1
EXHIBIT 10.5.1
SECOND LOAN EXTENSION AGREEMENT
This Second Loan Extension Agreement ("Agreement") is entered
into on February 26, 1999 (and is effective as of January 1, 1999), between U.S.
BANK NATIONAL ASSOCIATION ("U.S. Bank") and DAW TECHNOLOGIES, INC. ("Daw").
RECITALS
A. On or about April 17, 1998, Daw and U.S. Bank entered into a
loan agreement. The loan agreement was modified and amended by the terms of a
modification and forbearance agreement dated September 10, 1998, and a loan
extension agreement dated November ____, 1998, which operated, among other
things, to extend the maturity date of the Note (as defined below) to December
31, 1998. The above-described loan agreement, as amended, is referred to herein
as the "Loan Agreement."
B. Pursuant to the terms of the Loan Agreement, U.S. Bank
provides a revolving credit facility and a letter of credit facility to Daw.
Capitalized terms used in this Agreement that are not defined herein shall have
the meaning assigned to those terms in the Loan Agreement.
X. Xxx is obligated to U.S. Bank pursuant to a promissory note
dated August 6, 1997, in the principal amount of $8,000,000 (the "Note"). As of
February 11, 1999, Daw owes U.S. Bank the principal amount of $_______________
and accrued interest of $__________ pursuant to the Note.
D. Interest continues to accrue on Daw's obligations to U.S. Bank
pursuant to the Note on and after February ___, 1999. In addition, Daw is
obligated to reimburse U.S. Bank (or pay directly if requested to do so by U.S.
Bank) for fees and costs incurred by U.S. Bank in connection with its banking
relationship with Daw, including attorney fees.
E. The debts and obligations of Daw to U.S. Bank pursuant to the
Loan Agreement and the Note are referred to below collectively as the
"Indebtedness."
F. The Indebtedness is secured by security interests and liens
in, among other things, all of Daw's existing and after-acquired accounts,
chattel paper, contract rights, equipment, fixtures, general intangibles, and
inventory (and the products and proceeds of all of those assets). The security
agreements executed by Daw that grant the security interests and liens described
in the preceding sentence are referred to below as the "Security Agreements."
The personal property of Daw in which security interests and liens have been
granted in favor of U.S. Bank pursuant to the Security Agreements is referred to
below as the "Collateral."
G. The Loan Agreement, the Note, the Security Agreements, and the
other documents executed by Daw in favor of U.S. Bank are referred to herein as
the "Loan Documents."
-1-
2
H. The credit commitment extended by U.S. Bank to Daw pursuant to
the Loan Agreement has expired. U.S. Bank in its discretion has made certain
advances to Daw following the expiration of the revolving credit facility
governed by the Loan Agreement. Daw has asked U.S. Bank to extend the Maturity
Date of the Note and the revolving credit facility extended by U.S. Bank to Daw.
U.S. Bank is willing to do so, subject to the terms and conditions set forth in
this Agreement.
TERMS AND CONDITIONS
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties agree as follows:
SECTION I
AVAILABILITY OF CREDIT
1.1 Acknowledgment of Amounts Owed. Daw hereby acknowledges and
agrees that the amounts of principal and interest specified in Recital C with
respect to the Note are payable to U.S. Bank without offset, defense,
counterclaim, or claim of recoupment. In addition, Daw acknowledges its
obligation to pay U.S. Bank the amounts referred to in Recital D to this
Agreement.
1.2 Extension of the Maturity Date of the Credit Facilities. U.S.
Bank hereby agrees to continue to make Advances available to Daw through March
31, 1999, in accordance with the terms of the Loan Agreement (as modified
hereby). In that regard, the maturity date of the Note and revolving credit
facility governed by the Loan Agreement hereby is extended through March 31,
1999.
1.3 Amendment of the Note. Contemporaneously with the execution
of this Agreement, Daw shall execute and deliver to U.S. Bank a document in a
form satisfactory to U.S. Bank amending the Note to reflect the revised maturity
date thereof. Following the execution of this Agreement and the note amendment
agreement by Daw, references in the Loan Agreement to the Note shall mean the
Note as amended by the document described in the preceding sentence.
1.4 Loan Extension Fee. Prior to or contemporaneously with the
execution of this Agreement, Daw shall pay U.S. Bank a loan extension fee of
$7,500.
SECTION II
COLLATERAL FOR THE INDEBTEDNESS
2.1 Continued Validity of the Security Agreements. Daw hereby
expressly reaffirms and acknowledges the validity of the Security Agreements,
the accuracy of the information contained in those documents, and its grant of
security interests and liens in favor of U.S. Bank in the Collateral. Daw
acknowledges and agrees that the Security Agreements, and the security interests
and liens created by those agreements, secure payment of the Indebtedness.
Furthermore, Daw acknowledges and agrees that the Security Agreements, and the
security interests and liens created thereby, shall continue in full force and
effect after the execution of this Agreement.
-2-
3
2.2 Additional Financing Statements; Other Documents. Daw hereby
agrees that until the Indebtedness has been paid in full, Daw promptly shall
execute and deliver to U.S. Bank all documents deemed necessary or desirable by
U.S. Bank to evidence, perfect, or continue U.S. Bank's security interests or
liens in the Collateral.
SECTION III
MISCELLANEOUS PROVISIONS
3.1 No Agreement to Lend Additional Sums. Daw acknowledges and
agrees that, except as specified in the Loan Agreement (as modified and amended
by this Agreement), U.S. Bank has made no commitment to extend credit or to lend
funds to Daw and that U.S. Bank has no obligation to do so. Daw acknowledges and
agrees that this means, among other things, that U.S. Bank is not obligated to
provide Daw a domestic line of credit once contemplated by the parties hereto,
or the foreign accounts receivable credit facility guaranteed by the ExIm Bank
previously discussed by U.S. Bank and Daw.
3.2 Expenses of U.S. Bank. Daw shall reimburse U.S. Bank for all
expenses incurred by U.S. Bank, including, but not limited to, collateral
appraisals, collateral examination and inspection costs, and the reasonable fees
and expenses of legal counsel for U.S. Bank in connection with the analysis of
the existing banking relationship between Daw and U.S. Bank, the preparation,
negotiation, closing, administration, amendment, modification, and enforcement
of this Agreement, or the agreement evidenced hereby; the preservation,
protection, or disposition of the Collateral (or U.S. Bank's security interests
therein); or as required by applicable law, rules, policies, and regulations.
The amounts owed by Daw pursuant to the preceding sentence of this Agreement are
part of the Indebtedness and shall be paid by Daw within ten days of the date
U.S. Bank provides Daw with written notice requesting payment of such costs and
expenses, or on March 31, 1999, whichever occurs first.
3.3 Release of Claims. Daw hereby releases and forever discharges
U.S. Bank and U.S. Bank's agents, principals, successors, assigns, employees,
officers, directors, and attorneys, and each of them, of and from any and all
claims, demands, damages, suits, rights, defenses, offsets, or causes of action
of every kind and nature that Daw has or may have as of the date it executes
this Agreement, whether known or unknown, contingent or matured, foreseen or
unforeseen, asserted or unasserted, including, but not limited to, all claims
for compensatory, general, special, consequential, incidental, and punitive
damages, attorney fees, and equitable relief, other than U.S. Bank's obligations
under this Agreement and the Loan Agreement (as modified hereby).
3.4 Forbearance with Respect to Existing Defaults. Daw hereby
acknowledges and agrees that it is in default with respect to various terms and
conditions of the Loan Agreement, including the tangible net worth covenant and
the debt service coverage covenant specified therein. Daw's existing defaults
under the Loan Agreement are referred to in this Agreement as the "Existing
Defaults." U.S. Bank hereby agrees to forbear from exercising its rights and
remedies against Daw as a result of the Existing Defaults. U.S. Bank shall not
be obligated to forbear with respect to any Events of Default of the types
specified in paragraph 4.1 of this Agreement.
-3-
4
SECTION IV
DEFAULT AND REMEDIES
4.1 Events of Default. The occurrence of any of the following
events ("Event(s) of Default") shall constitute a default by Daw under this
Agreement and the Loan Documents:
(a) Failure to Pay. Daw fails to pay any amount owed to U.S. Bank
pursuant to the Note when such amount is due and such failure shall
continue for three business days following written notice from U.S.
Bank;
(b) Failure to Pay Attorney Fees and Costs. Daw fails to pay U.S.
Bank's attorney fees, costs, and expenses as required by paragraph 3.2
of this Agreement and such failure shall continue for three business
days following written notice from U.S. Bank;
(c) Failure to Comply with Other Obligations. Daw fails to comply
with any other covenant, agreement, term, or condition imposed upon Daw
by this Agreement, the Loan Documents, or any other agreement between
Daw and U.S. Bank (or among Daw, U.S. Bank, and any third party or
parties) (other than those that resulted in the Existing Defaults) and
does not remedy or cure such failure within ten days following written
notice from U.S. Bank of such failure;
(d) Diminution in the Value of the Collateral. A material
diminution in the value of all or any material portion of the
Collateral;
(e) Incorrect or Misleading Statement. Any material statement,
representation, or warranty made by Daw in this Agreement, or in any
oral or written statement furnished to U.S. Bank, whether prior to,
contemporaneously with, or subsequent to the delivery of this Agreement,
proves to have been incorrect or misleading in any material respect when
made; or
(f) Receivership/Bankruptcy. A receiver or trustee is appointed
for Daw, or for any substantial part of its assets, or any bankruptcy
case is instituted by or with respect to Daw.
4.2 Acceleration. At the option of U.S. Bank, upon the occurrence
of any Event of Default, the Indebtedness immediately shall be due and payable
and U.S. Bank shall have no obligation to extend any further credit to Daw.
4.3 Remedies. Following the occurrence of an Event of Default,
U.S. Bank immediately and without notice to Daw may exercise any or all of its
rights and remedies under the Loan Documents and applicable law, all of which
rights and remedies are cumulative.
-4-
5
SECTION V
GENERAL TERMS
5.1 Assignment. U.S. Bank reserves the right to transfer or
assign, without notice to or consent by Daw, any or all of the powers, rights,
title, and interests held by U.S. Bank under this Agreement, the Loan Documents,
or any other agreements between the parties to this Agreement (or among those
parties and any third party or parties). Those agreements may not be assigned by
Daw by operation of law, or otherwise, without U.S. Bank's prior, written
consent, and any such attempted assignment shall be void and entirely without
effect.
5.2 Captions. Any captions for the sections of this Agreement are
for convenience only and do not control or affect the meaning or construction of
any of the provisions of this Agreement.
5.3 Severability. If any term, condition, or provision of this
Agreement, or any other document or instrument referred to in this Agreement, is
held invalid for any reason, such offending term, condition, or provision shall
be stricken therefrom, and the remainder of this Agreement shall not be affected
thereby.
5.4 Amendments. The Loan Documents may be amended or modified
only by a written agreement signed by an authorized representative of Daw and an
authorized representative of U.S. Bank that by its terms expressly supersedes,
modifies, amends, or alters those documents.
5.5 Continued Effectiveness of the Loan Documents. The Loan
Documents remain in full force and effect and are binding and enforceable in
accordance with their terms (as modified hereby and by the note amendment
agreement referred to in paragraph 1.3 above). Following the execution of this
Agreement, references in the Loan Agreement to the "Agreement" mean the Loan
Agreement, as amended hereby.
5.6 Negotiated Agreement. This Agreement is a negotiated
agreement. In the event of any ambiguity in this Agreement, such ambiguity shall
not be subject to a rule of contract interpretation that would cause the
ambiguity to be construed against either of the parties to this Agreement.
5.7 Voluntary and Entire Agreement. The only consideration for
the execution of this Agreement is the consideration expressly recited herein.
This Agreement and the other agreements and instruments referred to in this
Agreement set forth and constitute the entire agreement among the parties hereto
with respect to the subject matter of this Agreement. No oral promise or
agreement of any kind or nature, other than those that have been reduced to
writing and set forth herein, has been made among U.S. Bank and Daw. Daw
acknowledges that it has been, or has had the opportunity to be, represented by
legal counsel in connection with the negotiation and execution of this Agreement
and the other agreements and instruments referred to in this Agreement. Daw
fully understands the meaning and intent of this Agreement and voluntarily
executed this Agreement and the other agreements and instruments referred to in
this Agreement.
-5-
6
5.8 Construction and Conflict with Other Agreements. In the event
of any conflict between the terms of this Agreement and the terms of any other
agreements or instruments referred to in this Agreement, the terms of this
Agreement shall control.
5.9 Waivers. No waiver of any provision of this Agreement, the
Loan Documents, or any other agreement between the parties hereto, nor consent
to any failure by Daw to comply with such provisions, shall be effective unless
the same shall be in writing and signed by U.S. Bank, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
5.10 Applicable Law. Notwithstanding anything in the Loan
Documents to the contrary, the Loan Documents, this Agreement, and any other
instruments or agreements required or contemplated hereunder shall be governed
by, and construed under, the laws of the state of Oregon without regard to
principles of conflicts of law.
5.11 Statutory Notices. UNDER OREGON LAW, MOST AGREEMENTS,
PROMISES, AND COMMITMENTS MADE BY U.S. BANK CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS THAT ARE NOT FOR PERSONAL, FAMILY, OR HOUSEHOLD PURPOSES OR SECURED
SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION,
AND BE SIGNED BY U.S. BANK TO BE ENFORCEABLE. BY UTAH STATUTE (UCA 25-5-4) THE
FOLLOWING DISCLOSURE IS REQUIRED: THIS AGREEMENT IS A FINAL EXPRESSION OF THE
AGREEMENT BETWEEN U.S. BANK AND DAW AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
ANY ALLEGED ORAL AGREEMENT. DAW ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS
AGREEMENT.
U.S. BANK NATIONAL ASSOCIATION DAW TECHNOLOGIES, INC.
By: By:
----------------------------- --------------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxx X. Xxx
Vice President President
By:
--------------------------------------
Xxxxxxx X. Xxxxxxxx
Senior Vice President and Chief
Financial Officer
-6-
