EXHIBIT 10.17
[LOGO OF COMERICA APPEARS HERE]
LOAN & SECURITY AGREEMENT
(ACCOUNTS AND INVENTORY)
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OBLIGOR # NOTE # AGREEMENT DATE
April 26, 1995
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CREDIT LIMIT INTEREST RATE B + 1.00% OFFICER NO./INITIALS
$2,500,000.00 10.00% 48117 XXXX XXXXX
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THIS AGREEMENT is entered into on APRIL 26, 1995, between COMERICA
BANK-CALIFORNIA ("Bank") as secured party, whose Headquarter Office is 000 XXXX
XXXXX XXXXX XXXXXX, XXX XXXX, XX and XXXX, XXXXXX & ASSOCIATES, INC.
("Borrower"), a CORPORATION whose sole place of business (if it has only one),
chief executive office (if it has more than one place of business) or residence
(if an individual) is located at 0000 XXXXXXX XXXXX XXXXXXXXX, XXX XXXX, XX.
The parties agree as follows:
1. DEFINITIONS
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1.1 "Agreement" as used in this Agreement means and includes this
Loan & Security Agreement (Accounts and Inventory), any concurrent or
subsequent rider to this Loan & Security Agreement (Accounts and
Inventory) and any extensions, supplements, amendments or modifications to
this Loan & Security Agreement (Accounts and Inventory) and to any such
rider.
1.2 "Bank Expenses" as used in this Agreement means and includes: all
costs or expenses required to be paid by Borrower under this Agreement
which are paid or advanced by Bank; taxes and insurance premiums of every
nature and kind of Borrower paid by Bank; filing, recording, publication
and search fees, appraiser fees, auditor fees and costs, and title
insurance premiums paid or incurred by Bank in connection with Bank's
transactions with Borrower; costs and expenses incurred by Bank in
collecting the Receivables (with or without suit) to correct any default
or enforce any provision of this Agreement, or in gaining possession of,
maintaining, handling, preserving, storing, shipping, selling, disposing
of, preparing for sale and/or advertising to sell the Collateral, whether
or not a sale is consummated; costs and expenses of suit incurred by Bank
in enforcing or defending this Agreement or any portion hereof, including,
but not limited to, expenses incurred by Bank in attempting to obtain
relief from any stay, restraining order, injunction or similar process
which prohibits Bank from exercising any of its rights or remedies; and
attorneys' fees and expenses incurred by Bank in advising, structuring,
drafting, reviewing, amending, terminating, enforcing, defending or
concerning this Agreement, or any portion hereof or any agreement related
hereto, whether or not suit is brought. Bank Expenses shall include Bank's
in-house legal charges at reasonable rates.
1.3 "Base Rate" as used in this Agreement means that variable rate of
interest so announced by Bank at its headquarters office in San Jose,
California as its "Base Rate" from time to time and which serves as the
basis upon which effective rates of interest are calculated for those
loans making reference thereto.
1.4 "Borrower's Books" as used in this Agreement means and includes
all of the Borrower's books and records including but not limited to:
minute books; ledgers; records indicating, summarizing or evidencing
Borrower's assets, liabilities, Receivables, business operations or
financial condition, and all information relating thereto, computer
programs; computer disk or tape files; computer printouts; computer runs;
and other computer prepared information and equipment of any kind.
1.5 "Borrowing Base" as used in this Agreement means the sum of: (1)
EIGHTY percent (80.00%) of the net amount of Eligible Accounts after
deducting therefrom all payments, adjustments and credits applicable
thereto ("Accounts Receivable Borrowing Base"); and (2) the amount, if
any, of the advances against Inventory agreed to be made pursuant to any
Inventory Rider ("Inventory Borrowing Base"), or other rider, amendment or
modification to this Agreement, that may now or hereafter be entered into
by Bank and Borrower.
1.6 "Cash Flow" as used in this Agreement means for any applicable
period of determination, the Net Income (after deduction for income taxes
and other taxes of such person determined by reference to income or
profits of such person) for such period, plus, to the extent deducted in
computation of such Net Income, the amount of depreciation and
amortization expense and the amount of deferred tax liability during such
period, all as determined in accordance with GAAP. The applicable period
of determination will be one year, beginning with the period from June 30,
1995 to each June 30 thereafter.
1.7 "Collateral" as used in this Agreement means and includes each
and all of the following: the Receivables; the Intangibles; the negotiable
collateral, the Inventory; all money, deposit accounts and all other
assets of Borrower in which Bank receives a security interest or which
hereafter come into the possession, custody or control of Bank; and the
proceeds of any of the foregoing, including, but not limited to, proceeds
of insurance covering the collateral and any and all Receivables,
Intangibles, negotiable collateral, Inventory, equipment, money, deposit
accounts or other tangible and intangible property of borrower resulting
from the sale or other disposition of the collateral, and the proceeds
thereof. Notwithstanding anything to the contrary contained herein,
collateral shall not include any waste or other materials which have been
or may be designated as toxic or hazardous by Bank.
1.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
1.8 "Credit" as used in this Agreement means all Obligations, except
those obligations arising pursuant to any other separate contract, instrument,
note, or other separate agreement which, by its terms, provides for a specified
interest rate and term.
1.9 "Current Assets" as used in this Agreement means, as of any
applicable date of determination, all cash, nonaffiliated customer receivables,
United States government securities, claims against the United States
government, and inventories and any other current asset that should be
classified as current in accordance with GAAP.
1.10 "Current Liabilities" as used in this Agreement means, as of any
applicable date of determination, (i) all liabilities of a person that should be
classified as current in accordance with GAAP, including without limitation any
portion of the principal of the indebtedness classified as current, plus (ii) to
the extent not otherwise included, all liabilities of the Borrower to any of its
affiliates whether or not classified as current in accordance with GAAP.
1.11 "Daily Balance" as used in this Agreement means the amount
determined by taking the amount of the Credit owed at the beginning of a given
day, adding any new Credit advanced or incurred on such date, and subtracting
any payments or collections which are deemed to be paid and are applied by Bank
in reduction of the Credit on that date under the provisions of this Agreement.
1.12 "Eligible Accounts" as used in this Agreement means and includes
those accounts of Borrower which are due and payable within THIRTY (30) days, or
less, from the date of invoice, have been validly assigned to Bank and strictly
comply with all of Borrower's warranties and representations to Bank; but
Eligible Accounts shall not include the following: (a) accounts with respect to
which the account debtor is an officer, employee, partner, joint venturer or
agent of Borrower; (b) accounts with respect to which goods are placed on
consignment, guaranteed sale or other terms by reason of which the payment by
the account debtor may be conditional; (c) accounts with respect to which the
account debtor is not a resident of the United States; (d) accounts with respect
to which the account debtor is the United States or any department, agency or
instrumentality of the United States; (e) accounts with respect to which the
account debtor is any State of the United States or any city, county, town,
municipality or division thereof; (f) accounts with respect to which the account
debtor is a subsidiary of, related to, affiliated or has common shareholders,
officers or directors with Borrower; (g) accounts with respect to which Borrower
is or may become liable to the account debtor for goods sold or services
rendered by the account debtor to Borrower; (h) accounts not paid by an account
debtor within ninety (90) days from the date of the invoice; (i) accounts with
respect to which account debtors dispute liability or make any claim, or have
any defense, crossclaim, counterclaim, or offset; (j) accounts with respect to
which any Insolvency Proceeding is filed by or against the account debtor, or if
an account debtor becomes insolvent, fails or goes out of business; and (k)
accounts owed by any single account debtor which exceed twenty percent (20%) of
all of the Eligible Accounts; and (l) accounts with a particular account debtor
on which over twenty-five percent (25%) of the aggregate amount owing is greater
than ninety (90) days from the date of the invoice.
1.13 "Event of Default" as used in this Agreement means those events
described in Section 7 contained herein below.
1.15 "GAAP" as used in this Agreement means as of any applicable
period, generally accepted accounting principles in effect during such period.
1.16 "Insolvency Proceeding" as used in this Agreement means and
includes any proceeding or case commenced by or against the Borrower, or any
guarantor of Borrower's Obligations, or any of Borrower's account debtors, under
any provisions of the Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including but not limited to assignments for the benefit of
creditors, formal or informal moratoriums, composition or extensions with some
or all creditors, any proceeding seeking a reorganization, arrangement or any
other relief under the Bankruptcy code, as amended, or any other bankruptcy or
insolvency law.
1.17 "Intangibles" as used in this Agreement means and includes all of
Borrower's present and future general Intangibles and other personal property
(including, without limitation, any and all rights in any legal proceedings,
goodwill, patents, trade names, copyrights, trademarks, blueprints, drawings,
purchase orders, computer programs, computer disks, computer tapes, literature,
reports, catalogs and deposit accounts) other than goods and Receivables, as
well as Borrower's Books relating to any of the foregoing.
2.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
1.18 "Inventory" as used in this Agreement means and includes all
present and future inventory in which Borrower has any interest, including, but
not limited to, goods held by Borrower for sale or lease or to be furnished
under a contract of service and all of Borrower's present and future raw
materials, work in process, finished goods, advertising materials, and packing
and shipping materials, wherever located and any documents of title representing
any of the above, and any equipment, fixtures or other property used in the
storing, moving, preserving, identifying, accounting for and shipping or
preparing for the shipping of inventory, and any and all other items hereafter
acquired by Borrower by way of substitution, replacement, return, repossession
or otherwise, and all additions and accessions thereto, and the resulting
product or mass, and any documents of title respecting any of the above.
1.19 "Net Income" as used in this agreement means the net income (or
loss) of a person for any period determined in accordance with GAAP but
excluding in any event:
(a) any gains or losses on the sale or other disposition, not in
the ordinary course of business, of investments or fixed or
capital assets, and any taxes on the excluded gains and any tax
deductions or credits on account on any excluded losses; and
(b) in the case of the Borrower, net earnings of any Person in
which Borrower has an ownership interest, unless such net
earnings shall have actually been received by Borrower in the
form of cash distributions.
1.20 "Judicial Officer or Assignee" as used in this Agreement means
and includes any trustee, receiver, contoller, custodian, assignee for the
benefit of creditors or any other person or entity having powers or duties like
or similar to the powers an duties of trustee, receiver, controller, custodian
or assignee for the benefit of creditors.
1.21 "Obligations" as used in this Agreement means and includes any
and all loans, advances, overdrafts, debts, liabilities (including, without
limitation, any and all amounts charged to Borrower's account pursuant to any
agreement authorizing Bank to charge Borrower's account), obligations, lease
payments, guaranties, covenants and duties owing by Borrower to Bank of any kind
and description whether advanced pursuant to or evidenced by this Agreement; by
any notes or other instrument; or by any other agreement between Bank and
Borrower and whether or not for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, and including, without limitation, any debt, liability or
obligation owing from Borrower to others which Bank may have obtained by
assignment, participation, purchase or otherwise, and further including, without
limitation, all interest not paid when due and all Bank Expenses which Borrower
is required to pay or reimburse by this Agreement, by law, or otherwise.
1.22 "Person" or "person" as used in this Agreement means and includes
any individual, corporation, partnership, joint venture, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency or other entity.
1.23 "Receivables" as used in this Agreement means and includes all
presently existing and hereafter arising accounts, instruments, documents,
chattel paper, general intangibles, all other forms of obligations owing to
Borrower, all of Borrower's rights in, to and under all purchase orders
heretofore or hereafter received, all monies due to Borrower under all contracts
or agreements (whether or not yet earned or due), all merchandise returned to or
reclaimed by Borrower and the Borrower's books (except minute books) relating to
any of the foregoing.
1.24 "Subordinated Debt" as used in this Agreement means indebtedness
of the Borrower to third parties which has been subordinated to the Obligations
pursuant to a subordination agreement in form and content satisfactory to the
Bank.
1.25 "Subordination Agreement" as used in this Agreement a
subordination agreement in form satisfactory to Bank making all present and
future indebtedness of the Borrower to N/A subordinate to the Indebtedness.
1.26 "Tangible Effective Net Worth" as used in this Agreement means
net worth as determined in accordance with GAAP consistently applied, increased
by subordinated debt if any, and decreased by the following: patents, licenses,
goodwill, subscription lists, organization expenses, trade receivables converted
to notes, and money due from affiliates (including officers, directors,
subsidiaries and commonly held companies.
1.27 "Tangible Net Worth" as used in this Agreement means, as of any
applicable date of determination, the excess of:
(a) the net book value of all assets of a person (other than
patents, patent rights, trademarks, trade names, franchises,
copyrights, licenses, goodwill, and similar tangible assets)
after all appropriate deductions in accordance with GAAP
(including, without limitation, reserves for doubtful
receivables, obsolescence, depreciation and amortization), over
(b) all total liabilities of such person.
1.28 "Total Liabilities" as used in this Agreement means the total of
all items of indebtedness, obligation or liability which, in accordance with
GAAP consistently applied, would be included in determining the total
liabilities of the Borrower as of the date Total Liabilities is to be
determined, including without limitation (a) all obligations secured by any
mortgage, pledge, security interest or other lien or property owned or acquired,
whether or not the obligations secured thereby shall have been assumed; (b) all
obligations which are capitalized lease obligations; and (c) all guaranties,
endorsements or other contingent or surety obligations with respect to the
indebtedness of others, whether
3.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
or not reflected on the balance sheets of the Borrower, including any
obligation to furnish funds, directly or indirectly through the purchase of
goods, supplies, services, or by way of stock purchase, capital
contribution, advance or loan or any obligation to enter into a contract
for any of the foregoing.
1.29 "Working Capital" as used in this Agreement means, as of any
applicable date of determination, Current Assets less Current Liabilities.
1.30 Any and all terms used in this Agreement shall be construed and
defined in accordance with the meaning and definition of such terms under
and pursuant to the California Uniform Commercial Code (hereinafter
referred to as the "Code") as amended.
2. LOAN AND TERMS OF PAYMENT
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For value received, Borrower promises to pay to the order of Bank such
amount, as provided for below, together with interest, as provided for
below.
2.1 Upon the request of Borrower, made at any time and from time to
time during the term hereof, and so long as no Event of Default has
occurred, Bank shall lend to Borrower an amount equal to the Borrowing
Base; provided, however, that in no event shall Bank be obligated to make
advances to Borrower under this Section 2.1 whenever the Daily Balance
exceeds, at any time, either the Borrowing Base or the sum of TWO MILLION
FIVE HUNDRED THOUSAND AND NO/100 ($2,500,000.00), such amount being
referred to herein as "Overadvance".
2.2 Except as hereinbelow provided, the Credit shall bear interest, on
the Daily Balance owing, at a rate of ONE AND NO/1000 (1.000%) percentage
points per annum above the Base Rate (the "Rate"). The Credit shall bear
interest, from and after the occurrence of an Event of Default and without
constituting a waiver of any such Event of Default, on the Daily Balance
owing, at a rate three (3) percentage points per annum above the Rate. All
interest chargeable under this Agreement that is based upon a per annum
calculation shall be computed on the basis of a three hundred sixty (360)
day year for actual days elapsed.
The Base Rate as of the date of this Agreement is NINE AND NO/1000
(9.000%) per annum. In the event that the Base Rate announced is, from time
to time hereafter, changed, adjustment in the Rate shall be made and based
on the Base Rate in effect on the date of such change. The Rate, as
adjusted, shall apply to the Credit until the Base Rate is adjusted again.
The minimum interest payable by the Borrower under this Agreement shall in
no event be less than N/A per month. All interest payable by Borrower under
the Credit shall be due and payable on the first day of each calendar month
during the term of this Agreement and Bank may, at its option, elect to
treat such interest and any and all Bank Expenses as advances under the
Credit, which amounts shall thereupon constitute Obligations and shall
thereafter accrue interest at the rate applicable to the Credit under the
terms of the Agreement.
2.3 Without affecting Borrower's obligation to repay immediately any
Overadvance in accordance with Section 2.1 hereof, all Overadvances shall
bear additional interest on the amount thereof at a rate equal to N/A
(N/A%) percentage points per month in excess of the interest rate set forth
in Section 2.2, from the date incurred and for each month thereafter, until
repaid in full.
3. TERM
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3.1 This Agreement shall remain in full force and effect until
terminated by notice, by either party. Notice of such termination shall be
effectuated by mailing of a registered or certified letter not less than
one hundred and twenty (120) days prior to the effective date of such
termination, addressed to the other party at the address set forth herein
and the termination shall be effective as of the date so fixed in such
notice. Notwithstanding the foregoing, should Borrower be in default of one
or more of the provisions of this Agreement, Bank may terminate this
Agreement at any time without notice. Notwithstanding the foregoing, should
either Bank or Borrower become insolvent or unable to meet its debts as
they mature, or fail, suspend, or go out of business, the other party shall
have the right to terminate this Agreement at any time without notice. On
the date of termination all Obligations shall become immediately due and
payable without notice or demand; no notice of termination by Borrower
shall be effective until Borrower shall have paid all Obligations to Bank
in full. Notwithstanding termination, until all Obligations have been fully
satisfied, Bank shall retain its security interest in all existing
Collateral and Collateral arising thereafter, and Borrower shall continue
to perform all of its Obligations.
3.2 After termination and when Bank has received payment in full of
Borrower's Obligations to Bank, Bank shall reassign to Borrower all
Collateral held by Bank, and shall execute a termination of all security
agreements and security interests given by Borrower to Bank, upon the
execution and delivery of mutual general releases.
4. CREATION OF SECURITY INTEREST
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4.1 Borrower hereby grants to Bank a continuing security interest in
all presently existing and hereafter arising Collateral in order to secure
prompt repayment of any and all Obligations owed by Borrower to Bank and in
order to secure prompt performance by Borrower of each and all of its
covenants and Obligations under this Agreement and otherwise created,
Bank's security interest in the Collateral shall attach to all Collateral
without further act on the part of Bank or Borrower. In the event that any
Collateral, including proceeds, is evidenced by or consists of a letter of
credit,
4.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
advice of credit, instrument, money, negotiable documents, chattel paper or
similar property (collectively, "Negotiable Collateral"), Borrower shall,
immediately upon receipt thereof, endorse and assign such Negotiable
Collateral over to Bank and deliver actual physical possession of the
Negotiable Collateral to Bank.
4.2 Bank's security interest in Receivables shall attach to all
Receivables without further act on the part of Bank or Borrower. Upon
request from Bank, Borrower shall provide Bank with schedules describing
all Receivables created or acquired by Borrower, twice a year and in the
event of default, (including without limitation agings listing the names
and addresses of, and amounts owing by date of account debtors), and shall
execute and deliver written assignments of all Receivables to Bank all in a
form acceptable to Bank, provided, however, Borrower's failure to execute
and deliver such schedules and/or assignments shall not affect or limit
Bank's security interest and other rights in and to the Receivables.
Together with each schedule, Borrower shall furnish Bank with copies of
Borrower's customers' invoices or the equivalent, and original shipping or
delivery receipts for all merchandise sold, and Borrower warrants the
genuineness thereof. Bank or Bank's designee may notify customers or
account debtors of collection costs and expenses to Borrower's account but,
unless and until Bank does so or gives Borrower other written instructions,
Borrower shall collect all Receivables for Bank, receive in trust all
payments thereon as Bank's trustee, and, if so requested to do so from
Bank, Borrower shall immediately deliver said payments to Bank in their
original form as received from the account debtor and all letters of
credit, advices of credit, instruments, documents, chattel paper or any
similar property evidencing or constituting Collateral. Notwithstanding
anything to the contrary contained herein, if sales of inventory are made
for cash, Borrower shall immediately deliver to Bank, in identical form,
all such cash, checks, or other forms of payment which Borrower receives.
The receipt of any check or other item of payment by Bank shall not be
considered a payment on account until such check or other item of payment
is honored when presented for payment, in which event, said check or other
item of payment shall be deemed to have been paid to Bank TWO (2) calendar
days after the date Bank actually receives such check or other item of
payment.
4.3 Bank's security interest in Inventory shall attach to all
Inventory without further act on the part of Bank or Borrower. Upon Bank's
request Borrower will from time to time at Borrower's expense pledge,
assemble and deliver such Inventory to Bank or to a third party as Bank's
bailee; or hold the same in trust for Bank's account or store the same in a
warehouse in Bank's name; or deliver to Bank documents of title
representing said Inventory; or evidence of Bank's security interest in
some other manner acceptable to Bank. Until a default by Borrower under
this Agreement or any other Agreement between Borrower and Bank, Borrower
may, subject to the provisions hereof and consistent herewith, sell the
Inventory, but only in the ordinary course of Borrower's business. A sale
of Inventory in Borrower's ordinary course of business does not include an
exchange or a transfer in partial or total satisfaction of a debt owing by
Borrower.
4.4 Borrower shall execute and deliver to Bank concurrently with
Borrower's execution of this Agreement, and at any time or times hereafter
at the request of Bank, all financing statements, continuation financing
statements, security agreements, mortgages, assignments, certificates of
title, affidavits, reports, notices, schedules of accounts, letters of
authority and all other documents that Bank may request, reasonable in form
satisfactory to Bank, to perfect and maintain perfected Bank's security
interest in the Collateral and in order to fully consummate all of the
transactions contemplated under this Agreement. Borrower hereby irrevocably
makes, constitutes and appoints Bank (and any of Bank's officers, employees
or agents designated by Bank) as Borrower's true and lawful attorney-in-
fact with power to sign the name of Borrower on any financing statements,
continuation financing statements, security agreement, mortgage,
assignment, certificate of title, affidavit, letter of authority, notice of
other similar documents which must be executed and/or filed in order to
perfect or continue perfected Bank's security interest in the Collateral.
Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Receivables. Bank (through any of its
officers, employees or agents) shall have the right at any time or times
hereafter during Borrower's usual business hours, or during the usual
business hours of any third party having control over the records of
Borrower, to inspect and verify Borrower's Books in order to verify the
amount or condition of, or any other matter, relating to, said Collateral
and Borrower's financial condition, twice per year and in the event of
default.
4.5 Borrower appoints Bank or any other person whom Bank may designate
as Borrower's attorney-in-fact, with power to endorse Borrower's name on
any checks, notes, acceptances, money order, drafts or other forms of
payment or security that may come into Bank's possession; to sign
Borrower's name on any invoice or xxxx of lading relating to any
Receivables, on drafts against account debtors, on schedules and
assignments of Receivables, on verifications of Receivables and on notices
to account debtors; to establish a lock box arrangement and/or notify the
post office authorities to change the address for delivery of Borrower's
mail addressed to Borrower to an address designated by Bank, to receive and
open all mail addressed to Borrower, and to retain all mail relating to the
Collateral and forward all other mail to Borrower; to send, whether in
writing or by telephone, requests for verification of Receivables; and to
do all things necessary to carry out this Agreement. Borrower ratifies and
approves all acts of the attorney-in-fact. Neither Bank nor its
attorney-in-fact will be liable for any acts or omissions or for any error
of judgments or mistake of fact or law. This power being coupled with an
interest, is irrevocable so long as any Receivables in which Bank has a
security interest remain unpaid and until the Obligations have been fully
satisfied.
4.6 In order to protect or perfect any security interest which Bank is
granted hereunder, Bank may, in its sole discretion, discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards,
warehousemen, or any personnel to protect the Collateral, pay any service
bureau, or, obtain any records, and all costs for the same shall be added
to the Obligations and shall be payable on demand.
4.7 Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates,
subsidiaries and service providers.
5.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
5. CONDITIONS PRECEDENT
--------------------
5.1 Conditions precedent to the making of the loans and the extension
of the financial accommodations hereunder, Borrower shall execute, or cause
to be executed, and deliver to Bank, in form and substance satisfactory to
Bank and its counsel, the following:
(a) This Agreement and other documents required by Bank;
(b) Financing statements (Form UCC-1) in form satisfactory to
Bank for filing and recording with the appropriate governmental
authorities;
(c) If Borrower is a corporation, then certified extracts from
the minutes of the meeting of its board of directors, authorizing
the borrowings and the granting of the security interest provided
for herein and authorizing specific officers to execute and
deliver the agreements provided for herein;
(d) If Borrower is a corporation, then a certificate of good
standing showing that Borrower is in good standing under the laws
of the state of its incorporation and certificates indicating that
Borrower is qualified to transact business and is in good standing
in any other state in which it conducts business;
(e) If Borrower is a partnership, then a copy of Borrower's
partnership agreement certified by each general partner of
Borrower;
(f) UCC searches, tax lien and litigation searches, fictitious
business statement filings, insurance certificates, notices or
other similar documents which Bank may require and in such form as
Bank may require, in order to reflect, perfect or protect Bank's
first priority security interest in the Collateral and in order to
fully consummate all of the transactions contemplated under this
Agreement;
(g) Evidence that Borrower has obtained insurance and acceptable
endorsements;
(h) Waivers executed by landlords and mortgagees of any real
property on which any Collateral is located; and
(i) Warranties and representations of officers.
6. WARRANTIES, REPRESENTATIONS AND COVENANTS.
------------------------------------------
6.1 If so requested by Bank, Borrower shall, at such intervals
designated by Bank, during the term hereof execute and deliver a Report of
Accounts Receivable or similar report, in form customarily used by Bank.
Borrower's Borrowing Base at all times pertinent hereto shall not be less
than the advances made hereunder. Bank shall have the right to recompute
Borrower's Borrowing Base in conformity with this Agreement.
6.2 If any warranty is breached as to any account, or any account is
not paid in full by an account debtor within NINETY (90) days from the date
of invoice, or an account debtor disputes liability or makes any claim with
respect thereto, or a petition in bankruptcy or other application for
relief under the Bankruptcy Code or any other insolvency law is filed by or
against an account debtor, or an account debtor makes an assignment for the
benefit of creditors, becomes insolvent, fails or goes out of business,
then Bank may deem ineligible any and all accounts owing by that account
debtor, and reduce Borrower's Borrowing Base by the amount thereof. Bank
shall retain its security interest in all Receivables and accounts, whether
eligible or ineligible, until all Obligations have been fully paid and
satisfied. Returns and allowances, if any, as between Borrower and its
customers, will be on the same basis and in accordance with the usual
customary practices of the Borrower, as they exist at this time. Any
merchandise which is returned by an account debtor or otherwise recovered
shall be set aside, marked with Bank's name, and Bank shall retain a
security interest therein. Borrower shall promptly notify Bank of all
disputes and claims and settle or adjust them on terms approved by Bank.
After default by Borrower hereunder, no discount, credit or allowance shall
be granted to any account debtor by Borrower and no return of merchandise
shall be accepted by Borrower without Bank's consent. Bank may, after
default by Borrower, settle or adjust disputes and claims directly with
account debtors for amounts and upon terms which Bank considers advisable,
and in such cases Bank will credit Borrower's account with only the net
amounts received by Bank in payment of the accounts, after deducting all
Bank Expenses in connection therewith.
6.3 Borrower warrants, represents, covenants and agrees that:
(a) Borrower has good and marketable title to the Collateral.
Bank has and shall continue to have a first priority perfected
security interest in and to the Collateral. The Collateral shall
at all times remain free and clear of all liens, encumbrances and
security interests (except those in favor of Bank).
(b) All accounts are and will, at all times pertinent hereto, be
bona fide existing Obligations created by the sale and delivery of
merchandise or the rendition of services to account debtors in the
ordinary course of business, free of liens, claims, encumbrances
and security interests (except as held by Bank and except as may
be consented to, in writing, by Bank) and are unconditionally owed
to Borrower without defenses, disputes, offsets, counterclaims,
rights of return or cancellation, and Borrower shall have received
no notice of actual or imminent bankruptcy or insolvency of any
account debtor at the time an account due from such account debtor
is assigned to Bank.
6.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(c) At the time each account is assigned to Bank, all property
giving rise to such account shall have been delivered to the
account debtor or to the agent for the account debtor for
immediate shipment to, and unconditional acceptance by, the
account debtor. Borrower shall deliver to Bank, as Bank may from
time to time require, delivery receipts, customer's purchase
orders, shipping instructions, bills of lading and any other
evidence of shipping arrangements. Absent such a request by Bank,
copies of all such documentation shall be held by Borrower as
custodian for Bank.
6.4 At the time each eligible account is assigned to Bank, all such
eligible accounts will be due and payable on terms set forth in Section
1.12, or on such other terms approved in writing by Bank in advance of the
creation of such accounts and which are expressly set forth on the face of
all invoices, copies of which shall be held by Borrower as custodian for
Bank, and no such eligible account will then be past due.
6.6 Borrower represents, warrants and covenants with Bank that
Borrower will not, without Bank's prior written consent:
(a) Grant a security interest in or permit a lien, claim or
encumbrance upon any of the Collateral to any person, association,
firm, corporation, entity or governmental agency or
instrumentality;
(b) Permit any levy, attachment or restraint to be made affecting
any of Borrower's assets;
(c) Permit any judicial officer or assignee to be appointed or to
take possession of any or all of Borrower's assets;
(d) Other than sales of Inventory in the ordinary course of
Borrower's business, to sell, lease, or otherwise dispose of,
move, or transfer, whether by sale or otherwise, any of Borrower's
assets;
(e) Change its name, business structure, corporate identity or
structure; add any new fictitious names, liquidate, merge or
consolidate with or into any other business organization;
(f) Move or relocate any Collateral;
(g) Acquire any other business organization;
7.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(h) Enter into any transaction not in the usual course of
Borrower's business;
(i) Make any investment in securities of any person, association,
firm, entity, or corporation other than the securities of the
United States of America;
(j) Make any change in Borrower's financial structure or in any
of its business objectives, purposes or operations which would
adversely affect the ability of Borrower to repay Borrower's
Obligations;
(k) Incur any debts outside the ordinary course of Borrower's
business except renewals or extensions of existing debts and
interest thereon;
(l) Make any advance or loan except in the ordinary course of
Borrower's business as currently conducted;
(m) Make loans, advances or extensions of credit to any Person,
except for sales on open account and otherwise in the ordinary
course of business;
(n) Guarantee or otherwise, directly or indirectly, in any way be
or become responsible for obligations of any other person, whether
by agreement to purchase the indebtedness of any other Person,
agreement for the furnishing of funds to any other Person through
the furnishing of goods, supplies or services, by way of stock
purchase, capital contribution, advance or loan, for the purpose
of paying or discharging (or causing the payment or discharge of)
the indebtedness of any other person, or otherwise, except for the
endorsement of negotiable instruments by the Borrower in the
ordinary course of business for deposit or collection;
(o) (a) Sell, lease, transfer or otherwise dispose of properties
and assets having an aggregate book value of more than two hundred
-----------
and fifty thousand Dollars ($250,000) (whether in one transaction
------------------ --------
or in a series of transactions) except as to the sale of inventory
in the ordinary course of business; (b) change its name,
consolidate with or merge into any other corporation, permit
another corporation to merge into it, acquire all or substantially
all the properties or assets of any other Person, enter into any
reorganization or recapitalization or reclassify its capital
stock, or (c) enter into any sale-leaseback transaction;
(p) Purchase or hold beneficially any stock or other securities
of, or make any investment or acquire any interest whatsoever in,
any other Person, except for the common stock of the Subsidiaries
owned by the Borrower on the date of this Agreement and except for
certificates of deposit with maturities of one year or less of
United States commercial banks with capital, surplus and undivided
profits in excess of One Hundred Million Dollars ($100,000,000)
and direct obligations of the United States Government maturing
within one year from the date of acquisition thereof;
(q) Allow any fact, condition or event to occur or exist with
respect to any employee pension or profit sharing plans
established or maintained by it which might constitute grounds for
termination of any such plan or for the court appointment of a
trustee to administer any such plan.
6.7 Borrower is not a merchant whose sales for resale of goods for
personal, family or household purposes exceeded seventy-five percent (75%)
in dollar volume of its total sales of all goods during the twelve (12)
months preceding the filing by Bank of a financing statement describing the
Collateral. At no time hereafter shall Borrower's sales for resale goods
for personal, family or household purposes exceed seventy-five percent
(75%) in dollar volume of its total sales.
6.8 Borrower's sole place of business or chief executive office or
residence is located at the address indicated above and Borrower covenants
and agrees that it will not, during the term of this Agreement, without
prior written notification to Bank, relocate said sole place of business or
chief executive office or residence.
6.9 If Borrower is a corporation, Borrower represents, warrants and
covenants as follows:
(a) Borrower will not make any distribution or declare or pay any
dividend (in stock or in cash) to any shareholder or on any of its
capital stock, of any class, whether now or hereafter outstanding,
or purchase, acquire, repurchase, or redeem or retire any such
capital stock;
(b) Borrower is and shall at all times hereafter be a corporation
duly organized and existing in good standing under the laws of the
state of its incorporation and qualified and licensed to do
business in California or any other state in which it conducts its
business;
8.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(c) Borrower has the right and power and is duly authorized to
enter into this Agreement; and
(d) The execution by Borrower of this Agreement shall not
constitute a breach of any provision contained in Borrower's
articles of incorporation or by-laws.
6.10 The execution of and performance by Borrower of all of the terms
and provisions contained in this Agreement shall not result in a breach of
or constitute an event of default under any Agreement to which Borrower is
now or hereafter becomes a party.
6.12 All assessments and taxes, whether real, personal or otherwise,
due or payable by, or imposed, levied or assessed against, Borrower or any
of its property have been paid, and shall hereafter be paid in full, before
delinquency. Borrower shall make due and timely payment or deposit of all
federal, state and local taxes, assessments or contributions required of it
by law, and will execute and deliver to Bank, on demand, appropriate
certificates attesting to the payment or deposit thereof. Borrower will
make timely payment or deposit of all F.I.C.A. payments and withholding
taxes required of it by applicable laws, and will upon request furnish Bank
with proof satisfactory to it that Borrower has made such payments or
deposit. If Borrower fails to pay any such assessment, tax, contribution,
or make such deposit, or furnish the required proof, Bank may, in its sole
and absolute discretion and without notice to Borrower, (i) make payment of
the same or any part thereof, or (ii) set up such reserves in Borrower's
account as Bank deems necessary to satisfy the liability therefor, or both.
Bank may conclusively rely on the usual statements of the amount owing or
other official statements issued by the appropriate governmental agency.
Each amount so paid or deposited by Bank shall constitute a Bank Expense
and an additional advance to Borrower.
6.13 There are no actions or proceedings pending by or against
Borrower or any guarantor of Borrower before any court or administrative
agency and Borrower has no knowledge of any pending, threatened or imminent
litigation, governmental investigations or claims, complaints, actions or
prosecutions involving Borrower or any guarantor of Borrower, except as
heretofore specifically disclosed in writing to Bank. If any of the
foregoing arise during the term of the Agreement, Borrower shall
immediately notify Bank in writing.
6.14 (a) Borrower, at its expense, shall keep and maintain its assets
insured against loss or damage by fire, theft, explosion, sprinklers
and all other hazards and risks ordinarily insured against by other
owners who use such properties in similar businesses for the full
insurable value thereof. Borrower shall also keep and maintain business
interruption insurance and public liability and property damage
insurance relating to Borrower's ownership and use of the Collateral
and its other assets. All such policies of insurance shall be in such
form, with such companies, and in such amounts as may be satisfactory
to Bank. Borrower shall deliver to Bank certified copies of such
policies of insurance and evidence of the payments of all premiums
therefor. All such policies of insurance (except those of public
liability and property damage) shall contain an endorsement in a form
satisfactory to Bank showing Bank as a loss payee thereof, with a
waiver of warranties (Form 438-BFU), and all proceeds payable
thereunder shall be payable to Bank and, upon receipt by Bank, shall be
applied on account of the Obligations owing to Bank. To secure the
payment of the Obligations, Borrower grants Bank a security interest in
and to all such policies of insurance (except those of public liability
and property damage) and the proceeds thereof, and Borrower shall
direct all insurers under such policies of insurance to pay all
proceeds thereof directly to Bank.
(b) In the event of default, Borrower hereby irrevocably appoints
Bank (and any of Bank's officers, employees or agents designated by
Bank) as Borrower's attorney for the purpose of making, selling and
adjusting claims under such policies of insurance, endorsing the name
of Borrower on any check, draft, instrument or other item of payment
for the proceeds of such policies of insurance and for making all
determinations and decisions with respect to such policies of
insurance. Borrower will not cancel any of such policies without Bank's
prior written consent. Each such insurer shall agree by endorsement
upon the policy or policies of insurance issued by it to Borrower as
required above, or by independent instruments furnished to Bank, that
it will give Bank at least ten (10) days written notice before any such
policy or policies of insurance shall be altered or cancelled, and that
no act or default of Borrower, or any other person, shall affect the
right of Bank to recover under such policy or policies of insurance
required above or to pay any premium in whole or in part relating
thereto. Bank, without waiving or releasing any Obligations or any
Event of Default, may, but shall have no obligation to do so, obtain
and maintain such policies of insurance and pay such premiums and take
any other action with respect to such policies which Bank deems
advisable. All sums so disbursed by Bank, as well as reasonable
attorneys' fees, court costs, expenses and other charges relating
thereto, shall constitute Bank Expenses and are payable on demand.
9.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
6.15 All financial statements and information relating to Borrower
which have been or may hereafter be delivered by Borrower to Bank are true
and correct and have been prepared in accordance with GAAP consistently
applied and there has been no material adverse change in the financial
condition of Borrower since the submission of such financial information to
Bank.
6.16 (a) Borrower at all times hereafter shall maintain a standard and
modern system of accounting in accordance with GAAP consistently
applied with ledger and account cards and/or computer tapes and
computer disks, computer printouts and computer records
pertaining to the Collateral which contain information as may
from time to time be requested by Bank, not modify or change its
method of accounting or enter into, modify or terminate any
agreement presently existing, or at any time hereafter entered
into with any third party accounting firm and/or service bureau
for the preparation and/or storage of Borrower's accounting
records without the written consent of Bank first obtained and
without said accounting firm and/or service bureau agreeing to
provide information regarding the Receivables and Inventory and
Borrower's financial condition to Bank; permit Bank and any of
its employees, officers or agents, upon demand, during Borrower's
usual business hours, or at the usual business hour of third
persons having control thereof, to have access to and examine all
of the Borrower's Books relating to the Collateral, Borrower's
Obligations to Bank, Borrower's financial condition and the
results of Borrower's operations and in connection therewith,
permit Bank or any of its agents, employees or officers to copy
and make extracts therefrom.
(b) Borrower shall deliver to Bank within thirty (30) days after
the end of each MONTH, a COMPANY PREPARED balance sheet and
----- ----------------
profit and loss statement covering Borrower's operations and
deliver to Bank within ninety (90) days after the end of each of
Borrower's fiscal years an REVIEWED statement of the financial
--------
condition of he Borrower for each such fiscal year, including but
not limited to, a balance sheet and profit and loss statement and
any other report requested by Bank relating to the Collateral and
the financial condition of Borrower, and a certificate signed by
an authorized employee of Borrower to the effect that all
reports, statements, computer disk or tape files, computer
printouts, computer runs, or other computer prepared information
of any kind or nature relating to the foregoing or documents
delivered or caused to be delivered to Bank under this
subparagraph are complete, correct and thoroughly present the
financial condition of Borrower and that there exists on the date
of delivery to Bank no condition or event which constitutes a
breach or Event of Default under this Agreement.
(c) In addition to the financial statements requested above, the
Borrower agrees to provide Bank with the following schedules:
X Accounts Receivable Agings on a MONTHLY basis
---------- ---------------------
X Accounts Payable Agings on a MONTHLY basis
---------- ---------------------
Job Progress Reports on a basis; and
---------- ---------------------
ACCOUNTS RECEIVABLES REPORT on a WEEKLY basis
------------------------------------- ---------------------
6.17 Borrower shall maintain the following financial ratios and
covenants on a consolidated and non-consolidated basis:
(a) Working Capital in an amount not less than n/a
------------------
-----------------------------------------------------------------
(b) Tangible Effective Net Worth in an amount not less than
$400,000.00
------------------------------------------------------------
-----------------------------------------------------------------
(c) a ratio of Current Assets to Current Liabilities of not
less than 1.0:1.00
---------------------------------------------------
-----------------------------------------------------------------
(d) a quick ratio of cash plus securities plus Receivables to
Current Liabilities of not less than N/A
------------------------
-----------------------------------------------------------------
(e) a ratio of Total Liabilities (less debt subordinated to
Bank) to Tangible Effective Net Worth of less than
4.00:1.00
------------------------------------------------------------
-----------------------------------------------------------------
(f) a ratio of Cash Flow to current portion of long term debt of
not less than 1.50:1.00
-----------------------------------------------
(g) Net Income after taxes of QUARTERLY
-----------------------------------
-----------------------------------------------------------------
(h) Borrower shall not without Bank's prior written consent
acquire or expend for or commit itself to acquire or expend
for fixed assets by lease, purchase or otherwise in an
aggregate amount that exceeds n/a Dollars
-------------
($ n/a ) in any fiscal year; and
------------
(i) ANNUAL PROJECTIONS FOR XXXX, XXXXXX & ASSOCIATES, INC.
------------------------------------------------------------
(j) Payroll tax reports on a quarterly basis.
------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All monies due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for all purposes
hereunder.
10.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
6.18 Borrower shall promptly supply Bank (and cause any guarantor to
supply Bank) with such other information (including tax returns) concerning
its affair (or that of any guarantor) as Bank may request from time to time
hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which
constitutes a breach of or an event which constitutes an Event of Default
under this Agreement.
6.19 Borrower is now and shall be at all times hereafter solvent and
able to pay its debts (including trade debts) as they mature.
6.20 Borrower shall immediately and without demand reimburse Bank for
all sums expended by Bank in connection with any action brought by Bank to
correct any default or enforce any provision of this Agreement, including
all Bank Expenses; Borrower authorizes and approves all advances and
payments by Bank for items described in this Agreement as Bank Expenses.
6.21 Each warranty, representation and agreement contained in this
Agreement shall be automatically deemed repeated with each advance and
shall be conclusively presumed to have been relied on by Bank regardless of
any investigation made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements
which Borrower shall give, or cause to be given, to Bank, either now or
hereafter.
6.22 Borrower shall keep all of its principal bank account with Bank
and shall notify the Bank immediately in writing of the existence of any
other bank account, deposit account, or any other account into which money
can be deposited.
6.23 Borrower shall furnish to the Bank: (a) as soon as possible, but
in no event later than thirty (30) days after Borrower knows or has reason
to know that any reportable event with respect to any deferred compensation
plan has occurred, a statement of the chief financial officer of Borrower
setting forth the details concerning such reportable event and the action
which Borrower proposes to take with respect thereto, together with a copy
of the notice of such reportable event given to the Pension Benefit
Guaranty Corporation, if a copy of such notice is available to Borrower;
(b) promptly after the filing thereof with the United States Secretary of
Labor or the Pension Benefit Guaranty Corporation, copies of each annual
report with respect to each deferred compensation plan; (c) promptly after
receipt thereof, a copy of any notice Borrower may receive from the Pension
Benefit Guaranty Corporation or the Internal Revenue Service with respect
to any deferred compensation plan; provided, however, this subparagraph
shall not apply to notice of general application issued by the Pension
Benefit Guaranty Corporation or the Internal Revenue Service; and (d) when
the same is made available to participants in the deferred compensation
plan, all notices and other forms of information from time to time
disseminated to the participants by the administrator of the deferred
compensation plan.
6.24 Borrower is now and shall at all times hereafter remain in
compliance with all federal, state and municipal laws, regulations and
ordinances relating to the handling, treatment and disposal of toxic
substances, wastes and hazardous material and shall maintain all necessary
authorizations and permits.
6.25 Borrower shall maintain insurance on the life of in the
---------
amount not to be less than No/100 Dollars ($ n/a ) under one
----------- -------------
or more policies issued by insurance companies satisfactory to Bank, which
policies shall be assigned to Bank as security for the indebtedness and on
which Bank shall be named as sole beneficiary.
6.26 Borrower shall limit direct and indirect compensation paid to the
following employees: N/A
--------------, -------------, -------------,
to an aggregate of N/A Dollars ($N/A) per N/A.
-------------, --- --- ---
7. EVENTS OF DEFAULT. Any one or more of the following events shall
-----------------
constitute a default by Borrower under this Agreement:
(a) If Borrower fails or neglects to perform, keep or observe any
term, provision, condition, covenant, agreement, warranty or
representation contained in this Agreement, or any other present or
future agreement between Borrower and Bank;
(b) If any representation, statement, report or certificate made
or delivered by Borrower, or any of its officers, employees or agents
to Bank is not true and correct;
(c) If Borrower fails to pay when due and payable or declared due
and payable, all or any portion of the Borrower's Obligations (whether
of principal, interest, taxes, reimbursement of Bank Expenses, or
otherwise);
(d) If there is a material impairment of the prospect of repayment
of all or any portion of Borrower's Obligations or a material
impairment of the value or priority of Bank's security interest in the
Collateral;
(e) If all or any of Borrower's assets are attached, seized,
subject to a writ or distress warrant, or are levied upon, or come into
the possession of any Judicial Officer or Assignee and the same are not
released, discharged or bonded against within ten (10) days thereafter;
(f) If any Insolvency Proceeding is filed or commenced by or
against Borrower without being dismissed within ten (10) days
thereafter;
11.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(g) If any proceeding is filed or commenced by or against Borrower for
its dissolution or liquidation;
(h) If Borrower is enjoined, restrained or in any way prevented by
court order from continuing to conduct all or any material part of its
business affairs;
(i) If a notice of lien, levy or assessment is filed of record with
respect to any or all of Borrower's assets by the United States
Government, or any department, agency or instrumentality thereof, or by
any state, county, municipal or other government agency, or if any
taxes or debts owing at any time hereafter to any one or more of such
entities becomes a lien, whether xxxxxx or otherwise, upon any or all
of the Borrower's assets and the same is not paid on the payment date
thereof;
(j) If a judgment or other claim becomes a lien or encumbrance upon
any or all of Borrower's assets and the same is not satisfied,
dismissed or bonded against within ten (10) days thereafter;
(k) If Borrower's records are prepared and kept by an outside computer
service bureau at the time this Agreement is entered into or during the
term of this Agreement such an agreement with an outside service bureau
is entered into, and at any time thereafter, without first obtaining
the written consent of Bank, Borrower terminates, modifies, amends or
changes its contractual relationship with said computer service bureau
or said computer service bureau fails to provide Bank with any
requested information or financial data pertaining to Bank's
Collateral, Borrower's financial condition or the results of Borrower's
operations;
(l) If Borrower permits a default in any material agreement to which
Borrower is a party with third parties so as to result in an
acceleration of the maturity of Borrower's indebtedness to others,
whether under any indenture, agreement or otherwise;
(m) If Borrower makes any payment on account of indebtedness which has
been subordinated to Borrower's Obligations to Bank; when Borrower is
in violation of any loan covenant.
(n) If any misrepresentation exists now or thereafter in any warranty
or representation made to Bank by any officer or director of Borrower,
or if any such warranty or representation is withdrawn by any officer
or director;
(o) If any party subordinating its claims to that of Bank's or any
guarantor of Borrower's Obligations dies or terminates its
subordination or guaranty, becomes insolvent or an insolvency
Proceeding is commenced by or against any such subordinating party or
guarantor;
(p) If Borrower is an individual and Borrower dies;
(q) If there is a change of ownership or control of Ten percent (10%)
or more of the issued and outstanding stock of Borrower; or
(r) If any reportable event, which the Bank determines constitutes
grounds for the termination of any deferred compensation plan by the
Pension Benefit Guaranty Corporation or for the appointment by the
appropriate United States District Court of a trustee to administer any
such plan, shall have occurred and be continuing thirty (30) days after
written notice of such determination shall have been given to Borrower
by Bank, or any such Plan shall be terminated within the meaning of
Title IV of the Employment Retirement Income Security Act ("ERISA"), or
a trustee shall be appointed by the appropriate United States District
Court to administer any such plan, or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any plan and in
case of any event described in this Section 7.0, the aggregate amount
of the Borrower's liability to the Pension Benefit Guaranty Corporation
under Sections 4062, 4063 or 4064 of ERISA shall exceed five percent
(5%) of Borrower's Tangible Effective Net Worth.
Notwithstanding anything contained in Section 7 to the contrary,
Bank shall refrain from exercising its rights and remedies and Event of
Default shall thereafter not be deemed to have occurred by reason of
the occurrence of any of the events set forth in Sections 7.e, 7.f or
7.j of this Agreement if, within ten (10) days from the date thereof,
the same is released, discharged, dismissed, bonded against or
satisfied; provided, however, if the event is the institution of
insolvency Proceedings against Borrower, Bank shall not be obligated to
make advances to Borrower during such cure period.
8. BANK'S RIGHTS AND REMEDIES
--------------------------
8.1 Upon the occurrence of an Event of Default by Borrower under
this Agreement, Bank may, at its election, without notice of its
election and without demand, do any one or more of the following, all
of which are authorized by Borrower;
(a) Declare Borrower's Obligations, whether evidenced by this
Agreement, installment notes, demand notes or otherwise, immediately
due and payable to the Bank;
(b) Cease advancing money or extending credit to or for the benefit of
Borrower under this Agreement, or any other agreement between Borrower
and Bank;
(c) Terminate this Agreement as to any future liability or obligation
of Bank, but without affecting Bank's rights and security interests in
the Collateral, and the Obligations of Borrower to Bank;
12.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
(d) Without notice to or demand upon Borrower or any guarantor, make
such payments and do such acts as Bank considers necessary or
reasonable to protect its security interest in the Collateral. Borrower
agrees to assemble the Collateral if Bank so requires and to make the
Collateral available to Bank as Bank may designate. Borrower authorizes
Bank to enter the premises where the Collateral is located, take and
maintain possession of the Collateral and the premises (at no charge to
Bank), or any part thereof, and to pay, purchase, contest or compromise
any encumbrance, charge or lien which in the opinion of Bank appears to
be prior or superior to its security interest and to pay all expenses
incurred in connection therewith;
(e) Without limiting Bank's rights under any security interest, Bank
is hereby granted a license or other right to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name,
trade secrets, trade names, trademarks and advertising matter, or any
property of a similar nature as it pertains to the Collateral, in
completing production of, advertising for sale and selling any
Collateral and Borrower's rights under all licenses and all franchise
agreement shall inure to Bank's benefit, and Bank shall have the right
and power to enter into sublicense agreements with respect to all such
rights with third parties on terms acceptable to Bank;
(f) Ship, reclaim, recover, store, finish, maintain, repair, prepare
for sale, advertise for sales and sell (in the manner provided for
herein) the Inventory;
(g) Sell or dispose the Collateral at either a public or private sale,
or both, by way of one or more contracts or transactions, for cash or
on terms, in such manner and at such places (including Borrower's
premises) as is commercially reasonable in the opinion of Bank. It is
not necessary that the Collateral be present at any such sale;
(h) Bank shall give notice of the disposition of the Collateral as
follows:
(1) Bank shall give the Borrower and each holder of a security
interest in the Collateral who has filed with Bank a written
request for notice, a notice in writing of the time and place of
public sale, or, if the sale is a private sale or some disposition
other than a public sale is to be made of the Collateral, the time
on or after which the private sale or other disposition is to be
made;
(2) The notice shall be personally delivered or mailed, postage
prepaid, to Borrower's address appearing in this Agreement, at
least five (5) calendar days before the date fixed for the sale,
or at least five (5) calendar days before the date on or after
which the private sale or other disposition is to be made, unless
the Collateral is perishable or threatens to decline speedily in
value. Notice to persons other than Borrower claiming an interest
in the Collateral shall be sent to such addresses as have been
furnished to Bank;
(3) If the sale is to be a public sale, Bank shall also give
notice of the time and place by publishing a notice one time at
least five (5) calendar days before the date of the sale in a
newspaper of general circulation in the county in which the sale
is to be held; and
(4) Bank may credit bid and purchase at any public sale.
(i) Borrower shall pay all Bank Expenses incurred in connection with
Bank's enforcement and exercise of any of its rights and remedies as
herein provided, whether or not suit is commenced by Bank;
(j) Any deficiency which exists after disposition of the Collateral as
provided above will be paid immediately by Borrower. Any excess will be
returned, without interest and subject to the rights of third parties,
to Borrower by Bank, or, in Bank's discretion, to any party who Bank
believes, in good faith, is entitled to the excess; and
(k) Without constituting a retention of Collateral in satisfaction of
an obligation within the meaning of 9505 of the Uniform Commercial Code
or an action under California Code of Civil Procedure 726, apply any
and all amounts maintained by Borrower as deposit accounts (as that
term is defined under 9105 of the Uniform Commercial Code) or other
accounts that Borrower maintains with Bank against the Obligations.
8.2 Bank's rights and remedies under this Agreement and all other
agreements shall be cumulative. Bank shall have all other rights and
remedies not inconsistent herewith as provided by law or in equity. No
exercise by Bank of one right or remedy shall be deemed an election, and no
waiver by Bank of any default on Borrower's part shall be deemed a
continuing waiver. No delay by Bank shall constitute a waiver, election or
acquiescence by Bank.
9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY
------------------------------------------------
If Borrower fails to pay promptly when due to another person or entity, monies
which Borrower is required to pay by reason of any provision in this Agreement,
Bank may, but need not, pay the same and charge Borrower's account therefor, and
Borrower shall promptly reimburse Bank. All such sums shall become additional
indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future, or (ii) a waiver by Bank of any default under this Agreement. Bank need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing. Such payments shall constitute Bank Expenses and additional advances
to Borrower.
13.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
10. WAIVERS
-------
10.1 Borrower agrees that checks and other instruments received by
Bank in payment or on account of Borrower's Obligations constitute only
conditional payment until such items are actually paid to Bank and Borrower
waives the right to direct the application of any and all payments at any
time or times hereafter received by Bank on account of Borrower's
Obligations and Borrower agrees that Bank shall have the continuing
exclusive right to apply and reapply such payments in any manner as Bank
may deem advisable, notwithstanding any entry by Bank upon its books.
10.2 Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any
default, nonpayment at maturity, release, compromise, settlement, extension
or renewal of any or all commercial paper, accounts, documents, instruments
chattel paper, and guarantees at any time held by Bank on which Borrower
may in any way be liable.
10.3 Bank shall not in any way or manner be liable or responsible for
(a) the safekeeping of the Inventory; (b) any loss or damage thereof
occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency or other person whomsoever. All
risks of loss, damage or destruction of Inventory shall be borne by
Borrower.
10.4 Borrower waives the right and the right to assert a confidential
relationship, if any, it may have with any accountant, accounting firm
and/or service bureau or consultant in connection with any information
requested by Bank pursuant to or in accordance with this Agreement, and
agrees that a Bank may contact directly any such accountants, accounting
firm and/or service bureau or consultant in order to obtain such
information.
10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION
HEREUNDER, OR CONTEMPLATED HEREUNDER, OR ANY OTHER CLAIM (INCLUDING TORT OR
BREACH OF DUTY CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND
BORROWER.
10.6 In the event that Bank elects to waive any rights or remedies
hereunder, or compliance with any of the terms hereof, or delays or fails
to pursue or enforce any term, such waiver, delay or failure to pursue or
enforce shall only be effective with respect to that single act and shall
not be construed to affect any subsequent transactions or Bank's right to
later pursue such rights and remedies.
11. ONE CONTINUING LOAN TRANSACTION. All loans and advances heretofore, now or
--------------------------------
at any time or times hereafter made by Bank to Borrower under this Agreement or
any other agreement between Bank and Borrower, shall constitute one loan secured
by Bank's security interests in the Collateral and by all other security
interests, liens, encumbrances heretofore, now or from time to time hereafter
granted by Borrower to Bank.
Notwithstanding the above, (i) to the extent that any portion of the Obligations
are consumer loan, that portion shall not be secured by any deed of trust or
mortgage on or other security interest in the Borrower's principal dwelling
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the Borrower (or
any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Obligation of the Borrower (or any of them), unless expressly
provided to the contrary in another place.
12. NOTICES. Unless otherwise provided in this Agreement, all notices or
--------
demands by either party on the other relating to this Agreement shall be in
writing and sent by regular United States mail, postage prepaid, properly
addressed to Borrower or to Bank at the addresses stated in this Agreement, or
to such other addresses as Borrower or Bank may from time to time specify to the
other in writing. Requests to Borrower by Bank hereunder may be made orally.
13. AUTHORIZATION TO DISBURSE. Bank is hereby authorized to make loans and
--------------------------
advances hereunder upon telephonic or other instructions received from anyone
purporting to be an officer, employee, or representative of Borrower, or at the
discretion of Bank if said loans and advances are necessary to meet any
Obligations of Borrower to Bank. Bank shall have no duty to make inquiry or
verify the authority of any such party, and Borrower shall hold Bank harmless
from any damage, claims or liability by reason of Bank's honor of, or failure to
honor, any such instructions.
14. DESTRUCTION OF BORROWER'S DOCUMENTS. Any documents, schedules, invoices or
------------------------------------
other papers delivered to Bank, may be destroyed or otherwise disposed of by
Bank six (6) months after they are delivered to or received by Bank, unless
Borrower requests, in writing, the return of the said documents, schedules,
invoices or other papers and makes arrangements, at Borrower's expense, for
their return.
15. CHOICE OF LAW. The validity of this Agreement, its construction,
--------------
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined according to the laws of the
State of California. The parties agree that all actions or proceedings arising
in connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or the County of Santa
Xxxxx.
16. GENERAL PROVISIONS
------------------
16.1 This Agreement shall be binding and deemed effective when executed by
the Borrower and accepted and executed by Bank at its headquarter office.
14.
LOAN & SECURITY AGREEMENT
(Accounts & Inventory)
16.2 This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties, provided,
however, that Borrower may not assign this Agreement or any rights
hereunder without Bank's prior written consent and any prohibited
assignment shall be absolutely void. No consent to an assignment by Bank
shall release Borrower or any guarantor from their Obligations to Bank.
Bank may assign this Agreement and its rights and duties hereunder. Bank
reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in Bank's rights and
benefits hereunder. In connection therewith, Bank may disclose all
documents and information which Bank now or hereafter may have relating to
Borrower or Borrower's business.
16.3 Paragraph headings and paragraph numbers have been set forth
herein for convenience only; unless the contrary is compelled by the
context, everything contained in each paragraph applies equally to this
entire Agreement.
16.4 Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Bank or Borrower, whether under any
rule of construction or otherwise; on the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to
the ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto. When permitted by the
context, the singular includes the plural and vice versa.
16.5 Each provision of this Agreement shall be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.
16.6 This Agreement cannot be changed or terminated orally. Except as
to currently existing Obligations owing by Borrower to Bank, all prior
agreements, understandings, representations, warranties, and negotiations,
if any, with respect to the subject matter hereof, are merged into this
Agreement.
16.7 The parties intend and agree that their respective rights,
duties, powers, liabilities, obligations and discretions shall be
performed, carried out, discharged and exercised reasonably and in good
faith.
16.8 In addition, if this Agreement is secured by a deed of trust or
mortgage covering real property, then the trustor or mortgagor shall not
mortgage or pledge the mortgaged premises as security for any other
indebtedness or obligations. This Agreement, together with all other
indebtedness secured by said deed of trust or mortgage, shall become due
and payable immediately, without notice, at the option of Bank, (a) if said
trustor or mortgagor shall mortgage or pledge the mortgaged premises for
any other indebtedness or obligations or shall convey, assign or transfer
the mortgaged premises by deed, installment sale contract or other
instrument; (b) if the title to the mortgaged premises shall become vested
in any other person or party in any manner whatsoever, or (c) if there is
any disposition (through one or more transactions) of legal or beneficial
title to a controlling interest of said trustor or mortgagor.
16.9 All references to "inventory" are considered not applicable for
purposes of this agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Loan & Security
Agreement (Accounts and Inventory) to be executed as of the date first
hereinabove written.
ATTEST:
-----------------------------------------------
Title:
BORROWER: Xxxx, Xxxxxx & Associates, Inc.
Accepted and effective as of April 26, 1995 By: /s/ Xxxxxx Xxxx
------------------ --------------------------------------
at Bank's Headquarter Office Signature of Xxxxxx Xxxx
Title: Chief Executive Officer
----------------------------------
COMERICA BANK-CALIFORNIA By: /s/ Xxxx Xxxxxx
----------------------------------------------- --------------------------------------
Signature of Xxxx Xxxxxx
By: Title: Vice President
-------------------------------------------- ----------------------------------
Signature of Xxxx Xxxxx
Title: Assistant Vice President By: /s/ Xxxxx Xxxxxx
---------------------------------------- --------------------------------------
Signature of Xxxxx Xxxxxx
Title: Chief Financial Officer
------------------------------------
By:
---------------------------------------
Signature of
Title:
------------------------------------
15.
[LETTERHEAD OF COMERICA APPEARS HERE]
ADDENDUM TO LOAN & SECURITY AGREEMENT
-------------------------------------
Reference is made to that certain Loan & Security Agreement dated April 26,
1995 (the "Agreement") between Comerica Bank-California (the "Bank") and Xxxx,
Xxxxxx & Associates, Inc. (the "Borrower"). Among other things, the Agreement
provides at Section 7q. that if there is a change of ownership or control of ten
percent (10%) or more of the issued and outstanding stock of Borrower, there is
a default under the Agreement.
Notwithstanding the foregoing provision, the Bank agrees that the Borrower
may sell up to twenty-five percent (25%) of its shares of stock to the Sprout
Group for a purchase price of Ten Million Dollars ($10,000,000), provided that
such sale occurs by no later than March 31, 1996.
Please sign below to indicate your acknowledgment of and agreement to the
foregoing.
XXXX, XXXXXX & ASSOCIATES, INC. COMERICA BANK-CALIFORNIA
By: /s/ XXXXXX XXXX By: /s/ XXXX XXXXX
--------------------------- ---------------------------
Title: CEO Title: AVP
------------------------ ------------------------
By: /s/ XXXXX XXXXXX
---------------------------
Title: CFO
------------------------
SECOND ADDENDUM TO LOAN & SECURITY AGREEMENT
--------------------------------------------
Reference is made to that certain Loan & Security Agreement dated April 26,
1995 (the "Agreement") between Comerica Bank-California (the "Bank") and Xxxx,
Xxxxxx & Associates, Inc. (the "Borrower"). Among other things, the Agreement
provides at Section 6.6(h), (l) and (m) respectively, that Borrower represents,
warrants and covenants with Bank that Borrower will not, without Bank's written
consent:
(a) Enter into any transaction not in the usual course of Borrower's
Business;
(b) Make any advance or loan except in the ordinary course of Borrower's
business as currently conducted; and
(c) Make loans, advances or extensions of credit to any Person, except for
sales on open account and otherwise in the ordinary course of business.
Notwithstanding the foregoing provisions, the Bank agrees that the Borrower
may do the following:
(a) Sell up to twenty-five percent (25%) of its shares of stock to the
Sprout Group for a purchase price of Ten Million Dollars ($10,000,000),
provided that such sale occurs by no later than March 31, 1996; and the
Bank is provided with copies of all documents related to the sale and
related loans to the shareholders.
(b) Make loans up to an aggregate of Five Million Dollars ($5,000,000) to
Xxxxxx Xxxx and Xxxx Xxxxxx, provided that these loans do not violate any
of the financial covenants contained in the Agreement between the Bank and
the Borrower.
Please sign below to indicate your acknowledgment of and agreement to the
foregoing Second Addendum to Loan & Security Agreement.
XXXX, XXXXXX & ASSOCIATES, INC. COMERICA BANK-CALIFORNIA
By: /s/ XXXXXX XXXX By: /s/ XXXX XXXXX
------------------------ ------------------------
Title: CEO Title: AVP
--------------------- ---------------------
By: /s/ XXXXX XXXXXX
------------------------
Title: CFO
---------------------
[LETTERHEAD OF COMERICA APPEARS HERE]
MODIFICATION TO LOAN & SECURITY AGREEMENT
-----------------------------------------
This First Modification to Loan & Security Agreement (this "Modification")
is entered into by and between XXXX, XXXXXX & ASSOCIATES, INC. ("Borrower") and
-------------------------------
COMERICA BANK-CALIFORNIA ("Bank") as of this 20TH day of DECEMBER, 1995, at San
Jose, California.
RECITIALS
---------
A. Bank and Borrower have previously entered into or are concurrently
herewith entering into a Loan & Security Agreement (Accounts & Inventory) (the
"Agreement") dated APRIL 26, 1995.
Borrower has requested, and Bank has agreed, to modify the Agreement as set
forth below.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth below:
Incorporation by Reference. The Agreement as modified hereby and the
--------------------------
Recitals are incorporated herein by this reference.
SECTION 2.1 Upon the request of the Borrower, made at any time
and from time to time during the term hereof, and so long as
no Event of Default has occurred, Bank shall lend to
Borrower an amount equal to the Borrowing Base; provided,
however, that in no event shall Bank be obligated to make
advances to Borrower under this Section 2.1 whenever the
Daily Balance exceeds, at any time, either the Borrowing
Base or the sum of THREE MILLION AND NO/100 dollars
------------------------
($3,000,000.00), such amount being referred to herein as
---------------
"Overadvance."
Legal Effect. Except as specifically set forth in this Modification, all
------------
of the terms and conditions of the Agreement remain in full force and effect.
Integration. This is an integrated Modification and supersedes all prior
-----------
negotiations and agreements regarding the subject matter hereof. All amendments
hereto must be in writing and signed by the parties.
IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.
XXXX, XXXXXX & ASSOCIATES, INC. COMERICA BANK-CALIFORNIA
By: /s/ Xxxxxx Xxxx By: /s/ XXXX XXXXX
---------------------------- ----------------------------
Xxxx Xxxxx
Title: CEO Title: Assistant Vice President
------------------------- -------------------------
By: /s/ Xxxxx Xxxxxx
----------------------------
Title: CFO
-------------------------
[LOGO OF COMERICA APPEARS HERE]
--------------------------------------------------------------------------------
Comerica Bank-California
SECOND MODIFICATION TO LOAN & SECURITY AGREEMENT
------------------------------------------------
This Second Modification to Loan & Security Agreement (this "Modification")
is entered into by and between Xxxx, Xxxxxx & Associates, Inc. ("Borrower"), a
California corporation, with its principal place of business at 0000 Xxxxxxx
Xxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxxxxxxxxx 00000 and Comerica
Bank-California ("Bank"), a California corporation, as of this 21st day of
October, 1996, at Bank's main office at 000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx,
Xxxxxxxxxx 00000.
RECITALS
--------
A. Bank and Borrower have previously entered into that certain Loan
& Security Agreement (Accounts and Inventory) dated April 26, 1995, as modified
pursuant to that certain First Modification to Loan & Security Agreement dated
December 20, 1995 (collectively, the "Agreement"), pursuant to which Bank has
made available to Borrower a line of credit in an amount not to exceed Three
Million and 00/100 Dollars ($3,000,000) (together with all principal, interest,
other fees and costs, sometimes collectively referred to as the "Line of Credit"
or the "Credit").
B. Borrower and Bank have previously entered into that certain
Variable Rate-Installment Note in the principal amount of Five Hundred Thousand
and 00/100 Dollars ($500,000) (the "$500,000 Term Note"). Loans under the
$500,000 Term Note have not been disbursed by Bank to Borrower.
C. Xxxxxx Xxxx and Xxxx Xxxxxx have previously guarantied the
obligations of Borrower to Bank pursuant to those certain Guaranties dated April
26, 1995 (the "Guaranties").
D. Concurrently with the execution hereof, Borrower is entering into
that certain Asset Purchase Agreement by and among TeamAlliance Technology
Partners, L.P., a Delaware limited partnership, TeamAlliance Technology
Partners, Inc., a Delaware corporation, TeamVisions, Inc., a Delaware
corporation, certain designated Limited Liability Companies Xxxxxxx Xxxxxx,
Xxxxx Xxxxxx, and Xxxxxxxxx Xxxx (sometimes collectively referred to hereinafter
as the "Sellers") (the "Purchase Agreement"), pursuant to which Borrower is
buying (the "Purchase") certain assets (the "Purchased Assets") from Sellers.
Among other things, the
1
Purchase Agreement provides for certain payments to be made in the future by
Borrower to Sellers (the "Deferred Payments"), as set forth more completely in
the Purchase Agreement.
E. Bank and Borrower are concurrently herewith entering into that
certain Variable Rate-Installment Note (the "Term Note") in the original
principal amount of Four Million and 00/100 Dollars ($4,000,000) (together with
all principal, interest and other fees and costs, collectively, the "Term
Loan"). A portion of the Term Loan will be used to fund a portion of the payment
of the Purchase Price to Sellers. Borrower may, subject to the terms and
conditions of this Modification, borrow from Bank an additional sum of One
Million and 00/100 Dollars ($1,000,000) in term debt in addition to the Term
Loan.
F. The Term Note provides, among other things, for interest to
accrue on the principal balance thereof at an annual rate equal to one percent
(1%) in excess of the Bank's Base Rate.
G. Also concurrently herewith, the Line of Credit is being increased
to a maximum principal balance of Seven Million Dollars ($7,000,000) or the
Borrowing Base, whichever is less, as the term "Borrowing Base" is defined in
the Agreement.
H. The Line of Credit and the Term Loan are sometimes hereinafter
collectively referred to as the "Loans."
I. The Agreement, this Modification, the documents previously or
concurrently executed in connection with the Line of Credit, the Term Note and
the documents previously or concurrently executed in connection therewith, all
as hereafter modified, are sometimes hereinafter collectively referred to as the
"Loan Documents."
J. The Purchase and the Loans are sometimes hereinafter collectively
referred to as the "Transactions."
K. In connection with preparation for the consummation of the
Transactions, Borrower has caused the preparation of and has reviewed income and
cash flow projections for the fiscal years 1997 through 1999 of Borrower, which
are attached hereto as Exhibit "A" (the "Latest Projections").
------------------
L. Borrower has caused the preparation of and has reviewed a pro
forma summary balance sheet of Borrower as of September 30, 1996 (the "Fair
----
Value Balance Sheet"), giving effect to the consummation of the Transactions,
-------------------
including the incurring by Borrower of the obligations to repay the indebtedness
consisting of the Credit Facility. The Fair Value Balance Sheet is attached
hereto as Exhibit "B."
2
M. Borrower has requested, and Bank has agreed, to modify the
Agreement, to cancel the $500,000 Term Note and the Guaranties, and for Bank to
make available to Borrower the Term Loan and the Line of Credit, all as set
forth more completely herein.
AGREEMENT
---------
For good and valuable consideration, the parties agree as set forth
below:
1. Incorporation by Reference. The Agreement as modified hereby, the
--------------------------
Loan Documents as modified hereby and the Recitals are incorporated herein by
this reference as though set forth in full herein. All terms not defined in this
Modification shall have the meanings given in the Agreement, the Term Note or
other Loan Documents, as the case may be.
2. Conditions Precedent To Effectiveness of This Modification.
----------------------------------------------------------
Bank's obligations to make the initial advances hereunder and under the Loan
Documents are subject to the following conditions precedent:
2.1 Document Delivery. Bank shall have received the following
-----------------
documents: this Modification and the Schedules hereto, the Term Note, any UCC
Financing Statements requested by Bank, the Equipment Rider and other necessary
documents referenced herein, duly executed by the appropriate party.
2.2 Corporate Resolution. Bank shall have received a duly
--------------------
executed corporate resolution from the Board of Directors of Borrower
authorizing the execution of this Modification and all documents to be executed
concurrently herewith.
2.3 Accounts Receivable Audit. Bank shall have performed an
-------------------------
audit of the accounts receivable of Borrower with results satisfactory to Bank,
satisfaction of which condition is hereby acknowledged by Bank.
2.4 Certificates of Good Standing. Bank shall have received
-----------------------------
certificates of good standing for Borrower from the Secretaries of State of the
States of California, Utah, Washington, Oregon, Colorado, Texas, Illinois,
Florida, and North Carolina and any other states in which Borrower is doing
business or will be doing business immediately subsequent to the closing of the
Purchase.
2.5 First Priority Security Interest. Bank shall have
--------------------------------
received evidence satisfactory to Bank that it has a first priority security
interest in all personal property assets of Borrower, including, without
limitation, those assets located in the States of California, Utah, Washington,
Oregon, Colorado, Texas, Illinois, Florida, and North Carolina and any other
states in which Borrower is doing business or will be doing business immediately
subsequent to the closing of the Purchase, except that Bank acknowledges that it
shall not have a security interest
3
in or lien on that certain real property commonly referred to as 0000 Xxxxxx
Xxxxx, Xxxx Xxxx, Xxxx (the "Utah Real Property").
2.6 UCC Terminations; Releases. Any liens against the
--------------------------
Purchased Assets shall have been released pursuant to UCC terminations or other
lien releases, in form satisfactory to Bank.
2.7 Purchase Criteria. The terms of the Purchase shall have
-----------------
met the terms of the Purchase Criteria, as defined in Section 13 hereof,
satisfaction of which conditions are hereby acknowledged by Bank as to the
Purchase.
2.8 Loan Fees. Payment to Bank by Borrower of the loan fees
---------
in the sum of Twenty-Five Thousand and 00/100 Dollars ($25,000) in connection
with the Specific Advance Term Facility and the sum of Seven Thousand and 00/100
Dollars ($7,000), of which the sum of Two Thousand Five Hundred Dollars ($2,500)
has previously been paid in 1996 to Bank under the Loan Agreement, leaving a
balance of Four Thousand Five Hundred and 00/100 Dollars ($4,500) to be paid at
the closing in connection with the Line of Credit (the foregoing loan fees are
sometimes hereinafter collectively referred to as the "Loan Fees").
2.9 Closing of the Purchase. The Purchase shall have closed
-----------------------
or will close concurrently with this Modification.
2.10 Payment of Attorneys' Fees and Legal and Other Costs.
----------------------------------------------------
Bank shall have received payment of the reasonable attorneys' fees and costs in
an amount not to exceed Ten Thousand Dollars ($10,000) incurred by Bank in
connection with the negotiation and preparation of this Modification and the
documents to be executed in connection herewith.
2.11 Other Items Reasonably Necessary. Bank shall have
--------------------------------
received such other and further items as Bank may reasonably require to carry
out the terms hereof and the Loan Documents as modified hereby.
To the extent that Bank has so agreed, the foregoing conditions
precedent that have not been completed by the closing of the Purchase will be
listed on Schedule A hereto, together with the dates by which such conditions
must be accomplished. Failure to comply with such items by such dates shall
constitute an Event of Default hereunder.
3. Specific Advance Facility. Bank agrees, on the terms set forth in
-------------------------
this Modification and the Agreement as modified by this Modification, to make
term loans to Borrower, including the Term Loan described in Recital E hereto
(collectively, the "Specific Advance Term Loans") from time to time on any
business day during the period from the date the Term Loan described in Recital
E is disbursed until the second anniversary of such disbursement in an aggregate
principal amount (subject to the Permitted Overformula described in Section
6.17 (k) of the Agreement as modified by this Modification) up to but not to
exceed
4
Five Million and 00/100 Dollars ($5,000,000) (the "Specific Advance Facility").
Notwithstanding the foregoing, Borrower may terminate the Specific Advance
Facility at any time upon written notice to Bank and may prepay any Specific
Advance Term Loan in whole or in part without penalty or premium. Each Specific
Advance Term Loan shall be evidenced by a promissory note substantially in the
form of the Term Note. Each advance under the Specific Advance Facility shall be
amortized over a four (4) year period commencing on the date of such advance. In
addition, Borrower shall pay interest on the unpaid principal amount of each
Specific Advance Term Loan from the date of such Loan until the maturity thereof
at a rate per annum equal to the Base Rate plus one percent (1%).
4. Representations and Warranties Re: States In Which Borrower Does
----------------------------------------------------------------
Business Or Owns Assets. The following states are the only states in which
-----------------------
Borrower is or shall be doing business or owns or will own assets immediately
subsequent to the closing of the Purchase: (a) California; (b) Utah; (c)
Washington; (d) Oregon; (e) Colorado; (f) Texas; (g) Illinois; (h) Florida; (i)
New York; and (j) North Carolina, and Borrower shall maintain such assets only
at the addresses listed on Schedule B hereto unless Borrower shall have given
Bank notice of its intent to maintain addresses at different addresses in such
states.
5. Modification of Agreement. The Agreement shall be modified by
-------------------------
replacing certain sections of the Agreement, as referenced below, with the
sections as set forth below.
(a) Section 1.6 "Cash Flow" as used in this Agreement means
for any applicable period of determination,
the Net Income (after deduction for income
taxes and other taxes of such person
determined by reference to income or profits
of such person) for such period, plus, to
the extent deducted in computation of such
Net Income, the amount of depreciation and
amortization expense and the amount of
deferred tax income taxes during such
period, all as determined in accordance with
GAAP. The applicable period of determination
will be Borrower's fiscal year, beginning
with the period from January 1 to December
31.
(b) Section 2.1 Upon the request of Borrower, made at any
time and from time to time during the term
hereof, and so long as no breach or Event of
Default has occurred, Bank shall lend to
Borrower an amount equal to the Borrowing
Base; provided, however, that Bank shall not
be obligated to make advances to Borrower
under this Section 2.1 whenever the Daily
Balance exceeds, at any time, either the
Borrowing Base or the sum of Seven Million
and 00/100
5
($7,000,000), such excess amount being
referred to hereinafter as the
"Overadvance."
(c) Section 2.2 Except as hereinbelow provided, the Credit
shall bear interest, on the Daily Balance
owing, at a rate of one half percent (.50%)
percentage points per annum above the Base
Rate (the "Rate"). The Credit shall bear
interest, from and after the occurrence of
an Event of Default and without constituting
a waiver of any such Event of Default, on
the Daily Balance owing, at a rate three (3)
percentage points per annum above the Rate.
All interest chargeable under this Agreement
that is based upon a per annum calculation
shall be computed on the basis of a three
hundred sixty (360) day year for actual days
elapsed.
The Base Rate as of the date of this
Agreement is eight and one quarter percent
(8.25%) per annum. In the event that the
Base Rate announced is, from time to time
hereafter, changed, adjustment in the Rate
shall be made and based on the Base Rate in
effect on the date of such change. The Rate,
as adjusted, shall apply to the Credit until
the Base Rate is adjusted again. The minimum
interest payable by the Borrower under this
Agreement shall in no event be less than N/A
---
per month. All interest payable by Borrower
under the Credit shall be due and payable on
the fifteenth (15th) day of each calendar
month during the term of this Agreement and
Bank may at its option, elect to treat such
interest and any and all Bank Expenses as
advances under the Credit, which amounts
shall thereupon constitute Obligations and
shall thereafter accrue interest at the rate
applicable to the Credit under the terms of
the Agreement.
(d) Section 6.3(b) To the extent Borrower seeks to have an
account treated as an eligible account for
purposes of this Agreement, all such
accounts are and will, at all times
pertinent hereto, be bona fide existing
Obligations created by the sale and delivery
of merchandise or the rendition of services
to account debtors in the ordinary course of
business, free of liens, claims,
encumbrances and security interests (except
as held by Bank and except as may be
consented to, in writing, by Bank) and are
unconditionally owed to Borrower without
defenses, disputes, offsets, counterclaims,
rights of return or cancellation, and
Borrower shall have received no notice
6
of actual or imminent bankruptcy or insolvency of such
account debtor.
(e) Section 6.3(c) To the extent Borrower seeks to have an account created
as an eligible account for purposes of this Agreement,
all services must have been performed by Borrower for
such account relating to a particular invoice.
(f) Section 6.6(g) Acquire all or substantially all of the stock or assets
of any other business organization without Bank's
consent, which consent shall not be unreasonably
withheld; provided, however, that no such consent shall
be required so long as (a) Borrower is not in breach of
any terms and conditions of either (i) this
Modification, including, without limitation, the
financial covenants contained herein, as this
Modification may hereafter be modified; or (ii) the
Loan Documents, including, without limitation, the
financial covenants, as the Loan Documents are modified
hereby or hereafter; and (b) all of the Purchase
Criteria have been met if Bank is providing a loan to
Borrower to fund such purchase.
(g) Section 6.6(i) Make any investment in securities of any person,
association, firm, entity, or corporation other than
the securities of the United States of America, and
those securities purchased in accordance with
Borrower's Cash Management Guidelines as provided to
Bank concurrently with the execution of the Second
Modification to Loan & Security Agreement (Accounts and
Inventory) dated October 21, 1996 (the "Modification").
(h) Section 6.6(o) (a) Sell, lease, transfer or otherwise dispose of
properties and assets having an aggregate book value of
more than Two Hundred and Fifty Thousand and 00/100
Dollars ($250,000) per year (whether in one transaction
or in a series of transactions) except as to the sale
of inventory in the ordinary course of business; (b)
change its name, consolidate with or merge into any
other corporation, permit another corporation to merge
into it, acquire all or substantially all the
properties or assets of any other Person except as
permitted by Section 6.6(g), enter into any
reorganization or recapitalization or reclassify its
capital stock; or (c) enter into any sale-leaseback
transaction.
7
(i) Section 6.16(b) Borrower shall deliver to Bank within thirty (30) days
after the end of each month, a company prepared balance
sheet and profit and loss statement covering Borrower's
operations and deliver to Bank within ninety (90) days
after the end of each of Borrower's fiscal years a CPA
audited financial statement of the financial condition
of the Borrower for each such fiscal year, including
but not limited to, a balance sheet and profit and loss
statement and any other report requested by Bank
relating to the Collateral and the financial condition
of Borrower, and a certificate signed by an authorized
employee of Borrower to the effect that all reports,
statements, computer disk or tape files, computer
printouts, computer runs, or other computer-prepared
information of any kind or nature relating to the
foregoing or documents delivered or caused to be
delivered to Bank under this subparagraph are complete,
correct and thoroughly present the financial condition
of Borrower and that there exists on the date of
delivery to Bank no condition or event which
constitutes a breach or Event of Default under this
Agreement.
(j) Section 6.16(c) X Borrowing Base Certificate on a monthly basis.
---
(k) Section 6.17(b) Tangible Effective Net Worth in an amount not less than
a negative One Million and 00/100 Dollars
($1,000,000.00), to be measured monthly. The Tangible
Net Worth covenant shall be increased by an amount
equal to fifty percent (50%) of Borrower's net profit
after taxes on a semi-annual basis effective December
31, 1996.
(l) Section 6.17(c) A ratio of Current Assets to Current Liabilities of
greater than 1.15:1.00, to be measured monthly.
(m) Section 6.17(g) Net Income after taxes to be measured at Borrower's
fiscal quarter end and fiscal year end.
(n) Section 6.17(i) Borrower to maintain a ratio of net profits plus
depreciation and amortization (to be annualized)
divided by the current portion of all long term debt
(including the current Deferred Payment) of greater
than 2.0:1.00, to be measured monthly.
8
(o) Section 6.17(j) In addition to any other payments to be made hereunder
or under the Loan Documents as modified hereby,
Borrower shall annually pay to Bank, to be applied to
reduce the principal balance of long term debt owed to
Bank, an amount equal to fifty percent (50%) of the net
profit after taxes; less the sum of (a) the current
portion of Bank debt and (b) the current portion of the
Deferred Payments (the "Cash Flow Recapture." The Cash
Flow Recapture for any one year shall not exceed Seven
Hundred Fifty Thousand and 00/100 Dollars
($750,000.00).
(p) Section 6.17(k) Notwithstanding the terms and conditions of the
Agreement and this Modification, the combined balance
of the Line of Credit, the Term Loan plus any other
term loan from Bank shall not exceed a sum that is Two
Million Dollars ($2,000,000) in excess of Borrower's
Borrowing Base (such excess amount is sometimes
hereinafter referred to as the "Permitted
Overformula"). The Permitted Overformula shall
permanently be reduced on a quarterly basis by the sum
of Three Hundred Thirty-Three Thousand and 33/100
Dollars ($333,333.33), with such permanent reductions
to be measured at each of Borrower's fiscal quarter
end. The Permitted Overformula shall be permanently
reduced to a zero balance by no later than eighteen
(18) months from the date of the first disbursement by
Bank to Borrower under the Term Note.
6. Maturity Date. Subject to Section 7 of this Modification and Section 3.1
-------------
of the Agreement, the obligations owing under the Line of Credit are due upon
demand by Bank, whether or not a breach, default or an Event of Default
thereunder or under any of the other Loan Documents shall have occurred as of
the date of such demand.
7. Notice of Demand In Event of Financial Covenant Violations; No Obligation
-------------------------------------------------------------------------
To Advance. Notwithstanding anything contained in the Agreement to the contrary,
----------
in the event Bank wishes to make demand for payment of the Loans in full based
upon a violation by Borrower of a financial covenant in the Loan Documents, as
modified hereby or hereafter, Bank agrees to give Borrower thirty (30) days'
notice prior to making demand for payment of the Loans, provided that Borrower
is not otherwise in breach or default under the Loan Documents as modified
hereby or hereafter or becomes in breach or default thereof, in which case no
such notice shall be required. Notwithstanding the foregoing notice requirement,
there shall be no obligation on the part of Bank to make further advances to
Borrower upon the breach of a financial covenant. Nothing in this Section 6
shall modify or alter the obligation of Borrower to make regularly scheduled
payments on the Loans when due as provided in the Loan Documents.
9
8. Compensating Balances. Bank acknowledges and agrees that the amounts of
---------------------
the Loan Fees charged by Bank has been calculated based upon the Borrower
maintaining on deposit with Bank certain compensating balances during certain
time periods. In that regard, as a condition of the Loans, Borrower has agreed
that commencing as of June 30, 1997, Borrower shall maintain compensating
balances on deposit with Bank either in money market accounts or demand deposit
accounts in a combined amount at all times equal to Three Million and 00/100
Dollars ($3,000,000) for the period of time commencing on June 30, 1997 and
terminating on June 30, 1998. Failure to maintain such compensating balances on
deposit shall not constitute a breach or an event of default; provided, however,
that if Borrower fails to maintain average deposits of Three Million and 00/100
Dollars ($3,000,000) during any fiscal quarter during the period of time from
June 30, 1997 to June 30, 1998, then Borrower shall pay a fee to Bank in the
amount of Five Thousand and 00/100 Dollars ($5,000) per quarter (the "Settlement
Fee") commencing on the quarter ending September 30, 1997. Failure by Borrower
to timely pay the quarterly Settlement Fee to Bank shall constitute a breach or
an Event of Default under this Modification and the other Loan Documents.
9. First Priority Security Interest. Except as provided with respect to the
--------------------------------
Utah Real Property, the security interest of Bank in the personal property
assets of Borrower shall at all times be a first priority and duly perfected
security interest.
10. Payroll. Borrower agrees that it shall at all times pay its employees all
-------
sums due to them and all payroll taxes and related expenses on a current basis,
and shall, upon reasonable request by Bank, provide Bank with evidence thereof.
11. No Reliance Upon Bank by Borrower. Borrower acknowledges and agrees that
---------------------------------
it is entering into the Purchase Agreement and effecting the Purchase of the
Purchased Assets based on its own evaluation and examination of the Purchased
Assets and its own business judgment, and not based on any advice or
recommendation of Bank.
12. Solvency. Borrower represents and warrants that:
--------
12.1 Latest Projections; Assumptions. In connection with the preparation
-------------------------------
of the Latest Projections, Borrower has relied upon (i) historical financial and
other information; and (ii) information with respect to sales, costs and other
data obtained from Borrower's officers and other supervisory personnel who are
directly responsible for the various operations involved. The assumptions upon
which the Latest Projections are based, which are deemed by Borrower to be
reasonable, are stated therein, which assumptions and any forecast by necessity
involve uncertainty and approximation. Based thereon, Borrower reasonably
believes that the Latest Projections, taken as a whole, provide reasonably
attainable estimates of future performance, subject, as stated above, to
inherent uncertainties and approximations;
12.2 Review of Latest Projections; No Material Change. The Latest
------------------------------------------------
Projections have been reviewed by members of Borrower's senior management,
including without limitation,
10
the chief financial officer of Borrower, for reasonableness. The Latest
Projections give effect to the consummation of the Transactions, including the
incurrence by Borrower of the obligations to repay the indebtedness consisting
of the Loans. The Latest Projections were prepared on the basis of information
available as of September 30, 1996. Borrower knows of no material fact which has
occurred since that date which would lead Borrower to believe that the Latest
Projections, taken as a whole, are not reasonably attainable, subject to the
uncertainties and approximations inherent in any projections;
12.3 Preparation of Fair Value Balance Sheet. The Fair Value Balance Sheet
---------------------------------------
has been prepared in a manner which Borrower believes reflects the fair value of
the assets of Borrower and the amount that will be required to pay Borrower's
probable liability on all of its obligations, contingent or otherwise, as they
become absolute and matured. Borrower understands "fair value" of assets to mean
the amount which could be realized within a reasonable time, either through the
collection or sale of such assets at their regular market value, conceiving of
the latter as the amount which could be obtained for the property in question
within such period by a capable and diligent businessperson from an interested
buyer who is willing to purchase under ordinary selling conditions. Borrower has
consulted counsel in connection with ascertaining and evaluating Borrower's
contingent liabilities (such as litigation and guaranties).
12.4 Solvency. Borrower is now and shall at all times, including after the
--------
consummation of the Transactions, be solvent.
12.5 No Intent to Hinder; Delay or Defraud Creditors. Borrower has not
-----------------------------------------------
entered in the Transactions or made any transfer or incurred any obligations
hereunder or thereunder, with the actual intent to hinder, delay or defraud
either the present or future creditors of Borrower.
13. Reliance by Bank. Borrower understands that Bank is relying upon the
----------------
foregoing representations and warranties regarding solvency and no fraudulent
conveyance in connection with the consummation of the Loans contemplated by the
Agreement.
14. Purchase Criteria. Any acquisition of assets of a third party (the
-----------------
"Target") by Borrower made with the proceeds of any loan from Bank, whether the
Purchase or any other purchase shall meet the following criteria (the "Purchase
Criteria"):
(a) the purchase price does not exceed seven (7) times the Target's most
recent twelve (12) month normalized earnings before interest, taxes,
depreciation and amortization ("EBITDA") (as used herein, "normalized" means
that excess officers' compensation shall have been taken into account);
(b) the aggregate of the Loans do not exceed four (4) times the most
recent twelve (12) month combined normalized EBITDA of Borrower and the Target;
11
(c) the Target shall have been profitable during its most recent two
(2) fiscal years;
(d) any assets being purchased shall be free and clear of liens;
(e) if the proposed purchase price exceeds the sum of Five Million and
00/100 Dollars ($5,000,000), there shall be a minimum of twenty-five percent
(25%) of the purchase price that will be deferred and not paid at the closing,
provided that as part of this Modification, Borrower acknowledges that Borrower
shall only make a payment to such recipient of a deferred payment if such
deferred payment would not cause a breach of any financial covenant or other
term of this Modification or the Loan Documents, as modified hereby, as this
Modification or the Loan Documents may be further modified hereafter or until
such time as such breach of financial covenant or other term has been cured.
Borrower shall further acknowledge to Bank that it has given notice of section
13(e) to any recipient of a deferred payment; and
(f) Bank shall have reviewed and found satisfactory the CPA reviewed
or audited financial statements of the Target.
15. Cancellation of $500.000 Term Note. The $500,000 Term Note is being
----------------------------------
canceled concurrently with the execution hereof, and Bank shall, concurrently
with the execution hereof, deliver to Borrower the original of the $500,000 Term
Note, stamped "Canceled."
16. Cancellation of the Guaranties. The Guaranties are being canceled
------------------------------
concurrently with the execution hereof, and Bank shall concurrently with the
execution hereof, deliver to Guarantors their respective Guaranties, each
stamped with the notation "Canceled."
17. Payment of Attorneys' Fees and Costs. Borrower shall pay to Bank the
------------------------------------
reasonable attorneys' fees and costs incurred by Bank in connection with the
negotiation and preparation of this Agreement and the documents executed in
connection herewith. Borrower shall also pay such additional reasonable
attorneys' fees and costs as Bank may incur in connection with the Loans and the
Loan Documents.
18. Survival of Warranties and Representations. The warranties and
------------------------------------------
representations set forth herein shall survive the execution of this
Modification and the making of the Loans.
19. Survival of Terms and Conditions. The terms and conditions of this
--------------------------------
Modification and the Agreement shall survive the repayment of the Line of Credit
and shall govern the Term Loan to the extent applicable thereto, and vice versa.
20. Cross Defaults. A default under any of the Loan Documents, as modified
--------------
hereby any documents executed in connection herewith or hereafter and/or this
Modification shall be a default under each of the Loan Documents, as modified
hereby, any documents executed herewith or hereafter and this Modification, and
vice versa.
12
21. Cross-Collateral. All collateral now existing or hereafter granted to
----------------
secure any of the Loans shall also be collateral for all other Loans, unless
Bank provides otherwise in writing, except that no real property shall be Bank's
collateral without Bank's prior written consent.
22. Legal Effect. Except as specifically set forth in this Modification,
------------
all of the terms and conditions of the Agreement and the Loan Documents, both as
modified hereby, shall remain in full force and effect.
23. Confidentiality. Borrower acknowledges that Bank may provide
---------------
information relating to this Modification and/or the Loan Documents as modified
hereby and/or Borrower to Bank's parent, affiliates, subsidiaries and service
providers in the ordinary course of business, provided that in handling any
confidential information of Borrower received by Bank pursuant to any of the
Loan Documents as modified hereby, Bank and any such parties shall (and Bank
shall cause any such parties to) exercise such degree of care as is required to
maintain such information as confidential that Bank exercises with respect to
its own proprietary information.
24. Accounting Terms. Unless otherwise provided in this Modification or the
----------------
Agreement as modified by this Modification, all calculations with respect to
accounting or financial matters shall be computed in accordance with GAAP,
consistently applied, and accounting terms used and not otherwise defined herein
shall have the meaning determined by GAAP.
25. Integration. This Modification is an integrated agreement and
-----------
supersedes all prior negotiations and agreements regarding the subject matter
hereof. All amendments hereto must be in writing and signed by the parties
hereto.
13
IN WITNESS WHEREOF, the parties hereto have agreed to the terms of this
Second Modification To Loan & Security Agreement as of the date first set forth
above.
COMERICA BANK-CALIFORNIA
By: /s/ XXXXXXXX XXXXX
-------------------------------
Xxxxxxxx Xxxxx
Title: Vice President
XXXX, XXXXXX & ASSOCIATES, INC.
By: /s/ XXXXXX XXXX
-------------------------------
Title: CEO
----------------------------
By: /s/ XXXX X. XXXXXXXX
-------------------------------
Title: President
----------------------------
14
SCHEDULE A TO LOAN AND SECURITY AGREEMENT
1. Document Delivery. Bank shall have received the following documents:
-----------------
this Modification and the Schedules hereto, the Term Note, any UCC Financing
Statements requested by Bank, the Equipment Rider and other necessary documents
referenced herein, duly executed by the appropriate party.
2. Corporate Resolution. Bank shall have received a duly executed corporate
--------------------
resolution from the Board of Directors of Borrower authorizing the execution of
this Modification and all documents to be executed concurrently herewith.
3. Certificates of Good Standing. Bank shall have received certificates of
-----------------------------
good standing for Borrower from the Secretaries of State of the States of
California, Utah, Washington, Oregon, Colorado, Texas, Illinois, Arizona,
Florida, and North Carolina and any other states in which Borrower is doing
business or will be doing business immediately subsequent to the closing of the
Purchase.
4. First Priority Security Interest. Bank shall have received evidence
--------------------------------
satisfactory to Bank that it has a first priority security interest in all
personal property assets of Borrower, including, without limitation, those
assets located in the States of California, Utah, Washington, Oregon, Colorado,
Texas, Illinois, Arizona, Florida, and North Carolina and any other states in
which Borrower is doing business or will be doing business immediately
subsequent to the closing of the Purchase, except that Bank acknowledges that it
shall not have a security interest in or lien on that certain real property
commonly referred to as 0000 Xxxxxx Xxxxx, Xxxx Xxxx, Xxxx (the "Utah Real
Property").
5. UCC Terminations; Releases. Any liens against the Purchased Assets shall
--------------------------
have been released pursuant to UCC terminations or other lien releases, in form
satisfactory to Bank.
6. Purchase Criteria. The terms of the Purchase shall have met the terms of
-----------------
the Purchase Criteria, as defined in Section 13 hereof, satisfaction of which
conditions are hereby acknowledged by Bank as to the Purchase.
7. Loan Fees. Payment to Bank by Borrower of the loan fees in the sum of
---------
Twenty-Five Thousand and 00/100 Dollars ($25,000) in connection with the
Specific Advance Term Facility and the sum of Seven Thousand and 00/100 Dollars
($7,000), of which the sum of Two Thousand Five Hundred Dollars ($2,500) has
previously been paid in 1996 to Bank under the Loan Agreement, leaving a balance
of Four Thousand Five Hundred and 00/100 Dollars ($4,500) to be paid at the
closing in connection with the Line of Credit (the foregoing loan fees are
sometimes hereinafter collectively referred to as the "Loan Fees").
8. Closing of the Purchase. The Purchase shall have closed or will close
-----------------------
concurrently with this Modification.
15
($4,500) to be paid at the closing in connection with the Line of Credit (the
foregoing loan fees are sometimes hereinafter collectively referred to as the
"Loan Fees").
9. Closing of the Purchase. The Purchase shall have closed or will close
-----------------------
concurrently with this Modification.
10. Payment of Attorneys' Fees and Legal and Other Costs. Bank shall have
----------------------------------------------------
received payment of the reasonable attorneys' fees and costs in an amount not to
exceed Ten Thousand Dollars ($10,000) incurred by Bank in connection with the
negotiation and preparation of this Modification and the documents to be
executed in connection herewith.
11. Other Items Reasonably Necessary. Bank shall have received such other
--------------------------------
and further items as Bank may reasonably require to carry out the terms hereof
and the Loan Documents as modified hereby.
16
SCHEDULE B TO SECOND MODIFICATION
TO LOAN SECURITY AGREEMENT
CALIFORNIA: NORTH CAROLINA:
---------- --------------
CORPORATE HEADQUARTERS RESEARCH TRIANGLE PARK
0000 Xxxxxxx Xxxxx Xxxx., Xxxxx 000 0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000 Xxxxxx, XX 00000
SAN XXXX XXXXXXXXXX:
0000 Xxxxxxx Xxxxx Xxxx., Xxxxx 000 ----------
Xxx Xxxx, XX 00000
SEATTLE
CAPITOLA 0000 000xx Xxx., X.X., Xxxxx 000
000 Xxx Xxx., Xxxxx 000 Xxxxxxxx, XX 00000
Xxxxxxxx, XX 00000
OREGON:
FREMONT-MILPITAS -------
0000 XxXxxxxx Xxxx., Xxxxx 000
Xxxxxxxx, XX 00000 PORTLAND
0000 X.X. Nimbus, Suite 000
XXXXX XXXXXX, XXX XXXX Xxxxxxxxx, XX 00000
0000 Xxxxxxx Xxxxx., Xxxxx 000
Xxx Xxxx, XX 00000 COLORADO:
--------
MOUNTAIN VIEW
0000 X. Xxxxxxxxx Xxxx., Xxxxx 000 XXXXXX
Xxxxxxxx Xxxx, XX 00000 0000 X X X Xxxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
XXXX:
---- 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
SALT LAKE CITY
0000 X. Xxxxx Xxxx Xxx., Xxxxx 000 XXXXX:
Xxxxxxx, XX 00000 -----
One Utah Center [VALID?] AUSTIN
000 Xxxxx Xxxx, Xxxxx 000 Xxxxxxx 000
Xxxx Xxxx Xxxx, XX 00000 0000 Xxxxxxx Xx Xxxxx Xxxxxxx,
Xxxxx 0000 Xxxxxx, XX 00000-0000
HOUSTON
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
17
ARIZONA:
-------
PHOENIX
0000 X. Xxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxx, XX 00000
ILLINOIS:
--------
CHICAGO
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
NEW YORK:
--------
NEW YORK
000 0xx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
FLORIDA:
-------
ORLANDO
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
TAMPA
000 X. Xxx Xx., Xxxxx 000
Xxxxx, XX 00000-0000
18
[LETTERHEAD OF COMERICA APPEARS HERE]
VARIABLE RATE-INSTALLMENT NOTE
======================================================================================================
AMOUNT NOTE DATE MATURITY DATE TAX IDENTIFICATION #
$4,000,000.00 November 4, 1996 November 15,1998 00-0000000
======================================================================================================
For Value Received the undersigned promise(s) to pay to the order of Comerica
Bank-California ("Bank") at any office of Bank in the State of California, Four
Million and 00/100 Dollars (U.S.) in installments of $83,333.33 each [_]
INCLUSIVE OF [X] PLUS interest on the unpaid balance from the date of
disbursement at a per annum rate equal to the Bank's rate from time to time in
effect plus 1.000% per annum until maturity, whether by acceleration or
otherwise, or until Default, as later defined, and after that at a default rate
equal to the rate of interest otherwise prevailing under this Note plus 3% per
annum (but in no event in excess of the maximum rate permitted by law). Interest
shall be calculated for the actual number of days the principal is outstanding
on the basis of a 360 day year if this Note evidences a business or commercial
loan or a 365 day year if a consumer loan. Bank's "base rate" is that annual
rate of interest so designated by Bank and which is changed by Bank from time to
time. Interest rate charges will be effective for interest computation purposes
as and when Bank's base rate changes. Installments of principal and accrued
interest due under this Note shall be payable on the 15th day of each month,
commencing November 15, 1996, and the entire remaining unpaid balance of
principal and accrued interest shall be payable on the Maturity Date set forth
above. If the frequency of principal and interest installments is not otherwise
specified, installments of principal and interest due under this Note shall be
payable monthly on the first day of each month.
In the event the periodic installments set forth above are inclusive of
interest, these installments are calculated at an assumed fixed interest rate
and an assumed amortization term. The amortization term ends on the Maturity
Date. In the event this Note evidences a business or commercial loan and Bank's
base rate changes, Bank, at its sole option, may from time to time recalculate
the periodic installment amount so that the remaining periodic installments will
fully amortize the remaining loan balance within the remaining amortization term
in equal installments at the interest rate then being charged under this Note.
THE UNDERSIGNED AGREE(S) TO PAY THE PERIODIC INSTALLMENTS AS THEY MAY BE
RECALCULATED BY Bank, AT Bank'S SOLE OPTION, FROM TIME TO TIME AND
ACKNOWLEDGE(S) THAT A RECALCULATION SHALL NOT AFFECT THE MATURITY DATE OR THE
OTHER TERMS AND PROVISIONS OF THIS NOTE. If this Note or any installment under
this Note shall become payable on a day other than a day on which Bank is open
for business, this payment may be extended to the next succeeding business day
and interest shall be payable at the rate specified in this Note during this
extension. Any payments of principal in excess of the installment payments
required under this Note need not be accepted by Bank (except as required under
applicable law), but if accepted shall apply to the installments last falling
due. A late installment charge equal to 5% of each late installment may be
charged on any installment payment not received by Bank within 10 calendar days
after the installment due date, but acceptance of payment of this charge shall
not waive any default under this Note.
This Note and any other Indebtedness and liabilities of any kind of the
undersigned (or any of them) to Bank, and any and all modifications, renewals or
extensions of it, whether joint or several contingent or absolute, now existing
or later arising, and however evidenced (collectively "Indebtedness") are
secured by and Bank is granted a security interest in all items deposited in any
account of any of the undersigned with Bank and by all proceeds of these items
(cash or otherwise), all account balances of any of the undersigned from time to
time with Bank, by all property of any of the undersigned from time to time in
the possession of Bank and by any other collateral, rights and properties
described in each and every deed of trust, mortgage, security agreement, pledge,
assignment and other agreement which has been, or will at any time(s) later be,
executed by any (or all) of the undersigned to or for the benefit of Bank
(collectively "Collateral"). Notwithstanding the above, (i) to the extent that
any portion of the Indebtedness is a consumer loan, that portion shall not be
secured by any deed of trust or mortgage on or other security interest in
1
any of the undersigned's principal dwelling or in any of the undersigned's real
property which is not a purchase money security interest as to that portion,
unless expressly provided to the contrary in another place, or (ii) if the
undersigned (or any of them) has (have) given or give(s) Bank a deed of trust or
mortgage covering real property, that deed of trust or mortgage shall not secure
this Note or any other Indebtedness of the undersigned (or any of them), unless
expressly provided to the contrary in another place.
Except as otherwise provided in that Second Modification of Loan & Security
Agreement dated as of November 4, 1996 between Borrower and Bank (the
"Modification") and the Loan & Security Agreement (Accounts and Inventory) dated
as of April 26, 1995 (the "Agreement") as modified by the Modification, if the
undersigned (or any of them) or any guarantor under a guaranty of all or part of
the Indebtedness ("guarantor") (a) fail(s) to pay this Note or any of the
Indebtedness when due, by maturity, acceleration or otherwise, or fail(s) to pay
any Indebtedness owing on a demand basis upon demand; or (b) fail(s) to comply
with any of the terms or provisions of any agreement between the undersigned (or
any of them) or any guarantor and Bank; or (c) becomes insolvent or the subject
of a voluntary or involuntary proceeding in bankruptcy, or a reorganization,
arrangement or creditor composition proceeding, (if a business entity) cease(s)
doing business as a going concern, (if a natural person) die(s) or become(s)
incompetent, (if a partnership) dissolve(s) or any general partner of it dies,
becomes incompetent or becomes the subject of a bankruptcy proceeding or (if a
corporation or a limited liability company) is the subject of a dissolution,
merger or consolidation; or (d) if any warranty or representation made by any of
the undersigned or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete; or (e) if there is
any termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part of
the Indebtedness; or (f) if there is any failure by any of the undersigned or
any guarantor to pay when due any of its Indebtedness (other than to Bank) or in
the observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such Indebtedness; or (g) if Bank deems
itself insecure, believing that the prospect of payment of this Note or any of
the Indebtedness is impaired or shall fear deterioration, removal or waste of
any of the Collateral; or (h) if there is filed or issued a levy or writ of
attachment or garnishment or other like judicial process upon the undersigned
(or any of them) or any guarantor or any of the Collateral, including without
limit, any accounts of the undersigned (or any of them) or any guarantor with
Bank, then Bank, upon the occurrence of any of these events (each a "Default"),
may at its option and without prior notice to the undersigned (or any of them),
declare any or all of the Indebtedness to be immediately due and payable
(notwithstanding any provisions contained in the evidence thereof to the
contrary), sell or liquidate all or any portion of the Collateral, set off
against the Indebtedness any amounts owing by Bank to the undersigned (or any of
them), charge interest at the default rate provided in the document evidencing
the relevant Indebtedness and exercise any one or more of the rights and
remedies granted to Bank by any agreement with the undersigned (or any of them)
or given to it under applicable law. In addition, if this Note is secured by a
deed of trust or mortgage covering real property, then the trustor or mortgagor
shall not mortgage or pledge the mortgaged premises as security for any other
Indebtedness or obligations. This Note, together with all other Indebtedness
secured by said deed of trust or mortgage, shall become due and payable
immediately, without notice, at the option of Bank, (a) if said trustor or
mortgagor shall mortgage or pledge the mortgaged premises for any other
Indebtedness or obligations or shall convey, assign or transfer the mortgaged
premises by deed, installment sale contract or other instrument, or (b) if the
title to the mortgaged premises shall become vested in any other person or party
in any manner whatsoever, or (c) if there is any disposition (through one or
more transactions) of legal or beneficial title to a controlling interest of
said trustor or mortgagor. All payments under this Note shall be in immediately
available United States funds, without setoff or counterclaim.
If this Note is signed by two or more parties (whether by all as makers or by
one or more as an accommodation party or otherwise), the obligations and
undertakings under this Note shall be that of all and any two or more jointly
and also of each severally. This Note shall bind the undersigned, and the
undersigned's respective heirs, personal representatives, successors and
assigns.
The undersigned waive(s) presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices and agree(s) that no extension or indulgence
to the undersigned (or any of them) or release, substitution or nonenforcement
of any security, or release or substitution of any of the undersigned, any
guarantor or any other party, whether with or without notice, shall affect the
obligations of any of the undersigned. The undersigned waive(s) all defenses or
right to discharge available under Section 3-
2
605 of the California Uniform Commercial Code and waive(s) all other suretyship
defenses or right to discharge. The undersigned agree(s) that Bank has the right
to sell, assign, or grant participations, or any interest, in any or all of the
Indebtedness, and that, in connection with this right, but without limiting its
ability to make other disclosures to the full extent allowable, Bank may
disclose all documents and information which Bank now or later has relating to
the undersigned or the Indebtedness. The undersigned agree(s) that Bank may
provide information relating to the Note or to the undersigned to Bank's parent,
affiliates, subsidiaries and service providers.
The undersigned agree(s) to reimburse the holder or owner of this Note for any
and all costs and expenses (including without limit, court costs, legal expenses
and reasonable attorneys' fees, whether inside or outside counsel is used,
whether or not suit is instituted and, if suit is instituted, whether at the
trial court level, appellate level, in a bankruptcy, probate or administrative
proceeding or otherwise) incurred in collecting or attempting to collect this
Note or incurred in any other matter or proceeding relating to this Note.
The undersigned acknowledge(s) and agree(s) that other than as set forth in the
Modification and the Agreement, which Modification and Agreement as modified by
the Agreement shall govern in the event of an explicit inconsistency with any
term hereof, there are no contrary agreements, oral or written, establishing a
term of this Note.
The undersigned acknowledge(s) and agree(s) that the terms and conditions of
this Note may not be amended, waived or modified except in a writing signed by
an officer of Bank expressly stating that the writing constitutes an amendment,
waiver of modification of the terms of this Note. As used in this Note, the word
"undersigned" means, individually and collectively, each maker, accommodation
party, endorser and other party signing this Note in a similar capacity. If any
provision of this Note is unenforceable in whole or in part for any reason, the
remaining provisions shall continue to be effective.
THIS NOTE IS MADE IN THE STATE OF CALIFORNIA AND SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
THE MAXIMUM INTEREST RATE SHALL NOT EXCEED THE HIGHEST APPLICABLE USURY CEILING.
THE UNDERSIGNED AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY RIGHT TO TRIAL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
This Note is subject to the terms and conditions of the Modification and the
Agreement, as modified by the Modification.
For Corporations, Partnerships, Trust, or Estates
XXXX, XXXXXX & ASSOCIATES. INC. By: /s/ XXXXXX XXXX Its: CEO
------------------------------- --------------------------- ---------------
OBLIGOR NAME TYPED/PRINTED SIGNATURE OF XXXXXX XXXX TITLE
0000 Xxxxxxx Xxxxx Xxxx. By: /s/ XXXX. X. XXXXXXXX By: President
------------------------ --------------------------- ---------------
STREET ADDRESS SIGNATURE OF XXXX X. XXXXXXXX TITLE
San Xxxx By: By:
------------------------ --------------------------- ---------------
XXXX XXXXXXXXX XX XXXXX
XX 00000 By: By:
------------------------ --------------------------- ---------------
STATE ZIP CODE SIGNATURE OF TITLE
3
For Individuals or Sole
Proprietorships
Name(s) of Obligor(s) Signature(s) of
(Type or Print): Obligor(s):
----------------------------------------- -----------------------------
------------------------------------------------ ----------------------------------------- -----------------------------
STREET ADDRESS
------------------------------------------------ ----------------------------------------- -----------------------------
CITY
------------------------------------------------ ----------------------------------------- -----------------------------
STATE ZIP CODE
============================================================================================================================
For Bank Use Only CCAR #
----------------------------------------------------------------------------------------------------------------------------
Loan Officer Initials Loan Group Name Obligor(s) Name
----------------------------------------------------------------------------------------------------------------------------
Loan Officer I.D. No. Loan Group No. Obligor # Note # Amount
============================================================================================================================
4
[LOGO OF COMERICA APPEARS HERE]
EQUIPMENT RIDER
Xxxx, Xxxxxx & Associates, Inc. ("Borrower") has entered into a certain
Loan and Security Agreement (Accounts and Inventory) dated April 26, 1995 with
Comerica Bank-California ("Bank"), as previously modified and as modified by
that certain Second Modification to Loan & Security Agreement of even date
herewith (hereinafter collectively referred to as the "Agreement"). This
Equipment Rider (hereinafter referred to as this "Rider") dated November 4, 1996
is hereby made a part of and incorporated into that Agreement.
1. Borrower grants to Bank a security interest in the following (hereinafter
referred to as "Equipment"):
(a) All of Borrower's present machinery, equipment, fixtures, vehicles,
office equipment, furniture, furnishings, tools, dies, jigs and
attachments, wherever located, (including but not limited to, the
items listed and described on the Schedule of Equipment attached
hereto and marked Exhibit "A" and by this reference made a part
hereof as though fully set forth hereat);
(b) all of Borrower's additional equipment, wherever located, of like or
unlike nature, to be acquired hereafter, and all replacements,
substitutes, accessions, additions and improvements to any of the
foregoing; and
(c) all of Borrower's general intangibles, including without limitation,
computer programs and computer disks.
2. Bank's security interest in the Equipment as set forth above shall secure
each, any and all of Borrower's Obligations to Bank, as the term "Obligations"
is defined in the Agreement; and, the payment of Borrower's indebtedness in the
principal amount of Twelve Million and 00/100 Dollars ($12,000,000.00) and
interest evidenced by the Agreement and various notes.
3. Bank may, in its sole discretion, from time to time hereafter, make loans
to Borrower. Loans made by Bank to Borrower pursuant to this Rider shall be
included as part of the Obligations of Borrower to Bank and at Bank's option,
may be evidenced by promissory note(s), in form satisfactory to Bank. Such loans
shall bear interest at the rate and be payable in the manner specified in said
promissory note(s) in the event Bank exercises the aforementioned option, and in
the event Bank does not, such loans shall bear interest at the rate and be
payable in the manner specified in the Agreement and various notes.
4. Borrower represents and warrants to Bank that:
(a) it has good and indefeasible title to the Equipment;
(b) the Equipment is and will be free and clear of all liens, security
interests, encumbrances and claims, except as held by Bank;
1
(c) the Equipment shall be kept only within the jurisdictions listed on
Schedule A hereto except upon no less than thirty (30) days' prior
written notice to Bank;
(d) for those jurisdictions listed on Schedule A hereto in which the
Equipment located therein has an aggregate value in excess of
$25,000, the locations and the owners of the locations of such
equipment are listed on Schedule B hereto;
(e) Bank shall have the right demand now and/or at all times hereafter,
during Borrower's usual business hours to inspect and examine the
Equipment at Bank's expense so long as no Event of Default exists at
the time of such inspection, in which event Borrower agreed to
reimburse Bank for its reasonable costs and expenses in so doing.
5. Borrower shall keep and maintain the Equipment in good operating condition
and repair, make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Borrower shall not permit any items of Equipment to become a fixture to real
estate or accession to other property, and the Equipment is now and shall at all
times remain and be personal property.
6. Borrower, at its expense, shall keep and maintain the Equipment insured
against loss or damage by fire, theft, explosion, sprinklers and all other
hazards and risks ordinarily insured against by other owners who use such
properties and interest in properties in similar businesses for the full
insurable value thereof; and business interruption insurance and public
liability and property damage insurance relating to Borrower's ownership and use
of its assets. All such policies of insurance shall be in such form, with such
companies and in such amounts as may be satisfactory to Bank. Borrower shall
deliver to Bank certified copies of such policies of insurance and evidence of
the payment of all premiums thereof. All such policies of insurance (except
those of public liability and property damage) shall contain an endorsement in a
form satisfactory to Bank showing loss payable to Bank and all proceeds payable
thereunder shall be payable to Bank and upon receipt by Bank shall be applied on
the account of Borrower's Obligations. To secure the payment of Borrower's
Obligations, Borrower grants Bank's security interest in and to all such
policies of insurance (except those of public liability and property damage) and
the proceeds thereof and directs all insurers under such policies of insurance
to pay all proceeds thereof directly to Bank). Borrower hereby irrevocably
appoints Bank (and any of Bank's officers, employees or agents designated by
Bank) as Borrower's attorney-in-fact for the purpose of making, settling and
adjusting claims under such policies of insurance if at such time an Event of
Default exists. Each such insurer shall agree by endorsement upon the policy or
policies of insurance issued by it to Borrower, or any other person, shall
affect the right of Bank to recover under such policy or policies of insurance
required above or to pay any premium in whole or in part relating thereto. Bank,
without waiving or releasing any obligations or defaults by Borrower hereunder,
may at any time or times hereafter, but shall have no obligations to do so,
obtain and maintain such policies of insurance and pay such premiums and take
any other action with respect to such policies which Bank deems advisable. All
sums so disbursed by Bank including reasonable attorneys' fees, court costs,
expenses and other charges relating thereto, shall be a part of Borrower's
Obligations and payable on demand.
7. Until default by Borrower under the Agreement, the various notes or this
Rider, Borrower may, subject to the provisions of the Agreement and this Rider
and consistent therewith, remain in possession hereof and use the Equipment
referred to herein in the ordinary course of business at the location or
locations hereinabove designated.
8. All of the terms, conditions, warranties, covenants, agreements and
representations of the Agreement are incorporated herein and reaffirmed.
2
9. Upon a default by Borrower under the Agreement or this Rider, Borrower
upon request of Bank to do so, agrees to assemble and make the Equipment or any
part thereof available to Bank at a place designated by Bank.
10. Borrower shall upon demand by Bank immediately deliver to Bank and
properly endorse, any and all evidences of ownership, certificates of title or
applications for titles to any of the aforesaid items of Equipment.
11. Bank shall not in any way or manner be liable or responsible for (a) the
safekeeping of the Equipment; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof or (d) any act or default by any person whomsoever. All risk of Loss,
damage or destruction of the Equipment shall be borne by Borrower.
Borrower(s) XXXX, XXXXXX & *Subject to the terms and provisions of the
ASSOCIATES, INC. Agreement and all modifications thereto.
/s/ XXXXXX XXXX
------------------------------ -----------------------------------------
By: By:
/s/ XXXX X. XXXXXXXX
------------------------------ -----------------------------------------
By: By:
Accepted this 4th day of November, 1996 at Bank's place of business in Xxx Xxxx,
XX 00000
By: /s/ XXXXXXXX XXXXX
--------------------------------------
Xxxxxxxx Xxxxx
Vice President
3
Schedule A
to Equipment Rider
California
Utah
Washington
Oregon
Colorado
Texas
Illinois
Arizona
Florida
New York
North Carolina
4
LOCATION LESSOR
-------- ------
MOUNTAIN VIEW XXXXXX ENTERPRISES
0000 X. Xxxxxxxxx Xxxx., Xxxxx 000 ---------------------------------------
Xxxxxxxx Xxxx, XX 00000 X.X. XXX 0000, 0000 X. XXXXXXXXX XXXX.
---------------------------------------
XXXXXX XXXX, XX. 00000
---------------------------------------
Attn: XXXXX XXXXXXXX
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
UTAH:
----
SALT LAKE CITY UTAH RETIREMENT SYSTEMS
0000 X. Xxxxx Xxxx Xxx., Xxxxx 000 ---------------------------------------
Xxxxxxx, XX 00000 C/O PROWSUCOA MANAGEMENT, INC.
---------------------------------------
0000 XXXXX 000 XXXX
---------------------------------------
XXXX XXXX XXXX, XXXX 00000
---------------------------------------
Attn: XXXXX XXXXXXX
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
One Utah Center [VALID?]
000 Xxxxx Xxxx, Xxxxx 000 ---------------------------------------
Xxxx Xxxx Xxxx, XX 00000
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
NORTH CAROLINA:
--------------
RESEARCH TRIANGLE PARK CMD PROPERTIES, INC., AN ILLINOIS CORP.
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000 ---------------------------------------
Xxxxxx, XX 00000 C/O CMD REALTY INVESTORS, INC.
---------------------------------------
X.X. XXX 00000, XXXXXXXX XXXXXXXX XXXX,
---------------------------------------
XX 00000
---------------------------------------
Attn: XXXXX XXXXXXXX, XX.
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
WASHINGTON:
----------
SEATTLE CORPORATE CAMPUS EAST III LIMITED
0000 000xx Xxx., X.X., Xxxxx 000 ---------------------------------------
Xxxxxxxx, XX 00000 PARTNERSHIP
---------------------------------------
TEACHERS RETIREMENT SYSTEM OF THE
---------------------------------------
STATE OF ILLINOIS
---------------------------------------
X/X XXXXXXX & XXXXXXXXX XX XX
---------------------------------------
000 XXXXX XXXXXX, #0000, XXXXXXX, XX
---------------------------------------
98104
---------------------------------------
Attn: XXXXXX XXXXXX
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
6
SCHEDULE B TO EQUIPMENT RIDER
LOCATION LESSOR
-------- ------
CALIFORNIA:
----------
CORPORATE HEADQUARTERS 0000 XXXXXXX XXXXX XXXX JOINT VENTURE,
0000 Xxxxxxx Xxxxx Xxxx., Xxxxx 000 --------------------------------------
Xxx Xxxx, XX 00000 A CALIFORNIA GENERAL PARTNERSHIP
--------------------------------------
C/O INSIGNIA COUNCIL GROUP, INC.
--------------------------------------
Attn: 000 XXXX XXXXX XXXXX XX.
---------------------------------
XXX XXXX, XX 00000
---------------------------------
Attn: XXXX XXXX
---------------------------------
000-000-0000
---------------------------------
000-000-0000 (FAX)
---------------------------------
XXX XXXX 0000 XXXXXXX XXXXX XXXX JOINT VENTURE,
0000 Xxxxxxx Xxxxx Xxxx., Xxxxx 000 --------------------------------------
Xxx Xxxx, XX 00000 A CALIFORNIA GENERAL PARTNERSHIP
--------------------------------------
C/O INSIGNIA COUNCIL GROUP, INC.
--------------------------------------
Attn: 000 XXXX XXXXX XXXXX XX.
---------------------------------
XXX XXXX, XX 00000
---------------------------------
Attn: XXXX XXXX
---------------------------------
000-000-0000
---------------------------------
000-000-0000 (FAX)
---------------------------------
CAPITOLA CROSSROADS ASSOCIATES
000 Xxx Xxx., Xxxxx 000 --------------------------------------
Xxxxxxxx, XX 00000 C/O LOMAR PROPERTY GROUP, INC.
--------------------------------------
000 XXX XXX, XXXXX 000
--------------------------------------
XXXXXXXX, XX 00000
--------------------------------------
Attn: XXXXX XXXXXXXX
---------------------------------
Phone: 000-000-0000
--------------------------------
Fax: 000-000-0000
----------------------------------
FREMONT-MILPITAS XXXXXXX PROPERTIES, L.P.
0000 XxXxxxxx Xxxx., Xxxxx 000 --------------------------------------
Xxxxxxxx, XX 00000 0000 X. XXXXX XX., XXXXX 000
--------------------------------------
XXX XXXX, XX 00000
--------------------------------------
Attn: XXXXXXXX XXXXXXX
---------------------------------
Phone: 000-000-0000
--------------------------------
Fax: 000-000-0000
----------------------------------
SOUTH VALLEY, SAN XXXX XXXXX USA, LTD, A CALIF CORP.
0000 Xxxxxxx Xxxxx., Xxxxx 000 --------------------------------------
Xxx Xxxx, XX 00000 C/O BORELLI INVESTMENT COMPANY
--------------------------------------
0000 XXXXXXXXXX XXXXX, XXXXX 000
--------------------------------------
XXX XXXX, XX 00000
--------------------------------------
Attn: XXXXX XXXXXX
--------------------------------
Phone: 000-000-0000
--------------------------------
Fax: 000-000-0000
----------------------------------
5
LOCATION LESSOR
-------- ------
OREGON:
------
PORTLAND PETULA ASSOCIATES, LTD. (AN IOWA CORP.)
0000 X.X. Xxxxxx, Xxxxx 000 ---------------------------------------
Xxxxxxxxx, XX 00000 & XXXX CREEKSIDE ASSOCIATES, A
---------------------------------------
CALIFORNIA GENERAL PARTNERSHIP
---------------------------------------
C/O FORUM PROPERTIES
---------------------------------------
0000 XX XXXXXX XXXXXX, XXXXX 000
---------------------------------------
XXXXXXXXX, XXXXXX 00000
---------------------------------------
000-000-0000
---------------------------------------
000-000-0000 (FAX)
---------------------------------------
COLORADO:
--------
DENVER STRAWBERRY HOLDINGS, INC.
0000 XXX Xxxxxxx, Xxxxx 000 ---------------------------------------
Xxxxxxxxx, XX 00000 C/O THE XXXXXXXXX COMPANY
---------------------------------------
0000 XXX XXXXXXX, XXXXX 000
---------------------------------------
XXXXXXXXX, XX 00000
---------------------------------------
Attn: XXXXXXX XXXX
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000 ---------------------------------------
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
TEXAS:
------
AUSTIN WESTECH 360 LIMITED PARTNERSHIP
Westech 360 ---------------------------------------
8911 Capital Of Texas Highway, C/O INSIGNIA COMMERCIAL GROUP
Suite 3310 ---------------------------------------
Xxxxxx, XX 00000-0000 0000 XXXXXXX XX XXXXX XXXXXXX,
---------------------------------------
XXXXX 0000
---------------------------------------
XXXXXX, XX 00000
---------------------------------------
Attn: XXXXX XXXXXX
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
HOUSTON
0000 Xxx Xxxxxx, Xxxxx 0000 ---------------------------------------
Xxxxxxx, XX 00000
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
7
LOCATION LESSOR
-------- ------
ARIZONA:
-------
PHOENIX DMB PROPERTY VENTURES LTD. PARTNERSHIP
0000 X. Xxxx Xxxxxx Xxxx, Xxxxx 0000 ---------------------------------------
Xxxx, XX 00000 0000 X. XXXX XXXXXX XXXX, XXXXX 0000
---------------------------------------
XXXX, XX 00000
---------------------------------------
Attn: XXXXXX XXXX
----------------------------------
Phone: 000-000-0000
---------------------------------
Fax: 000-000-0000
-----------------------------------
ILLINOIS:
--------
CHICAGO
000 X. XxXxxxx Xxxxxx, Xxxxx 0000 ---------------------------------------
Xxxxxxx, XX 00000
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
NEW YORK:
--------
NEW YORK
000 0xx Xxx., 00xx Xxxxx ---------------------------------------
Xxx Xxxx, XX 00000
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
FLORIDA:
-------
ORLANDO
000 Xxxxxxxxx Xxxx, Xxxxx 000 ---------------------------------------
Xxxxxxxx, XX 00000
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
TAMPA
000 X. Xxx Xx., Xxxxx 000 ---------------------------------------
Xxxxx, XX 00000-0000
---------------------------------------
---------------------------------------
Attn:
----------------------------------
Phone:
---------------------------------
Fax:
-----------------------------------
8
[LOGO OF COMERICA APPEARS HERE]
BORROWER'S AUTHORIZATION
DATE: OCTOBER 16, 1996
------------------
I (we) hereby authorized and direct COMERICA BANK-CALIFORNIA ("Bank") to
pay
to RENEW AND INCREASE LOAN #3384556864-26 $ 168,000.00
--------------------------------------------- -------------------------
to $
--------------------------------------------- -------------------------
to $
--------------------------------------------- -------------------------
to $
--------------------------------------------- -------------------------
of the proceeds of my (our) loan from the Bank evidenced by a note in the
original principal amount of $7,000,000.00 , dated OCTOBER 16, 1996.
------------------ ----------------
Borrower(s): XXXX, XXXXXX & ASSOCIATES, INC.
--------------------------------------
By: /s/ XXXXXX XXXX Its: CEO
----------------------------- -------------------------
Signature of Title (if applicable)
By: /s/ XXXX X. XXXXXXXX Its: President
----------------------------- -------------------------
Signature of Title (if applicable)
By: Its:
----------------------------- -------------------------
Signature of Title (if applicable)
By: Its:
----------------------------- -------------------------
Signature of Title (if applicable)
[LOGO OF COMERICA APPEARS HERE]
BORROWER'S AUTHORIZATION
DATE: OCTOBER 21, 1996
------------------
I (we) hereby authorize and direct COMERICA BANK-
-------------
CALIFORNIA ("Bank") to pay
----------
to CLOSE LOAN #3384556864-59 $ 4,000,000.00
--------------------------------------------- -------------------------
to $
--------------------------------------------- -------------------------
to $
--------------------------------------------- -------------------------
to $
--------------------------------------------- -------------------------
of the proceeds of my (our) loan from the Bank evidenced by a note in the
original principal amount of $4,000,000.00, dated OCTOBER 21, 1996.
------------- ----------------
Borrower(s): XXXX, XXXXXX & ASSOCIATES, INC.
-----------------------------------------
By: /s/ XXXXXX XXXX Its: CEO
----------------------------- -------------------------
Signature of Title (if applicable)
By: /s/ XXXX X. XXXXXXXX Its: President
----------------------------- -------------------------
Signature of Title (if applicable)
By: Its:
----------------------------- -------------------------
Signature of Title (if applicable)
By: Its:
----------------------------- -------------------------
Signature of Title (if applicable)
[LOGO OF COMERICA APPEARS HERE]
Guaranty
--------------------------------------------------------------------------------
The undersigned, for value received, unconditionally and absolutely guarantee(s)
to COMERICA BANK-CALIFORNIA ("Bank") a California banking corporation, and to
------------------------
the Bank's successors and assigns, payment when due, whether by stated maturity,
demand, acceleration or otherwise, of all existing and future indebtedness to
the Bank of XXXX, XXXXXX & ASSOCIATES, INC. ("Borrower") whose address is 5300
------------------------------ ----
XXXXXXX XXXXX XXXXXXXXX, XXX XXXX, XX. of any successor in interest, including
-------------------------------------
without limit any debtor-in-possession or trustee in bankruptcy which succeeds
to the interest of this party or person (jointly and severally the "Borrower"),
however this indebtedness has been or may be incurred or evidenced, whether
absolute or contingent direct or indirect, voluntary or involuntary, liquidated
or unliquidated, joint or several, and whether or not known to the undersigned
at the time of this Guaranty or at the time any future indebtedness is incurred
(the "Indebtedness").
The Indebtedness guaranteed includes without limit: (a) any and all direct
indebtedness of the Borrower to the Bank, including indebtedness evidenced by
any and all promissory notes; (b) any and all obligations or liabilities of the
Borrower to the Bank arising under any guaranty where the Borrower has
guaranteed the payment of indebtedness owing to the Bank from a third party; (c)
any and all obligations or liabilities of the Borrower to the Bank arising from
applications or agreements for the issuance of letters of credit; (d) any and
all obligations or liabilities of the Borrower to the Bank arising out of any
other agreement by the Borrower including without limit any agreement to
indemnify the Bank for environmental liability or to clean up hazardous waste;
(e) any and all indebtedness, obligations or liabilities for which the Borrower
would otherwise be liable to the Bank were it not for the invalidity,
irregularity or unenforceability of them by reason of any bankruptcy, insolvency
or other law or order of any kind, or for any other reason, including without
limit liability for interest and attorneys' fees on, or in connection with, any
of the indebtedness from and after the filing by or against the Borrower of a
bankruptcy petition whether an involuntary or voluntary bankruptcy case,
including, without limitation, all attorneys' fees and costs incurred in
connection with motions for relief from stay, cash collateral motions,
nondischargeability motions, preference liability motions, fraudulent conveyance
liability motions, fraudulent transfer liability motions and all other motions
brought by Borrower, Guarantor, Bank or third parties in any way relating to
Bank's rights with respect to such Borrower, Guarantor, or third party and/or
affecting any collateral securing any obligation owed to Bank by Borrower,
Guarantor, or any third party, probate proceedings, on appeal or otherwise; (f)
any and all amendments, modifications, renewals and/or extensions of any of the
above, including without limit amendments, modifications, renewals and/or
extensions which are evidenced by new or additional instruments, documents or
agreements; and (g) all costs of collecting Indebtedness, including without
limit reasonable attorneys' fees and costs.
The undersigned waive(s) notice of this Guaranty and presentment, demand,
protest, notice of protest, dishonor, notice of dishonor, notice of default,
notice of intent to accelerate or demand payment of any Indebtedness, and
diligence in collecting any Indebtedness, and agree(s) that the Bank may modify
the terms of any Indebtedness, compromise, extend, increase, accelerate, renew
or forbear to enforce payment of any or all Indebtedness, or permit the Borrower
to incur additional Indebtedness, all without notice to the undersigned and
without affecting in any manner the unconditional obligation of the undersigned
under this Guaranty. The undersigned further waive(s) any and all other notices
to which the undersigned might otherwise be entitled. The undersigned
acknowledge(s) and agree(s) that the liabilities created by this Guaranty are
direct and are not conditioned upon pursuit by the Bank of any remedy the Bank
may have against the Borrower or any other person or any security. No
invalidity, irregularity or unenforceability of any part or all of the
Indebtedness or any documents evidencing the same, by reason of any bankruptcy,
insolvency or other law or order of any kind or for any other reason, and no
defense or setoff available at any time to the Borrower, shall impair, affect or
be a defense or setoff to the obligations of the undersigned under this
Guaranty.
The undersigned deliver(s) this Guaranty based solely on the undersigned's
independent investigation of the financial condition of the Borrower and is
(are) not relying on any information furnished by the Bank. The undersigned
assume(s) full responsibility for obtaining any further information concerning
the Borrower's financial condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or appropriate from time to
time. The undersigned waive(s) any duty on the part of the Bank, and agree(s)
that it is not relying upon nor expecting the Bank to disclose to the
undersigned any fact now or later known by the Bank, whether relating to the
operations or condition of the Borrower, the existence, liabilities or financial
condition of any co-guarantor of the Indebtedness, the occurrence of any default
with respect to the Indebtedness, or otherwise, notwithstanding any effect these
facts may have upon the undersigned's risk under this Guaranty or the
undersigned's rights against the Borrower. The undersigned knowingly accept(s)
the full range of risk encompassed in this Guaranty, which risk includes without
limit the possibility that the Borrower may incur Indebtedness to the Bank after
the financial condition of the Borrower, or its ability to pay its debts as they
mature, has deteriorated.
The undersigned represent(s) and warrant(s) that: (a) the Bank has made no
representation to the undersigned as to the creditworthiness of the Borrower;
and (b) the undersigned has (have) established adequate means of obtaining from
the Borrower on a continuing basis financial and other information pertaining to
the Borrower's financial condition. The undersigned agree(s) to keep adequately
informed of any facts, events or circumstances which might in any way affect the
risks of the undersigned under this Guaranty.
The undersigned grant(s) to the Bank a security interest in and the right of
setoff as to any and all property of the undersigned now or later in the
possession of the Bank. The undersigned subordinate(s) any claim of any nature
that the undersigned now or later has (have) against the Borrower to and in
favor of all Indebtedness and agree(s) not to accept payment or satisfaction of
any claim that the undersigned now or later may have against the Borrower
without the prior written consent of the Bank. Should any payment,
distribution, security, or proceeds, be received by the undersigned upon or with
respect to any claim that the undersigned now or may later have against the
Borrower, the undersigned shall immediately deliver the same to the Bank in the
form received (except for endorsement or assignment by the undersigned where
required by the Bank) for application on the Indebtedness, whether matured or
unmatured, and until delivered the same shall be held in trust by the
undersigned as the property of the Bank. The undersigned further assign(s) to
the Bank as collateral for the obligations of the undersigned under this
Guaranty all claims of any nature that the undersigned now or later has (have)
against the Borrower (other than any claim under a deed of trust or mortgage
covering real property) with full right on the part of the Bank, in its own name
or in the name of the undersigned, to collect and enforce these claims.
The undersigned agree(s) that no security now or later held by the Bank for the
payment of any Indebtedness, whether from the Borrower, any guarantor, or
otherwise, and whether in the nature of a security interest, pledge, lien,
assignment, setoff, suretyship, guaranty, indemnity, insurance or otherwise,
shall affect in any manner the unconditional obligation of the undersigned under
this Guaranty, and the Bank, in its sole discretion, without notice to the
undersigned, may release, exchange, enforce and otherwise deal with any security
without affecting in any manner the unconditional obligation of the undersigned
under this Guaranty. The undersigned acknowledge(s) and agree(s) that the Bank
has no obligation to acquire or perfect any lien on or security interest in any
asset(s), whether realty or personalty, to secure payment of the Indebtedness,
and the undersigned is (are) not relying upon any asset(s) in which the Bank has
or may have a lien or security interest for payment of the Indebtedness.
The undersigned acknowledge(s) that the effectiveness of this Guaranty is not
conditioned on any or all of the Indebtedness being guaranteed by anyone else.
Until the Indebtedness is irrevocably paid in full, the undersigned waive(s) any
and all rights to be subrogated to the position of the Bank or to have the
benefit of any lien, security interest or other guaranty now or later held by
the Bank for the Indebtedness or to enforce any remedy which the Bank now or
later has against the Borrower or any other person. Until the Indebtedness is
irrevocably paid in full, the undersigned shall have no right of reimbursement,
indemnity, contribution or other right of recourse to or with respect to the
Borrower or any other person. The undersigned agree(s) to indemnity and hold
harmless the Bank from and against any and all claims, actions, damages, costs
and expenses, including without limit reasonable attorneys' fees, incurred by
the Bank in connection with the
1.
undersigned's exercise of any right of subrogation, contribution,
indemnification or recourse with respect to this Guaranty. The Bank has no duty
to enforce or protect any rights which the undersigned may have against the
Borrower or any other person and the undersigned assume(s) full responsibility
for enforcing and protecting these rights.
Notwithstanding any provision of the preceding paragraph or anything else in
this Guaranty to the contrary, if any of the undersigned is or becomes an
"insider" or "affiliate" (as defined in Section 101 of Federal Bankruptcy Code,
as it may be amended) with respect to the Borrower, then that undersigned
irrevocably and absolutely waives any and all rights of subrogation,
contribution, indemnification, recourse, reimbursement and any similar rights
against the Borrower (or any other guarantor) with respect to this Guaranty,
whether such rights arise under an express or implied contract or by operation
of law. It is intention of the parties that the undersigned shall not be (or be
deemed to be) a "creditor" (as defined in Section 101 of the Federal Bankruptcy
Code, as it may be amended) of the Borrower (or any other guarantor) by reason
of the existence of this Guaranty in the event that the Borrower becomes a
debtor in any proceeding under the Federal Bankruptcy Code. This waiver is
given to induce the Bank to enter into certain written contracts with the
Borrower included in the Indebtedness. The undersigned warrant(s) and agree(s)
that none of Bank's rights, remedies or interests shall be directly or
indirectly impaired because of any of the undersigned's status as an "insider"
or "affiliate" of the Borrower, and undersigned shall take any action, and shall
execute any document, which the Bank may request in order to effectuate this
warranty to the Bank.
If any Indebtedness is guaranteed by two or more guarantors, the obligation of
the undersigned shall be several and also joint, each with all and also each
with any one or more of the others, and may be enforced at the option of the
Bank against each severally, any two or more jointly, or some severally and some
jointly the Bank, in its sole discretion, may release any one or more of the
guarantors for any consideration which it deems adequate, and may fail or elect
not to prove a claim against the estate of any bankrupt, insolvent, incompetent
or deceased guarantor; and after that, without notice to any other guarantor,
the Bank may extend or renew any or all Indebtedness and may permit the Borrower
to incur additional Indebtedness, without affecting in any manner the
unconditional obligation of the remaining guarantor(s). This action by the Bank
shall not, however, be deemed to affect any right to contribution which may
exist among the guarantors.
Any of the undersigned may terminate their obligation under this Guaranty as to
future Indebtedness (except as provided below) by (and only by) delivering
written notice of termination to an officer of the Bank and receiving from an
officer of the Bank written acknowledgement of delivery; provided, the
termination shall not be effective until the opening of business on the fifth
(5th) day following written acknowledgement of delivery. Any termination shall
not affect in any way the unconditional obligations of the remaining
guarantor(s), whether or not the termination is known to the remaining
guarantor(s). Any termination shall not affect in any way the unconditional
obligations of the terminating guarantor(s) as to any Indebtedness existing at
the effective date of termination or any Indebtedness created after that
pursuant to any commitment or agreement of the Bank or any Borrower loan with
the Bank existing at the effective date of termination (whether advances or
readvances by the Bank are optional or obligatory), or any modifications,
extensions or renewals of any of this Indebtedness, whether in whole or in part,
and as to all of this Indebtedness and modifications, extensions or renewals of
it, this Guaranty shall continue effective until the same shall have been fully
paid. The Bank has no duty to give notice of termination by any guarantor(s) to
any remaining guarantor(s). The undersigned shall indemnify the Bank against
all claims, damages, costs and expenses, including without limit reasonable
attorneys' fees and costs, incurred by the Bank in connection with any suit,
claim or action against the Bank arising out of any modification or termination
of a Borrower loan or any refusal by the Bank to extend additional credit in
connection with the termination of this Guaranty.
Notwithstanding any prior revocation, termination, surrender or discharge of
this Guaranty (or of any lien, pledge or security interest securing this
Guaranty) in whole or part, the effectiveness of this Guaranty, and of all
liens, pledges and security interests securing this Guaranty, shall
automatically continue or be reinstated, as the case may be, in the event that
(a) any payment received or credit given by the Bank in respect of the
Indebtedness is returned, disgorged or rescinded as a preference, impermissible
setoff, fraudulent conveyance, diversion of trust funds, or otherwise under any
applicable state or federal law, including, without limitation, laws pertaining
to bankruptcy or insolvency, in which case this Guaranty, and all liens, pledges
and security interests securing this Guaranty, shall be enforceable against the
undersigned as if the returned, disgorged or rescinded payment or credit had not
been received or given by the Bank, and whether or not the Bank relied upon this
payment or credit or changed its position as a consequence of it; or (b) any
liability is imposed, or sought to be imposed, against the Bank relating to the
environmental condition of, or the presence of hazardous or toxic substances on,
in or about, any property given as collateral to the Bank by the Borrower,
whether this condition is known or unknown, now exists or subsequently arises
(excluding only conditions which arise after any acquisition by the Bank of any
such property, by foreclosure, in lieu of foreclosure or otherwise, to the
extent due to the wrongful act or omission of the Bank), in which case this
Guaranty, and all liens, pledges and security interests securing this Guaranty
shall be enforceable against the undersigned to the extent of all liability,
costs and expenses (including without reasonable attorneys' fees and costs)
incurred by the Bank as the direct or indirect result of any environmental
condition or hazardous or toxic substances. In the event of continuation or
reinstatement it, the undersigned agree(s) upon demand by the Bank to execute
and deliver to the Bank those documents which the Bank determines are
appropriate to further evidence (in the public records or otherwise this
continuation or reinstatement, although the failure of the undersigned to do so
shall not affect in any way the reinstatement or continuation. If the
undersigned do(es) not execute and deliver to the Bank upon demand such
documents, the Bank and each Bank officer is irrevocably appointed (which
appointment is coupled with an interest) the true and lawful attorney of the
undersigned (with full power of substitution) to execute and deliver such
documents in the name and on behalf of the undersigned. For purposes of this
Guaranty, "environmental condition" includes, without limitation, conditions
existing with respect to the surface or ground water, drinking water supply,
land surface or subsurface and the air; and "hazardous or toxic substances"
shall include any and all substances now or subsequently determined by any
federal, state or local authority to be hazardous or toxic, or otherwise
regulated by any of these authorities.
Although the intent of the undersigned and the Bank is that California law shall
apply to this Guaranty, regardless of whether California law applies, the
undersigned further agree(s) as follows: With respect to the limitation, if any,
stated in the Additional Provisions below on the amount of principal guaranteed
under this Guaranty, the undersigned agree(s) that (a) this limitation shall not
be a limitation on the amount of Borrower's Indebtedness to the Bank; (b) any
payments by the undersigned shall not reduce the maximum liability of the
undersigned under this Guaranty unless written notice to that effect is actually
received by the Bank at or prior to the time of the payment; and (c) the
liability of the undersigned to the Bank shall at all times be deemed to be the
aggregate liability of the undersigned under this Guaranty and any other
guaranties previously or subsequently given to the Bank by the undersigned and
not expressly revoked, modified or invalidated in writing.
The undersigned waive(s) any right to require the Bank to: (a) proceed any
person, including without limit the Borrower; (b) proceed against or exhaust any
security held from the Borrower or any other person; (c) give notice of the
terms, time and place of any public or private sale of personal property
security held from the Borrower or any other person, or otherwise comply with
the provisions of Section 9-504 of the California or other applicable Uniform
Commercial Code; (d) pursue any other remedy in the Bank's power; or (e) make
any presentments or demands for performance, or give any notices of
nonperformance, protests, notices of protest, or notices of dishonor in
connection with any obligations or evidences of Indebtedness held by the Bank as
security, in connection with any other obligations or evidences of Indebtedness
which constitute in whole or in part Indebtedness, or in connection with the
creation of new or additional Indebtedness.
The undersigned authorize(s) the Bank, either before or after termination of
this Guaranty, without notice to or demand on the undersigned and without
affecting the undersigned's liability under this Guaranty, from time to time to:
(a) apply any security and direct the order or manner of sale of it, including
without limit, a nonjudicial sale permitted by the terms of the controlling
security agreement, mortgage or deed of trust, as the Bank in its discretion may
determine; (b) release or substitute any one or more of the endorsers or any
other guarantors of the Indebtedness; and (c) apply payments received by the
Bank from the Borrower to any indebtedness of the Borrower to the Bank, in such
order as the Bank shall determine in its sole discretion, whether or not this
indebtedness is covered by this Guaranty, and the undersigned waive(s) any
provision of law regarding application of payments which specifies otherwise.
The Bank may without notice assign this Guaranty in whole or in party. Upon the
Bank's request, the undersigned agree(s) to provide to the Bank copies of the
undersigned's financial statements.
2.
The undersigned waive(s) any defense based upon or arising by reason of (a) any
disability or other defense of the Borrower or any other person; (b) the
cessation or limitation from any cause whatsoever, other than final and
irrevocable payment in full, of the Indebtedness; (c) any lack of authority of
any officer, director, partner, agent or any other person acting or purporting
to act on behalf of the Borrower which is a corporation, partnership or other
type of entity, or any defect in the formation of the Borrower; (d) the
application by the Borrower of the proceeds of any Indebtedness for purposes
other than the purposes represented by the Borrower to the Bank or intended or
understood by the Bank or the undersigned; (e) any act or omission by the Bank
which directly or indirectly results in or aids the discharge of the Borrower or
any Indebtedness by operation of law or otherwise; or (f) any modification of
the Indebtedness, in any form whatsoever including without limit any
modification made after effective termination, and including without limit, the
renewal, extension, acceleration or other change in time for payment of the
Indebtedness, or other change in the terms of any Indebtedness, including
without limit increase or decrease of the interest rate. The undersigned waives
all rights and defenses arising out of an election of remedies by the Bank, even
though that election of remedies, such as a nonjudicial foreclosure with respect
to security for a guaranteed obligation, has destroyed the guarantor's rights of
subrogation and reimbursement against the principal by the operation of Section
580d of the Code of Civil Procedure or otherwise. By way of example, the
undersigned waive(s) any defense the undersigned may have based upon any
election of remedies by the Bank which destroys, reduces, or extinguishes the
undersigned's subrogation rights or the undersigned's right to proceed against
the Borrower of the Borrower's assets for reimbursement, including without limit
(1) any loss of rights the undersigned may suffer by reason of any rights,
powers, remedies, or defenses of the Borrower in connection with any anti-
deficiency, appraisement or valuation laws or any other laws limiting,
qualifying or discharging any Indebtedness; (2) any defense based on estoppel
arising from the operation of Code of Civil Procedure Section 580d; (3) any
defense based on the Bank's loss of the right to obtain a deficiency judgment
against the Borrower after a nonjudicial foreclosure sale; and/or (4) any
defense arising out of the Bank's nonjudicial foreclosure on any real property
security securing the repayment of the Borrower's Indebtedness which nonjudicial
foreclosure would destroy the undersigned's subrogation rights against the
Borrower. The undersigned acknowledge(s) that the Bank's nonjudicial
foreclosure on any real property security securing the repayment of the
Borrower's Indebtedness could, pursuant to Code of Civil Procedure Section 580d,
preclude the Bank from obtaining a deficiency judgment against the Borrower and
could thereby destroy, impair, or reduce the undersigned's right of subrogation
against the Borrower, and the undersigned further acknowledge(s) and
understand(s) that, absent the foregoing waiver, such destruction, impairment,
or reduction of the undersigned's subrogation rights would prevent the Bank from
proceeding against the undersigned for the balance of the Indebtedness due.
The undersigned acknowledge(s) that the Bank has the right to sell, assign,
transfer, negotiate, or grant participations in all or any part of the
Indebtedness and any related obligations, including without limit this Guaranty.
In connection with that right, the Bank may disclose any documents and
information which the Bank now or later acquires relating to the undersigned and
this Guaranty, whether furnished by the Borrower, the undersigned or otherwise.
The undersigned further agree(s) that the Bank may disclose these documents and
information to the Borrower. The undersigned agree(s) that the Bank may provide
information relating to this Guaranty or to the undersigned to the Bank's
parent, affiliates, subsidiaries and service providers.
The total obligation under this Guaranty shall be UNLIMITED unless specifically
limited in the Additional Provisions of this Guaranty, and this obligation
(whether unlimited or limited to the extent indicated in the Additional
Provisions) shall include, IN ADDITION TO any limited amount of principal
guaranteed, any and all interest on all Indebtedness and any and all costs and
expenses of any kind, including without limit reasonable attorneys' fees and
costs, incurred by the Bank at any time(s) for any reason in enforcing any of
the duties and obligations of the undersigned under this Guaranty or otherwise
incurred by the Bank in any way connected with this Guaranty, the Indebtedness
or any other guaranty of the Indebtedness (including without limit reasonable
attorneys' fees and other expenses incurred in any suit involving the conduct of
the Bank, the Borrower or the undersigned). All of these costs and expenses
shall be payable immediately by the undersigned when incurred by the Bank,
without demand, and until paid shall bear interest at the highest per annum rate
applicable to any of the Indebtedness, but not in excess of the maximum rate
permitted by law. Any reference in this Guaranty to attorneys' fees shall be
deemed a reference to fees, charges, costs and expenses of both in-house and
outside counsel and paralegals, whether or not a suit or action is instituted,
and to court costs if a suit or action is instituted, and whether attorneys'
fees or court costs are incurred at the trial court level, on appeal, in a
bankruptcy, administrative or probate proceeding or otherwise. Any reference in
the Additional Provisions or elsewhere (a) to this Guaranty being secured by
certain collateral shall NOT be deemed to limit the total obligation of the
undersigned under this Guaranty or (b) to this Guaranty being limited in any
respect shall NOT be deemed to limit the total obligation of the undersigned
under any prior to subsequent guaranty given by the undersigned to the Bank.
The undersigned unconditionally and irrevocably waive(s) each and every defense
and setoff of any nature which, under principles of guaranty or otherwise, would
operate to impair or diminish in any way the obligation of the undersigned under
this Guaranty, and acknowledge(s) that each such waiver is by this reference
incorporated into each security agreement, collateral assignment, pledge and/or
other document from the undersigned now or later securing this Guaranty and/or
the Indebtedness, and acknowledge(s) that as of the date of this Guaranty no
such defense or setoff exists. The undersigned acknowledge(s) that the
effectiveness of this Guaranty is subject to no conditions of any kind.
The Guaranty shall remain effective with respect to successive transactions
which shall either continue the Indebtedness, increase or decrease it, or from
time to time create new Indebtedness after all or any prior Indebtedness has
been satisfied, until this Guaranty is terminated in the manner and to the
extent provided above.
The undersigned warrant(s) and agree(s) that each of the waivers set forth above
are made with undersigned's full knowledge of their significance and
consequences, and that under the circumstances, the waivers are reasonable and
not contrary to public policy or law. If any of these waivers are determined to
be contrary to any applicable law or public policy, these waivers shall be
effective only to the extent permitted law.
This Guaranty constitutes the entire agreement of the undersigned and the Bank
with respect to the subject matter of this Guaranty. No waiver, consent,
modification or change of the terms of this Guaranty shall bind any of the
undersigned or the Bank unless in writing and signed by the waiving party or an
authorized officer of the waiving party, and then this waiver, consent,
modification or change shall be effective only in the specific instance and for
the specific purpose given. This Guaranty shall inure to the benefit of the
Bank and its successors and assigns. The Guaranty shall be binding on the
undersigned and the undersigned's heirs, legal representatives, successors and
assigns including, without limit, any debtor in possession or trustees in
bankruptcy for any of the undersigned. The undersigned has (have) knowingly and
voluntarily entered into this Guaranty in good faith for the purpose of inducing
the Bank to extend credit or make other financial accommodations to the
Borrower, and the undersigned acknowledge(s) that the terms of this Guaranty are
reasonable. If any provision of this Guaranty is unenforceable in whole or in
part for any reason, the remaining provisions shall continue to be effective.
THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF CALIFORNIA.
Additional Provisions (if any):
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3.
THE UNDERSIGNED AND BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED, EACH PARTY, AFTER CONSULTING (OR
HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY
AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY RIGHT TO TRAIL BY JURY
IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN
ANY WAY RELATED TO, THIS GUARANTY OR THE INDEBTEDNESS.
IN WITNESS WHEREOF, the undersigned has (have) signed this Guaranty on April 26,
---------
1995.
--
GUARANTOR(S) XXXXXX XXXX
--------------------------------------
By: /s/ Xxxxxx Xxxx
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Signature of XXXXXX XXXX
Its: N/A
-------------------------------------------
(If Applicable)
By:
-----------------------------------------------
Signature of
Its:
-------------------------------------------
(If Applicable)
XXXXXXXXX'X XXXXXXX
00000 CAMINO BARCO
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Xxxxxx Xxxxxxx
XXXXXXXX, XX. 00000
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City State Zip Code
4.
