LOAN AGREEMENT (TERM LOAN)
Exhibit
10.1
(TERM
LOAN)
This
Loan
Agreement (Term Loan) (the "Agreement), dated June 8,
2006 for
reference purposes only, is executed
by and between ASDS
of Orange County, Inc., a Delaware corporation (the
"Borrower"), and First
Republic Bank
(the
"Lender"), with reference to the following facts:
A. Borrower
has requested a term loan in the original principal amount of Five
Million Three Hundred Thousand and 00/100 Dollars ($5,300,000.00)
(the
"Loan") from the Lender for the purposes set forth in this
Agreement.
B. Borrower
and the Lender desire to enter into this Agreement to establish certain terms
and conditions relating to
the
Loan.
THEREFORE,
for valuable consideration, Borrower and the Lender agree as follows:
ARTICLE
1
DEFINITIONS
For
purposes of this Agreement, the following terms shall have the following
definitions:
1.1
Borrower's
Application. "Borrower's
Application" means the written application, if any
and
all
financial
statements and other information submitted by Borrower to the Lender in
connection with the Lender's approval of the
Loan.
1.2
Business
Day. "Business
Day" means any day other than a day on which commercial banks in California
are authorized or required by law to close.
1.3
Collateral.
"Collateral"
means
all
real and personal property, if
any, of
Borrower or any third Person now
or
hereafter securing all or any part of the Obligations.
1.4
Commitment.
"Commitment"
means an amount equal to the original principal face amount of the Note.
1.5
Default.
"Default"
means any event which, with notice or passage of time or both, would constitute
an
Event
of Default.
1.6
Event
of Default. "Event
of
Default" means the Lender's declaration by written notice to Borrower
of
a
default by Borrower under the Loan Documents based on the occurrence of one
or
more of the events described in Section
4.1 of this Agreement.
1.7
Governmental
Authorities. "Governmental
Authorities" means (a) the United States; (b) the state, county,
city or other political subdivision in which any of the Collateral is located;
(c) all other governmental or quasi-governmental
authorities, boards, bureaus, agencies, commissions, departments, administrative
tribunals, instrumentalities and authorities; and (d) all judicial authorities
and public utilities having or exercising jurisdiction over Borrower or the
Collateral.
The term "Governmental Authority" means any one of the Governmental
Authorities.
1.8
Governmental
Permits. "Governmental
Permits" means all permits, approvals, licenses, and authorizations
now or hereafter issued by any Governmental Authorities for or in connection
with the conduct of Borrower's business
or the ownership or use by Borrower of the Collateral or any of its other
assets.
1.9
Governmental
Requirements. "Governmental
Requirements" means all existing and future laws, ordinances,
rules, regulations, orders, and requirements of all Governmental Authorities
applicable to Borrower, the Collateral
or any of Borrower's other assets.
1.10
Guaranties.
"Guaranties"
means, collectively, (a) the Continuing Guaranties of Payment and Performance
and all other guaranty agreements of any kind, if
any
now
or
hereafter executed by the Guarantors, and all extensions,
renewals, modifications and replacements of any or all of such documents; and
(b) any pledge of or grant of security
interest in any certificate of deposit, account, stock, securities, bonds,
or
other property or asset of any kind, if
any, now
or
hereafter executed by any third Person to secure any or all of the Obligations,
and all extensions, renewals, modifications and replacements of any or all
of
such documents (collectively, the "Third Party Pledge Agreements").
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1.11
Guarantors.
"Guarantors"
means, collectively, (a) the Person or Persons, if
any, now
or
hereafter guaranteeing
payment of the Note or payment or performance of any or all of the other
Obligations, including the Persons, if any,
identified
as guarantors in the Loan Schedule; and (b) the Person or Persons, if
any
now
or
hereafter entering into any of
the
Third Party Pledge Agreements to secure any or all of the
Obligations.
1.12
Loan
Closing. "Loan
Closing" or "Closing Date" means the earlier of the first date on which all
or
any
part
of the proceeds of the Loan are initially disbursed by the Lender to or for
the
benefit of Borrower.
1.13
Loan
Documents. "Loan
Documents" means the Note, Security Agreements, Guaranties, Third Party
Pledge Agreements, this Agreement, all other documents now or hereafter executed
by Borrower and any of the Guarantors, respectively, and delivered to the Lender
at the Lender's request in connection with the Loan, and all extensions,
renewals, modifications and replacements of any or all of such
documents.
1.14
Loan
Fee. "Loan
Fee" means the Loan fee specified in Section 8 of the Loan Schedule which shall
be
payable by Borrower to the Lender prior to or on the Loan Closing.
1.15
Loan
Schedule. "Loan
Schedule" means the Loan Schedule attached to this Agreement as Exhibit
"A"
1.16
Maturity
Date. "Maturity
Date" means the stated maturity date of the Note.
1.17
Note. "Note"
means (a) the promissory note dated the same date as this Agreement executed
by
Borrower
evidencing the Loan and all extensions, renewals, modifications and replacements
of such promissory note; and (b) any additional note or notes now or hereafter
executed by Borrower in favor of the Lender which specifically recite that
they
arise out of this Agreement, and all extensions, renewals, modifications and
replacements of any or all of such note or notes.
1.18
Obligations.
"Obligations"
means all debts, obligations, and liabilities of Borrower to the Lender
currently
existing or hereafter made, incurred or created, whether voluntary or
involuntary, and however arising or evidenced,
whether direct or acquired by the Lender by assignment or succession, whether
due or not due, absolute or continent, liquidated or unliquidated, determined
or
undetermined, whether under this Agreement, the Note, any of the other Loan
Documents, or otherwise, and whether Borrower may be liable individually or
jointly, or whether recovery upon such debt may be or become barred by any
statute of limitations or otherwise unenforceable, including all attorneys'
fees
and costs now or hereafter payable by Borrower to the Lender under the Loan
Documents or in connection with the collection and enforcement of such debts,
obligations and liabilities. Notwithstanding anything to the contrary contained
in this Agreement, this Agreement shall not secure and the term "Obligations
shall not include, any debts that are or may hereafter constitute "consumer
credit" which is subject to the disclosure requirements of the federal Truth-In
Lending Act (15 U.S.C. Section 1601, et
seq.) or
any
similar state law in effect from time to time, unless the Lender and Borrower
shall otherwise agree
in
a separate written agreement.
1.19
Person.
"Person"
means any natural person or any entity, including any corporation, partnership,
joint
venture, trust, limited liability company, unincorporated organization, trustee,
or Governmental Authority.
1.20
Personal
Property Security Agreements. "Personal
Property Security Agreement" or "Personal Property
Security Agreements" means, collectively, any and all personal security
agreements, pledge agreements, and Third Party Pledge Agreements, if
any, now
or
hereafter executed by Borrower or any other Person pursuant to which Borrower
or
such Person grants a personal property security interest to the Lender to secure
any or all of the Obligations, and all extensions,
renewals, modifications and replacements of any or all of such
documents.
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1.21
Real
Property Security Instruments. "Real
Property Security Instrument" or "Real Property Security
Instruments" means, collectively, any and all deeds of trust and mortgages,
if
any, now
or
hereafter executed by Borrower or any other Person pursuant to which Borrower
or
such Person grants a lien on real property to the Lender to secure any or all
of
the Obligations, and all extensions, renewals, modifications and replacements
of
any or all of such documents.
1.22
Security
Agreements. "Security
Agreements" means, collectively, the Personal Property Security Agreements
and
Real Property Security Instruments.
1.23
Other
Terms. All
accounting terms with an initial capital letter that are used but not defined
in
this Agreement shall have the respective meanings given to such terms in
accordance with generally accepted accounting principles,
consistently applied.
ARTICLE
2
DISBURSEMENT
OF LOAN PROCEEDS
2.1
Term
Loan. The
Lender agrees, on the terms and conditions contained in this Agreement and
the
other
Loan Documents, to make a term Loan to Borrower in the aggregate original
principal amount of the Commitment. The Loan shall be advanced on the Closing
Date and shall be evidenced by and repaid with interest in accordance with
the
terms
and
conditions of the Note.
2.2
Use
of Loan Proceeds. All
Loan
proceeds received by Borrower shall be used by Borrower solely for
payment of those costs, charges, and other items shown in the Loan Disbursement
Instructions executed by Borrower in connection with the Loan, general working
capital purposes in the ordinary course of Borrower's business, and any other
use specified in the Loan Schedule. The Lender shall have no obligation to
monitor or verify the use or application of any Loan proceeds disbursed by
the
Lender. Borrower shall not, directly or indirectly, use all or any part of
the
Loan proceeds for the purpose of purchasing or carrying any margin stock within
the meaning of Regulation U of the Board of Governors of the Federal Reserve
System (the "Board of Governors") or to extend credit to any Person for the
purpose of purchasing or carrying any such margin stock or for any purpose
which
violates or is inconsistent with Regulation X of the Board of Governors,
unless such use has been expressly approved in writing by the Lender, in its
discretion.
2.3
Initial
Loan Fee. Concurrently
with or prior to the Closing Date, Borrower shall pay to the Lender the Loan
Fee
specified in the Loan Schedule. The entire Loan Fee shall be deemed to be fully
earned by the Lender as of the
Loan
Closing, and no part of the Loan Fee shall be refundable to Borrower, whether
or
not the principal balance of the Loan
is
prepaid prior to the Maturity Date.
2.4
Reliance
by Lender. The
Lender may conclusively presume that all requests, statements, information,
certifications, and representations, whether written or oral, submitted or
made
by Borrower or any of its agents to the Lender in connection with the Loan
are
true and correct, and the Lender shall be entitled to rely thereon, without
investigation or inquiry of any kind by the Lender, in disbursing the Loan
proceeds and taking or refraining from taking any other
action in connection with the Loan.
ARTICLE
3
BORROWER'S
COVENANTS
3.1
Existence
of Borrower. If
Borrower is a corporation or other form of entity, Borrower shall maintain
its
existence in good standing under the laws of the state in which it is organized
and maintain its qualification as a foreign entity in good standing in each
jurisdiction in which the nature of its business requires qualification as
a
foreign entity and where
the
failure to qualify would have a material adverse effect on Borrower's
business.
3.2
Books
and Records; Inspections by Lender. Borrower
shall keep and maintain complete and accurate
books and records relating to it business at its principal place of business.
The Lender shall have access to such books and records at all reasonable times
upon not less than two (2) Business Days prior written notice to Borrower for
the purposes of examination, inspection, verification, copying and for any
other
reasonable purpose. Borrower authorizes the Lender, at its option but without
any obligation of any kind to do so, to discuss the affairs, finances and
accounts of Borrower with any of its officers and directors and with Borrower's
independent accountants and auditors, and Borrower irrevocably authorizes all
accountants and auditors employed or retained by Borrower to respond to and
answer all requests from the Lender
for financial and other information regarding Borrower. Borrower waives the
benefit of any accountant-client privilege
or other evidentiary privilege precluding or limiting the disclosure or delivery
of any of its books and records to the Lender
(except that Borrower does not waive any attorney-client
privilege).
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3.3
Reports.
Without
limiting any of the other terms of the Loan Documents, from time to time within
ten
(10)
Business Days after the Lender's written reasonable request to Borrower,
Borrower shall deliver to the Lender such reports and information available
to
Borrower concerning the business, financial condition and affairs of Borrower
and each Guarantor
as the Lender may reasonably request.
3.4
Payment
of Obligations; Compliance with Financial Covenants. Borrower
shall pay all of its indebtedness
under the Note and pay and perform all of its other Obligations under the Loan
Documents as and when the same
become due. Without limiting the generality of the immediately preceding
sentence, Borrower shall comply with all of the
financial covenants, if
any
contained
in Section 6 of the Loan Schedule (the "Financial Covenants") and the other
terms set
forth
in the Loan Schedule.
3.5
Notice
of Material Adverse Changes. Borrower
shall immediately notify the Lender in writing of (a)
any
material adverse change in the financial condition of Borrower or any Guarantor;
(b) any material adverse change in the Collateral; (c) any claim, proceeding,
litigation or investigation in the future threatened or instituted by or against
Borrower involving any claim or claims which, individually or in the aggregate,
may cause or result in a material adverse change
in
the financial condition or business of Borrower or any material impairment
in
the ability of Borrower to carry on its business
in substantially the same manner as it is now being conducted; and (d) any
occurrence which could form the basis of
an
Event of Default.
3.6
Further
Assurances. Upon
Lender's request, Borrower, at Borrower's expense, shall: (i) execute
(or
re-execute) and deliver such further documents and notices satisfactory to
Lender and take any action requested by Lender to carry out the intent of this
Agreement and the other Loan Documents; and (ii) provide such reports and
information available
to Borrower concerning its business and financial condition.
3.7
Claims.
Borrower
shall pay when due all claims which, if unpaid, might become a lien or charge
on
any
or
all of the properties or assets of Borrower.
3.8
Taxes. Borrower
shall pay when due all foreign, federal, state and local taxes, assessments,
and
governmental
charges now or hereafter levied upon or against Borrower or any of its
properties or assets, including all income,
franchise, personal property, real property, excise, withholding, sales and
use
taxes.
3.9
Contest.
Borrower
shall have the right to contest the payment of any tax, assessment, charge
or
claim
referred to in Section 3.7 or 3.8 above, provided that (a) appropriate contest
proceedings are promptly and in good faith commenced and diligently prosecuted
by Borrower; (b) a bond is posted or other appropriate action reasonably
acceptable to the Lender is taken to prevent such tax, assessment, charge or
claim from becoming a lien on the properties and
assets of Borrower; and (c) Borrower notifies the Lender in writing of the
commencement of, and any material development in, such proceedings.
3.10
Pension
Plans. Borrower
shall pay all amounts necessary to fund all of its present and future employee
benefit plans in accordance with their terms, and Borrower shall not permit
the
occurrence of any event with respect to any such plan which would result in
any
liability of Borrower, including any liability to the Pension Benefit
Guaranty
Corporation or any other Governmental Authority.
3.11
Insurance.
Borrower
shall maintain insurance against such risks and liabilities, in such forms,
and
for
such
amounts as are customarily maintained by entities engaged in the same or similar
businesses and similarly situated.
The form and substance of all such insurance policies shall be reasonably
acceptable to the Lender. Such insurance
shall be maintained with financially sound and reputable insurers reasonably
acceptable to the Lender. Upon the Lender's request, Borrower shall provide
the
Lender with evidence satisfactory to the Lender regarding the maintenance of
the
insurance required by this Section, including proof of premium payments and
copies of insurance policies, certificates of insurance, and endorsements.
If
Borrower fails to provide or pay for any policies of insurance required by
this
Section, the Lender, at its option and in its discretion, but without any
obligation of any kind to do so, shall have the right to obtain the same
at
Borrower's expense.
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3.12
Maintenance
of Properties. Borrower
shall maintain its properties in good condition and repair.
3.13
Licenses.
Borrower
shall maintain all Governmental Permits necessary for the ownership of it
properties
and the conduct of its businesses.
3.14
Compliance
with Applicable Laws. Borrower
shall at all times comply with and keep in effect all Governmental
Permits relating to Borrower, the Collateral, and Borrower's other assets.
Borrower shall at all times comply with, and shall cause the Collateral to
comply with (a) all Governmental Requirements, including all Hazardous Substance
Laws; (b) all requirements and orders of all judicial authorities which have
jurisdiction over Borrower or the Collateral; and (c)
all
covenants, conditions, restrictions and other documents relating to Borrower
or
the Collateral.
3.15
Place
of Business; Borrower's Name. Borrower
shall give the Lender at least thirty (30) days prior
written notice of any change in the location of Borrower's chief executive
office. Borrower shall give the Lender not less than thirty (30) days prior
written notice before changing its name or doing business under any other name.
Borrower has complied, and will in the future comply, with all Governmental
Requirements relating to the conduct of Borrower's business under
a
fictitious business name.
3.16
Annual
Financial Statements. Within
the time period set forth in the Loan Schedule after the close
of
Borrower's fiscal year, Borrower shall deliver to the Lender a balance sheet
and
a statement of profit and loss for Borrower for such fiscal year. Borrower
shall
cause all financial statements furnished to the Lender under this Agreement
to
be certified by the party to whom such statements apply. All annual financial
statements furnished to the Lender under this Section
shall comply with the requirements of Section 7.1 of the Loan
Schedule.
3.17
Quarterly/Monthly
Financial Statements. If
specifically required by the Lender in the Loan Schedule or at any time after
the Loan Closing, (a) within forty-five (45) days after the close of each of
the
first three (3) calendar quarters, Borrower shall deliver to the Lender a
balance sheet and a statement of profit and loss for Borrower for such calendar
quarter; and (b) within thirty (30) days after the end of each calendar month,
Borrower shall deliver to the Lender a balance sheet and statement of profit
and
loss for Borrower for such calendar month. If the Lender specifically requires
quarterly or monthly financial statements, such statements shall comply with
the
requirements of Section 7.1 of the Loan
Schedule.
3.18
Other
Financial Information. Borrower
shall deliver to the Lender, or cause to be delivered to the Lender, a complete
and accurate copy of each federal income tax return, including K-1 schedules,
and each application for an
extension of time to file each federal income tax return filed by each Guarantor
by October
15.
ARTICLE
4
DEFAULT
AND REMEDIES
4.1
Events
of Default. The
Lender, at its option, may declare Borrower to be in default under this
Agreement
and the other Loan Documents upon the occurrence of any or all of the following
events (the declaration of such a
default
by the Lender shall constitute an "Event of Default"):
(a) Payment
of Note and Other Monetary Obligations. If
Borrower fails to pay any of its indebtedness
under the Note or perform any of its other obligations under the Loan Documents
or under any other document with Lender requiring the payment of money to the
Lender or any third Person within fifteen (15) days after the date on which
such
indebtedness or monetary obligation is due; provided, however, that the fifteen
(15) day grace period contained in this Section 4.1(a) shall not apply to
Borrower's obligation to pay the outstanding principal balance and all
accrued
but unpaid interest under the Note on the Maturity Date of the
Note;
(b) Failure
to Comply with Financial Covenants, Permit Inspections, or to Perform
Certain
Non-Monetary Obligations Under Other Loan Documents. If
(i)
Borrower fails to comply with any or all of the Financial
Covenants, if any; (ii) Borrower fails to permit any inspection the Collateral
or any of Borrower's books and records
in accordance with the terms of the Loan Documents; or (iii) Borrower breaches
any of its non-monetary obligations to the Lender or any third Person under
any
of the Loan Documents or under any other document with Lender, which breach
is
not
reasonably susceptible to being cured by Borrower;
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(c) Performance
of Non-Monetary Obligations Under Other Loan Documents Which are Curable.
If
(i)
Borrower fails to perform any of its non-monetary obligations to the Lender
(other than those set forth in Section
4.1(b) above) or any third Person under any of the Loan Documents or under
any
other document with Lender when due;
and
(ii) if such non-monetary obligation is reasonably susceptible to being cured
by
Borrower, Borrower fails to diligently
complete a cure of its breach of such non-monetary obligation as soon as
reasonably practicable after written notice
by
the Lender to Borrower setting forth such non-monetary breach, but in any event
within thirty (30) days after such notice is given; provided, however, that
the
thirty (30) day cure period contained in this Section 4.1(c) shall not be deemed
to apply if Borrower commits more than two (2) such non-monetary breaches within
any twelve (12) calendar month period. Without
limiting any of the terms of this Section 4.1(c), the cure provision contained
in this Section 4.1(c) (the "Cure Provision")
shall not apply with respect to Borrower's failure to comply with the Financial
Covenants or Borrower's breach of any
non-monetary obligation of Borrower that is not reasonably susceptible to being
cured by Borrower, including any transfer
of the Collateral in violation of the terms of the Loan Documents.
Notwithstanding anything to the contrary contained
in this Section 4.1(c) or Section 4.1(a) above, if Borrower breaches any of
the
terms of the Loan Documents, and if
the
Lender, in its discretion, determines that such breach impairs the Lender's
security for the Loan, the Lender, immediately
upon the occurrence of any such breach, shall have the right to take such
actions and exercise such remedies under the Loan Documents as the Lender may
in
good faith determine to be necessary or appropriate to avoid such impairment;
(d) Misrepresentation.
If
any
request, statement, information, certification, representation, or
warranty, whether written or oral, submitted or made by Borrower to the Lender
in connection with the Loan or any other extension
of credit by the Lender to Borrower, now or in the future, is false or
misleading in any material respect;
(e) Insolvency
of Borrower. If
(i) a
petition is filed by or against Borrower under the federal bankruptcy
laws or any other applicable federal or state bankruptcy, insolvency or similar
law; (ii) a receiver, liquidator, trustee, custodian, sequestrator, or other
similar official is appointed to take possession of Borrower, the Collateral,
or
any material part of Borrower's other assets, or Borrower consents to such
appointment; (iii) Borrower makes an assignment for the benefit of creditors;
(iv) Borrower takes any action in furtherance of any of the foregoing; or (v)
there is a material adverse change in Borrower's financial condition as
represented to the Lender in connection with the Lender's approval of the Loan
and the Lender reasonably determines that such change materially impairs
Borrower's ability to perform any or all of the Obligations; provided, however,
that Borrower shall have sixty (60) days within which to cause any involuntary
bankruptcy
proceeding to be dismissed or the involuntary appointment of any receiver,
liquidator, trustee, custodian, or sequestrator
to be discharged. The cure provision contained in this Section shall be in
lieu
of, and not in addition to, any and
all
other cure provisions contained in the Loan Documents;
(f) Insolvency
of Other Persons. If
any of
the events specified in clauses (i) through (v) of Section
4.1(e) above occurs with respect to any Guarantor, as if such Guarantor were
the
Borrower described therein;
(g) Performance
of Obligations to Third Persons. If
(i)
Borrower fails to pay any of its indebtedness
or to perform any of its obligations when due under any document between
Borrower and any other Person who holds a lien on the Collateral that is senior
to the lien held by the Lender in the Collateral and fails to cure such breach
within
any applicable cure period under such document; or (ii) Borrower fails to pay
any of its indebtedness or to perform any of
its
obligations when due under any other material document between Borrower and
any
other Person, provided the Lender
reasonably determines that such failure has an actual or potential material
adverse effect on the Collateral or Borrower's ability to perform any or all
of
the Obligations. Nothing contained in this Section constitutes or shall be
construed as
the
Lender's consent to any lien being placed on the Collateral, other than the
Permitted Liens;
(h) Attachment.
If
all or
any material part of the assets of Borrower or any Guarantor are attached,
seized, subjected to a writ or levied upon by any court process and Borrower
fails to cause such attachment, seizure, writ or levy to be fully released
or
removed within sixty (60) days after the occurrence of such event. The cure
provision contained in this Section shall be in lieu of, and not in addition
to,
any and all other cure periods contained in the Loan
Documents;
(i) Injunctions. If
a
court order is entered against Borrower or any Guarantor enjoining the
conduct
of all or part of such Person's business and Borrower fails to cause such
injunction to be fully stayed, dissolved or removed within sixty (60) days
after
such order is entered. The cure provision contained in this Section shall be
in
lieu of, and
not
in addition to, any and all other cure periods contained in the Loan
Documents;
(j) Dissolution. If
Borrower or any Guarantor is a corporation, partnership, limited liability
company,
trust or other entity, the dissolution, liquidation, or termination of existence
of such Person;
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(k) Transfers
of Interests. If
Borrower is a corporation, partnership, limited liability company,
or other entity, the sale or transfer of an aggregate of more than twenty-five
percent (25%) of the beneficial interests
in Borrower without the Lender's prior written consent;
(l) Death;
Incompetence. If
Borrower or any Guarantor is an individual, the death of such Person
or
judicial determination that such person is mentally incompetent, except where
applicable law limits or prohibits the Lender's declaration of a default based
on such occurrences; provided, however, that the Lender shall not declare an
Event of Default to exist based solely on the death or mental incompetence
of
any individual Guarantor if, within forty-five (45) days after the occurrence
of
such event, Borrower causes a substitute guarantor to execute and deliver to
the
Lender a continuing guaranty in the form previously executed by the affected
Guarantor, and the Lender in its discretion determines that such substitute
guarantor's financial condition is comparable to that of the affected Guarantor
and that such substitute Guarantor is
otherwise reasonably acceptable to the Lender;
(m) Impairment
of Security Interest or Lender's Rights. If
(i)
the validity or priority of the Lender's
security interest in the Collateral is impaired for any reason; or (ii) the
value of the Collateral has deteriorated, declined or depreciated as a result
of
any intentional act or omission by Borrower; or (iii) the Lender, acting in
good
faith and in a commercially reasonable manner, deems itself insecure because
of
the occurrence of an event affecting Borrower, or any Guarantor or the
Collateral prior to the Closing Date of which Lender had no actual knowledge
as
of the Closing Date or because
of the occurrence of such an event on or subsequent to the Closing
Date;
(n) Default
by Guarantors. If
any
Guarantor fails to pay any of its indebtedness or perform any of its obligations
under any of the Guaranties when due or the revocation, limitation or
termination or attempted revocation,
limitation or termination of any of the obligations of any Guarantor under
any
of the Guaranties; or
(o) Misrepresentation
by Guarantors. If
any
request, statement, information, certification, representation,
or warranty, whether written or oral, submitted or made by any Guarantor to
the
Lender in connection with the Loan or any other extension of credit by the
Lender to Borrower or such Guarantor, now or in the future, is
false
or
misleading
in any material respect.
4.2
Remedies.
Upon
the
Lender's election to declare Borrower to be in default under the Loan
Documents
pursuant to Section 4.1 above, Borrower shall be deemed to be in default under
the Loan Documents, and the Lender
shall have the right to do any or all of the following:
(a) Acceleration.
The
Lender shall have the right to declare any or all of the Obligations to
be
immediately due and payable, including the entire principal amount and all
accrued but unpaid interest under the Note, and
notwithstanding the Maturity Date of the Note, such Obligations shall thereupon
be immediately due and payable;
(b) Remedies
Under Other Loan Documents. The
Lender may exercise any or all rights and
remedies which the Lender may have under any or all of the Loan Documents and
applicable law;
(c) Discontinuation
of Disbursements. The
Lender may discontinue or withhold any or all advances
of the Loan proceeds; and
(d) Discontinuation
of Other Extensions of Credit. The
Lender may discontinue advancing
money or extending credit to or for the benefit of Borrower in connection with
any other document between the Lender
and Borrower.
ARTICLE
5
WARRANTIES
AND REPRESENTATIONS
5.1
Borrower's
Warranties and Representations. As
a
material inducement to the Lender's extension
of credit to Borrower in connection with the Loan, Borrower warrants and
represents to the Lender as follows:
(a) Existence.
If
Borrower is a corporation, partnership, limited liability company, trust, or
other
form of entity, Borrower is duly organized, validly existing and in good
standing under the laws of the state in which Borrower is organized, and
Borrower is qualified to do business and is in good standing in each
jurisdiction in which the ownership of its assets or the conduct of its business
requires qualification as a foreign entity and where the failure to so
qualify
would have a material adverse effect on Borrower's business.
-9-
(b) Authority
to Own Assets. Borrower
has the full power and authority to own its assets and
to
transact the business in which it is now engaged.
(c) Authority
to Execute Loan Documents. Borrower
has the full power and authority to execute,
deliver and perform its obligations under the Loan Documents, and the execution,
delivery and performance of the Loan Documents and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
action
on
the part of Borrower. The Person or Persons signing the Loan Documents on behalf
of Borrower are duly authorized
to execute the Loan Documents and all other documents necessary to consummate
the Loan on behalf of Borrower.
(d) Valid
Obligations. The
Loan
Documents are legal, valid and binding obligations of Borrower
and the Guarantors, as applicable, enforceable in accordance with their terms
(except as enforcement may be limited by equitable principles and by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to creditors'
rights
generally).
(e) No
Consents Required. No
consent of any other Person and no consent, approval, authorization
or other action by or filing with any Governmental Authority not previously
obtained by Borrower is required in connection
with the execution, delivery and performance of the Loan Documents by
Borrower.
(f) Chief
Executive Office. Borrower's
chief executive office is located at the address set forth
in
Borrower's Application..
(g) Borrower's
Name. Borrower
has set forth above its full and correct name, and Borrower does
not
use any other names or tradenames, except for the tradenames disclosed in
Borrower's Application.
(h) No
Violations. The
execution, delivery and performance of the Loan Documents and compliance
with their respective terms will not conflict with or result in a violation
or
breach of any of the terms or conditions of
any
document to which Borrower is a party or by which Borrower is bound or any
order
or judgment of any court or Governmental Authority binding on
Borrower.
(i) Organizational
Documents. Borrower's
execution, delivery and performance of the Loan Documents
and Borrower's compliance with their respective terms (i) will not violate
any
Governmental Requirements applicable
to Borrower; (ii) Borrower's agreement or certificate of limited partnership,
if
Borrower is a limited partnership; (iii)
Borrower's agreement or statement of partnership, if Borrower is a general
partnership; (iv) Borrower's articles of incorporation
or bylaws, if Borrower is a corporation; (v) Borrower's trust agreement, if
Borrower is a trust; or (vi) Borrower's articles
of organization or operating agreement, if Borrower is a limited liability
company.
(j) Tax
Claims. To
the
best of Borrower's knowledge, there are no claims or adjustments proposed
by any taxing authority for any of Borrower's prior tax years which could result
in additional taxes becoming due and payable by Borrower. Borrower and each
Guarantor have filed all federal, state and local tax returns required to be
filed under
applicable Governmental Requirements and have paid all taxes, assessments,
fees,
penalties, and other governmental
charges that are due and payable in connection therewith.
(k) Litigation.
To
the
best of Borrower's knowledge, there are no actions, suits, proceedings
or
investigations pending or threatened against or affecting Borrower or any
Guarantor in any court or before any other Governmental
Authority which may result, either separately or in the aggregate, in any
material adverse change in the assets,
properties, business, prospects, profits, or condition of Borrower or any of
such Persons, nor does Borrower know of any
basis
for any such action, suit, proceeding or investigation.
(l) Financial
Statements. All
financial statements respecting the financial condition of Borrower
which have been furnished to the Lender prior to the Closing Date (i) are
accurate and complete in all material respects as of the dates appearing
thereon; (ii) present fairly the financial condition and results of operations
of the Person to whom the financial statement applies as of the dates and for
the periods shown on such statements; and (iii) disclose all contingent
liabilities affecting the Person to whom the financial statement applies to
the
extent that such disclosure is required
by generally accepted accounting principles. Since the last date covered by
any
such statement, there has been no material adverse change in the financial
condition of Borrower, and Borrower is now and at all times hereafter shall
continue
to be solvent.
(m) Periodic
Financial Statements. All
financial statements respecting the financial condition of Borrower hereafter
delivered to the Lender by Borrower shall satisfy the requirements of clauses
(i) through (iii) of Section 5.1(1)
above.
-10-
(n) Margin
Stock. Borrower
is not engaged in the business of extending credit for the purpose
of purchasing or carrying any "margin stock" (as defined in Regulation G of
the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of the Loan shall be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying any margin stock,
unless such use is approved in writing by the Lender
or
otherwise expressly contemplated by the Loan Documents.
(o) Licenses
and Governmental Requirements. Neither
Borrower nor any Guarantor (i) is in
violation in any material respect of any Governmental Permits or Governmental
Requirements (including all Hazardous Substance Laws) to which it is subject;
or
(ii) has failed to obtain any Governmental Permits necessary for the ownership
of its
properties or the conduct of its business.
(p) Other
Facts. All
of
the information set forth in Borrower's Application is accurate and complete
in
all material respects. There is no fact which Borrower has failed to disclose
to
the Lender in writing which (i) may materially and adversely affect the assets,
properties, business, prospects, profits, or condition of Borrower, or any
Guarantor; or (ii) may be necessary to disclose in order to keep the
representations and warranties contained in this Section 5.1
from
being misleading.
5.2
Borrowers
Warranties. Borrower's
warranties and representations set forth in Section 5.1 above shall
be
true and correct at the time of execution of this Agreement and as of the
Closing Date, shall survive the closing of the Loan, and shall remain true
and
correct as of the date on which such warranties and representations are given.
For purposes of this Agreement and the other Loan Documents, the term "to the
best of Borrower's knowledge" shall be deemed to mean to the best knowledge
of
Borrower after a commercially reasonable and diligent investigation, inspection
and inquiry by
Borrower.
ARTICLE
6
MISCELLANEOUS
6.1
Relationship
of Parties. The
Lender shall not be deemed to be, nor do the Lender or Borrower intend
that the Lender shall ever become, a partner, joint venturer, trustee,
fiduciary, manager, controlling person, or other business
associate or participant of any kind in the business or affairs of Borrower,
whether as a result of the Loan Documents
or any of the transactions contemplated by the Loan Documents. In exercising
its
rights and remedies under the Loan Documents, the Lender shall at all times
be
acting only as a lender to Borrower within the normal and usual scope of
activities
of a lender.
6.2
Indemnification.
Borrower
shall indemnify and hold the Lender and its officers, directors, agents,
employees,
representatives, shareholders, affiliates, successors and assigns (collectively,
the "Indemnified Parties") harmless from and against any and all claims,
demands, damages (including special
and consequential damages), liabilities, actions,
causes of action, legal proceedings, administrative proceedings, suits,
injuries, costs, losses, debts, liens, interest, fines, charges, penalties
and
expenses (including attorneys', accountants', consultants', and expert witness
fees and costs) of
every
kind and nature (collectively, the "Claims") arising directly or indirectly
out
of or relating to any or all of the following: (i)
Borrower's breach of any of its Obligations or warranties under the Loan
Documents; (ii) any act or omission by Borrower or any of its employees or
agents; (iii) Borrower's use of the Collateral or any other activity or thing
allowed or suffered by Borrower to be done on or about the any of Borrower's
properties; and (iv) any claims for commissions, finder's fees or brokerage
fees
arising out of the Loan or the transactions contemplated by the Loan Documents,
if such claim is based on any act, omission or agreement by Borrower or any
Affiliate. Notwithstanding anything to the contrary contained in this Section,
Borrower shall not be obligated to indemnify any Indemnified Party for any
liabilities resulting solely from the gross negligence or intentional tortious
conduct of such Indemnified Party which such Indemnified Party is determined
by
the final judgment of a court of competent jurisdiction to have committed.
Borrower's obligation to indemnify the Indemnified Parties under this Section
6.2 shall survive the cancellation of the Note and the release of the Lender's
security interests under the Security
Agreements.
6.3
Power
of Attorney. Borrower
irrevocably appoints the Lender, with full power of substitution, as
Borrower's
attorney-in-fact, coupled with an interest, with full power, in the Lender's
own
name or in the name of Borrower to sign, record and file all documents referred
to in Section 3.6 above. The Lender shall have the right to exercise the power
of attorney
granted in this Section directly or to delegate all or part of such power to
one
or more agents of the Lender. Nothing
contained in the Loan Documents shall be construed to obligate the Lender to
act
on behalf of Borrower as attorney-in-fact.
6.4
Actions.
Whether
or not an Event of Default has occurred, the Lender shall have the right, but
not the
obligation, to commence, appear in, or defend any action or proceeding which
affects or which the Lender determines may affect (a) the Collateral; (b)
Borrower's or the Lender's respective rights or obligations under the Loan
Documents; (c) the
Loan;
or (d) the disbursement of any proceeds of the Loan. Whether or not an Event
of
Default has occurred, the Lender
shall at all times have the right to take any or all actions which the Lender
determines to be necessary or appropriate to
protect the Lender's interest in connection with the Loan.
-11-
6.5
Attorneys'
Fees and Costs and Other Expenses. Upon
the
Lender's demand, Borrower shall reimburse
the Lender for all costs and expenses, including attorneys' fees and costs,
incurred by the Lender in connection with the exercise of any or all of the
Lender's rights and remedies under the Loan Documents; the enforcement of any
or
all Obligations, whether or not any legal proceedings are instituted by the
Lender; or the defense of any action or proceeding by Borrower or any other
Person relating to the Loan. Without limiting the generality of the immediately
preceding sentence, such costs and expenses shall include all attorneys' fees
and costs
incurred
by the Lender in connection with any federal or state bankruptcy, insolvency,
reorganization, or other similar proceeding by or against Borrower or any
Guarantor which in any
way
affects the Lender's exercise of its rights and remedies under the Loan
Documents. Borrower's obligation to reimburse
the Lender under this Section shall include payment of interest on all amounts
expended by the Lender from the date of expenditure at the rate of interest
applicable to principal under the Note. Wherever any of the terms of the Loan
Documents provide for the payment or recovery of costs, fees, or other expenses
(including attorneys' fees and costs), such term shall be deemed to provide
for
the payment or recovery of reasonable costs, fees, expenses, and reasonable
attorneys' fees
and
costs.
6.6
No
Third Party Beneficiaries. The
Loan
Documents are entered into for the sole protection and benefit
of the Lender, Borrower and Guarantors, as applicable, and their respective
permitted successors and assigns. No other
Person shall have any rights or causes of action under the Loan
Documents.
6.7
Documents.
The
form
and substance of all documents and instruments which Borrower is required
to
deliver to the Lender under this Agreement shall be subject to the Lender's
approval.
6.8
Notices.
All
notices and demands by the Lender to Borrower under this Agreement shall be
in
writing
and shall be effective on the earliest of (a) personal delivery to Borrower;
(b)
two
(2)
days
after deposit in first class or certified United States mail, postage prepaid,
addressed to Borrower at the address set forth in the Loan Schedule; and (c)
one
(1) business day after deposit with a reputable overnight delivery service,
delivery charges prepaid, addressed to Borrower
at the address set forth in the Loan Schedule. All notices and demands by
Borrower to the Lender under this Agreement
shall be in writing and shall be effective on actual receipt by the Lender
at
the Lender's address shown in the Loan Schedule; provided, however, that
non-receipt of any such notice or demand by the Lender as a result of the
Lender's refusal to accept delivery or the Lender's failure to notify Borrower
of the Lender's change of address shall be deemed to constitute receipt by
the
Lender. The addresses specified in the Loan Schedule may be changed by notice
given in accordance
with this Section. If Borrower consists of more than one Person, service of
any
notice on any one of such Persons
by the Lender shall be effective service on Borrower for all
purposes.
6.9
Severability;
No Offsets. If
any
provision of the Loan Documents shall be held by any court of competent
jurisdiction to be unlawful, voidable, void, or unenforceable for any reason,
such provision shall be deemed to be severable
from and shall in no way affect the validity or enforceability of the remaining
provisions of the Loan Documents. No
Obligations shall be offset by all or part of any claim, cause of action, or
cross-claim of any kind, whether liquidated or unliquidated, which Borrower
now
has or may hereafter acquire or allege to have acquired against the Lender.
To
the fullest extent permitted by law, Borrower waives the benefits of any
applicable law, regulation, or procedure which provides, in substance, that
where cross demands for money exist between parties at any point in time when
neither demand is barred by the applicable statute of limitations, and an action
is thereafter commenced by one such party, the other party may assert the
defense of payment in that the two demands are compensated so far as they equal
each other, notwithstanding that an independent
action asserting the claim would at the time of filing the response be barred
by
the applicable statute of limitations.
6.10
Interpretation.
Whenever
the context of this Agreement reasonably requires, all words used in the
singular
shall be deemed to have been used in the plural, and the neuter gender shall
be
deemed to include the masculine and
feminine gender, and vice versa. The headings to sections of this Agreement
are
for convenient reference only and shall
not
be used in interpreting this Agreement. For purposes of this Agreement, (a)
the
term "including" shall be deemed to
mean
"including without limitation"; (b) the term "document" shall be deemed to
include all written contracts, commitments,
agreements, and instruments; and (c) the term "discretion," when applied to
any
determination, consent, or approval
right by the Lender, shall be deemed to mean the Lender's sole but good faith
business judgment.
6.11
Time
of the Essence. Time
is
of the
essence in the performance of each provision of the Loan Documents
by Borrower.
6.12
Amendments.
The
Loan
Documents (excluding the Guaranties) may be modified only by a written
agreement
signed by Borrower and the Lender.
6.13
Counterparts.
This
Agreement may be executed in counterparts, each of which shall constitute an
original,
and all of which together shall constitute one and the same
document.
-12-
6.14
Entire
Agreement. The
Loan
Documents contain the entire agreement concerning the subject matter
of
the Loan Documents and supersede all prior and contemporaneous negotiations,
agreements, statements, understandings,
terms, conditions, representations and warranties, whether oral or written,
by
and among the Lender, Borrower
and Guarantors concerning the Loan which is the subject matter of the Loan
Documents.
6.15
No
Waiver by Lender. No
waiver
by the Lender of any of its rights or remedies in connection with the
Obligations or of any of the terms or conditions of the Loan Documents shall
be
effective unless such waiver is in writing and
signed by the Lender.
6.16
Cumulative
Remedies. No
right
or remedy of the Lender under this Agreement or the other Loan Documents
shall be exclusive of any other right or remedy under the Loan Documents or
to
which the Lender may be entitled.
The Lender's rights and remedies under the Loan Documents are cumulative and
in
addition to all other rights and remedies
which the Lender may have under any other document with Borrower and under
applicable law.
6.17
Joint
and Several Liability. Each
Person signing this Agreement as Borrower shall be jointly and severally
liable to the Lender for the performance of Borrower's Obligations under the
Loan Documents. If Borrower consists
of more than one Person, the occurrence of any Default or Event of Default
with
respect to any one or more of such Persons
shall constitute a Default or Event of Default, as applicable, and (in the
case
of an Event of Default) entitle the Lender
to
exercise its rights and remedies under Section 4.2 above. Each Borrower who
is a
married person agrees that the Lender
shall have the right to recourse against his or her community property and
separate property for any or all Obligations
to the fullest extent permitted by law.
6.18
Assignment.
Borrower
shall not assign, encumber, or otherwise transfer any or all of Borrower's
rights
under the Loan Documents, whether voluntarily, involuntarily, or by operation
of
law, without the Lender's prior written consent,
which consent may be withheld in the Lender's discretion. Any purported
assignment, encumbrance or transfer by Borrower
in violation of this Section shall be void. Borrower acknowledges and agrees
that the Lender's agreement to make the Loan to Borrower and enter into the
Loan
Documents is based in material part on the Lender's reliance on Borrower's
particular financial condition, credit history, character, experience, ability,
skill, and reputation, as represented by Borrower to the
Lender.
6.19
Waivers.
Borrower
waives presentment, demand for payment, protest, notice of demand, dishonor,
protest
and non-payment, and all other notices and demands in connection with the
delivery, acceptance, performance, default under, and enforcement of the Loan
Documents. Borrower waives the right to assert any statute of limitations as
a
defense to the enforcement of any or all of the Loan Documents to the fullest
extent permitted by law. Borrower waives all rights, remedies, and benefits
under California Civil Code Section 2822(a). Without limiting the generality
of
the immediately preceding sentence, in the event of Borrower's payment in
partial satisfaction of any or all of the Obligations, Lender shall have the
sole and exclusive right and authority to designate the portion of the
Obligations that is to be satisfied. Borrower and all Persons holding a lien
of
any kind affecting all or part of the Collateral who have actual or constructive
notice of this Agreement waive (a) all rights to require marshalling of assets
or liens in the event of Lender's exercise of any of its rights and
remedies under the Loan Documents; and (b) all rights to require Lender to
exercise any other right or power or to pursue
any other remedy which Lender may have under any document or applicable law
before exercising any other such right,
power, or remedy.
6.20
Applicable
Law; Jurisdiction. The
Loan
Documents shall be governed by and construed in accordance
with the laws of the State of California. Borrower agrees that the courts of
the
State of California and Federal District Courts located in San Francisco County,
California, shall have exclusive jurisdiction and venue of any action or
proceeding
directly or indirectly arising out of or related to the negotiation, execution,
delivery, performance, breach, enforcement
or interpretation of this Agreement and all of the other Loan Documents or
any
of the transactions contemplated
by or related to any or all of the Loan Documents, regardless of whether or
not
any claim, counterclaim or defense in any such action or proceeding is
characterized as arising out of fraud, negligence, intentional misconduct,
breach of contract or fiduciary duty, or violation of any Governmental
Requirements. Borrower irrevocably consents to the personal jurisdiction of
such
courts, to such venue, and to the service of process in the manner provided
for
the giving of notices in this
Agreement. Borrower waives all objections to such jurisdiction and venue,
including all objections that are based upon inconvenience or the nature of
the
forum.
-13-
6.21
WAIVER
OF RIGHT TO JURY TRIAL. BORROWER
IRREVOCABLY WAIVES ALL RIGHTS TO A JURY
TRIAL IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND DIRECTLY
OR
INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THE LOAN, THIS NOTE, ANY
AGREEMENT SECURING THIS NOTE, OR
ANY OF
THE OTHER DOCUMENTS EXECUTED BY BORROWER IN CONNECTION WITH THE LOAN
(COLLECTIVELY,
THE "LOAN DOCUMENTS"), ANY OR ALL OF THE REAL AND PERSONAL PROPERTY COLLATERAL
SECURING THE LOAN, OR ANY OF THE TRANSACTIONS WHICH ARE CONTEMPLATED BY THE
LOAN
DOCUMENTS. THE JURY TRIAL WAIVER CONTAINED IN THIS SECTION IS INTENDED TO APPLY,
TO THE FULLEST
EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE
OUT OF OR
IN ANY
WAY RELATED TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE IMMEDIATELY PRECEDING
SENTENCE,
INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON
LAW
AND
STATUTORY CLAIMS OF ANY KIND. BORROWER ACKNOWLEDGES AND AGREES THAT (1) BORROWER
HAS
CAREFULLY READ AND UNDERSTANDS ALL OF THE TERMS OF THE LOAN DOCUMENTS; (2)
BORROWER HAS
EXECUTED THE LOAN DOCUMENTS FREELY AND VOLUNTARILY, AFTER HAVING CONSULTED
WITH
BORROWER'S INDEPENDENT LEGAL COUNSEL AND AFTER HAVING HAD ALL OF THE TERMS
OF
THE LOAN DOCUMENTS EXPLAINED TO IT BY ITS INDEPENDENT LEGAL COUNSEL OR AFTER
HAVING HAD A FULL AND ADEQUATE OPPORTUNITY TO CONSULT WITH BORROWER'S
INDEPENDENT LEGAL COUNSEL; (3) THE WAIVERS CONTAINED IN THE LOAN DOCUMENTS
ARE
REASONABLE, NOT CONTRARY TO PUBLIC POLICY OR LAW, AND HAVE BEEN INTENTIONALLY,
INTELLIGENTLY, KNOWINGLY, AND VOLUNTARILY AGREED TO BY BORROWER; (4) THE WAIVERS
CONTAINED IN THE LOAN DOCUMENTS HAVE BEEN AGREED TO BY BORROWER WITH FULL
KNOWLEDGE OF THEIR SIGNIFICANCE AND CONSEQUENCES, INCLUDING FULL KNOWLEDGE
OF
THE SPECIFIC NATURE OF ANY RIGHTS OR DEFENSES WHICH BORROWER HAS AGREED TO
WAIVE
PURSUANT TO THE LOAN DOCUMENTS; (5) BORROWER HAS HAD A FULL AND ADEQUATE
OPPORTUNITY TO NEGOTIATE THE TERMS CONTAINED
IN THE LOAN DOCUMENTS; (6) BORROWER IS EXPERIENCED IN AND FAMILIAR WITH LOAN
TRANSACTIONS
OF THE TYPE EVIDENCED BY THE LOAN DOCUMENTS; AND (7) THE WAIVERS CONTAINED
IN
THE
LOAN
DOCUMENTS ARE MATERIAL INDUCEMENTS TO THE LENDER'S EXTENSION OF CREDIT TO
BORROWER,
AND THE LENDER HAS RELIED ON SUCH WAIVERS IN MAKING THE LOAN TO BORROWER AND
WILL CONTINUE TO RELY ON SUCH WAIVERS IN ANY RELATED FUTURE DEALINGS WITH
BORROWER. THE WAIVERS CONTAINED IN THE LOAN DOCUMENTS SHALL APPLY TO ALL
SUBSEQUENT EXTENSIONS, RENEWALS, MODIFICATIONS,
AND REPLACEMENTS OF THE LOAN DOCUMENTS. THIS NOTE MAY BE FILED WITH ANY
COURT
OF
COMPETENT JURISDICTION AS BORROWER'S WRITTEN CONSENT TO BORROWER'S WAIVER OF
A
JURY TRIAL. BORROWER HAS INITIALED THIS SECTION BELOW TO INDICATE ITS AGREEMENT
WITH THE JURY TRIAL WAIVER AND OTHER TERMS CONTAINED IN THIS
SECTION.
6.22
Successors.
Subject
to the restrictions contained in the Loan Documents, the Loan Documents
shall
be
binding upon and inure to the benefit of the Lender and Borrower and their
respective permitted successors and assigns.
|
Dated:
|
June
8, 2006
|
|
|
Borrower:
|
||
|
ASDS
of Orange County, Inc.
|
||
|
a
Delaware corporation
|
||
|
By:
|
/s/
Xxxxx X. Xxxxxx
|
|
|
Xxxxx
X. Xxxxxx, President
|
||
|
By:
|
/s/
Xxxxx X. Xxxx
|
|
|
Xxxxx
X. Xxxx, Secretary
|
||
|
Lender:
|
||
|
First
Republic Bank
|
||
|
By:
|
/s/
Xxxxxxx Xxxxxx
|
|
|
Xxxxxxx
Xxxxxx
|
||
|
Its:
|
Managing
Director
|
-14-
(TERM
LOAN)
EXHIBIT
"A"
LOAN
SCHEDULE
This
Loan Schedule is an integral part of the Loan Agreement between the Lender
and
Borrower, and the following terms
are incorporated in and made a part of the Loan Agreement to which this Loan
Schedule is attached:
| 1. |
Borrower:
ASDS
of Orange County, Inc., a Delaware
corporation
|
| 2. |
Guarantors:
CRESA
Partners of Orange County, LP, a Delaware limited partnership; Xxxxx
Xxxx
Xxxxx; Xxxxx
Xxxxx and Xxxxx Xxxxx, Trustees of the Xxxxx Trust; Xxxxxxx Xxxx;
Xxxxxx
X. Xxxxxxxxx; Xxxx X. Xxxxxx; Xxxxx Xxx Xxxxxx; Xxxxx Xxx Xxxxxx
and
Xxxxxx Xxxxxxxxx Xxxxxx, Trustees of the Xxxxx and Xxxxxx
Xxxxxx
Trust; Xxxxxxx X. Xxxxxx; Xxxxxxx X. Xxxxxxx; Xxxxx X. Xxxx and Xxxxxxx
Xxxxx Xxxx
|
| 3. |
Borrower's
Notice Address: ASDS
of Orange County, Inc., a Delaware corporation 000
Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxxxxx
Xxxxx, Xxxxxxxxxx
00000
|
| 4. |
Lender's
Notice Address: First
Republic Bank
|
000
Xxxx Xxxxxx
Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention:
Manager, Commercial Loan Operations
| 5. |
Loan
Fee: Thirteen
Thousand Two Hundred Fifty and 00/100 Dollars ($13,250.00)
Loan
Documentation Fee: Nine
Hundred Ninety-Five and 00/100 Dollars
($995.00)
|
| 6. |
Financial
Covenants. Borrower
and/or Guarantor shall comply with the following Financial
Covenants:
|
6.1 Capital
Expenditures of Guarantor: Guarantor
(CRESA Partners of Orange County, LP) shall not make
any
expenditures for fixed or capital assets if, after giving effect thereto, the
aggregate of all such expenditures
made by Guarantor would exceed $350,000.00 during Guarantor's fiscal year end
for 2006 and $200,000.00
during Guarantor's fiscal year end for 2007 through 2009.
6.2 Debt
Service Coverage Ratio for Guarantor: Guarantor
(CRESA Partners of Orange County, LP) shall maintain a Debt Service Coverage
Ratio of not less than 1.20 to 1 based on debt outstanding at ASDS calculated
on a rolling 4 quarter average. For purposes of this Section, the term "Debt
Service Coverage Ratio" is based
on
EBITDA divided by current portion of term debt at ASDS plus
interest.
| 6.3 |
No
Additional Indebtedness: Borrower
and Guarantor (CRESA Partners of Orange County, LP) (a) shall
not directly or indirectly make, create, incur, assume, or permit
to exist
any guaranty of any kind of any indebtedness
or other obligation of any other person during the term of this Agreement,
excluding any guaranties by Borrower and Guarantor as of the date
of this
Agreement that are reflected in the financial statements referred
to in
Section 5.1 of this Agreement; and (b) shall not directly or indirectly
incur indebtedness for borrowed money during
the term of this Agreement, excluding (i) debts owing by Borrower
and
Guarantor as of the date of this Agreement
that are reflected in the financial statements referred to in Section
5.1
of this Agreement (other than those that are being paid substantially
concurrently with the funding of the Loan); (ii) other borrowings
from the
Lender; and (iii) indebtedness secured by purchase money mortgages
or
liens which encumber only the property being
purchased.
|
-15-
7. Accounting.
7.1
Quarterly/Annual
Financial Statements. All
quarterly and annual fiscal year end financial statements provided
by Borrower and Guarantor (CRESA Partners of Orange County, LP) to the Lender
under the Loan Documents
shall be provided by February
15, May 15, August 15 and November 15 and
shall
comply with the following
requirements: All
quarterly/annual financial statements shall be certified by Borrower and
Guarantor,
respectively, or, if Borrower or Guarantor is an entity, by Borrower's or
Guarantor's chief financial
officer or by another officer or agent of Borrower or Guarantor acceptable
to
the Lender.
7.2
Annual
Personal Financial Statements of Guarantors. Borrower
shall ensure that all annual personal financial
statements provided by each individual Guarantor to the Lender under the Loan
Documents shall be provided
by May
15 and
shall
comply with the following requirements: All
annual personal financial statements shall
be certified by each individual Guarantor.
7.3
Quarterly/Annual
Accounts Receivable Aging Statements of Guarantor. Borrower
shall ensure that all quarterly
and annual fiscal year end accounts receivable aging statements provided by
Guarantor (CRESA Partners
of Orange County, LP) to the Lender under the Loan Documents shall be provided
by February
15, May 15, August 15 and November 15 and
shall
comply with the following requirements: All
quarterly/annual accounts
receivable aging statements shall be certified by Guarantor or, if Guarantor
is
an entity, by Guarantor's chief financial officer or by another officer or
agent
of Guarantor acceptable to the Lender.
8. Authorization
to Charge Account.
8.1
Automatic
Payment Authorization. Borrower
authorizes the Lender to make automatic deductions from the following
deposit account (the "Account") maintained by Borrower at Lender's offices
in
order to pay, when and as due, all of the regularly scheduled installment
payments of interest, principal, or both principal and interest (a "Payment")
that Borrower is required or obligated to make under the Note: Account
No: 000-0000-0000
Without
limiting any of the terms of the Loan Documents, Borrower acknowledges and
agrees that if Borrower defaults in its obligation to make a Payment because
the
collected funds in the Account are insufficient to make such Payment in full
on
the date that such Payment is due, then Borrower shall be responsible for all
late payment charges
and other consequences of such default by Borrower under the terms of the Loan
Documents.
8.2 Revocation
of Authorization. Subject
to the Section immediately following this Section, this authorization
shall continue in full force and effect until the date which is five (5)
business days after the date on which Lender actually receives written notice
from Borrower expressly revoking the authority granted to the Lender
to
charge
the Account for Payments in connection with the Loan. No such revocation by
Borrower shall in any way release
Borrower from or otherwise affect Borrower's obligations under the Loan
Documents, including Borrower's obligations
to continue to make all Payments required under the terms of the
Note.
8.3 Termination
by Lender.The
Lender,
at
its
option
and
in
its discretion,
reserves the
right
to
terminate
the
arrangement
for automatic
deductions
from the
Account
pursuant to
this
Section
at
any
time
effective upon written
notice of
such
election
(a "Termination Notice") given
by
Lender
to
Borrower. Without
limiting
the generality of
the
immediately preceding sentence, the
Lender
may
elect
to
give
a
Termination
Notice to
Borrower
if
Borrower
fails
to
comply
with any
of
the
Lender's rules,
regulations,
or
policies
relating to
the
Account, including requirements
regarding minimum
balance,
service
charges,
overdrafts, insufficient funds, uncollected funds, returned items,
and
limitations
on
withdrawals.
8.4 Increase
in Interest Rate Upon Termination of Automatic Debit Arrangement.
The
date on which the
arrangement for automatic deductions from the Account terminates (whether as
a
result of Borrower's revocation of such arrangement or any Termination Notice
given by the Lender) is referred to as the "Auto Debit Termination Date."
Borrower acknowledges and agrees that the Lender would not have been willing
to
make the Loan at the interest rate or interest rates contained in the Note
in
the absence of the arrangement
for automatic deductions from the Account pursuant to this authorization.
Therefore, effective
on the first due date of a Payment following the Auto Debit Termination Date,
the Lender, at its option and in its discretion, shall have the right to
increase the interest rate on the outstanding principal balance
of the Note to a rate which is equal to one-half of one percent (0.50%) per
annum (the "Percentage Rate Increase") above the otherwise applicable interest
rate under the terms of the Note. If the Note provides
for amortized monthly payments of principal and interest, then the amount of
such monthly payments
shall be increased by the Lender based on a reamortization schedule prepared
by
the Lender using
the increased interest rate and the then remaining number of months in the
original amortization period
that was used by the Lender to calculate the original monthly payment amount.
Such new monthly payments
shall be payable commencing on the first Payment due date following the date
of
the interest rate
increase.
9. Other
Covenants.
Borrower
shall
at all times comply with all of the
following additional covenants:
9.1
Borrower shall ensure that Guarantor (CRESA Partners of Orange County, LP)
shall
not make distributions
with the exception of: (1) to ASDS for taxes and debt service and (2) to ASI
for
management fees
no greater than $75,000.00.
9.2
Borrower shall not disburse dividends or payments to Ascendant Solutions, Inc.
(ASI).
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