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EXHIBIT 10.4
LOAN AGREEMENT
FOR A LOAN FROM
PACIFIC NORTHWEST BANK
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1. DATE AND PARTIES. The date of this Loan Agreement (Agreement) is August 1,
1994, and the parties are the following:
BORROWER: SEAMED CORPORATION
a Delaware corporation
00000 Xxxxx Xxxxx Xxxxxxx X.
Xxxxxxx, XX 00000
Tax I.D. #00-0000000
BANK: PACIFIC NORTHWEST BANK
a WASHINGTON banking corporation
00000 X.X. 0xx
Xxxxxxxx, XX 00000
Tax I.D. #00-0000000
Branch No. 102
2. BACKGROUND. Borrower has applied for the renewal of a loan (Loan) in the
principal amount of $750,000.00. The Loan shall be evidenced by a promissory
note, No. 1000003895-3, (Note) dated August 1, 1994, and executed by Borrower
payable to the order of Bank and all extensions, renewals, modifications, or
substitutions thereof. There may be other documents (Related Documents) that
secure, guaranty or otherwise relate to the Loan, any collateral securing the
Loan (Collateral), or this Agreement. To induce Bank to make the Loan and as
part of the consideration for Bank making the Loan, Borrower and Bank agree to
the following terms, representations, warranties and covenants, which shall
prevail so long as any part of the Loan or any other obligation of Borrower to
Bank remains outstanding or Bank is obligated to make any advances on the Loan.
3. DEPOSITORY RELATIONSHIP. Borrower shall maintain a primary checking, savings,
or similar account, at Bank during the term of this Agreement and any extensions
thereto. Bank shall have the right, in its sole discretion, to dishonor checks
drawn on such deposit account and to hold such deposit account as cash
collateral to secure the payment of the Loan. Notwithstanding the foregoing,
nothing contained herein shall interfere with Bank's right under statutory and
common law to set-off the balances of any such deposit account against the Loan.
4. COLLECTION EXPENSES. Borrower shall, upon demand, reimburse Bank for all fees
and expenses paid or incurred by Bank for the preparation in and recordation of
all documentation, the closing, and the enforcement of the Note, this Agreement
or the Related
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Documents, whether or not a suit is filed. These fees and expenses include, but
are not limited to, accountants' fees and other professional fees. All such fees
and expenses shall be additional liabilities of Borrower to Bank as advances
under the Loan and shall be secured by the Collateral securing the Loan.
5. ATTORNEYS' FEES. Upon demand and to the extent not prohibited by law,
Borrower shall reimburse Bank for all reasonable attorneys' fees paid or
incurred by Bank in connection with the preparation and recordation of all
documentation, closing, and enforcement of the Note, this Agreement or the
Related Documents, whether or not a suit is filed. Such reasonable attorneys'
fees shall be additional liabilities of Borrower to Bank as advances under the
Loan and shall be secured by the Collateral securing the Loan.
6. AFFIRMATIVE COVENANTS. Borrower agrees:
A. PERFORMANCE OF LOAN OBLIGATIONS. To make full and timely payment of all
principal and interest obligations, and to comply with the terms and
covenants contained in this Agreement and in the Related Documents.
B. PRESERVE EXISTENCE. To preserve Borrower's present existence until such
time as Bank consents in writing to any change. Bank's consent to any
such change will not be unreasonably withheld provided Bank can protect
Bank's security interest and provided further Borrower can provide Bank
with sufficient security to assure repayment of the Loan.
C. MAINTENANCE OF PROPERTY. To maintain, preserve and keep Borrower's
properties in good repair, working order and condition, and from time
to time to make all needful and proper repairs, renewals, replacements,
additions, betterments and improvements thereto so that the efficiency
of the properties is fully preserved and maintained at all times.
D. INSURANCE. To keep and maintain the Collateral insured in full with
companies acceptable to Bank, naming Bank and Borrower on the policy in
accordance with their respective interests, with the loss payable to
Bank. Insurance of the types and in amounts customarily carried by
entities in businesses similar to Borrower's shall be maintained for
the full insurable value, including without limitation, fire, public
liability, property damage, business interruption, rent loss insurance,
and worker's compensation insurance. Certified copies of all such
insurance policies or certificates of insurance shall be delivered upon
demand to Bank.
E. LOSS OR DEPRECIATION OF COLLATERAL. To immediately notify Bank of any
material casualty, loss or depreciation to the Collateral or to any
other property of Borrower which affects Borrower's business.
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F. AGING REPORTS. To furnish Bank a certified and detailed accounts
receivable aging report upon Bank's request, and in event of no request
at least quarterly, in such form and for such period(s) as Bank may
request.
G. INSPECTION. To permit Bank, or its agents, to enter upon any of
Borrower's premises and any location where the Collateral is located at
all reasonable times for the following purposes, without limitation:
(1) to inspect, audit, check, review and obtain copies from Borrower's
books, records, journals, orders, receipts, and any correspondence and
other business related data; (2) to make verifications concerning the
Collateral, proceeds of the Collateral and proceeds of proceeds and
their use and disposition; and (3) to discuss the affairs, finances and
business of Borrower with any person or entity who claims to be a
creditor of Borrower.
H. BOOKS AND RECORDS. To maintain accurate and complete books and records
regarding its operations and to permit Bank, or its agents, to examine
and copy all or any part of them.
I. FINANCIAL STATEMENTS. To promptly provide Bank with all financial
statements which Bank may request concerning the Borrower, initially
and from time to time, within 30 days of the request(s), or if no
request is made, at least every 12 months from the date of this
Agreement, including business and personal financial statements; such
statements shall be reasonably current, accurate, complete, in a form
acceptable to Bank and shall be based on generally accepted accounting
principles (GAAP) then in effect.
J. FURNISH DOCUMENTS. To promptly furnish Bank such other documents,
instruments, and information as Bank may reasonably request.
K. TAXES AND LIENS. To file all federal, state and other tax and similar
returns and to pay all taxes or liens assessed against Borrower or
Borrower's properties, whether due now or hereafter, including but not
limited to sales taxes, use taxes, personal property taxes, documentary
stamp taxes, recordation taxes, franchise taxes, income taxes,
withholding taxes, FICA taxes and unemployment taxes when due, and to
promptly furnish Bank with written evidence of such payments.
L. LICENSES, PERMITS, BONDS AND OTHER RIGHTS. To acquire and maintain in
full force and effect all licenses, permits, bonds and other documents
or certificates reasonably necessary or required to engage in and to
carry on its business or venture as contemplated by Borrower and Bank.
M. NOTICE TO BANK BY BORROWER. To promptly notify Bank of the occurrence
of any Event of Default under the terms of this Agreement and of the
occurrence of any default against Borrower by third parties which
materially affects Borrower's business.
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N. CERTIFICATION OF NO DEFAULT. To furnish Bank a written certification
upon Bank's request or in event of no request at least quarterly, that
there exists no Event of Default under the terms of this Agreement or
under the Related Documents, and that there exists no other action,
condition or event which with the giving of notice or lapse of time or
both would constitute an Event of Default. If such a condition does
exist, the certificate must accurately and fully disclose the extent
and nature of such condition and state what action is being taken to
correct it.
O. ADDITIONAL AFFIRMATIVE COVENANT. To provide monthly account receivable
agings and borrower's certificates, quarterly profit and loss
statements and balance sheet within 30 days of month end, and annual
CPA audited financial statements within 120 days of fiscal year end.
P. ADDITIONAL AFFIRMATIVE COVENANT. To maintain a minimum working capital
of $2,000,000, current ratio of 2.0:1, net worth and subordinated debt
of $3,000,000 and maximum debt/worth and subordinated debt of 1.5:1.
Q. ADDITIONAL AFFIRMATIVE COVENANT. To notify the bank prior to any
changes in the repayment provisions or other terms and conditions of
the note payable to Cordis Corporation, dated June 30, 1991 which has
been subordinated to the bank's interest.
7. NEGATIVE COVENANTS. Without Bank's prior written consent, which shall
not be unreasonably withheld, Borrower agrees:
A. NO CHANGE IN STRUCTURE. Not to change the structure or ownership of
Borrower's entity or business venture, which includes a change in the
management, shareholders, directors, or officers of any corporate
borrower and to notify Bank in writing of any change in name or
management of Borrower.
B. NOT TO FORM. Not to form, organize or participate in the organization
of any other corporation, partnership or other entity, or in the
creation of any other business entity or merge, consolidate with or
into any other corporation, partnership or other entity.
C. PAY NO DIVIDENDS. Not to pay or declare any dividends (including but
not limited to any cash dividend or stock dividend) or similar
distribution.
D. NO CHANGE IN CAPITAL STRUCTURE OR STOCK. Not to release, redeem,
retire, purchase or otherwise acquire, directly or indirectly, any of
its capital stock or other equity security or partnership interest or
make any change in Borrower's capital structure except to the extent
required by the terms of any agreements signed prior to this Agreement.
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E. DEALINGS WITH INSIDERS. Not to purchase, acquire or lease any property
or services from, or sell, provide or lease any property or service to,
or otherwise deal with, any insiders. The term "insiders" includes but
is not limited to any officer, employee, stockholder, director,
partner, or any immediate family member thereof, or any business entity
who owns a controlling interest in Borrower.
F. LOANS TO INSIDERS. Not to lend or advance or permit to be outstanding
any loans or advances to any of its "insiders" which term is defined
above.
G. INCUR NO OTHER LIABILITIES. Not to incur, assume or otherwise permit
any liability to exist for money borrowed, except from Bank, or incur,
assume or otherwise permit any other debts or obligations outside of
the ordinary course of business, or loan money to, or guaranty or
otherwise become in any way liable for the debt or obligations of any
other person or entity.
H. USE OF LOAN PROCEEDS. Not to permit the loan proceeds to be used to
purchase, carry, reduce, or retire any loan incurred to purchase or
carry any margin stock.
I. DISPOSE OF NO ASSETS. Not to sell or dispose of or make any other
distribution of any of Borrower's assets, properties or business other
than as permitted in the Related Documents.
J. NO OTHER LIENS OR ENCUMBRANCES. Not to permit or suffer any lien or
encumbrance upon any of Borrower's properties, except to Bank, and
except for any valid purchase money security interests, or any other
liens specifically agreed to by Bank in writing.
8. REPRESENTATIONS. Borrower represents, guaranties and warrants to Bank
that:
A. AUTHORITY TO DO BUSINESS. Borrower is authorized to do business in this
state and in each state where it may be doing business and has full
power and authority to execute and deliver the Note and enter into this
Agreement and the Related Documents.
B. CORPORATE STATUS. Borrower is duly incorporated and validly existing
and in good standing in the jurisdiction of Borrower's incorporation
and where Borrower conducts Borrower's business.
C. AUTHORITY TO ENTER AGREEMENTS. This Agreement, the Note, and the
Related Documents will constitute legal, valid, and binding agreements
and are enforceable against Borrower and all other parties thereto.
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D. TITLE AND POSSESSION. Borrower has good and marketable title to its
assets, and enjoys peaceful and undisturbed possession under all leases
under which Borrower now operates.
E. LABOR LAWS. Borrower is complying with all applicable federal or state
labor laws, including but not limited to the Federal Fair Labor
Standards Act.
F. TAX LAWS. Borrower has complied with all federal, state and local tax
laws, licensing laws and permit laws.
G. OTHER LAWS. Borrower is not in violation of other federal laws or state
laws, including but not limited to, ERISA (Employee Retirement Income
Security Act) or RICO (Racketeer Influenced and Corrupt Organizations).
H. COMPLIANCE. Borrower is in compliance with all laws, orders, judgments,
decrees and regulations (Laws) of all federal, foreign, state and local
governmental authorities relating to the business operations and the
assets of Borrower, the violation of which would have an adverse effect
on the value of or Bank's interest in any of the Collateral or would
have a materially adverse effect on Borrower's financial condition,
business or conduct of its business.
I. ADVERSE AGREEMENTS. Borrower is not a party to, nor is Borrower bound
by, any agreement that materially or adversely affects Borrower's
business, properties, assets or operations.
J. OTHER CLAIMS. There are no outstanding claims or rights that would
conflict with the execution, delivery or performance by Borrower of the
terms of the Note, this Agreement or the Related Documents or that
would cause a lien to be placed on the Collateral given for this Loan,
including proceeds of the Collateral and proceeds of proceeds, except
those, if any, disclosed to and agreed to by Bank in writing prior to
the execution of this Agreement.
K. ACCURATE STATEMENTS. All financial statements, books, records,
documents, and instruments submitted by Borrower to Bank in connection
with the Loan are accurate and complete, and there has been no material
adverse change in the financial condition of Borrower as shown by such
statements, books, records, documents or instruments.
L. SOLVENCY. Borrower is solvent, able to pay its debts as they mature,
and has sufficient capital to carry on its business and all businesses
in which Borrower is or will be engaged. Borrower's total assets, at a
present, fair market value, are greater than the amount of Borrower's
total obligations. Borrower will not be rendered insolvent by the
execution of the Note, this Agreement or Related Documents or by any
other transactions.
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M. LITIGATION. There are no proceedings pending or threatened before any
court or administrative agency which will or could have a materially
adverse affect upon the financial condition or operations of Borrower.
N. SURVIVAL OF WARRANTIES. All representations, warranties, statements,
guaranties and covenants contained in the Note, this Agreement or any
Related Documents shall survive the execution of such documents.
9. EVENTS OF DEFAULT. Borrower shall be in default upon the occurrence of
any of the following events, circumstances or conditions (Events of Default):
A. Failure by any party obligated on the Loan to make payment when due; or
B. A default or breach by Borrower or any co-signer, endorser, surety, or
guarantor under any of the terms of this Agreement the Note, any
construction loan agreement or other loan agreement, any security
agreement, mortgage, deed to secure debt, deed of trust, trust deed, or
any other document or instrument evidencing, guarantying, securing or
otherwise relating to the Loan; or
C. The making or furnishing of any verbal or written representation,
statement or warranty to Bank which is or becomes false or incorrect in
any material respect by or on behalf of Borrower, owner, or any
co-signer, endorser, surety or guarantor of the Loan; or
D. Failure to obtain or maintain the insurance coverages required by Bank,
or insurance as is customary and proper for the Collateral (as herein
defined); or
E. The death, dissolution or insolvency of, the appointment of a receiver
by or on behalf of, the assignment for the benefit of creditors by or
on behalf of, the voluntary or involuntary termination of existence by,
or the content of any proceeding under any present or future federal or
state insolvency, bankruptcy, reorganization, composition or debtor
relief law by or against Borrower, owner, or any co-signer, endorser,
surety or guarantor of the Loan; or
F. A good faith belief by Bank at any time that Bank is insecure with
respect to Borrower, or any co-signer, endorser, surety or guarantor,
that the prospect of any payment is impaired or that the Collateral (as
herein defined) is impaired; or
G. Failure to pay or provide proof of payment of any tax, assessment,
rent, insurance premium, escrow or escrow deficiency on or before its
due date; or
H. A material adverse change in Borrower's business, including ownership,
management, and financial conditions, which in Bank's opinion, impairs
the Collateral or repayment of the Obligations; or
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I. A transfer of a substantial part of Borrower's money or property.
10. REMEDIES ON DEFAULT. Upon the occurrence of any Event of Default, Bank,
at its option, may declare the Loan immediately due and payable as well as
invoke any or all other remedies provided in the Note, any Related Document or
by law. All remedies are cumulative and not exclusive, Bank is also entitled to
all remedies provided at law or equity, whether or not expressly set forth.
11. NOTICE. All notices, requests, and demands under this Agreement shall
be given by regular United States mail, postage prepaid, or personal delivery,
at the address set forth above or such other address as the parties may
designate in writing.
12. GENERAL PROVISIONS.
A. TIME IS OF THE ESSENCE. Time is of the essence in Borrower's
performance of all duties and obligations imposed by this Agreement
B. NO WAIVER BY BANK. Bank's course of dealing, or Bank's forbearance
from, or delay in, the exercise of any of Bank's rights, remedies,
privileges or right to insist upon Borrower's strict performance of any
provisions contained in this Agreement, or other loan documents, shall
not be construed as a waiver by Bank, unless any such waiver is in
writing and is signed by Bank.
C. AMENDMENT. The provisions contained in this Agreement may not be
amended, except through a written amendment which is signed by Borrower
and Bank.
D. INTEGRATION CLAUSE. This written Agreement and all documents executed
concurrently herewith, represent the entire understanding between the
parties as to the Obligations and may not be contradicted by evidence
of prior, contemporaneous, or subsequent oral agreements of the
parties.
E. FURTHER ASSURANCES. Borrower, upon request of Bank, agrees to execute,
acknowledge, deliver and record or file such further instruments or
documents as may be required by Bank to secure the Note or confirm any
lien.
F. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of WASHINGTON, provided that such laws are not otherwise
preempted by federal laws and regulations.
G. FORUM AND VENUE. In the event of litigation pertaining to this
Agreement, the exclusive forum, venue and place of jurisdiction shall
be in the State of WASHINGTON in the state courts for the county, or
the federal court of the United States Federal District, where the
principal office of Bank is located (as applicable). If, in conjunction
with any litigation on the Note or Obligations, there
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is relief sought against any property securing such Note or
Obligations, Bank may, at its option, designate as the exclusive forum,
venue and place of jurisdiction, any location where the security is
situated, unless otherwise designated in writing by Bank or otherwise
required by law.
H. SUCCESSORS. This Agreement shall inure to the benefit of and bind the
heirs, personal representatives, successors and assigns of the parties;
provided however, that Borrower may not assign, transfer or delegate
any of the rights or obligations under this Agreement.
I. NUMBER AND GENDER. Whenever used, the singular shall include the
plural, the plural the singular, and the use of any gender shall be
applicable to all genders.
J. DEFINITIONS. The terms used in this Agreement, if not defined herein,
shall have their meanings as defined in the other documents executed
contemporaneously, or in conjunction, with this Agreement.
K. PARAGRAPH HEADINGS. The headings at the beginning of any paragraph, or
any subparagraph, in this Agreement are for convenience only and shall
not be dispositive in interpreting or construing this Agreement.
L. IF HELD UNENFORCEABLE. If any provision of this Agreement shall be held
unenforceable or void, then such provision shall be severable from the
remaining provisions and shall in no way affect the enforceability of
the remaining provisions nor the validity of this Agreement.
M. CHANGE IN APPLICATION. Borrower will notify Bank in writing prior to
any change in Borrower's name, address, or other application
information.
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N. NOTICE. All notices under this Agreement must be in writing. Any notice
given by Bank to Borrower hereunder will be effective upon personal
delivery or 24 hours after mailing by first class United States mail,
postage prepaid, addressed to Borrower at the address indicated below
Borrower's name on page one of this Agreement. Any notice given by
Borrower to Bank hereunder will be effective upon receipt by Bank at
the address indicated below Bank's name on page one of this Agreement.
Such addresses may be changed by written notice to the other party.
BORROWER:
SEAMED CORPORATION, [Corporate Seal*]
a DELAWARE corporation
By /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx, V.P. - Finance
(* Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
BANK:
PACIFIC NORTHWEST BANK, [Corporate Seal*]
a WASHINGTON corporation
By /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Vice President
(* Corporate seal may be affixed, but failure to affix shall not affect validity
or reliance.)
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