May 31, 2001
XXXXXXX BUSINESS SERVICES, INC.
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Dear Xxxx:
This letter amendment (this "Amendment") is to confirm the changes agreed
upon between XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank") and XXXXXXX
BUSINESS SERVICES, INC. ("Borrower") to the terms and conditions of that certain
letter agreement between Bank and Borrower dated as of May 31, 2000, as amended
from time to time (the "Agreement"). For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree
that the Agreement shall be amended as follows to reflect said changes.
1. The Agreement is hereby amended by deleting "May 31, 2001" as the last
day on which Bank will make advances under the Line of Credit, and by
substituting for said date "July 1, 2002," with such change to be effective upon
the execution and delivery to Bank of a promissory note substantially in the
form of Exhibit A attached hereto (which promissory note shall replace and be
deemed the Line of Credit Note defined in and made pursuant to the Agreement)
and all other contracts, instruments and documents required by Bank to evidence
such change.
2. Paragraph I.4. is hereby deleted in its entirety, and the following
substituted therefor:
4. COLLATERAL:
As security for all indebtedness of Borrower to Bank under the Line of
Credit, Borrower hereby grants to Bank a lien of not less than first priority in
all its rights to payment from customers and accounts receivable arising from
services rendered or to be rendered, whether or not the same has been earned by
performance, and all rights under any contracts it has or may have with its
customers, and proceeds of all of the foregoing.
As security for all indebtedness of Borrower to Bank under Term Loan A,
Borrower hereby grants to Bank a lien of not less than first priority on that
certain real property located at 0000 XX Xxxxxxx Xxxxxx, Xxxxxxxx, XX.
As security for all indebtedness of Borrower to Bank under Term Loan B,
Borrower hereby grants to Bank a lien of not less than first priority in all
municipal bonds held by Xxxxx Fargo Brokerage Services, LLC account number
00000000.
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All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds of trust and other documents as
Bank shall reasonably require, all in form and substance satisfactory to Bank.
Borrower shall reimburse Bank immediately upon demand for all costs and expenses
incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of appraisals, audits
and title insurance.
3. Paragraph V.9 is hereby deleted in its entirety, and the following
substituted therefor:
9. FINANCIAL CONDITION. Maintain Borrower's financial condition as
follows using generally accepted accounting principles consistently applied and
used consistently with prior practices (except to the extent modified by the
definitions herein):
(a) Current Ratio as of the end of each fiscal quarter not at any time
less than 1.05 to 1.0, with "Current Ratio" defined as total current assets
divided by total current liabilities.
(b) Funded Debt to EBITDA Ratio not more than 2.25 to 1.0 as of the end of
each fiscal quarter end, with "Funded Debt" defined as all borrowed funds plus
the amount of all capitalized lease obligations of Borrower, "EBITDA" defined as
net income before tax plus interest expense (net of capitalized interest
expense), depreciation expense and amortization expense, and "Funded Debt to
EBITDA Ratio" defined as Funded Debt divided by EBITDA.
(c) EBITDA Coverage Ratio not less than 1.25 to 1.0 through September 30,
2001, 1.5 to 1.0 at December 31, 2001 and 1.75 to 1.0 thereafter as of each
fiscal quarter end, with "EBITDA" defined as net income before tax plus interest
expense (net of capitalized interest expense), depreciation expense and
amortization expense, and with "EBITDA Coverage Ratio" defined as EBITDA divided
by the aggregate of (i) total interest expense for the trailing four quarters,
including the current quarter then ended, plus (ii) scheduled principal payments
on long-term debt and subordinated debt for the trailing four quarters,
including the current quarter then ended.
(d) Outstanding Line Liabilities not greater than sixty-five (65%) of
Borrower's trade accounts receivable as of each fiscal quarter end, with
"Outstanding Line Liabilities" defined as outstanding borrowings under the Line
of Credit plus the face amount of outstanding Letters of Credit."
4. Paragraph V.11 is hereby deleted in its entirety, and the following
substituted therefor:
11. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Not merge into or
consolidate with any other entity; nor make any substantial change in the nature
of Borrower's business as conducted as of the date hereof; nor acquire all or
substantially all of the assets of any other entity in any transaction involving
a purchase price of $5,000,000.00 or more without the prior written approval of
Bank, which approval shall no be unreasonably withheld; nor sell, lease,
transfer or otherwise dispose of all or a substantial or material portion of
Borrower's assets except in the ordinary course of its business.
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5. Except as specifically provided herein, all terms and conditions of the
Agreement remain in full force and effect, without waiver or modification. All
terms defined in the Agreement shall have the same meaning when used herein.
This Amendment and the Agreement shall be read together, as one document.
6. Borrower hereby remakes all representations and warranties contained in
the Agreement and reaffirms all covenants set forth therein. Borrower further
certifies that as of the date of Xxxxxxxx's acknowledgment set forth below there
exists no default or defined event of default under the Agreement or any
promissory note or other contract, instrument or document executed in connection
therewith, nor any condition, act or event which with the giving of notice or
the passage of time or both would constitute such a default or defined event of
default.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH 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 BANK TO BE
ENFORCEABLE.
Your acknowledgment of this Amendment shall constitute acceptance of the
foregoing terms and conditions.
Sincerely,
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx, Vice President
Acknowledged and accepted as of 06-01-01:
XXXXXXX BUSINESS SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxx,
Vice President-Finance
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REVOLVING LINE OF CREDIT NOTE
$13,000,000.00 Portland, Oregon
May 31, 2001
FOR VALUE RECEIVED, the undersigned XXXXXXX BUSINESS SYSTEMS, INC. ("Borrower")
promises to pay to the order of XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank")
at its office at 0000 X. X. Fifth Avenue, T-13, Portland, Oregon, or at such
other place as the holder hereof may designate, in lawful money of the United
States of America and in immediately available funds, the principal sum of
Thirteen Million Dollars ($13,000,000.00), or so much thereof as may be advanced
and be outstanding, with interest thereon, to be computed on each advance from
the date of its disbursement as set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:
(a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in Oregon are authorized or required by law to
close.
(b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one (1), two (2), or three (3) months, as designated by Borrower,
during which all or a portion of the outstanding principal balance of this Note
bears interest determined in relation to LIBOR; provided however, that no Fixed
Rate Term may be selected for a principal amount less than Five Hundred Thousand
Dollars ($500,000.00); and provided further, that no Fixed Rate Term shall
extend beyond the scheduled maturity date hereof. If any Fixed Rate Term would
end on a day which is not a Business Day, then such Fixed Rate Term shall be
extended to the next succeeding Business Day.
(c) "LIBOR" means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) and determined pursuant to the following formula:
LIBOR = Base LIBOR
--------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States dollar
deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage prescribed by
the Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency
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Liabilities" (as defined in Regulation D of the Federal Reserve Board, as
amended), adjusted by Bank for expected changes in such reserve percentage
during the applicable Fixed Rate Term.
(d) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
INTEREST:
(a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum one and thirty five hundredths percent
(1.35%) below the Prime Rate in effect from time to time, or (ii) at a fixed
rate per annum determined by Bank to be one and thirty five hundredths percent
(1.35%) above LIBOR in effect on the first day of the applicable Fixed Rate
Term. When interest is determined in relation to the Prime Rate, each change in
the rate of interest hereunder shall become effective on the date each Prime
Rate change is announced within Bank. With respect to each LIBOR selection
hereunder, Bank is hereby authorized to note the date, principal amount,
interest rate and Fixed Rate Term applicable thereto and any payments made
thereon on Bank's books and records (either manually or by electronic entry)
and/or on any schedule attached to this Note, which notations shall be prima
facie evidence of the accuracy of the information noted.
(b) Selection of Interest Rate Options. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At such time as
Borrower requests an advance hereunder or wishes to select a LIBOR option for
all or a portion of the outstanding principal balance hereof, and at the end of
each Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the
interest rate option selected by Borrower; (ii) the principal amount subject
thereto; and (iii) for each LIBOR selection, the length of the applicable Fixed
Rate Term. Any such notice may be given by telephone (or such other electronic
method as Bank may permit) so long as, with respect to each LIBOR selection, (A)
if requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it's sole option
but without obligation to do so, accepts Xxxxxxxx's notice and quotes a fixed
rate to Borrower. If Borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time any
advance is requested hereunder or at the end of any Fixed Rate Term, Borrower
shall be deemed to have made a Prime Rate interest selection for such advance or
the principal amount to which such Fixed Rate Term applied.
(c) Taxes and Regulatory Costs. Borrower shall pay to Bank immediately
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i)
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withholdings, interest equalization taxes, stamp taxes or other taxes (except
income and franchise taxes) imposed by any domestic or foreign governmental
authority and related in any manner to LIBOR, and (ii) future, supplemental,
emergency or other changes in the LIBOR Reserve Percentage, assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar requirements or
costs imposed by any domestic or foreign governmental authority or resulting
from compliance by Bank with any request or directive (whether or not having the
force of law) from any central bank or other governmental authority and related
in any manner to LIBOR to the extent they are not included in the calculation of
LIBOR. In determining which of the foregoing are attributable to any LIBOR
option available to Borrower hereunder, any reasonable allocation made by Bank
among its operations shall be conclusive and binding upon Borrower.
(d) Payment of Interest. Interest accrued on this Note shall be payable on
the first day of each month, commencing July 1, 2001.
(e) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.
BORROWING AND REPAYMENT:
(a) Borrowing and Repayment. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note shall be due and
payable in full on July 1, 2002.
(b) Advances. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of (i)
Xxxxxxx X. Xxxxxxxx, Xx. or Xxxxxxx X. Xxxxxxxxxx, any one acting alone, who are
authorized to request advances and direct the disposition of any advances until
written notice of the revocation of such authority is received by the holder at
the office designated above, or (ii) any person, with respect to advances
deposited to the credit of any deposit account of any Borrower, which advances,
when so deposited, shall be conclusively presumed to have been made to or for
the benefit of each Borrower regardless of the fact that persons other than
those authorized to request advances may have authority to draw against such
account. The holder shall have no obligation to determine whether any person
requesting an advance is or has been authorized by any Borrower.
(c) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the
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outstanding principal balance of this Note which bears interest determined in
relation to LIBOR, with such payments applied to the oldest Fixed Rate Term
first.
PREPAYMENT:
(a) Prime Rate. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to the Prime Rate at any time, in
any amount and without penalty.
(b) LIBOR. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to LIBOR at any time and in the minimum
amount of One Hundred Thousand Dollars ($100,000.00); provided however, that if
the outstanding principal balance of such portion of this Note is less than said
amount, the minimum prepayment amount shall be the entire outstanding principal
balance thereof. In consideration of Bank providing this prepayment option to
Borrower, or if any such portion of this Note shall become due and payable at
any time prior to the last day of the Fixed Rate Term applicable thereto by
acceleration or otherwise, Borrower shall pay to Bank immediately upon demand a
fee which is the sum of the discounted monthly differences for each month from
the month of prepayment through the month in which such Fixed Rate Term matures,
calculated as follows for each such month:
(i) Determine the amount of interest which would have accrued each
month on the amount prepaid at the interest rate applicable to
such amount had it remained outstanding until the last day of the
Fixed Rate Term applicable thereto.
(ii) Subtract from the amount determined in (i) above the amount of
interest which would have accrued for the same month on the
amount prepaid for the remaining term of such Fixed Rate Term at
LIBOR in effect on the date of prepayment for new loans made for
such term and in a principal amount equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is greater than
zero, discount that difference by LIBOR used in (ii) above.
Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to
pay any prepayment fee when due, the amount of such prepayment fee shall
thereafter bear interest until paid at a rate per annum two percent (2%) above
the Prime Rate in effect from time to time (computed on the basis of a 360-day
year, actual days elapsed). Each change in the rate of interest on any such past
due prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank.
EVENTS OF DEFAULT:
The occurrence of any of the following shall constitute an "Event of
Default" under this Note:
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(a) The failure to pay any principal, interest, fees or other charges when
due hereunder or under any contract, instrument or document executed in
connection with this Note.
(b) The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.
(c) The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder; provided, however,
that any cure period applicable to such default has expired, and with respect to
a default under any obligation to any person or entity other than Bank, the
amount of the debts or other liabilities in default exceeds $2,000,000.00 in the
aggregate.
(e) Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.
(f) Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary course
of its business.
(g) Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any loan agreement, guaranty,
security agreement, deed of trust, mortgage or other document executed in
connection with or securing this Note, which, if such violation or breach is
curable, in not cured within the earlier to occur of (i) 30 days after the
occurrence thereof or (ii) any applicable cure period expressly provided in such
document.
MISCELLANEOUS:
(a) Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Each Borrower shall pay to the holder
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of the holder's in-house counsel), expended
or incurred by the holder in connection with the enforcement of the holder's
rights and/or the collection of any amounts which become due to
5
the holder under this Note, and the prosecution or defense of any action in any
way related to this Note, including without limitation, any action for
declaratory relief, whether incurred at the trial or appellate level, in an
arbitration proceeding or otherwise, and including any of the foregoing incurred
in connection with any bankruptcy proceeding (including without limitation, any
adversary proceeding, contested matter or motion brought by Bank or any other
person) relating to any Borrower or any other person or entity.
(b) Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
(c) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Oregon.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH 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 BANK TO BE
ENFORCEABLE.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.
XXXXXXX BUSINESS SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President-Finance
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FIRST MODIFICATION TO PROMISSORY NOTE
THIS FIRST MODIFICATION TO PROMISSORY NOTE (this "Modification") is
entered into as of May 31, 2001, by and between XXXXXXX BUSINESS SERVICES, INC.
("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
WHEREAS, Xxxxxxxx is currently indebted to Bank pursuant to the terms and
conditions of that certain Term Note in the maximum principal amount of
$8,000,000.00, executed by Xxxxxxxx and payable to the order of Bank, dated as
of May 31, 1999 (the "Note"), which Note is subject to the terms and conditions
of a loan agreement between Borrower and Bank dated as of May 31, 2000, as
amended from time to time (the "Loan Agreement").
WHEREAS, Bank and Borrower have agreed to certain changes in the terms and
conditions set forth in the Note, and have agreed to modify the Note to reflect
said changes.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree that the Note shall be
modified as follows:
1. The maximum principal amount available under the Note is hereby
modified to be One Million One Hundred Thousand Dollars ($1,100,000.00).
2. The scheduled principal plus interest payments due on the Note are
hereby modified to be Ninety One Thousand Six Hundred Sixty Seven Dollars
($91,667.00) each, with the understanding that Borrower shall make such payments
on the scheduled payment dates set forth in the Note.
3. Except as expressly set forth herein, all terms and conditions of the
Note remain in full force and effect, without waiver or modification. All terms
defined in the Note [or the Loan Agreement] shall have the same meaning when
used in this Modification. This Modification and the Note shall be read
together, as one document.
4. Borrower certifies that as of the date of this Modification there
exists no Event of Default under the Note, nor any condition, act or event which
with the giving of notice or the passage of time or both would constitute any
such Event of Default.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH 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 BANK TO BE
ENFORCEABLE.
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IN WITNESS WHEREOF, the parties hereto have caused this Modification to be
executed as of the day and year first written above.
XXXXX FARGO BANK,
XXXXXXX BUSINESS SERVICES, INC. NATIONAL ASSOCIATION
By: /s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxx Xxxxxx
-------------------------- -----------------------
Xxxxxxx X. Xxxxxxxxxx, Xxxxx Xxxxxx
Vice President-Finance Vice President
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CONTINUING SECURITY AGREEMENT:
RIGHTS TO PAYMENT
1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
XXXXXXX BUSINESS SERVICES, INC., or any of them ("Debtor"), hereby grants and
transfers to XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security interest
in all its rights to payment from customers and accounts receivable arising from
services rendered or to be rendered, whether or not the same has been earned by
performance, and all rights under any contracts it has or may have with its
customers (collectively called "Collateral"), now existing or at any time
hereafter and prior to the termination hereof arising, together with whatever is
receivable or received when any of the Collateral or proceeds thereof are sold,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary, including without limitation, all rights to payment
with respect to any cause of action affecting or relating to any of the
foregoing (hereinafter called "Proceeds").
2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly with others, or whether recovery upon such
Indebtedness may be or hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of Debtor to Bank, and the termination of all commitments of Bank
to extend credit to Debtor, existing at the time Bank receives written notice
from Debtor of the termination of this Agreement.
4. OBLIGATIONS OF BANK. Bank has no obligation to make any loans
hereunder. Any money received by Bank in respect of the Collateral may be
deposited, at Bank's option, into a non-interest bearing account over which
Debtor shall have no control, and the same shall, for all purposes, be deemed
Collateral hereunder.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank
that: (a) Debtor is the owner and has possession or control of the Collateral
and Proceeds; (b) Debtor has the right to grant a security interest in the
Collateral and Proceeds; (c) all Collateral and Proceeds are genuine, free from
liens, adverse claims, setoffs, default, prepayment, defenses and conditions
precedent of any kind or character, except the lien created hereby or as
otherwise agreed to by Bank, or as heretofore disclosed by Debtor to Bank, in
writing; (d) all statements contained herein and, where applicable, in the
Collateral are true and complete in all material respects; (e) no financing
statement covering any of the Collateral or Proceeds, and naming any secured
party other than Bank, is on file in any public office; (f) all persons
appearing to be obligated on Collateral and Proceeds have authority and capacity
to contract and are bound as they appear to be; and (g) all Collateral and
Proceeds comply with all applicable laws concerning form, content and manner of
preparation and
1
execution, including where applicable Federal Reserve Regulation Z and any State
consumer credit laws.
6. COVENANTS OF DEBTOR
(a) Debtor agrees in general: (i) to pay Indebtedness secured hereby when
due; (ii) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (iii) to pay all costs
and expenses, including reasonable attorneys' fees, incurred by Bank in the
perfection and preservation of the Collateral or Bank's interest therein and/or
the realization, enforcement and exercise of Bank's rights, powers and remedies
hereunder; (iv) to permit Bank to exercise its powers; (v) to execute and
deliver such documents as Bank deems necessary to create, perfect and continue
the security interests contemplated hereby; and (vi) not to change its chief
place of business or the places where Debtor keeps any of the Collateral or
Debtor's records concerning the Collateral and Proceeds without first giving
Bank written notice of the address to which Debtor is moving same.
(b) Debtor agrees with regard to the Collateral and Proceeds, unless Bank
agrees otherwise in writing: (i) where applicable, to insure the Collateral with
Bank as loss payee, in form, substance and amounts, under agreements, against
risks and liabilities, and with insurance companies satisfactory to Bank; (ii)
not to permit any lien on the Collateral or Proceeds, except in favor of Bank;
(iii) not to sell, hypothecate or otherwise dispose of, nor permit the transfer
by operation of law of, any of the Collateral or Proceeds or any interest
therein; (iv) to keep, in accordance with generally accepted accounting
principles, complete and accurate records regarding all Collateral and Proceeds,
and to permit Bank to inspect the same and make copies thereof at any reasonable
time; (v) if requested by Bank, to receive and use reasonable diligence to
collect Proceeds, in trust and as the property of Bank, and to immediately
endorse as appropriate and deliver such Proceeds to Bank daily in the exact form
in which they are received together with a collection report in form
satisfactory to Bank; (vi) not to commingle Collateral or Proceeds, or
collections thereunder, with other property (except that prior to any Event of
Default hereunder Debtor shall be permitted to deposit collections in its
general bank accounts; (vii) to give only normal allowances and credits and to
advise Bank thereof immediately in writing if they affect any Collateral or
Proceeds in any material respect; (viii) from time to time, when requested by
Bank, to prepare and deliver a schedule of all Collateral and Proceeds subject
to this Agreement and to assign in writing and deliver to Bank all related
contracts, documents and other evidences thereof; (ix) in the event Bank elects
to receive payments of Collateral or Proceeds hereunder, to pay all expenses
incurred by Bank in connection therewith, including expenses of accounting,
correspondence, collection efforts, reporting to account or contract debtors,
filing, recording, record keeping and expenses incidental thereto; and (x) to
provide any service and do any other acts which may be necessary to keep all
Collateral and Proceeds free and clear of all defenses, rights of offset and
counterclaims.
7. POWERS OF BANK. Debtor appoints Bank its true attorney in fact to
perform any of the following powers, which are coupled with an interest, are
irrevocable until termination of this Agreement and may be exercised from time
to time by Bank's officers and employees, or any of them, whether or not Debtor
is in default: (a) to perform any obligation of Debtor hereunder in Debtor's
name or otherwise; (b) to give notice to account debtors or others of Bank's
rights in the Collateral and Proceeds, to enforce the same and make extension
agreements with respect thereto; (c) to release persons liable on Collateral or
Proceeds and to give receipts and acquittances and compromise disputes in
connection therewith; (d) to release
2
security; (e) to resort to security in any order; (f) to prepare, execute, file,
record or deliver notes, assignments, schedules, designation statements,
financing statements, continuation statements, termination statements,
statements of assignment, applications for registration or like papers to
perfect, preserve or release Bank's interest in the Collateral and Proceeds; (g)
to receive, open and read mail addressed to Debtor; (h) to take cash,
instruments for the payment of money and other property to which Bank is
entitled; (i) to verify facts concerning the Collateral and Proceeds by inquiry
of obligors thereon, or otherwise, in its own name or a fictitious name; (j) to
endorse, collect, deliver and receive payment under instruments for the payment
of money constituting or relating to Proceeds; (k) to prepare, adjust, execute,
deliver and receive payment under insurance claims directly related to
Collateral, and to collect and receive payment of and endorse any instrument in
payment of loss or returned premiums or any other insurance refund or return
directly related to Collateral, and to apply such amounts received by Bank, at
Bank's sole option, toward repayment of the Indebtedness; (l) to exercise all
rights, powers and remedies which Debtor would have, but for this Agreement,
with respect to all Collateral and Proceeds subject hereto; and (m) to do all
acts and things and execute all documents in the name of Xxxxxx or otherwise,
deemed by Bank as necessary, proper and convenient in connection with the
preservation, perfection or enforcement of its rights hereunder.
8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Debtor
agrees to pay, prior to delinquency, all insurance premiums, taxes, charges,
liens and assessments against the Collateral, if applicable, and Proceeds, and
upon the failure of Debtor to do so, Bank at its option may pay any of them and
shall be the sole judge of the legality or validity thereof and the amount
necessary to discharge the same. Any such payments made by Bank shall be
obligations of Debtor to Bank, due and payable immediately upon demand, together
with interest at a rate determined in accordance with the provisions of Section
15 hereof, and shall be secured by the Collateral and Proceeds, subject to all
terms and conditions of this Agreement.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" under this Agreement: (a) any default in the
payment or performance of any obligation, or any defined event of default, under
(i) any contract or instrument evidencing any Indebtedness, or (ii) any other
agreement between any Debtor and Bank, including without limitation any loan
agreement, relating to or executed in connection with any Indebtedness; (b) any
representation or warranty made by any Debtor herein shall prove to be
incorrect, false or misleading in any material respect when made; (c) any Debtor
shall fail to observe or perform any obligation or agreement contained herein;
(d) any attachment or like levy on any property of any Debtor; and (e) Bank, in
good faith, believes any or all of the Collateral and/or Proceeds to be in
danger of misuse, dissipation, commingling, loss, theft, damage or destruction,
or otherwise in jeopardy or unsatisfactory in character or value.
10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have
the right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the Oregon Uniform Commercial Code
or otherwise provided by law, including without limitation, the right to contact
all persons obligated to Debtor on any Collateral or Proceeds and to instruct
such persons to deliver all Collateral and/or Proceeds directly to Bank. All
rights, powers, privileges and remedies of Bank shall be cumulative. No delay,
failure or discontinuance of Bank in exercising any right, power, privilege or
remedy hereunder shall affect or operate as a waiver of such right, power,
privilege or remedy; nor shall any single or partial
3
exercise of any such right, power, privilege or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power, privilege or remedy. Any waiver, permit, consent or approval
of any kind by Bank of any default hereunder, or any such waiver of any
provisions or conditions hereof, must be in writing and shall be effective only
to the extent set forth in writing. It is agreed that public or private sales,
for cash or on credit, to a wholesaler or retailer or investor, or user of
property of the types subject to this Agreement, or public auction, are all
commercially reasonable since differences in the sales prices generally realized
in the different kinds of sales are ordinarily offset by the differences in the
costs and credit risks of such sales. While an Event of Default exists: (a)
Debtor will deliver to Bank from time to time, as requested by Bank, current
lists of all Collateral and Proceeds; (b) Debtor will not dispose of any of the
Collateral or Proceeds except on terms approved by Bank; and (c) at Bank's
request, Debtor will assemble and deliver all Collateral and Proceeds, and books
and records pertaining thereto, to Bank at a reasonably convenient place
designated by Bank.
11. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or
any part of the Indebtedness, Bank may transfer all or any part of the
Collateral or Proceeds and shall be fully discharged thereafter from all
liability and responsibility with respect to any of the foregoing so
transferred, and the transferee shall be vested with all rights and powers of
Bank hereunder with respect to any of the foregoing so transferred; but with
respect to any Collateral or Proceeds not so transferred, Bank shall retain all
rights, powers, privileges and remedies herein given. Any proceeds of any
disposition of any of the Collateral or Proceeds, or any part thereof, may be
applied by Bank to the payment of expenses incurred by Bank in connection with
the foregoing, including reasonable attorneys' fees, and the balance of such
proceeds may be applied by Bank toward the payment of the Indebtedness in such
order of application as Bank may from time to time elect.
12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in
full and all commitments by Bank to extend credit to Debtor have been
terminated, the power of sale and all other rights, powers, privileges and
remedies granted to Bank hereunder shall continue to exist and may be exercised
by Bank at any time and from time to time irrespective of the fact that the
Indebtedness or any part thereof may have become barred by any statute of
limitations, or that the personal liability of Debtor may have ceased, unless
such liability shall have ceased due to the payment in full of all Indebtedness
secured hereunder.
13. MISCELLANEOUS. (a) The obligations of Debtor are joint and several;
(b) Debtor hereby waives any right (i) to require Bank to make any presentment
or demand, or give any notice of nonpayment or nonperformance, protest, notice
of protest or notice of dishonor hereunder, (ii) to direct the application of
payments or security for any Indebtedness of Debtor, or indebtedness of
customers of Debtor, or (iii) to require proceedings against others or to
require exhaustion of security; and (c) Debtor hereby consents to extensions,
forbearances or alterations of the terms of Indebtedness, the release or
substitution of security, and the release of any guarantors; provided however,
that in each instance, Bank believes in good faith that the action in question
is commercially reasonable in that it does not unreasonably increase the risk of
nonpayment of the Indebtedness to which the action applies. Until all
Indebtedness shall have been paid in full, no Debtor shall have any right of
subrogation or contribution, and each Debtor hereby waives any benefit of or
right to participate in any of the Collateral or Proceeds or any other security
now or hereafter held by Bank.
14. NOTICES. All notices, requests and demands required under this
Agreement must be in writing, addressed to Bank at the address specified in any
other loan documents
4
entered into between Debtor and Bank and to Debtor at the address of its chief
executive office (or personal residence, if applicable) specified below or to
such other address as any party may designate by written notice to each other
party, and shall be deemed to have been given or made as follows: (a) if
personally delivered, upon delivery; (b) if sent by mail, upon the earlier of
the date of receipt or three (3) days after deposit in the U.S. mail, first
class and postage prepaid; and (c) if sent by telecopy, upon receipt.
15. COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in exercising any right, power, privilege or remedy conferred
by this Agreement or in the enforcement thereof, whether incurred at the trial
or appellate level, in an arbitration proceeding or otherwise, and including any
of the foregoing incurred in connection with any bankruptcy proceeding
(including without limitation, any adversary proceeding, contested matter or
motion brought by Bank or any other person) relating to Debtor or in any way
affecting any of the Collateral or Bank's ability to exercise any of its rights
or remedies with respect thereto. All of the foregoing shall be paid by Debtor
with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten percent (10%) or Bank's Prime Rate in effect from
time to time.
16. SUCCESSORS; ASSIGNS; AMENDMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Bank and Debtor.
17. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
18. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
Debtor warrants that its chief executive office is located at the
following address: 0000 X.X. Macadam Avenue, Portland Oregon 97201.
IN WITNESS WHEREOF, this Agreement has been duly executed as of June 1,
2001.
XXXXXXX BUSINESS SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President-Finance
5
SECURITY AGREEMENT
SECURITIES ACCOUNT
XXXXX FARGO BANK
1. GRANT OF SECURITY INTEREST. For valuable consideration, the undersigned
XXXXXXX BUSINESS SERVICES, INC., or any of them ("Debtor"), hereby grants and
transfers to XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank") a security interest
in (a) Debtor's PLEDGED SECURITIES Account No. 00000000 (whether held in
Debtor's name or as a Bank collateral account for the benefit of Debtor), and
all replacements or substitutions therefor, including any account resulting from
a renumbering or other administrative re-identification therefor (collectively,
the "Securities Account") maintained with XXXXX FARGO BROKERAGE SERVICES, LLC
("Intermediary"), (b) all financial assets credited to the Securities Account,
(c) all security entitlements with respect to the financial assets credited to
the Securities Account, and (d) any and all other investment property or assets
maintained or recorded in the Securities Account (with all the foregoing defined
as "Collateral"), together with whatever is receivable or received when any of
the Collateral or proceeds thereof are sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, including
without limitation, (i) all rights to payment, including returned premiums, with
respect to any insurance relating to any of the foregoing, (ii) all rights to
payment with respect to any cause of action affecting or relating to any of the
foregoing, and (iii) all stock rights, rights to subscribe, stock splits,
liquidating dividends, cash dividends, dividends paid in stock, new securities
or other property of any kind which Debtor is or may hereafter be entitled to
receive on account of any securities pledged hereunder, including without
limitation, stock received by Debtor due to stock splits or dividends paid in
stock or sums paid upon or in respect of any securities pledged hereunder upon
the liquidation or dissolution of the issuer thereof (hereinafter called
"Proceeds"). Except as otherwise expressly permitted herein, in the event Debtor
receives any such Proceeds, Debtor will hold the same in trust on behalf of and
for the benefit of Bank and will immediately deliver all such Proceeds to Bank
in the exact form received, with the endorsement of Debtor if necessary and/or
appropriate undated stock powers duly executed in blank, to be held by Bank as
part of the Collateral, subject to all terms hereof. As used herein, the terms
"security entitlement," "financial asset" and "investment property" shall have
the respective meanings set forth in the Oregon Uniform Commercial Code.
2. OBLIGATIONS SECURED. The obligations secured hereby are the payment and
performance of: (a) all present and future Indebtedness of Debtor to Bank; (b)
all obligations of Debtor and rights of Bank under this Agreement; and (c) all
present and future obligations of Debtor to Bank of other kinds. The word
"Indebtedness" is used herein in its most comprehensive sense and includes any
and all advances, debts, obligations and liabilities of Debtor, or any of them,
heretofore, now or hereafter made, incurred or created, whether voluntary or
involuntary and however arising, whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether Debtor may
be liable individually or jointly, or whether recovery upon such Indebtedness
may be or hereafter becomes unenforceable.
3. TERMINATION. This Agreement will terminate upon the performance of all
obligations of Debtor to Bank, including without limitation, the payment of all
Indebtedness of
-1-
Debtor to Bank, and the termination of all commitments of Bank to extend credit
to Debtor, existing at the time Bank receives written notice from Debtor of the
termination of this Agreement.
4. OBLIGATIONS OF BANK. Bank shall have no duty to take any steps necessary to
preserve the rights of Debtor against prior parties, or to initiate any action
to protect against the possibility of a decline in the market value of the
Collateral or Proceeds. Bank shall not be obligated to take any action with
respect to the Collateral or Proceeds requested by Debtor unless such request is
made in writing and Bank determines, in its sole discretion, that the requested
action would not unreasonably jeopardize the value of the Collateral and
Proceeds as security for the Indebtedness.
5. REPRESENTATIONS AND WARRANTIES. Debtor represents and warrants to Bank that:
(a) Debtor is the sole owner of the Collateral and Proceeds; (b) Debtor has the
right to grant a security interest in the Collateral and Proceeds; (c) all
Collateral and Proceeds are genuine, free from liens, adverse claims, setoffs,
default, prepayment, defenses and conditions precedent of any kind or character,
except the lien created hereby or as otherwise agreed to by Bank, or heretofore
disclosed by Debtor to Bank, in writing; (d) all statements contained herein
and, where applicable, in the Collateral, are true and complete in all material
respects; (e) no financing statement or control agreement covering any of the
Collateral or Proceeds, and naming any secured party other than Bank, exists or
is on file in any public office or remains in effect; (f) no person or entity,
other than Debtor, Bank and Intermediary, has any interests in or control over
the Collateral; and (g) specifically with respect to Collateral and Proceeds
consisting of investment securities, instruments, chattel paper, documents,
contracts, insurance policies or any like property, (i) all persons appearing to
be obligated thereon have authority and capacity to contract and are bound as
they appear to be, and (ii) the same comply with applicable laws concerning
form, content and manner of preparation and execution.
6. COVENANTS OF DEBTOR.
(a) Debtor Agrees in general: (i) to pay Indebtedness secured hereby when
due; (ii) to indemnify Bank against all losses, claims, demands, liabilities and
expenses of every kind caused by property subject hereto; (iii) to pay all costs
and expenses, including reasonable attorneys' fees, incurred by Bank in the
perfection and preservation of the Collateral or Bank's interest therein and/or
the realization, enforcement and exercise of Bank's rights, powers and remedies
hereunder; (iv) to permit Bank to exercise its powers; (v) to execute and
deliver such documents as Bank deems necessary to create, perfect and continue
the security interests contemplated hereby; and (vi) not to change its chief
place of business (or personal residence, if applicable) or the places where
Debtor keeps any of the Collateral or Debtor's records concerning the Collateral
and Proceeds without first giving Bank written notice of the address to which
Debtor is moving same.
(b) Debtor agrees with regard to the Collateral and Proceeds, unless Bank
agrees otherwise in writing: (i) not to permit any security interest in or lien
on the Collateral or Proceeds, except in favor of Bank and except liens in favor
of Intermediary to the extent expressly permitted by Bank in writing; (ii) not
to hypothecate or permit the transfer by operation of law of any of the
Collateral or Proceeds or any interest therein; (iii) to keep, in
-2-
accordance with generally accepted accounting principles, complete and accurate
records regarding all Collateral and Proceeds, and to permit Bank to inspect the
same and make copies thereof at any reasonable time; (iv) if requested by Bank,
to receive and use reasonable diligence to collect Proceeds, in trust and as the
property of Bank, and to immediately endorse as appropriate and deliver such
Proceeds to Bank daily in the exact form in which they are received together
with a collection report in form satisfactory to Bank; (v) in the event Bank
elects to receive payments of Proceeds hereunder, to pay all expenses incurred
by Bank in connection therewith, including expenses of accounting,
correspondence, collection efforts, filing, recording, record keeping and
expenses incidental thereto; (vi) to provide any service and do any other acts
which may be necessary to keep all Collateral and Proceeds free and clear of all
defenses, rights of offset and counterclaims; and (vii) if the Collateral or
Proceeds consists of securities and so long as no Event of Default exists, to
vote said securities and to give consents, waivers and ratifications with
respect thereto, provided that no vote shall be cast or consent, waiver or
ratification given or action taken which would impair Bank's interests in the
Collateral and Proceeds or be inconsistent with or violate any provisions of
this Agreement. Debtor further agrees that any party now or at any time
hereafter authorized by Debtor to advise or otherwise act with respect to the
Securities Account shall be subject to all terms and conditions contained herein
and in any control, custodial or other similar agreement at any time in effect
among Bank, Debtor and Intermediary relating to the Collateral.
7. POWERS OF BANK. Debtor appoints Bank its true attorney-in-fact to perform any
of the following powers, which are coupled with an interest, are irrevocable
until termination of this Agreement and may be exercised from time to time by
Bank's officers and employees, or any of them, whether or not Debtor is in
default: (a) to perform any obligation of Debtor hereunder in Debtor's name or
otherwise; (b) to notify any person obligated on any security, instrument or
other document subject to this Agreement of Bank's rights hereunder; (c) to
collect by legal proceedings or otherwise all dividends, interest, principal or
other sums now or hereafter payable upon or on account of the Collateral or
Proceeds; (d) to enter into any extension, reorganization, deposit, merger or
consolidation agreement, or any other agreement relating to or affecting the
Collateral or Proceeds, and in connection therewith to deposit or surrender
control of the Collateral and Proceeds, to accept other property in exchange for
the Collateral and Proceeds, and to do and perform such acts and things as Bank
may deem proper, with any money or property received in exchange for the
Collateral or Proceeds, at Bank's option, to be applied to the Indebtedness or
held by Bank under this Agreement; (e) to make any compromise or settlement Bank
deems desirable or proper in respect of the Collateral and Proceeds; (f) to
insure, process and preserve the Collateral and Proceeds; (g) to exercise all
rights, powers and remedies which Debtor would have, but for this Agreement,
with respect to all Collateral and Proceeds subject hereto; and (h) to do all
acts and things and execute all documents in the name of Debtor or otherwise,
deemed by Bank as necessary, proper and convenient in connection with the
preservation, perfection or enforcement of its rights hereunder. To effect the
purposes of this Agreement or otherwise upon instructions of Debtor, or any of
them, Bank may cause any Collateral and/or Proceeds to be transferred to Bank's
name or the name of Bank's nominee. If an Event of Default has occurred and is
continuing, any or all Collateral and/or Proceeds consisting of securities may
be registered, without notice, in the name of Bank or its nominee, and
thereafter Bank or its nominee may exercise, without notice, all voting and
corporate rights at any meeting of the shareholders of the issuer thereof, any
and all rights of conversion, exchange or subscription, or any other rights,
privileges or options pertaining to such Collateral
-3-
and/or Proceeds, all as if it were the absolute owner thereof. The foregoing
shall include, without limitation, the right of Bank or its nominee to exchange,
as its discretion, any and all Collateral and/or Proceeds upon the merger,
consolidation, reorganization, recapitalization or other readjustment of the
issuer thereof, or upon the exercise by the issuer thereof or Bank of any right,
privilege or option pertaining to any shares of the Collateral and/or Proceeds,
and in connection therewith, the right to deposit and deliver any and all of the
Collateral and/or Proceeds with any committee, depository, transfer agent,
registrar or other designated agency upon such terms and conditions as Bank may
determine. All of the foregoing rights, privileges or options may be exercised
without liability on the part of Bank or its nominee except to account for
property actually received by Bank. Bank shall have no duty to exercise any of
the foregoing, or any other rights, privileges or options with respect to the
collateral or Proceeds and shall not be responsible for any failure to do so or
delay in so doing.
8. PAYMENT OF PREMIUMS, TAXES, CHARGES, LIENS AND ASSESSMENTS. Xxxxxx agrees to
pay, prior to delinquency, all insurance premiums, taxes, charges, liens and
assessments against the Collateral and Proceeds, and upon the failure of Debtor
to do so, Bank at its option may pay any of them and shall be the sole judge of
the legality or validity thereof and the amount necessary to discharge the same.
Any such payments made by Bank shall be obligations of Debtor to Bank, due and
payable immediately upon demand, together with interest at a rate determined in
accordance with the provisions of Section 15 hereof, and shall be secured by the
Collateral and Proceeds, subject to all terms and conditions of this Agreement.
9. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement: (1) any default (for which any
applicable cure period has expired) in the payment or performance of any
obligation, or any defined event of default, under (i) any contract or
instrument evidencing any Indebtedness, (ii) any other agreement between any
Debtor and Bank, including without limitation any loan agreement, relating to or
executed in connection with any Indebtedness, or (iii) any control, custodial or
other similar agreement in effect among Bank, Debtor and Intermediary relating
to the Collateral; (b) any representation or warranty made by any Debtor herein
shall prove to be incorrect, false or misleading in any material respect when
made; (c) any Debtor shall fail to observe or perform any obligation or
agreement contained herein; (d) any attachment or like levy on any property of
any Debtor; and (e) Bank, in good faith, believes any or all of the Collateral
and/or Proceeds to be in danger of misuse, dissipation, commingling, loss,
theft, damage or destruction, or otherwise in jeopardy or unsatisfactory in
character or value.
10. REMEDIES. Upon the occurrence of any Event of Default, Bank shall have the
right to declare immediately due and payable all or any Indebtedness secured
hereby and to terminate any commitments to make loans or otherwise extend credit
to Debtor. Bank shall have all other rights, powers, privileges and remedies
granted to a secured party upon default under the Oregon Uniform Commercial Code
or otherwise provided by law, including without limitation, the right to contact
all persons obligated to Debtor on any Collateral or Proceeds and to instruct
such persons to deliver all Collateral and/or Proceeds directly to Bank. All
rights, powers, privileges and remedies of Bank shall be cumulative. No delay,
failure or discontinuance of Bank in exercising any right, power, privilege or
remedy hereunder shall affect or operate as a waiver of such right, power,
privilege or remedy; nor shall any single or partial exercise of any such right,
power, privilege or remedy preclude, waive or otherwise affect any other or
further exercise
-4-
thereof or the exercise of any other right, power, privilege or remedy. Any
waiver, permit, consent or approval of any kind by Bank of any default
hereunder, or any such waiver of any provisions or conditions hereof, must be in
writing and shall be effective only to the extent set forth in writing. It is
agreed that public or private sales, for cash or on credit, to a wholesaler or
retailer or investor, or user of property of the types subject to this
Agreement, or public auction, are all commercially reasonable since differences
in the sales prices generally realized in the different kinds of sales are
ordinarily offset by the differences in the costs and credit risks of such
sales.
While an Event of Default exists: (a) Debtor will not dispose of any of the
Collateral or Proceeds except on terms approved by Bank; (b) Bank may
appropriate the Collateral and apply all Proceeds toward repayment of the
Indebtedness in such order of application as Bank may from time to time elect;
(c) Bank may take any action with respect to the Collateral contemplated by any
control, custodial or other similar agreement then in effect among Bank, Debtor
and Intermediary; and (d) at Bank's request, Xxxxxx will assemble and deliver
all books and records pertaining to the Collateral or Proceeds to Bank at a
reasonably convenient place designated by Bank. For any Collateral or Proceeds
consisting of securities, Bank shall have no obligation to delay a sale of any
portion thereof for the period of time necessary to permit the issuer thereof to
register such securities for public sale under any applicable state or Federal
law, even if the issuer thereof would agree to do so.
11. DISPOSITION OF COLLATERAL AND PROCEEDS. Upon the transfer of all or any part
of the Indebtedness, Bank may transfer all or any part of the Collateral or
Proceeds and shall be fully discharged thereafter from all liability and
responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Bank hereunder with
respect to any of the foregoing so transferred; but with respect to any
Collateral or Proceeds not so transferred Bank shall retain all rights, powers,
privileges and remedies herein given. Any proceeds of any disposition of any of
the Collateral or Proceeds, or any part thereof, may be applied by Bank to the
payment of expenses incurred by Bank in connection with the foregoing, including
reasonable attorneys' fees, and the balance of such proceeds may be applied by
Bank toward the payment of the Indebtedness in such order or application as Bank
may from time to time elect.
12. STATUTE OF LIMITATIONS. Until all Indebtedness shall have been paid in full
and all commitments by Bank to extend credit to Debtor have been terminated, the
power of sale and all other rights, powers, privileges and remedies granted to
Bank hereunder shall continue to exist and may be exercised by Bank at any time
and from time to time irrespective of the fact that the Indebtedness or any part
thereof may have become barred by any statute of limitations, or that the
personal liability of Debtor may have ceased, unless such liability shall have
ceased due to the payment in full of all Indebtedness secured hereunder.
13. MISCELLANEOUS. (a) The obligations of Debtor are joint and several; (b)
Debtor hereby waives any right (i) to require Bank to make any presentment or
demand, or give any notice of nonpayment or nonperformance, protest, notice of
protest or notice of dishonor hereunder, (ii) to direct the application of
payments or security for Indebtedness of Debtor or indebtedness of customers of
Debtor, or (iii) to require proceedings against others or to require exhaustion
of security; and (c) Debtor hereby consents to extensions, forbearances or
alterations
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of the terms of Indebtedness, the release or substitution of security, and the
release of any guarantors; provided however, that in each instance, Bank
believes in good faith that the action in question is commercially reasonable in
that it does not unreasonably increase the risk of nonpayment of the
Indebtedness to which the action applies. Until all Indebtedness shall have been
paid in full, no Debtor shall have any right of subrogation or contribution, and
each Debtor hereby waives any benefit of or right to participate in any of the
Collateral or Proceeds or any other security now or hereafter held by Bank.
14. NOTICES. All notices, requests and demands required under this Agreement
must be in writing, addressed to Bank at the address specified in any other loan
documents entered into between Debtor and Bank and to Debtor at the address of
its chief executive office (or personal residence, if applicable) specified
below or to such other address as any party may designate by written notice to
each other party, and shall be deemed to have been given or made as follows: (a)
if personally delivered, upon delivery; (b) if sent by mail, upon the earlier of
the date of receipt or 3 days after deposit in the U.S. mail, first class and
postage prepaid; and (c) if sent by telecopy, upon receipt.
15. COSTS, EXPENSES AND ATTORNEYS' FEES. Debtor shall pay to Bank immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of Bank's in-house counsel), expended or incurred by
Bank in exercising any right, power, privilege or remedy conferred by this
Agreement or in the enforcement thereof, whether incurred at the trial or
appellate level, in an arbitration proceeding or otherwise, and including any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Bank or any other person) relating to Debtor or in any way affecting any of
the Collateral or Bank's ability to exercise any of its rights or remedies with
respect thereto. All of the foregoing shall be paid by Debtor with interest from
the date of demand until paid in full at a rate per annum equal to the greater
of ten percent (10%) or Bank's Prime Rate in effect from time to time.
16. SUCCESSORS, ASSIGNS, AMENDMENT. This Agreement shall be binding upon and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Bank and Debtor.
17. Deleted.
18. SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall be held
to be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
19. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon.
20. ADDENDUM. Additional terms and conditions relating to the Securities Account
are set forth in an Addendum attached hereto and incorporated herein by this
reference.
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Debtor warrants that its chief executive office (or personal residence, if
applicable) is located at the following address: 0000 XX XXXXXXX XXXXXX,
XXXXXXXX, XX 00000.
IN WITNESS WHEREOF, this Agreement has been duly executed as of MAY 31, 2001.
Xxxxxxx Business Services, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
Xxxxxxx X. Xxxxxxxxxx, Vice President- Finance
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ADDENDUM TO SECURITY AGREEMENT: SECURITIES ACCOUNT
THIS ADDENDUM is attached to and made a part of that certain Security
Agreement: Securities Account executed by XXXXXXX BUSINESS SERVICES, INC.
("Debtor") in favor of XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank"), dated as
of May 31, 2001 (the "Agreement").
The following provisions are hereby incorporated into the Agreement:
1. Securities Account Activity. So long as no Event of Default exists, Debtor,
or any party authorized by Debtor to act with respect to the Securities Account,
may (a) receive payments of interest and/or cash dividends earned on financial
assets maintained in the Securities Account, and (b) trade financial assets
maintained in the Securities Account. Without Bank's prior written consent,
except as permitted by the preceding sentence, neither Debtor nor any party
other than Bank may withdraw or receive any distribution of any Collateral from
the Securities Account. The Collateral Value of the Securities Account shall at
all times be equal to or greater than $1,295,000.00. In the event that the
Collateral Value, for any reason and at any time, is less than the required
amount, Debtor shall promptly make a principal reduction on the Indebtedness or
deposit additional assets of a nature satisfactory to Bank into the Securities
Account, in either case in amounts or with values sufficient to achieve the
required Collateral Value.
2. "Collateral Value" means 100% of the par value of the Securities Account.
3. Exclusion from Collateral. Notwithstanding anything herein to the contrary,
the terms "Collateral" and "Proceeds" do not include, and Bank disclaims a
security interest in all Common Trust Funds now or hereafter maintained in the
Securities Account.
4. "Common Trust Funds" means common trust funds as described in 12 CFR 9.18 and
includes, without limitation, common trust funds maintained by Bank for the
exclusive use of its fiduciary clients.
5. Limitation on Indebtedness. Notwithstanding anything in this Agreement to the
contrary, the Indebtedness secured hereby is limited to all obligations of
Debtor arising under or in connection with that certain Term Loan executed by
Xxxxxx and payable to the order of Bank, dated as of May 31, 1999, in the
original principal amount of $8,000,000.00 now $1,100,000.00, and all
extensions, renewals or modifications thereof, and restatements or substitutions
therefor.
IN WITNESS WHEREOF, this Xxxxxxxx has been executed as of the same date as the
Agreement.
XXXXXXX BUSINESS SERVICES, INC. XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:/s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxx Xxxxxx
--------------------------- ---------------------------
Xxxxxxx X. Xxxxxxxxxx, Xxxxx Xxxxxx, Vice President
Vice President - Finance
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