Loan No. 1910069-0008
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Xxxxxx Financial
SECURITY AGREEMENT
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THIS SECURITY AGREEMENT ("Agreement") is made this 31st day of March 1998, by
and between Xxxxxxxxxx Industries, Inc., an Oregon Corporation ("Debtor"), whose
business address is 0000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxx 00000, and Xxxxxx
Financial, Inc., a Delaware corporation ("Secured Party"), whose address is
Commercial Equipment Finance Division, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000.
WITNESSETH:
1. Secure Payment. To secure payment of indebtedness in the principal sum of up
to One Million Five Hundred Nineteen Thousand One Hundred Five and 74/100
Dollars ($1,519,105.74), as evidenced by a note or notes executed and delivered
by Debtor to Secured Party (the "Notes") and any obligations now or hereafter
arising under the Loan Documents (as defined below) (all the foregoing
hereinafter called the "Indebtedness"), Debtor hereby grants and conveys to
Secured Party a first priority continuing lien and security interest in the
property described on the Schedule(s) attached hereto (the "Schedules"), all
products and proceeds (including insurance proceeds) thereof, if any, and all
substitutions, replacements, attachments, additions, and accessions thereto, all
or any of the foregoing hereinafter called the "Collateral." The Schedules may
be supplemented from time to time to evidence the Collateral subject to this
Agreement.
2. Warranties, Representations and Covenants. Debtor warrants, represents,
covenants and agrees as follows:
(a) Perform Obligations. Debtor shall pay as and when due all of the
Indebtedness secured by this Agreement and perform all of the obligations
contained in this Agreement according to its terms. Debtor shall use the loan
proceeds for business uses and not for personal, family, household, or
agricultural uses.
(b) Perfection. This Agreement creates a valid and first priority
continuing lien and security interest in the Collateral, securing the payment
and performance of the Indebtedness and, assuming UCC-1 financing statements
describing the Collateral in substantially the same manner as described on the
attached Schedule A is duly filed with the Secretary of State of the States of
Oregon and Washington, with the official real estate records of the Counties of
Polk and Xxxxxxx, Oregon and the County of King, Washington, all actions
necessary to perfect such security interest have been duly taken.
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(c) Collateral Free and Clear. Except as may be set forth on the Schedules,
Debtor shall keep the Collateral free and clear of all liens, claims, charges,
encumbrances and other security interests of any kind (other than the security
interest granted hereby and any lien securing payment of ad valorem property
taxes, fees or assessments that are not delinquent). Debtor shall defend the
title to the Collateral against all persons and against all claims and demands
whatsoever. At the request of Secured Party, Debtor shall furnish further
assurance of title, execute any written agreement and to any other acts
necessary to effectuate the purposes and provisions of this Agreement, including
in order to perfect, continue, or terminate the security interest of Secured
Party in the Collateral, and pay all costs in connection therewith.
(d) Possession and Operating Order of the Collateral. Subject to Secured
Party's rights and remedies upon the occurrence of an Event of Default (defined
below), Debtor shall retain possession of the Collateral at all times and shall
not sell, exchange, assign, loan, deliver, lease, mortgage, or otherwise dispose
of the Collateral or any part thereof without the prior written consent of
Secured Party, Debtor shall at all times keep the Collateral at the location[s]
specified on the Schedules (except for removals thereof in the usual course of
business for temporary periods). At Debtor's sole cost and expense, Debtor shall
also keep the Collateral in good repair and condition and shall not misuse,
abuse, waste or otherwise allow it to deteriorate, except for normal wear and
tear. Secured Party may verify any Collateral in any reasonable manner which
Secured Party may consider appropriate, and Debtor shall furnish all reasonable
assistance and information and perform any acts which Secured Party may
reasonably request in connection therewith.
(e) Insurance. Debtor shall insure the Collateral against loss by fire
(including extended coverage), theft and other hazards (not including flood or
earth movement), for its full insurable value including replacement costs, with
a deductible not to exceed One Hundred Thousand and 00/100 Dollars ($100,000.00)
per occurrence and without co-insurance. In addition, Debtor shall obtain
liability insurance covering liability for bodily injury, including death and
property damage, in an amount of at least Five Million and 00/100 Dollars
($5,000,000.00) per occurrence or such greater amount as may comply with general
industry standards, or in such other amounts as Secured Party may otherwise
require. All policies of insurance required hereunder shall be in such form,
amounts, and with such companies as Secured Party may approve; shall provide for
at least thirty (30) days prior written notice to Secured Party prior to any
modification or cancellation thereof; shall name Secured Party as loss payee or
additional insured, as applicable, and shall be payable to Debtor and Secured
Party as their interests may appear; shall waive any claim for premium against
Secured Party; and, with respect to the policies insuring against loss by fire,
theft and other hazards, shall provide that no act or neglect of Debtor shall
invalidate the coverage afforded thereunder to Secured Party, and with respect
to liability insurance policies, shall provide coverage unless Debtor
intentionally fails to disclose all hazards existing as of the inception of the
policy. Certificates of insurance or policies evidencing the insurance required
hereunder along with satisfactory
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proof of the payment of the premiums therefor shall be delivered to Secured
Party who is authorized, but under no duty, to obtain such insurance upon
failure of Debtor to do so. Debtor shall give immediate written notice to
Secured Party and to insurers of loss or damage to the Collateral and shall
promptly file proofs of loss with insurers. Debtor hereby irrevocably appoints
Secured Party as Debtor's attorney-in-fact, coupled with an interest, for the
purpose of obtaining, adjusting and canceling any such insurance and endorsing
settlement drafts. Debtor hereby assigns to Secured Party, as additional
security for the Indebtedness, all sums which may become payable under such
insurance.
In the event Debtor fails to provide Secured Party with evidence of the
insurance coverage required by this Agreement, Secured Party may purchase
insurance at Debtor's expense to protect Secured Party's interests in the
Collateral. This insurance may, but need not, protect Debtor's interests. The
coverage purchased by Secured Party may not pay any claim made by Debtor or any
claim that is made against Debtor in connection with the Collateral. Debtor may
later cancel any insurance purchased by Secured Party, but only after providing
Secured Party with evidence that Debtor has obtained insurance as required by
this Agreement. If Secured Party purchases insurance for the Collateral, Debtor
will be responsible for the costs of that insurance, including interest and
other charges imposed by Secured Party in connection with the placement of the
insurance, until the effective date of the cancellation or expiration of the
insurance. The costs of the insurance may be added to the Indebtedness. The
costs of the insurance may be more than the cost of insurance Debtor is able to
obtain on its own.
(f) If Collateral Attaches to Real Estate. If the Collateral or any part
thereof has been attached to or is to be attached to real estate, an accurate
description of the real estate and the name and address of the record owner is
set forth on the Schedules. Debtor shall, on demand of Secured Party, furnish
Secured Party with a disclaimer or waiver or any interest in any such Collateral
satisfactory to Secured Party and signed by all persons other than Debtor having
an interest in the real estate.
(g) Financial Statements. Debtor shall furnish to Secured Party, as soon as
practicable, and in any vent within sixty (60) days after the end of each fiscal
quarter of Debtor and each guarantor of all or any part of the Indebtedness
(each, a "Guarantor"), respectively, Debtor's and each Guarantor's unaudited
financial statements including in each insurance, balance sheets, income
statements, and statements of cash flow, on a consolidated and consolidating
basis, as appropriate, and separate profit and loss statements as of and for the
quarterly period then ended and for the respective person's fiscal year to date,
prepared in accordance with generally accepted accounting principles,
consistently applied ("GAAP"). Debtor shall also furnish to Secured Party, as
soon as practicable, and in any event within ninety (90) days after the end of
each fiscal year of Debtor and each Guarantor, respectively, Debtor's and
Guarantor's annual audited financial statements, including balance sheets,
income statements and statements of cash flow for the fiscal year then ended, on
a consolidated and consolidating basis, as appropriate, which have been prepared
by its independent accountants in accordance with
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GAAP. Such audited financial statements shall be accompanied by the independent
accountant's opinion, which opinion shall be in form generally recognized as
"unqualified."
(h) Authorization. Debtor is now, and will at all times remain, duly
licensed, qualified to do business and in good standing in every jurisdiction
where failure to be so licensed or qualified and in good standing would have a
material adverse effect on its business, properties or assets. Debtor has the
power to authorize, execute and deliver this Agreement, the Notes and any other
documents and instruments relating thereto (the Agreements, Notes and other
documents and instruments, all as amended from time to time, are hereafter
collectively referred to as the "Loan Documents"), to incur and perform
obligations hereunder and thereunder, and to grant the security interests
created hereby. As of the time of delivery thereof to Secured Party, the Loan
Documents will have been duly authorized, executed, and delivered by or on
behalf of Debtor, and will constitute the legal, valid, and binding obligations
of Debtor, enforceable against Debtor in accordance with their respective terms.
Debtor shall preserve and maintain its existence and shall not wind up its
affairs or otherwise dissolve. Debtor shall not, without thirty (30) days prior
written notice to Secured Party, (1) change its name or so change its structure
that any financing statement or other record notice becomes misleading or (2)
change its principal place of business or chief executive or accounting offices
from the address stated herein.
(i) Litigation. There are no actions, suits, proceedings, or investigations
("Litigation") pending or, to the knowledge of Debtor, threatened against Debtor
or otherwise affecting the Collateral other than as disclosed in Schedule 2(i)
attached hereto. Debtor shall promptly notify Secured Party in writing of
Litigation against it if: (1) the outcome of such Litigation may materially or
adversely affect the finances or operations of Debtor (for purposes of this
provision, Five Hundred Thousand and 00/100 Dollars ($500,000.00) shall be
deemed material) or (2) such Litigation questions the validity of any Loan
Document or any action taken or to be taken pursuant thereto. Debtor shall
furnish to Secured Party such information regarding any such Litigation as
Secured Party shall reasonably request.
(j) No Conflicts. Debtor is not in violation of any material term or
provision of its by-laws, or of any material agreement or instrument, or of any
judgment, decree, order, or any statute, rule, or governmental regulation
applicable to it. The execution, delivery, and performance of the Loan Documents
do not and will not violate, constitute a default under, or otherwise conflict
with any such term or provision or result in the creation of any security
interest, lien, charge, or encumbrance upon any of the properties or assets of
Debtor, except for the security interest herein created.
(k) Compliance with Laws. Debtor shall use and maintain the Collateral in a
lawful manner in accordance with all applicable laws, regulations, ordinances,
and codes and shall otherwise comply in all material respects with all
applicable laws, rules, and regulations and duly observe all valid requirements
of all governmental authorities, and all statutes,
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rules and regulations relating to its business, including (i) the Internal
Revenue Code of 1986, as amended from time to time, (ii) all federal, state, and
local laws, rules, regulations, orders, and decrees relating to health, safety,
hazardous substances, and environmental matters, including the Resource Recovery
and Reclamation Act of 1976, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Toxic Substances Control Act, the
Clean Water Act of 1977, and the Clean Air Act, all as amended from time to time
(collectively, "Environmental Laws"), (iii) the Employees Retirement Income
Security Act of 1974, as amended from time to time, and (iv) the Fair Labor
Standards Act, as amended from time to time.
(l) Taxes. Debtor has timely filed all tax returns (federal, state, local,
and foreign) required to be filed by it and has paid or established reserves for
all taxes, assessments, fees, and other governmental charges in respect of its
properties, assets, income and franchises. Debtor shall promptly pay and
discharge all taxes, assessments, license fees (related to the Collateral) and
other governmental charges prior to the date on which penalties are attached
thereto, establish adequate reserves for the payments of such taxes,
assessments, and other governmental charges and make all required withholding
and other tax deposits, and, upon request, provide Secured Party with receipts
or other proof that any or all of such taxes, assessments, license fees or
governmental charges have been paid in a timely fashion; provided, however, that
nothing contained herein shall require the payment of any tax, assessment, or
other governmental charge so long as its validity is being diligently contested
in good faith and by appropriate proceedings diligently conducted and Debtor has
established cash reserves therefor in accordance with GAAP. Should any stamp,
excise, or other tax, including mortgage, conveyance, deed, intangible, or
recording taxes become payable in connection with or respect of any of the Loan
Documents, Debtor shall pay the same (including interest and penalties, if any)
and shall hold Secured Party harmless with respect thereto.
(m) Environmental Laws. Except as disclosed by Debtor (or Debtor's
representative or agent) in writing to Secured Party's counsel (including
internal counsel) on or prior to the date hereof, Debtor has (1) not received
any summons, complaint, order, or other notice that it is not in compliance
with, or that any public authority is investigating its compliance with, any
Environmental Laws and (2) no knowledge of any material violation of any
Environmental Laws on or about its assets or property. Debtor shall provide
Secured Party, promptly following receipt, copies of any correspondence, notice,
complaint, order, or other document that it receives asserting or alleging a
circumstance or condition which requires or may require cleanup, removal,
remedial action or other response by or on the part of Debtor under any
Environmental Laws, or which seeks damages or civil, criminal or punitive
penalties from Debtor for an alleged violation of any Environmental Laws.
(n) Regulations. No proceeds of the loans or any other financial
accommodation hereunder will be used, directly or indirectly, for the purpose of
purchasing or carrying any
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margin security, as that term is defined in Regulations G, T, U, X of the Board
of governors of the Federal Reserve System.
(o) Books and Records. Debtor shall maintain, at all times, true and
complete books and records in accordance with GAAP and consistent with those
applied in the preparation of Debtor's financial statements. At all reasonable
times, upon reasonable notice, and during normal business hours, Debtor shall
permit Secured Party or its agents to audit, examine and make extracts from or
copies of any of its books, ledgers, reports, correspondence, and other records
relating to the Collateral.
(p) Setoff. Without limiting any other right of Secured Party, whenever
Secured Party has the right to declare any Indebtedness to be immediately due
and payable (whether or not it has so declared), Secured Party is hereby
authorized at any time and from time to time to the fullest extent permitted by
law, to set off and apply against any and all of the Indebtedness, any and all
monies then or thereafter owed to Debtor by Secured Party in any capacity,
whether or not the obligation to pay such monies owed by Secured Party is then
due. Secured Party shall be deemed to have exercised such right or setoff
immediately at the time of such election even though any charge therefor is made
or entered on Secured Party's records subsequent thereto.
(q) Standard of Care; Notice of Claims. Debtor acknowledges and agrees that
Secured Party shall not be liable for any acts or omissions nor for any error of
judgment or mistake of fact or law other than as a sole and direct result of
Secured Party's gross negligence or willful misconduct. Debtor shall give
Secured Party written notice of any action or inaction by Secured Party or any
agent or attorney of Secured Party that may give rise to a claim against Secured
Party or any agent or attorney of Secured Party or that may be a defense to
payment or performance of and of the Indebtedness for any reason, including
commission of a tort (subject, in any event, to the first sentence of this
paragraph) or violation of any contractual duty or duty implied by law. Debtor
agrees that unless such notice is fully given as promptly as possible (and in
any event within thirty (30) days) after the Chairman of the Board, Chief
Executive Officer, President, Chief Operating Officer, Chief Financial Officer,
Secretary, any Senior or Executive Vice President or internal counsel of Debtor,
or any Vice President of Business and/or Technical Operations of Debtor's
Dallas, Oregon operations, has knowledge, or with the exercise of reasonable
diligence should have had knowledge, of any such action or inaction, Debtor
shall not assert, and Debtor shall be deemed to have waived, any claims or
defense arising therefrom.
(r) Indemnity. Debtor shall indemnify, defend and hold harmless Secured
Party, its parent, affiliates, officers, directors, agents, employees, and
attorneys harmless from and against any loss, expense (including reasonable
attorneys' fees and costs), damage or liability arising directly or indirectly
out of (i) any breach of any representation, warranty or covenant contained in
any Loan Document, (ii) any claim or cause of action that would deny Secured
Party the full benefit or protection of any provision in any Loan Document, or
(iii) the ownership, possession, lease, operation, use, condition, sale, return,
or other
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disposition of the Collateral, except to the extent the loss, expense, damage or
liability arises solely and directly from Secured Party's gross negligence or
willful misconduct. If after receipt of any payment of all or any part of the
Indebtedness, Secured Party is for any reason compelled to surrender such
payment to any person or entity, because such payment is determined to be void
or voidable as a preference, impermissible set-off, or a diversion of trust
funds, or for any other reason, the Loan Documents shall continue in full force
and effect and Debtor shall be liable to Secured Party for the amount of such
payment surrendered. The provisions of the preceding sentence shall be and
remain effective notwithstanding any contrary action which may have been taken
by Secured Party in reliance upon such payment, and any contrary action so taken
shall be without prejudice to Secured Party's rights under this Agreement and
shall be deemed to have been conditioned upon such payment having become final
and irrevocable. Additionally, Debtor shall be liable for all charges, costs,
expenses and attorneys' fees incurred by Secured Party (including a reasonable
allocation of the compensation, costs and expenses of internal counsel, based
upon time spent): (i) in perfecting, defending or protecting its security
interest in the Collateral, or any part thereof; (ii) in the negotiation,
execution, delivery, administration, amendment or enforcement of the Loan
Documents or the collection of any amounts due under any Note or other Loan
Document; (iii) in any lawsuit or other legal proceeding in any way connected
with any of the Loan Documents, including any contract or tort or other actions,
any arbitration or other alternative dispute resolution proceeding, all appeals
and judgment enforcement actions and any bankruptcy proceeding (including any
relief from stay and/or adequate protection motions, cash collateral disputes,
assumption/rejection motions and disputes or objections to any proposed
disclosure statement or reorganization plan). Debtor acknowledges and agrees
that the preceding sentence shall survive and not be merged with any judgment in
connection with any exercise of any right or remedy by Secured Party provided
under this Agreement. The provisions of this paragraph shall survive the
termination of this Agreement and the other Loan documents.
(s) Complete Information. No representation or warranty made by Debtor in
any Loan Document and no other document or statement furnished to Secured Party
by or on behalf of Debtor contains any material misstatement of a material fact
or omits to state any material fact necessary in order to make the statements
contained therein not misleading. Except as expressly set forth in the
Schedules, there is no fact know to Debtor that will or could have a materially
adverse affect on the business, operation, condition (financial or otherwise),
performance, properties or prospects of Debtor or Debtor's ability to timely pay
all of the Indebtedness and perform all of its other obligations contained in or
secured by this Agreement. Each representation and warranty made by Debtor in
this Agreement shall be deemed to have been made as of the date of this
Agreement and as of the date each advance of funds under a Note.
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(t) Collateral Documentation. Debtor shall deliver to Secured Party prior
to any advance or loan, satisfactory documentation regarding the Collateral to
be financed, including such invoices, canceled checks evidencing payments, or
other documentation as may be reasonably requested by Secured Party.
Additionally, Debtor shall satisfy Secured Party that Debtor's business and
financial information is as has been represented and there has been no material
change in Debtor's business, financial condition, or operations.
3. Prepayment. Upon forty-five (45) days prior written notice to Secured Party,
Debtor may prepay in whole, but not in part (except as set forth below), on any
regularly scheduled payment date under the Note, the then entire unpaid
principal balance of any Note, together with all accrued and unpaid interest
thereon to the date of such prepayment, provided that along with and in addition
to such prepayment, Debtor shall pay (i) any and all other sums then due under
any of the Loan Documents, and (ii) a prepayment fee as liquidated damages and
not as a penalty, in a sum equal to three percent (3%) of the principal balance
being prepaid for any prepayment on or before the second anniversary of the date
of the Note and once percent (1%) of the principal balance being prepaid for any
prepayment after the second anniversary of the date of the Note and before the
seventh anniversary date of the Note. The prepayment fee described in clause
(ii) above shall also be due upon the acceleration of the maturity date of any
Note following the occurrence of any Event of Default. Notwithstanding anything
to the contrary set forth above, provided no Event of Default has occurred and
is continuing, in each yearly period following the date of this Agreement (each
such yearly period shall begin on the date of this Agreement or an anniversary
date thereof, as the case may be, and end on the day immediately preceding the
next anniversary date of this Agreement), Debtor shall be permitted to prepay
(without paying any fee, liquidated damages or other penalties) principal
outstanding under the Note in the amount of One Hundred Thousand and 00/100
Dollars ($100,000.00), or less, together with all accrued and unpaid interest
thereon to the date of such prepayment, provided, however, that each such
prepayment shall be made on a regularly scheduled payment date under the Note.
4. Events of Default. If any one of the following events (each of which is
herein called an "Event of Default") shall occur: (a) Debtor fails to pay any
part of the Indebtedness within ten (10) calendar days of its due date, or (b)
any warranty or representation of Debtor in any Loan Document is materially
untrue, misleading or inaccurate, or (c) Debtor breaches or defaults in the
performance of any of its obligations under Paragraphs (c) through (e) of
Section 2, above, or (d) Debtor or any Guarantor breaches or defaults in the
performance of any other agreement or covenant under any Loan Document and fails
to cure such breach or default within thirty (30) days after written notice of
the breach or default from Secured Party, or (e) Debtor of any Guarantor
breaches or defaults in the payment or performance of any debt or other
obligation owed by it to Secured Party or any affiliate of Secured Party and
fails to cure such breach or default within the applicable cure period, if any,
or (f) Debtor breaches or defaults in the payment or performance of any debt or
other obligation, whether now or hereafter existing, with an outstanding
principal balance in excess of One Million and 00/100 Dollars ($1,000,000.00),
and the
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same is subsequently accelerated, or (g) there shall be a change in the
beneficial ownership and control, directly or indirectly, of the majority of the
outstanding voting securities or other interests entitled (without regard to the
occurrence of any contingency) to elect or appoint members of the board of
directors or other managing body of Debtor or any Guarantor other than any such
change as the result of the death of Xxxxxx X. Xxxxxxxxxx or Xxxxx X.
Xxxxxxxxxx, or as the result of a transfer for estate planning purpose of any
shares of Debtor owned by Xxxxxx X. Xxxxxxxxxx or Xxxxx X. Xxxxxxxxxx to a trust
for the benefit of his or her heirs, as to which Xxxxxx X. Xxxxxxxxxx or Xxxxx
X. Xxxxxxxxxx, or both, are the sole trustee(s) (a "change of control"), or
there is any merger, consolidation, dissolution, liquidation, winding up or sale
or other transfer of all or substantially all of the assets of Debtor or any
Guarantor pursuant to which there is a change of control or cessation of Debtor
or the Guarantor or the business of either, or (h) Debtor or any Guarantor shall
file a voluntary petition in bankruptcy, shall apply for or permit the
appointment by consent or acquiescence of a receiver, conservator,
administrator, custodian or trustee for itself or all or a substantial part of
its property, shall make an assignment for the benefit of creditors or shall be
unable, fail or admit in writing its inability to pay its debts generally as
such debts become due, or (i) there shall have been filed against Debtor or any
Guarantor an involuntary petition in bankruptcy or Debtor or any Guarantor shall
suffer or permit the involuntary appointment of a receiver, conservator,
administrator, custodian or trustee for all or a substantial part of its
property or the issuance of a warrant of attachment, diligence, execution or
similar process against all or any substantial part of its property; unless, in
each case, such petition, appointment or process is fully bonded against,
vacated, or dismissed within forty-five (45) days from its effective date but
not later than ten (10) days prior to any proposed disposition of any assets
pursuant to any such proceeding, or (j) if there is a material adverse change in
the business or financial condition or prospects of Debtor, then, and in any
such event, Secured Party shall have the right to exercise any one or more of
the remedies hereinafter provided.
Each of the following events shall also constitute an Event of Default hereunder
and upon the occurrence of any one or more of them, Secured Party shall have the
right to exercise any one or more of the remedies hereinafter provided:
(aa) If at the end of the fist fiscal year of Debtor ending after the date
of this Agreement, and each fiscal year ending thereafter (each a "Fiscal
Year"), Debtor's operating income before income expense, income taxes,
depreciation, amortization and extraordinary gains and/or losses, all as
determined in accordance with GAAP ("EBITDA"), for each such Fiscal Year, is
less than one and one-half (1.5) times as much as the sum of all of Debtor's
interest expense incurred during the Fiscal Year plus the current portion of
long term debt and capitalized leases reported as of the end of the Fiscal Year,
all as determined in accordance with GAAP; or
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(bb) If Debtor at any time has a net worth as determined in accordance with
GAAP of less than Thirty Million and 00/100 Dollars ($30,000,000.00) increasing
annually by an amount equal to 50% of the reported net after-tax earnings
beginning with the Fiscal Year ending June 30, 1997 and each subsequent year
thereafter; or
(cc) If at the end of any Fiscal Year End of Debtor, the sum of Debtor's
notes payable, capitalized lease obligations and all other borrowed funds
(whether reflected as a current liability or a long-term liability) as
determined by GAAP is greater than three and one-half (3/5) times Debtor's
EBITDA for the Fiscal Year then ended.
5. Remedies. If an Event of Default shall occur, in addition to all rights and
remedies of a secured party under the Uniform Commercial Code, Secured Party
may, at its option, at any time (a) declare the entire unpaid Indebtedness to be
immediately due and payable; (b) without demand or legal process, enter into the
premises where the Collateral may be found and take possession of and remove the
Collateral, all without charge to or liability on the part of Secured party; or
(c) require Debtor to discontinue its use of the Collateral, and, to the extent
it is not permanently affixed to or otherwise a part of real property, assemble,
crate, pack, ship, and deliver the Collateral to Secured Party in such manner
and at such place as Secured Party may require, all at Debtor's sole cost and
expense. DEBTOR HEREBY EXPRESSLY WAIVES ITS RIGHTS, IF ANY, TO (1) PRIOR NOTICE
OF REPOSSESSION AND (2) A JUDICIAL OR ADMINISTRATIVE HEARING PRIOR TO SUCH
REPOSSESSION. Secured Party may, at its option, ship, store and repair the
Collateral so removed and sell any or all of it at a public or private sale or
sales. Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured Party
will give Debtor reasonable notice of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made, it being understood and agreed that Secured
Party may be a buyer at any such sale and Debtor may not, either directly or
indirectly, be a buyer at any such sale. The requirements, if any, for
reasonable notice will be met if such notice is delivered to Debtor in
accordance with Section 10 of this Agreement at least ten (10) days before the
time of sale or disposition. In accordance with Section 2(r), Debtor shall also
be liable for and shall upon demand pay to Secured Party all expenses incurred
by Secured Party in connection with the undertaking or enforcement by Secured
Party of any of its rights or remedies hereunder or at law, all of which costs
and expenses shall be additional Indebtedness hereby secured. After any such
sale or disposition, Debtor shall be liable for any deficiency of the
Indebtedness remaining unpaid, with interest thereon at the rate set forth in
the related Notes.
6. Cumulative Remedies. All remedies of Secured Party hereunder are cumulative,
are in addition to any other remedies provided for by law or in equity and may,
to the extent permitted by law, be exercised concurrently or separately, and the
exercise of any one remedy shall not be deemed an election of such remedy or to
preclude the exercise of any other remedy. No failure on the part of Secured
Party to exercise, and no delay in
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exercising any right or remedy, shall operate as a waiver thereof or in any way
modify or be deemed to modify the terms of this Agreement or any other Loan
Document or the Indebtedness, nor shall any single or partial exercise by
Secured Party of any right or remedy preclude any other or further exercise of
the same or any other right or remedy.
7. Assignment. Secured Party may transfer or assign all or any part of the
Indebtedness and the Loan Documents without releasing Debtor or the Collateral,
and upon such transfer or assignment the assignee or holder shall be entitled to
all the rights, powers, privileges and remedies of Secured party to the extent
assigned or transferred. The obligations of Debtor shall not be subject, as
against any such assignee or transferee, to any defense, set-off, or counter-
claim available to Debtor against Secured Party and any such defense, set-off,
or counter-claim may be asserted only against Secured Party.
8. Time is of the Essence. Time and manner of performance by Debtor of its
duties and obligations under the Loan Documents is of the essence. If Debtor
shall fail to comply with any provision of any of the Loan documents, Secured
Party shall have the right, but shall not be obligated, to take action to
address such non-compliance, in whole or in part, and all moneys spent and
expenses and obligations incurred or assumed by Secured Party shall be paid by
Debtor upon demand and shall be added to the Indebtedness. Any such action by
Secured Party shall not constitute a waiver of Debtor's default.
9. Enforcement. This Agreement shall be governed by and construed in accordance
with the internal laws and decisions of the State of Illinois, without regard to
principles of conflicts of law. At Secured Party's election and without limiting
Secured Party's right to commence an action in any other jurisdiction, Debtor
hereby submits to the exclusive jurisdiction and venue of any court (federal,
state or local) having situs within the State of Illinois, expressly waives
personal service of process and consents to service by certified mail, postage
prepaid, directed to the Chief Financial Officer of Debtor at the last known
address of Debtor, which service shall be deemed completed within ten (10) days
after the mailing thereof.
10. Further Assurance; Notice. Debtor shall, at its expense, do, execute and
deliver such further acts and documents as Secured Party may from time to time
reasonably require to assure and confirm the rights created or intended to be
created hereunder, to carry out the intention or facilitate the performance of
the terms of the Loan Documents or to assure the validity, perfection, priority
or enforceability or any security interest created hereunder. Debtor agrees to
execute any instrument or instruments necessary or expedient for filing,
recording, perfecting, notifying, foreclosing, and/or liquidating of Secured
Party's interest in the Collateral upon request of, and as determined by,
Secured Party, and Debtor hereby specifically authorizes Secured Party to
prepare and file Uniform Commercial code financing statements and other
documents and to execute same for and on behalf of Debtor as Debtor's attorney-
in-fact, irrevocably and coupled with an interest, for such purposes. All
notices required or otherwise given by either party shall be in writing and
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shall be delivered by hand, by registered or certified first class United States
mail, return receipt requested, or by overnight courier to the other party at
its address stated herein or at such other address as the other party may from
time to time designate by written notice (and, if to Debtor, directed to the
Chief Financial Officer of Debtor). All notices shall be deemed given when
received, when delivery is refused or when the returned for failure to be called
for.
11. Waiver of Jury Trial. Debtor and Secured Party hereby waive their respective
rights to a jury trial of any claim or cause of action based upon or arising in
connection with any of the Loan Documents. this waiver is informed and freely
made. Debtor and Secured Party acknowledge that this waiver is a material
inducement to enter into a business relationship, that each has already relied
on the waiver in entering into the Loan Documents, and that each will continue
to rely on the waiver in their related future dealings. Debtor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel.
12. Complete Agreement. The Loan Documents are intended by Debtor and Secured
Party to be the final, complete, and exclusive expression of the agreement
between them. The Loan documents may not be altered, modified or terminated in
any manner except by a writing duly signed by the parties thereto. Debtor and
Secured Party intend the Loan Documents to be valid and binding and no
provisions hereof and thereof which may be deemed unenforceable shall in any way
invalidate any other provisions of the Loan Documents, all of which shall remain
in full force and effect. The Loan Documents shall be binding upon the
respective successors, legal representatives, and assigns of the parties. The
singular shall include the plural, the plural shall include the singular, and
the use of any gender shall be applicable to all genders. The use in any of the
Loan Documents of the word "including," or other words of similar import, when
following any general term, statement or matter shall not be construed to limit
such term, statement or matter to any specific item or matters, whether or not
language of nonlimitation, such as "without limitation" or "but not limited to,"
or words of similar import, are used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within
the broadest possible scope of such term, statement or matter. If there be more
than one Debtor, the warranties, representations and agreements contained herein
and in the other Loan Documents shall be joint and several. The Schedules on the
following page[s] are incorporated herein by this reference and made a part
hereof. Sections and subsections headings are included for convenience of
reference only and shall not be given any substantive effect.
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IN WITNESS WHEREOF, Secured Party and Debtor have each signed this Security
Agreement as of the day and year first above written.
XXXXXX FINANCIAL, INC., XXXXXXXXXX INDUSTRIES, INC.,
a Delaware corporation an Oregon corporation
By: XXXX XXXXXX By: XXXXX XXXXXXX
------------------------ ------------------------
Name: Xxxx Xxxxxx Name: Xxxxx Xxxxxxx
---------------------- ----------------------
Title: VP Title: VP-Finance
--------------------- ---------------------
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Loan No. 1910069-0008
--------------------------------------------------------------------------------
Xxxxxx Financial
PROMISSORY NOTE
$1,519,105.74 March 31, 1998
FOR VALUE RECEIVED, Xxxxxxxxxx Industries, Inc., an Oregon corporation
("Maker"), promises to pay to the order of Xxxxxx Financial, Inc., a Delaware
corporation (together with any holder of this Note, "Payee"), at its office
located at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, or at such other
place as Payee may from time to time designate, the principal sum of One Hundred
Five Hundred Nineteen One Hundred Five and 74/100 Dollars ($1,519,105.74),
together with interest thereon at a fixed rate equal to seven and 80/100 percent
(7/80%) per annum. Principal and interest shall be payable in eighty-four (84)
consecutive monthly installments commencing May 1, 1998, and continuing on the
same day of each consecutive calendar month thereafter until this Note is fully
paid, each such installment in the amount of Twenty-Three thousand Five Hundred
Twenty-Six and 02/100 Dollars ($23,526.02); provided, however, that in any and
all events the final installment payment hereunder shall be in the amount of the
entire then outstanding principal balance hereunder, plus all accrued and unpaid
interest, charges and other amounts owing hereunder or under the Security
Agreement (defined below). All payments shall be applied first to interest and
then to principal. Interest shall be computed on the basis of a 360 day year
comprised of 30-day months. Maker shall make an interest only initial payment on
April 1, 1998 of accrued interest from the loan disbursement date through March
31, 1998.
Notwithstanding the foregoing, if at any time implementation of any
provision hereof shall cause the interest contracted for or charged herein or
collectable hereunder to exceed the applicable lawful maximum rate, then the
interest shall be limited to such applicable lawful maximum.
This Note is secured by the collateral described in the Security Agreement
dated March 31, 1998, between the Maker and Payee (the "Security Agreement;" and
together with all related documents and instruments, the "Loan Documents") to
which reference is made for a statement of the nature and extent of protection
and security afforded, certain rights of Payee and certain rights and
obligations of Maker, including Maker's rights, if any, to prepay the principal
balance hereof; provided, however, that in addition to any other sum payable
hereunder, under the Security Agreement or any of the other Loan documents, in
the event of a prepayment of the principal balance hereunder, whether voluntary,
following acceleration or otherwise, Maker shall pay to Payee together with such
prepayment a Breakage Fee (defined below), which Breakage Fee, together with the
amounts payable under Section 3(ii) of the Security Agreement, if any,
represents liquidated damages to Payee for the loss of its bargain and not a
penalty. As used herein, the term "Breakage Fee" shall mean the amount, if any,
by which (A) the present value, in the aggregate, of the then remaining
installments of principal and interest due hereunder, absent the prepayment,
using a discount rate equal to (i) the yield to maturity as of the date two (2)
days prior to the date of the prepayment on United States Treasury securities
with a final maturity approximately equal to the remaining term hereof, absent
the prepayment, as published in The Wall Street Journal, plus (ii) two and
10/100 percent (2.10%), exceeds (B) the then outstanding principal balance
hereunder, absent the prepayment.
Time is of the essence hereof. If payment of any installment or any other
sum due under this Note or the Loan Documents is not paid when due, Maker agrees
to pay a late charge equal to the lesser of (i) five cents (5 cents) per dollar
on, and in addition to, the amount of each such payment, or (ii) the maximum
amount Payee is permitted to charge by law. In the event of the occurrence of an
Event of Default (as defined in the Security Agreement), then the entire unpaid
principal balance hereof with accrued and unpaid interest thereon, together with
all other sums payable under this Note or the Loan Documents, shall, at the
option of Payee and without notice or demand, become immediately due and
payable, such accelerated balance bearing interest until paid at the rate of
three and 00/100 percent (3.00%) per annum above the fixed rate set forth in the
first paragraph of this Note.
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Maker and all endorsers, guarantors or any others who may at any time
become liable for the payment hereof hereby consent to any and all extensions of
time, renewals, waivers and modifications of, and substitutions or release or
security or of any party primarily or secondarily liable on, or with respect to,
this Note or any of the Loan Documents or any of the terms and provisions
thereof that may be made, granted or consented to by Payee, and agree that suit
may be brought and maintained against any one or more of them, at the election
of Payee, without joinder of the others as parties thereto, and that Payee shall
not be required to first foreclose, proceed against, or exhaust any security
herefor, in order to enforce payment of this Note by any one or more of them.
Maker and all endorsers, guarantors or any others who may at any time become
liable for the payment hereof hereby severally waive presentment, demand for
payment, notice of nonpayment, protest, notice of protest, notice of dishonor,
and all other notices in connection with this Note, filing of suit and diligence
in collecting this Note or enforcing any of the security herefor, and, without
limiting any provision of any of the Loan Documents, agree to pay, if permitted
by law, all expenses incurred in collection, including reasonable attorneys'
fees, and hereby waive all benefits of valuation, appraisement and exemption
laws.
If there be more than one Maker, all the obligations, promises, agreements
and covenants of maker under this Note are joint and several.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. AT PAYEE'S ELECTION AND WITHOUT LIMITING PAYEE'S
RIGHT TO COMMENCE AN ACTION IN ANY OTHER JURISDICTION, MAKER HEREBY SUBMITS TO
THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURT (FEDERAL, STATE OR LOCAL)
HAVING SITUS WITHIN THE STATE OF ILLINOIS, EXPRESSLY WAIVES PERSONAL SERVICE OF
PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO
THE LAST KNOWN ADDRESS OF MAKER, WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN
TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.
MAKER HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE. THIS WAIVER IS INFORMED AND
FREELY MADE. MAKER ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT PAYEE HAS ALREADY RELIED ON THE WAIVER
IN MAKING THE LOAN EVIDENCED BY THIS NOTE, AND THAT PAYEE WILL CONTINUE TO RELY
ON THE WAIVER IN ITS RELATED FUTURE DEALINGS. MAKER FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.
Witness/Attest: XXXXXXXXXX INDUSTRIES, INC.
XXXXXX X. XXXXXXX By: XXXXX XXXXXXX
----------------- ------------------------
Name: Xxxxx Xxxxxxx
----------------------
Title: VP - Finance
---------------------
2
