partnerships, it is
not necessary for Lender to inquire into the powers of Borrower or Guarantor or
the officers, directors, partners, or agents acting or purporting to act on
their behalf, and any Indebtedness made or created in reliance upon the
professed exercise of such powers shall be guaranteed under this Guaranty.
WAIVER. Lender shall not be deemed to have waived any rights under this
Guaranty unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Guaranty shall not prejudice or constitute a waiver
of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Guaranty. No prior waiver by
Lender, nor any course of dealing between Lender and Guarantor, shall
constitute a waiver of any of Lender's rights or of any of Guarantor's
obligations as to any future transactions. Whenever the consent of Lender
is required under this Guaranty, the granting of such consent by lender in
any instance shall not constitute continuing consent to subsequent
instances where such consent is required and in all cases such consent may
be granted or withheld in the sole discretion of Lender.
TAX RETURNS. GUARANTOR SHALL PROVIDE TO LENDER COPIES OF GUARANTOR'S ANNUAL
FEDERAL INCOME TAX RETURNS, INCLUDING ALL SCHEDULES, WITHIN 15 DAYS OF WHEN
SUCH RETURNS ARE FILED.
FINANCIAL STATEMENTS. GUARANTOR SHALL PROVIDE TO LENDER GUARANTOR'S ANNUAL
PERSONAL FINANCIAL STATEMENT WITHIN 30 DAYS OF THE END OF EACH CALENDAR YEAR,
SUCH STATEMENTS SHALL BE IN FORM AND CONTENT ACCEPTABLE TO LENDER.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING REAL ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED JANUARY 5, 1998.
GUARANTOR:
X /s/ Xxxxxxxx X. Xxxx
----------------------------
XXXXXXXX X. XXXX
31
SUBORDINATION AGREEMENT
-------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
$3,000,000.00 01-05-1998 07-31-1998 9003 Y 7420 7057008 11049
===============================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
-------------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
XXXX XXXX XXXX, XX 00000
CREDITOR: XXXXXX X. XXXXXXXX
000 XXXX XXXXXXX XXXXXX
XXXXXXX, XX 00000
================================================================================
THIS SUBORDINATION AGREEMENT Is entered Into among 1-800 CONTACTS, INC.
("Borrower"), whose address is 00000 XXXXX XXXXXXXXX XX XXXXX, XXXXX X-000,
XXXXXX, XX 00000; ZIONS FIRST NATIONAL BANK ("Lender"), whose address is #0
XXXXX XXXX XXXXXX, X.X. XXX 00000, XXXX XXXX XXXX, XX 00000; and XXXXXX X.
XXXXXXXX ("Creditor"), whose address is 000 XXXX XXXXXXX XXXXXX, XXXXXXX, XX
00000. As of this date, January 6, 1998, Borrower is indebted to Creditor in
the aggregate amount of One Million Seven Hundred Thirteen Thousand Fifteen &
00/100 Dollars ($1,713,015.00). This amount is the total indebtedness of every
kind from Borrower to Creditor. Borrower and Creditor each want Lender to
provide financial accommodations to Borrower in the form of (a) new credit or
loan advances, (b) an extension of time to pay or other compromises regarding
all or part of Borrower"s present Indebtedness to Lender, or (c) other benefits
to Borrower. Borrower and Creditor each represent and acknowledge to Lender
that Creditor will benefit as a result of these financial accommodations from
Lender to Borrower, and Creditor acknowledges receipt of valuable consideration
for entering into this Agreement. Based on the representations and
acknowledgments contained In this Agreement, Creditor and Borrower agree with
Lender as follows:
DEFINITIONS. The following words shag have the following meanings when used In
this Agreement. Terms no( otherwise defined in this Agreement shall have the
meanings attributed to such terms In the Uniform Commercial Code. All
references to dollar amounts shag mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Subordination Agreement, as this
Subordination Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Subordination
Agreement from time to time.
Borrower. The word "Borrower" means I-800 CONTACTS, INC..
Creditor. The word "Creditor" means XXXXXX X. XXXXXXXX.
Lender. The word "Lender" means ZIONS FIRST NATIONAL BANK, its successors
and assigns.
Security Interest. The words "Security Interest" mean and Include without
Initiation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien Interest whatsoever,
whether created by law, contract, or otherwise.
Subordinated Indebtedness. The words "Subordinated Indebtedness" mean and
Include without limitation all present and future Indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from Borrower to Creditor. The term "Subordinated
Indebtedness" is used in its broadest sense and includes without limitation
all principal, all interest, all costs and reasonable attorneys' fees, all
sums paid for the purpose of protecting the rights of a holder of security
(such as a secured party paying for insurance on collateral If the owner
falls to do so), all contingent obligations of Borrower (such as a
guaranty), and all other obligations, secured or unsecured, of any nature
whatsoever.
Superior Indebtedness. The words "Superior Indebtedness" mean and include
without limitation all present and future indebtedness, obligations,
liabilities, claims, rights, and demands of any kind which may be now or
hereafter owing from Borrower to Lender. The term "Superior Indebtedness"
is used in its broadest sense and includes without limitation all
principal, all interest, all costs and reasonable attorneys' fees, all sums
paid for the purpose of protecting Lender's rights in security (such as
paying for insurance on collateral if the owner falls to do so), all
contingent obligations of Borrower (such as a guaranty), all obligations
arising by reason of Borrower"s accounts with Lender (such as an overdraft
on a checking account), and all other obligations of Borrower to Lender,
secured or unsecured, of any native whatsoever.
SUBORDINATION. All Subordinated Indebtedness of Borrower to Creditor is and
shall be subordinated in all respects to all Superior Indebtedness of Borrower
to Lender. If Creditor holds one or more Security Interests, whether now
existing or hereafter acquired. In any of Borrower"s real property or personal
property, Creditor also subordinates all its Security Interests to all Security
Interests hold by Lender, whether the Lender's Security Interest or Interests
exist now or are acquired later.
32
01-05-1998 SUBORDINATION AGREEMENT Page 2
(Continued)
================================================================================
PAYMENTS TO CREDITOR. Except as provided below, Borrower will not make and
Creditor will not accept, at any time while any Superior Indebtedness Is owing
to Lender, (a) any payment upon any Subordinated Indebtedness, (b) any advance,
transfer, or assignment of assets to Creditor in any form whatsoever that would
reduce at any time or in any way the amount of Subordinated Indebtedness, or
(c) any transfer of any assets as security for the Subordinated Indebtedness.
Notwithstanding the foregoing, Borrower may make regularly scheduled payments
of interest only to Creditor so long as Borrower is not in default under any
agreement between Lender and Borrower. Creditor may not accelerate any amounts
owed to Creditor without Lender's prior written consent.
In the event of any distribution, division, or application, whether partial or
complete, voluntary or Involuntary, by operation of law or otherwise, of all or
any part of Borrower's assets, or the proceeds of Borrower's assets, in
whatever form, to creditors of Borrower or upon any Indebtedness of Borrower,
whether by reason of the liquidation, dissolution or other winding-up of
Borrower, or by reason of any execution sale, receivership, Insolvency, or
bankruptcy proceeding, assignment for the benefit of creditors, proceedings for
reorganization, or readjustment of Borrower or Borrower's properties, then and
in such event, (a) the Superior Indebtedness shall be paid In full before any
payment Is made upon the Subordinated Indebtedness, and (b) all payments and
distributions, of any kind or character and whether In cash, property, or
securities, which shall be payable or deliverable upon or in respect of the
Subordinated Indebtedness shag be paid or delivered directly to Lender for
application In payment of the amounts then due on the Superior indebtedness
until the Superior Indebtedness shall have been paid in full.
In order that Lender may establish Its right to prove claims and recover for
its own account dividends based on the Subordinated Indebtedness, Creditor does
hereby assign all its right, title, and interest in such claims to Lender.
Creditor further agrees to supply such information and evidence, provide access
to and copies of such of Creditor"s records as may pertain to the Subordinated
Indebtedness, and execute such Instruments as may be required by Lender to
enable Lender to enforce all such claims and collect all dividends, payments,
or other disbursements which may be made on account of the Subordinated
Indebtedness. For such purposes, Creditor hereby irrevocably authorizes Lender
in its discretion to make and present for or on behalf of Creditor such proofs
of claims on account of the Subordinated Indebtedness as Lender may deem
expedient and proper and to vote such claims in any such proceeding and to
receive and collect any and all dividends, payments, or other disbursements
made thereon in whatever form the same may be paid or issued and to apply the
same on account of the Superior Indebtedness.
Should any payment, distribution, security, or proceeds thereof be received by
Creditor at any time on the Subordinated Indebtedness contrary to the terms of
this Agreement, Creditor immediately will deliver the same to Lender in
precisely the form received (except for the endorsement or assignment of
Creditor where necessary), for application on or to secure the Superior
Indebtedness, whether it is due or not due, and until so delivered the same
shall be held in trust by Creditor as property of Lender. In the event
Creditor fails to make any such endorsement or assignment, Lender, or any of
its officers on behalf of Lender, is hereby irrevocably authorized by Creditor
to make the same.
CREDITOR'S NOTES. Creditor agrees to deliver to Lender, at Lender's request,
all notes of Borrower to Creditor, or other evidence of the Subordinated
Indebtedness, now held or hereafter acquired by Creditor, while this Agreement
remains in effect. At Lender's request, Borrower also will execute and deliver
to Creditor a promissory note evidencing any book account or claim nor or
hereafter owed by Borrower to Creditor, which note also shall be delivered by
Creditor or Lender. Creditor agrees not to sell, assign, pledge or otherwise
transfer any of such notes except subject to all the terms and conditions of
this Agreement.
CREDITOR'S REPRESENTATIONS AND WARRANTIES. Creditor represents and warrants to
Lender that: (a) no representations or agreements of any kind have been made
to Creditor which would limit or qualify in any way the terms of this
Agreement; (b) this Agreement is executed at Borrower's request and not at the
request of Lender; (c) Lender has made no representation to Creditor as to the
creditworthiness of Borrower; and (d) Creditor has established adequate means
of obtaining from Borrower on a continuing basis information regarding
Borrower's financial condition. Creditor agrees to keep adequately informed
from such means of any facts, events, or circumstances which might in any way
affect Creditor's risks under this Agreement, and Creditor further agrees that
Lender shall have no obligation to disclose to Creditor Information or material
acquired by Lender in the course of its relationship with Borrower.
CREDITOR'S WAIVERS. Creditor waives any right to require Lender: (a) to make,
extend, renew, or modify any loan to Borrower or to grant any other financial
accommodations to Borrower whatsoever; (b) to make any presentment, protest,
demand, or notice of any kind, including notice of any nonpayment of the
Superior Indebtedness or of any nonpayment related to any Security Interests,
or notice of any action or nonaction on the part of Borrower, Lender, any
surety, endorser, or other guarantor in connection with the Superior
Indebtedness, or in connection with the creation of new or additional Superior
Indebtedness; (c) to resort for payment or to proceed directly or at once
against any person, including Borrower; (d) to proceed directly against or
exhaust any Security Interests held by Lender from Borrower, any other
guarantor, or any other person; (e) to give notice of the terms, time, and
place of any public or private sale of personal property security held by
Lender from Borrower or to comply with any other applicable provisions of the
Uniform Commercial Code; (f) to pursue any other remedy within Lender's power;
or (g) to commit any act or omission of any kind, at any time, with respect to
any matter whatsoever.
33
01-05-1998 SUBORDINATION AGREEMENT Page 3
(Continued)
================================================================================
LENDER'S RIGHTS. Lender may take or omit any and all actions with respect to
the Superior Indebtedness or any Security Interests for the Superior
Indebtedness without affecting whatsoever any of Lender's rights under this
Agreement. In particular, without limitation, Lender may, without notice of
any kind to Creditor, (a) make one or more additional secured or unsecured
loans to Borrower; (b) repeatedly alter, compromise, renew, extend, accelerate,
or otherwise change the time for payment or other terms of the Superior
Indebtedness or any part thereof, including increases and decreases of the rate
of interest on the Superior Indebtedness; extensions may be repeated and may be
for longer than the original loan term; (c) take and hold Security Interests
for the payment of the Superior Indebtedness, and exchange, enforce, waive, and
release any such Security Interests, with or without the substitution of new
collateral; (d) release, substitute, agree not to xxx, or deal with any one or
more of Borrower's sureties, endorsers, or guarantors on any terms or manner
Lender chooses; (e) determine how, when and what application of payments and
credits, shall be made on the Superior Indebtedness; (f) apply such security
and direct the order or manner of sale thereof, as Lender in its discretion may
determine and (g) assign this Agreement in whole or in part.
DEFAULT BY BORROWER. If Borrower becomes insolvent or bankrupt, this Agreement
shall remain in full force and effect. In the event of a corporate
reorganization or corporate arrangement of Borrower under the provisions of the
Bankruptcy Code, as amended, this Agreement shall remain in full force and
effect and the court having jurisdiction over the reorganization or arrangement
is hereby authorized to preserve such priority and subordination in approving
any such plan of reorganization or arrangement. Any default by Borrower under
the terms of the Subordinated Indebtedness also shall be a default under the
terms of the Superior Indebtedness to Lender.
DURATION AND TERMINATION. This Agreement will take effect when received by
Lender, without the necessity of any acceptance by Lender, in writing or
otherwise, and will remain in full force and effect until Creditor shall notify
Lender in writing at the address shown above to the contrary. Any such notice
shall not affect the Superior Indebtedness owed Lender by Borrower at the time
of such notice, nor shall such notice affect Superior Indebtedness thereafter
granted in compliance with a commitment made by Lender to Borrower prior to
receipt of such notice, nor shall such notice affect any renewals of or
substitutions for any of the foregoing. Such notice shall affect only
Indebtedness of Borrower to Lender arising after receipt of such notice and not
arising from financial assistance granted by Lender to Borrower in compliance
with Lender's obligations under a commitment. Any notes lodged with Lender
pursuant to the section titled "Creditor's Notes" above need not be returned
until this Agreement has no further force or effect.
PAYMENT OF INDEBTEDNESS TO CREDITOR. NOTWITHSTANDING THE RESTRICTIONS ON
PAYMENTS AS DESCRIBED IN THE SECTION ENTITLED PAYMENTS TO CREDITOR ABOVE,
BORROWER WILL BE ALLOWED TO PAY THE SUBORDINATED INDEBTEDNESS SOLELY FROM THE
PROCEEDS OF THE INITIAL PUBLIC OFFERING.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
APPLICABLE LAW. This Agreement has been delivered to Lender and accepted by
Lender in the State of Utah. If there is a lawsuit, Creditor and Borrower
agree upon Lender's request to submit to the jurisdiction of the courts of
SALT LAKE County, State of Utah. Subject to the provisions on arbitration,
this Agreement shall be governed by and construed in accordance with the
laws of the State of Utah. No provision contained in this Agreement shall
be construed (a) as requiring Lender to grant to Borrower or to Creditor any
financial assistance or other accommodations, or (b) as limiting or
precluding Lender from the exercise of Lender's own judgment and discretion
about amounts and times of payment in making loans or extending
accommodations to Borrower.
AMENDMENTS. This Agreement constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Agreement. No
alteration of or amendment to this Agreement shall be effective unless made
in writing and signed by Lender, Borrower, and Creditor.
ARBITRATION DISCLOSURES:
1. AS USED IN THIS ARBITRATION SECTION, THE TERM "PARTIES" MEANS
THE LENDER, ANY OTHER SIGNERS HERETO AND PERMITTED SUCCESSORS AND
ASSIGNS.
2. ARBITRATION IS USUALLY FINAL AND BINDING ON THE PARTIES AND
SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT.
3. THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT,
INCLUDING THEIR RIGHT TO A JURY TRIAL.
34
01-05-1998 SUBORDINATION AGREEMENT Page 4
(Continued)
================================================================================
4. PRE-ARBITRATION DISCOVERY IS GENERALLY MORE LIMITED AND DIFFERENT
FROM COURT PROCEEDINGS.
5. ARBITRATORS' AWARDS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR
LEGAL REASONING AND ANY PARTY'S RIGHT TO APPEAL OR TO SEEK MODIFICATION
OF RULINGS BY ARBITRATORS IS STRICTLY LIMITED.
6. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
7. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR
THE AMERICAN ARBITRATION ASSOCIATION.
ARBITRATION PROVISIONS:
(a) Any controversy or claim between or among the parties, including but not
limited to those arising out of or relating to this Agreement or any
agreements or instruments relating hereto or delivered in connection
herewith, and including but not limited to a claim based on or arising from
an alleged tort, shall at the request of any party be determined by
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association. The arbitration proceedings shall be
conducted in Salt Lake City, Utah. The arbitrator(s) shall have the
qualifications set forth in subparagraph (c) hereto. All statutes of
limitations which would otherwise be applicable in a judicial action brought
by a party shall apply to any arbitration or reference proceedings
hereunder.
(b) In any judicial action or proceeding arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered In
connection herewith, including but not limited to a claim based on or
arising from an alleged tort, if the controversy or claim is not submitted
to arbitration as provided and limited in subparagraph (a) hereto, all
decisions of fact and law shall be determined by a reference in accordance
with Rule 63 of the Federal Rules of Civil Procedure or Rule 63 of the Utah
Rules of Civil Procedure or other comparable, applicable reference
procedure. The parties shall designate to the court the referee(s) selected
under the auspices of the American Arbitration Association In the same
manner as arbitrators are selected in Association-sponsored arbitration
proceedings. The referee(s) shall have the qualifications set forth In
subparagraph (c) hereto.
(c) The arbitrator(s) or referee(s) shall be selected in accordance with the
rules of the American Arbitration Association from panels maintained by the
Association. A single arbitrator or referee shall be knowledgeable In the
subject matter of the dispute. Where three arbitrators or referees conduct
an arbitration or reference proceeding, the claim shall be decided by a
majority vote of the three arbitrators or referees, at least one of whom
must be knowledgeable In the subject matter of the dispute and at least one
of whom must be a practicing attorney. The arbitrator(s) or referee(s)
shall award recovery of all costs and fees (including reasonable attorneys'
fees, administrative fees, arbitrators' fees, and court costs). The
arbitrator(s) or referee(s) also may grant provisional or ancillary remedies
such as, for example, injunctive relief, attachment, or the appointment of a
receivers either during the pendency of the arbitration or reference
proceeding or as part of the arbitration or reference award.
(d) Judgment upon an arbitration or reference award may be entered in any
court having jurisdiction, subject to the following limitation: the
arbitration or reference award Is binding upon the parties only If the
amount does not exceed Four Million Dollars ($4,000,000.00); If the award
exceeds that limit, either party may commence legal action for a court trial
de novo. Such legal action must be filed within thirty (30) days following
the date of the arbitration or reference award; if such legal action is not
filed within that time period, the amount of the arbitration or reference
award shall be binding. The computation of the total amount of an
arbitration or reference award shall include amounts awarded for arbitration
few, attorneys' fees, interest, and all other related costs.
(e) At the Lender's option, foreclosure under a deed of trust or mortgage
may be accomplished either by exercise of a power of sale under the deed of
trust or by judicial foreclosure. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any other
party contests such action for judicial relief.
(f) Notwithstanding the applicability of other law to any other provision of
this Agreement, the Federal Arbitration Act, 9 U.S.C. Section 1 et seq.,
shall apply to the construction and Interpretation of this arbitration
paragraph.
Attorneys' Fees; Expenses. Creditor and Borrower agree to pay upon demand all
of Lender's costs and expenses, including reasonable attorneys' fees and
Lendees legal expenses. incurred In connection with the enforcement of this
Agreement. Lender may pay someone else to help enforce this Agreement, and
Creditor and Borrower shall pay the costs and expenses of such enforcement.
Costs and expenses Include Lender's reasonable attorneys' fees and legal
expenses whether or not a salaried employee of Lender and whether or not there
is a lawsuit, including reasonable attorneys' fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any automatic
stay or Injunction), appeals, and any anticipated post-judgment collection
services. Creditor and Borrower also shall pay all court costs and such
additional fees as may be directed by the court.
35
01-05-1998 SUBORDINATION AGREEMENT Page 5
(Continued)
================================================================================
Successors. This Agreement shall extend to and bind the respective heirs,
personal representatives, successors and assigns of the parties to this
Agreement, and the covenants of Borrower and Creditor respecting subordination
of the Subordinated indebtedness in favor of Lender shall extend to, include,
and be enforceable by any transferee or endorsee to whom Lender may transfer
any or all of the Superior Indebtedness.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given In writing and signed by Lender. No
delay or emission on the part of Lender In exercising any right shall operate
as a waiver of such right or any other right. A waiver by Lender of a
provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or any
other provision of this Agreement. No prior waiver by Lender, nor any course
of dealing between Lender and Creditor, shall constitute a waiver of any of
Lender"s rights or of any of Creditor's obligations as to any future
transactions. Whenever the consent of Lender Is required under this Agreement,
the granting of such consent by Lender in any instance shall not constitute
continuing consent to subsequent Instances where such consent is required and
In all cases such consent may be granted or withheld in the sole discretion of
Lender.
BORROWER AND CREDITOR ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
SUBORDINATION AGREEMENT, AND BORROWER AND CREDITOR AGREE TO ITS TERMS. THIS
AGREEMENT IS DATED JANUARY 6, 1998.
BORROWER:
1-800 CONTACTS, INC.
By: /s/ Xxxxxxxx X. Xxxx By:
----------------------------------- --------------------------------
XXXXXXXX X. XXXX, PRESIDENT XXXX XXXXXXX, VICE PRESIDENT
CREDITOR: LENDER:
XXXXXX X. XXXXXXXX ZIONS FIRST NATIONAL BANK
/s/ Xxxxxx X. Xxxxxxxx By:
-------------------------------------- --------------------------------
Creditor's Signature Authorized Officer
================================================================================
36
LANDLORD'S CONSENT
------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL LOAN DATE MATURITY LOAN NO CALL COLLATERAL ACCOUNT OFFICER INITIALS
Y 7420 7057008 11049
==============================================================================================================================
References in the shaded area are for Lender"s use only and do not limit the applicability of this document to any particular
loan or item.
------------------------------------------------------------------------------------------------------------------------------
BORROWER: 1-800 CONTACTS, INC. LENDER: ZIONS FIRST NATIONAL BANK
13751 SOUTH XXXXXXXXX XX DRIVE, HEAD OFFICE/COMMERCIAL LOANS
XXXXX X-000 #0 XXXXX XXXX XXXXXX
XXXXXX, XX 00000 X.X. XXX 00000
================================================================================
THIS LANDLORD'S CONSENT is entered into among 1-800 CONTACTS, INC. (Borrower"),
whose address is 00000 XXXXX XXXXXXXXX XX XXXXX, XXXXX X-000, XXXXXX, XX 00000;
ZIONS FIRST NATIONAL BANK ("Lender"), whose address Is #0 XXXXX XXXX XXXXXX,
X.X. XXX 00000, XXXX XXXX XXXX, XX 00000; and XXXXXXX XXXX ("Landlord"), whose
address is 00000 XXXXX XXXXXXXX XXXXX, XXXXX, XX. Borrower and Lender have
entered into, or are about to enter into, an agreement whereby Lender has
acquired or will acquire a security Interest or other interest in the
Collateral. Some or all of the Collateral my be affixed or otherwise become
located on the Premises. To induce Lender to extend the Loan to Borrower
against such security interest In the Collateral and for other valuable
consideration, Landlord hereby agrees with Lender and Borrower as follows.
DEFINITIONS. The following words shall have the following meanings when used
In this Agreement. Terms not otherwise defined In this Agreement shall have
the meanings attributed to such terms In the Uniform Commercial Code. All
references to dollar amounts shall mean amounts in lawful money of the United
States of America.
Agreement. The word "Agreement" means this Landlord's Consent, as this
Landlord's Consent may be amended or modified from time to time, together
with all exhibits and schedules attached to this Landlord's Consent from
firm to time.
Borrower. The word "Borrower" means 1-800 CONTACTS, INC..
Collateral. The word "Collateral" means certain of Borrower's personal
property in which Lender has acquired or will acquire a security interest,
Including without limitation the following specific property.
All Inventory, Chattel Paper, Accounts, Equipment and General Intangibles
Landlord. The word "Landlord" means XXXXXXX XXXX. The term "Landlord" is
used for convergence purposes only. Landlord's interest in the Promises may
be that of a fee owner, lessor, sublessor or lienholder, or that of any
other holder of an interest in the Premises which may be, or may become,
prior to the interest of Lender.
Lease. The word "Lease" means that certain lease of the Premises, dated
____________ between Landlord and Borrower.
Lender. The word "Lender" means ZIONS FIRST NATIONAL BANK its successors
and assigns.
Loan. The word "Loan" means the loan, or any other financial
accommodations, Lender has made or Is making to Borrower.
Premises. The word "Premises" means the real property located in UTAH
County, State of Utah, commonly known as 00 XXXX 00000 XXXXX, XXXXXX, XX
00000.
DISCLAIMER OF INTEREST. Landlord hereby consents to Lendees security Interest
(or other interest) in the Collateral and disclaims all interests, hens and
claims which Landlord now has or may hereafter acquire In the Collateral.
Landlord agrees that any lien or claim it may now have or may hereafter have in
the Collateral will be subject at all times to Lendees security Interest (or
other present or future interest) in the Collateral and will be subject to the
rights granted by Landlord to Lender in this Agreement.
ENTRY ONTO PREMISES. Landlord and Borrower grant to Lender the right to enter
upon the Premises for the purpose of removing the Collateral from the Premises
or conducting sales of the Collateral on the Premises. The rights granted to
Lender In this Agreement will continue until a reasonable time after Lender
receives notice in writing from Landlord that Borrower no longer is in lawful
possession of the Premises. If Lender enters onto the Premises and removes the
Collateral, Lender agrees with Landlord not to remove any Collateral In such a
way that the Premises are damaged, without either repairing any such damage or
reimbursing Landlord for the cost of repair.
MISCELLANEOUS PROVISIONS. This Agreement shall extend to and bind the
respective heirs, personal representatives, successors and assigns of the
parties to this Agreement. The covenants of Borrower and Landlord respecting
subordination of the claim or claims of Landlord in favor of Lender shall
extend to, Include, and be enforceable by any transferee or endorsee to whom
Lender may transfer any claim or calms to which this Agreement shall apply.
Lender need not accept this Agreement in writing or otherwise to make it
effective. This Agreement shall be governed by and construed in accordance
with the laws of the State of Utah. If Landlord Is other than an Individual,
any agent or other person executing this Agreement on behalf of Landlord
represents and warrants to Lender that he or she has full power and authority
to execute this Agreement on Landlord's behalf. Lender shall not be deemed to
have waived any rights under this Agreement unless such waiver is in writing
and signed by Lender. Without notice to
37
01-05-1998 LANDLORD'S CONSENT Page 2
(Continued)
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Landlord and without affecting the validity of this Consent, Lender may do or
not do anything it deems appropriate or necessary with respect to the Loan, any
obligors on the Loan, or any Collateral for the Loan; including without
limitation extending, renewing, rearranging, or accelerating any of the Loan
Indebtedness. No delay or omission on the part of Lender In exercising any
right shall operate as a waiver of such right or any other right. A waiver by
Lender of a provision of this Agreement shall not constitute a waiver of or
prejudice Lendees right otherwise to demand strict compliance with that
provision or any other provision. Whenever consent by Lender is required in
this Agreement, the granting of such consent by Lender in any one Instance
shall not constitute continuing consent to subsequent instances where such
consent is required.
BORROWER AND LANDLORD ACKNOWLEDGE HAVING READ ALL THE PROVISIONS OF THIS
LANDLORD'S CONSENT, AND BORROWER AND LANDLORD AGREES TO ITS TERMS. THIS
AGREEMENT IS DATED JANUARY 6, 1998.
BORROWER:
1-800 CONTACTS, INC.
By: By:
------------------------------ ----------------------------------
XXXXXXXX X. XXXX, PRESIDENT XXXX NIGHOLS, VICE PRESIDENT
LANDLORD: LENDER:
XXXXXXX XXXX ZIONS FIRST NATIONAL BANK
/s/ Xxxxxxx Xxxx By:
--------------------------------- ----------------------------------
Landlord's Signature Authorized Officer
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