COLUMBIA SPORTSWEAR COMPANY
DEFERRED COMPENSATION CONVERSION AGREEMENT
This Deferred Compensation Conversion Agreement (this "Agreement") is made
December 31, 1996 by and between Columbia Sportswear Company, an Oregon
corporation (the "Company"), and Xxx Xxxxxxxxx ("Xxxxxxxxx").
The Company and Xxxxxxxxx are parties to a Participation Share Agreement
having an effective date of December 31, 1990, as amended by an Amendment to
Participation Share Agreement having an effective date of July 1, 1993
(collectively, the "Participation Agreement"), providing for the award to
Xxxxxxxxx on a conditional basis of deferred compensation units.
The Participation Agreement provides for the award to Xxxxxxxxx of up to a
total of 7,581 Participation Shares in three separate awards. Each award is
subject to the requirement that Xxxxxxxxx be employed by the Company on a
specified date. Two of these dates have occurred, resulting in two awards to
Xxxxxxxxx of a total of 5,933 Participation Shares. The remaining award of 1,648
Participation Shares is subject to the requirement that Xxxxxxxxx be a full-time
employee of the Company on January 1, 2000. Each award is subject to a five-year
vesting schedule from the date of the award. The 7,581 Participation Shares that
have been awarded to Xxxxxxxxx or to which Xxxxxxxxx may become entitled under
the Participation Agreement will sometimes be referred to herein collectively as
the "Participation Shares."
Pursuant to the Participation Agreement and the terms and conditions of
this Agreement, the Company and Xxxxxxxxx wish to cause the conversion of the
Participation Shares, whether or not awarded or vested under the Participation
Agreement, into nonvoting Common Stock and voting Common Stock of the Company,
to provide for the vesting, in accordance with the schedule contemplated by the
Participation Agreement, of the shares of nonvoting Common Stock and voting
Common Stock issued to Xxxxxxxxx with respect to Participation Shares that are
not currently vested, to terminate the Participation Agreement and to enter into
certain other agreements, all as set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. Conversion of Participation Shares; Termination of Participation
Agreement. On December 31, 1996, each of the Participation Shares will be
converted into .909 shares of nonvoting Common Stock and .091 shares of voting
Common Stock of the Company (thereafter multiplied in each case by 400 to take
account of the stock split by the Company) by the issuance of 2,756,452 shares
of nonvoting Common Stock and 275,948 shares of voting Common Stock to Xxxxxxxxx
in full discharge, settlement and termination of all rights and obligations of
Xxxxxxxxx and the Company under the Participation Agreement, which shall be
superseded and of no further force or effect (the "Conversion"). The Conversion
will be effected by the delivery by the Company to Xxxxxxxxx of stock
certificates evidencing the nonvoting Common Stock and voting Common Stock
issued to Xxxxxxxxx in the Conversion (collectively, the "Conversion Shares,"
which shall include, if the outstanding Common Stock of the Company is hereafter
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of any stock split,
combination of shares or dividend payable in shares, any such shares or other
securities issued with respect to the nonvoting and/or voting Common Stock
issued to Xxxxxxxxx in the Conversion).
2. Entry into Restrictive Agreement. It shall be a condition precedent to
the obligations of the Company under this Agreement that, prior to the issuance
of stock certificates to Xxxxxxxxx and the effectiveness of the Conversion, (a)
Xxxxxxxxx have executed and delivered to the Company a Shareholder Signature
Page to the Restrictive Agreement in the form attached as Exhibit A by which
Xxxxxxxxx shall become a party to the Restrictive Agreement dated as of May 1,
1993 among Xxxxxxxx Xxxxx, Xxxxxxx Xxxxx and Xxxxx X. Xxxx (the "Restrictive
Agreement") so as to cause the Conversion Shares to become subject to the
Restrictive Agreement upon their issuance and have executed and delivered to the
Company an Amendment No. 1 to the Restrictive Agreement in the form attached as
Exhibit B (the "Amendment No. 1") to cause the Restrictive Agreement to be
amended as therein provided upon the execution thereof by the other parties to
the Restrictive Agreement, and (b) Xxxxxx Xxxxxxxxx, Santorufo's spouse, have
executed and delivered to the Company a Spousal Agreement in the form attached
as Exhibit C relating to the Restrictive Agreement and the Amendment No. 1.
Xxxxxxxxx acknowledges that he has received and reviewed the Restrictive
Agreement and Amendment No. 1 in advance of entering into this Agreement and the
Restrictive Agreement and that the restrictions imposed on him and the
Conversion Shares under the Restrictive Agreement, as amended, will be in
addition to the restrictions and obligations imposed on Xxxxxxxxx and the
Conversion Shares pursuant to this Agreement. The Company will use its best
efforts to cause each of the other shareholders of the Company and spouses to
execute and deliver Amendment No. 1.
3. Shareholder Rights. Upon the Conversion, Xxxxxxxxx will be a shareholder
in the Company with respect to all of the Conversion Shares, whether or not
vested in accordance with Section 4. As such, Xxxxxxxxx will be entitled to all
shareholder rights associated with the Conversion Shares, including without
limitation voting rights (to the extent any such shares have voting rights) and
rights to participate
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in distributions made by the Company with respect to its outstanding shares,
subject, however, to the provisions of this Agreement and of the Restrictive
Agreement.
4. Vesting Schedule. The Conversion Shares will be subject to the following
vesting schedule, which will be applied separately to the nonvoting Common Stock
and the voting Common Stock within each specified vesting category; provided
that no vesting otherwise provided for under this schedule as of any December 31
shall occur unless Xxxxxxxxx is a full-time employee of the Company on such
date:
Shares of Common Stock
By Vesting Category Status Vesting Schedule
----------------------- ------ ----------------
Category 1:
1,646,308 shares of Vested N/A
nonvoting Common Stock
and 164,812 shares of
voting Common Stock
Category 2:
510,932 shares of Unvested 33.33% on 12/31/97
nonvoting Common Stock 33.33% on 12/31/98
and 51,148 shares of 33.34% on 12/31/99
voting Common Stock
Category 3:
599,212 shares of Unvested 20.00% on 12/31/00
nonvoting Common Stock 20.00% on 12/31/01
and 59,988 shares of 20.00% on 12/31/02
voting Common Stock 20.00% on 12/31/03
20.00% on 12/31/04
Notwithstanding any provision of this Section 4 apparently to the contrary,
however, upon any Triggering Event, any Unvested Shares then held by Xxxxxxxxx
that are not purchased by the Company pursuant to the "Repurchase Option," as
defined in Section 5, will vest automatically upon the expiration of the 180-day
period provided for in Section 5, without any action by the Company other than
its execution of this Agreement. The Conversion Shares that are unvested under
this Section 4 at any time the matter has relevance shall be referred to herein
as the "Unvested Shares."
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5. Repurchase Option upon Triggering Event. In the event the full-time
employment of Xxxxxxxxx is voluntarily or involuntarily terminated for any
reason (including death, disability, voluntary or involuntary retirement or
termination by the Company for any reason, whether with or without cause) (each,
a "Triggering Event"), the Company shall have the right, exercisable by it by
notice given to Xxxxxxxxx or any successor within 180 days after the occurrence
of the Triggering Event, to purchase any or all of the Unvested Shares. The
purchase price for the Unvested Shares to be purchased under this Section 5
shall be an amount equal to the initial aggregate principal amount of the
"Notes," as defined in Section 9, allocable to the Unvested Shares being
purchased, which amount shall be determined by multiplying such aggregate
principal amount by a fraction, the numerator of which is the number of Unvested
Shares being purchased and the denominator of which is the total number of
Conversion Shares. The purchase price shall be paid by offset (in the manner
provided in Section 13) against, and in discharge of, the balance of principal
then owing on the Notes and, to the extent of any excess of the purchase price
over all principal then outstanding under the Notes, shall be paid by the
Company to Xxxxxxxxx in cash. The right of the Company to purchase any or all of
the then Unvested Shares in accordance with this Section 5 will be referred to
as the "Repurchase Option." Any payment to Xxxxxxxxx in purchase of Unvested
Shares pursuant to the Repurchase Option will be subject to the assignment to
the Company provided for in Section 13.
6. Application of IRC Section 83; Section 83(b) Election. Transfer of the
Conversion Shares to Xxxxxxxxx pursuant to this Agreement will have federal
income tax consequences to Xxxxxxxxx and the Company pursuant to Section 83 of
the Internal Revenue Code of 1986, as amended ("IRC"). The Company has been
valued by Corporate Valuations of Washington, Inc. at $156,934,882 on a
minority, privately-held basis to aid the Company in determining the required
withholding with respect to the Conversion Shares and to aid the Board of
Directors in relation to the possible granting of stock options (the "1996
Appraisal"). Xxxxxxxxx will have taxable compensation income upon the transfer
to him of the vested Conversion Shares, and the Company will withhold with
respect to such income. Because the Unvested Shares are nontransferable under
the Restrictive Agreement and are subject to the Repurchase Option, they will be
substantially nonvested for purposes of IRC Section 83 when transferred to
Xxxxxxxxx pursuant to this Agreement. Accordingly, Xxxxxxxxx will not have
taxable income with respect to the Unvested Shares now (unless, as Xxxxxxxxx has
indicated to the Company he intends to do, he so elects pursuant to IRC Section
83(b), with the consequences discussed below), but Xxxxxxxxx will have ordinary
compensation income for federal income tax purposes when each group of Unvested
Shares vests pursuant to Section 4 (whether according to the vesting schedule or
upon the Company's nonexercise of its Repurchase Option within 180 days after a
Triggering Event) or upon lapse of the prohibition on transfer in the
Restrictive Agreement equal to the fair market value of the Conversion Shares
vesting on that day,
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and the Company will withhold upon that amount at that time. Xxxxxxxxx
understands that he may elect pursuant to IRC Section 83(b) to be taxed on the
Unvested Shares when they are transferred to him on December 31, 1996, rather
than when and if the Repurchase Option expires with respect to each group of
Unvested Shares. If desired, this election must be filed with the Internal
Revenue Service within 30 days after the Unvested Shares are transferred to
Xxxxxxxxx pursuant to this Agreement. The primary effect of election pursuant to
IRC Section 83 is to measure and recognize the ordinary income element in the
Unvested Shares now, rather than later as and if they vest. If the election is
made, subsequent appreciation in the Unvested Shares will be capital gain,
rather than ordinary income, for federal income tax purposes. TO BE EFFECTIVE,
THE ELECTION MUST BE COMPLETED AND FILED WITHIN 30 DAYS AFTER TRANSFER OF THE
UNVESTED SHARES TO XXXXXXXXX PURSUANT TO THIS AGREEMENT. XXXXXXXXX UNDERSTANDS
AND ACKNOWLEDGES THAT IT IS HIS SOLE RESPONSIBILITY AND NOT THE RESPONSIBILITY
OF THE COMPANY TO FILE IN A TIMELY MANNER ANY IRC SECTION 83(b) ELECTION, EVEN
IF HE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS
BEHALF. XXXXXXXXX IS URGED TO CONSULT HIS PERSONAL TAX ADVISOR WITH RESPECT TO
THE EFFECT OF ELECTION PURSUANT TO IRC SECTION 83(b) AND THE ADVISABILITY OF HIS
SO ELECTING WITH RESPECT TO THE UNVESTED SHARES. Based on the understanding that
Xxxxxxxxx intends to make an election pursuant to IRC Section 83(b) with respect
to the Conversion Shares and that the Conversion Shares will represent 10% of
the outstanding capital stock of the Company on December 31, 1996, the Company
will withhold with respect to $15,693,488 of income to Xxxxxxxxx in respect of
the Conversion Shares, which amount is 10% of the value of the Company
determined under the 1996 Appraisal.
7. Bonus Compensation. On December 31, 1996, the Company will pay Xxxxxxxxx
a cash bonus in the amount of $2,750,000 in consideration of the past services
rendered by Xxxxxxxxx to the Company. On each date on which any interest is due
under any Note, including without limitation by reason of a prepayment by
Xxxxxxxxx of any principal amount owing thereunder, the Company shall pay
Xxxxxxxxx, in partial consideration of services rendered by Xxxxxxxxx to the
Company during the calendar year then elapsed and/or for past services, a cash
bonus in an amount equal to the accrued interest due and owing on such Note on
such date, grossed up to take account of the federal, state or local income tax
that Xxxxxxxxx will incur on such bonus (each, a "Cash Bonus"). Each Cash Bonus
will be subject to the assignment to the Company provided for in Section 13.
Xxxxxxxxx acknowledges and agrees that unless the assignment to the Company
provided for under Section 13 continues in full force and effect, Xxxxxxxxx
shall have no rights to any bonus under this Section 7 and the Company shall
have no obligation under this Agreement to pay or otherwise apply any such bonus
hereunder to or for the benefit of Xxxxxxxxx.
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8. Loan to Xxxxxxxxx by Company. On December 31, 1996, the Company will
loan Xxxxxxxxx $3,818,316 upon his execution and delivery to the Company of a
Promissory Note in the form attached as Exhibit D (the "Initial Promissory
Note"), and on April 15, 1997, the Company will loan Xxxxxxxxx $1,906,466 upon
his execution and delivery to the Company of a Promissory Note in the form
attached as Exhibit E (the "Second Promissory Note") .
9. Additional Bonus and Loan Proceeds. If by reason of any audit of
Xxxxxxxxx or the Company by the Internal Revenue Service or any other taxing
authority, it is conclusively determined, through settlement, by final
nonappealable order or otherwise, that the value of the Conversion Shares for
compensation purposes exceeded the amount reported as income by Xxxxxxxxx for
federal, state or local income tax purposes in accordance with this Agreement,
the Company, to assist Xxxxxxxxx in paying any resulting additional federal,
state and local liability, including interest and penalties, in respect of such
compensation ("Additional Tax Liability"), shall pay to Xxxxxxxxx, not more than
30 days after his request therefor, a cash bonus in the amount of 50% of the
Additional Tax Liability, which bonus shall be grossed up to take account of any
federal, state or local income tax that Xxxxxxxxx will incur on such bonus and
shall not be a Cash Bonus for purposes of this Agreement. On the same date or as
soon thereafter as Xxxxxxxxx shall have executed and delivered a Promissory Note
to the Company in the form of Exhibit F in a principal amount equal to 50% of
the Additional Tax Liability or such lesser amount as may be requested by
Xxxxxxxxx (an "Additional Promissory Note"), the Company shall also make a loan
to Xxxxxxxxx in such amount. The Initial Promissory Note, the Second Promissory
Note and any Additional Promissory Note will sometimes be referred to
collectively as the "Notes" or individually as a "Note." Any failure by
Xxxxxxxxx to make any payment when due on any Note (unless by reason of any
failure by the Company to perform its obligations under this Agreement) shall
constitute a breach by Xxxxxxxxx of this Agreement.
10. Registration Rights. If (but without any obligation to do so) the
Company proposes to register any of its Common Stock under the Securities Act of
1933, as amended (the "Act"), in connection with an initial firm underwritten
public offering of such securities solely for cash (an "IPO," which shall not
include a registration relating solely to the sale of securities to participants
in a Company stock plan or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Common Stock by holders), the
Company shall, at such time promptly give Xxxxxxxxx written notice of such
registration and shall not later than the date immediately prior to the closing
of the IPO cause the Conversion Shares that are shares of nonvoting Common Stock
to be converted, on a one-for-one basis, into shares of voting Common Stock
(which voting Common Stock will be Conversion Shares for
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purposes of this Agreement). Upon the written request of Xxxxxxxxx given within
20 days after any such notice by the Company, the Company shall, subject to this
Section 10, cause to be registered under the Act that number of Conversion
Shares equal to the lesser of:
(a) that number of Conversion Shares as would result in after-tax
proceeds to Xxxxxxxxx sufficient to enable Xxxxxxxxx to repay in full all
principal on the Notes, plus an additional $8,000,000 in after-tax proceeds,
which number of shares shall be determined on the basis of the midpoint of the
price range reflected in the preliminary prospectus used in the offering,
applying either the long or short-term capital gain rate, whichever is
applicable to the sale of Conversion Shares in the IPO;
(b) 25% of the Conversion Shares; or
(c) Such number of the Conversion Shares as Xxxxxxxxx has requested to
be registered.
Notwithstanding the foregoing, the Company shall not be required to include any
of the Conversion Shares in any IPO unless Xxxxxxxxx accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
the Company and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company; provided
that the Company shall use its best efforts to cause to be included not less
than the number of Conversion Shares Xxxxxxxxx wishes to include under Section
10(a), (b) or (c) (whichever is applicable being the "Minimum Includable
Shares"). If the total amount of securities requested by Xxxxxxxxx and other
holders to be included in such offering exceeds the amount of securities to be
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities that the
underwriters believe will not jeopardize the success of the offering (the
securities so included to be, first, the Minimum Includable Shares, and, second,
to the extent of any excess, to be apportioned pro rata among the selling
holders according to the total amount of securities then owned by each selling
holder (disregarding in all respects the Minimum Includable Shares for purposes
of determining the proportion owned by Xxxxxxxxx) or in such other proportions
as shall mutually be agreed to by such selling holders). The Company shall bear
and pay all expenses incurred in connection with registration pursuant to this
Section 10, including printing and accounting fees, but excluding underwriting
discounts and commissions relating to the sale of shares by holders including
Xxxxxxxxx and the selling holders' pro rata share of the filing fees. In
connection with an IPO and upon request of the Company or the underwriters
managing such offering, Xxxxxxxxx will not sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any Conversion
Shares (other than those included in the registration, if any) without
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the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed 180 days) from the effective date of
such registration as may be requested, provided that any other officers or
directors of the Company who also own stock of the Company also agree to such a
restriction. The proceeds to which Xxxxxxxxx is entitled in connection with any
IPO will be subject to the assignment to the Company provided for in Section 13.
11. Distribution of AAA Account. The Company is currently a Subchapter S
Corporation. Prior to any IPO, the Company may distribute to its shareholders as
much of the Company's accumulated adjustments account, as defined in IRC Section
1368(e) ("AAA Account"), as is deemed practicable by its Board of Directors
after considering any input from Xxxxxxxxx and the underwriters involved in the
IPO. Each shareholder of the Company will receive the shareholder's
proportionate share of any such distribution based on the shareholder's
percentage ownership of the outstanding stock of the Company on the date such
distribution is authorized by the Board of Directors or such later date as the
Board of Directors may specify in connection with such authorization, treating
the nonvoting Common Stock and the voting Common Stock as entitled to share
equally on a per share basis in such distribution. Any such distribution to
Xxxxxxxxx will be subject to the assignment to the Company provided for in
Section 13.
12. Option to Sell Stock If IPO Does Not Occur. If an IPO does not close by
December 31, 1998, Xxxxxxxxx may sell to the Company such number of the
Conversion Shares as will cause Xxxxxxxxx to receive, on an after-tax basis,
funds sufficient to repay in full all principal on the Notes. Any such sale
shall be, first, of Conversion Shares that are vested and second, to the extent
Santorufo's option to sell is not exhausted thereby, of Unvested Shares. Upon
any notice of exercise of this option given by Xxxxxxxxx at any time subsequent
to December 31, 1998 and prior to the closing of any IPO, the Company shall, as
requested by Xxxxxxxxx in his notice of exercise in Santorufo's sole discretion
(or, if no such request is so made by Xxxxxxxxx, as determined by the Company in
its sole discretion), either cause an appraisal of the Company to be undertaken
for purposes of determining the fair market value of the Conversion Shares, on a
minority, privately-held basis, or cause the factors taken into account in the
1996 Appraisal and any circumstances affecting the 1996 Appraisal, including any
change in value resulting from an audit or settlement with the Internal Revenue
Service or any other taxing authority, to be updated and applied using the same
methodologies, to determine the value of the Conversion Shares on the date of
the notice of exercise. The Company will pay the cost of any such appraisal or
of any such updating and application with respect to the 1996 Appraisal.
Xxxxxxxxx acknowledges that any such purchase by the Company will be subject to
the restrictions governing the right of a corporation to purchase its own shares
under Oregon law and such other legal restrictions as are now or may hereafter
become effective and, with respect to any voting rights Xxxxxxxxx may now or
hereafter hold, agrees to vote in
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favor of any necessary corporate action to allow the Company to make such
purchase. Any distribution to Xxxxxxxxx in purchase of Conversion Shares under
this Section 12 will be subject to the assignment to the Company provided for in
Section 13.
13. Assignment of Cash Bonuses and Distributions on Conversion Shares.
Xxxxxxxxx hereby assigns all of his right, title and interest to each of the
following, less all withholding for federal, state or local income taxes
required to be made by the Company with respect thereto (in each case, the "Net
Amount"), to the Company as security for and in payment of any and all payment
obligations of Xxxxxxxxx to the Company evidenced by the Notes and directs that
the Company apply the Net Amount of each Cash Bonus (other than the initial Cash
Bonus) against accrued interest on the Notes and apply the Net Amount of any or
all of the following, as applicable, against the principal amount of, first, the
Initial Promissory Note, second, the Second Promissory Note, and, finally, any
Additional Promissory Note:
(a) Any distribution to Xxxxxxxxx of any of the Company's AAA Account;
(b) Any other cash distribution to Xxxxxxxxx on the Conversion Shares,
including, on an after-tax basis, any distribution in purchase of any Conversion
Shares under either Section 5 or 12; and
(c) The net proceeds to which Xxxxxxxxx is entitled by reason of any
IPO, up to the amount of all principal then outstanding on the Notes.
This assignment shall be irrevocable and any attempt by Xxxxxxxxx to revoke this
assignment shall be void and a breach of this Agreement. The death or incapacity
of Xxxxxxxxx shall not revoke or otherwise affect this assignment.
14. Pledge and Escrow. As security for the faithful performance of the
terms of this Agreement and the availability for delivery of the Unvested Shares
upon any exercise of the Repurchase Option by the Company, Xxxxxxxxx hereby
grants to the Company a security interest in, and pledges with and delivers to
the Company, the Conversion Shares to be held pursuant to the following:
(a) Xxxxxxxxx hereby pledges the Conversion Shares to the Company in
accordance with this Section 14 and authorizes and directs the Company to
deliver to and deposit with the Secretary of the Company, or such other person
designated from time to time by the Company, as escrow agent (the "Escrow
Agent"), such stock assignments in blank, duly endorsed, with date and number of
shares blank, as may be requested by the Company, together with all certificate
or certificates evidencing the Conversion Shares, which shall be held by the
Escrow Agent as the agent of the Company in accordance with this Section 14.
Xxxxxxxxx acknowledges that the
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Escrow Agent is appointed as the escrow agent as a material inducement to the
Company to make this Agreement and that the appointment is coupled with an
interest and is accordingly irrevocable.
(b) The Escrow Agent shall hold the certificates and stock powers in
escrow and take all actions to give effect to the provisions of this Agreement
relating to the escrow. The Escrow Agent shall not be liable to any party for
any actions or omissions unless the Escrow Agent is grossly negligent and such
negligence results in material financial damage to the complaining party. The
Escrow Agent may rely upon any letter, notice or other document bearing any
signature that the Escrow Agent believes to be genuine. Upon notification to the
Escrow Agent by Xxxxxxxxx and the Company that the Notes have been paid in full
and of the number of the Conversion Shares that are then vested, the Escrow
Agent shall deliver to Xxxxxxxxx certificates evidencing the vested Conversion
Shares in the Escrow Agent's possession. As the Unvested Shares thereafter vest
from time to time, the Escrow Agent shall deliver to Xxxxxxxxx certificates
evidencing the vested Conversion Shares in the Escrow Agent's possession.
(c) In the event of any default by Xxxxxxxxx in making any payment
owed to the Company under this Agreement, including any payment owed under the
Notes (unless by reason of any failure by the Company to perform its obligations
under this Agreement), the Company shall have the right to exercise all rights
of a secured party with respect to the Conversion Shares held by the Escrow
Agent.
(d) The pledge by Xxxxxxxxx pursuant to this Section 14 shall be
irrevocable. Any attempt by Xxxxxxxxx to revoke this pledge shall be void and a
breach of this Agreement. The death or incapacity of Xxxxxxxxx shall not revoke
or otherwise affect the pledge by Xxxxxxxxx.
15. Withholding. Notwithstanding any other provision of this Agreement
apparently to the contrary, the Company shall satisfy any and all withholding
obligations of the Company with respect to any amount that is compensation to
Xxxxxxxxx out of any such amounts payable to or for the benefit of Xxxxxxxxx in
cash or, if not then payable in cash or if subject to additional withholding for
any reason, either from amounts deposited by Xxxxxxxxx with the Company on
demand or by withholding any such amount from other amounts payable by the
Company to Xxxxxxxxx, including salary or compensation, subject to applicable
law. In furtherance and not in limitation of the foregoing, the Company shall be
entitled to withhold from each Cash Bonus and from any loan proceeds under the
Initial Promissory Note and the Second Promissory Note, and to pay over to the
relevant taxing authorities, all amounts the Company is required to withhold
either with respect to such Cash Bonus or by reason of the Conversion. The
Company shall also be entitled to withhold from any bonus payable to Xxxxxxxxx
under Section 9 and to pay over to the relevant taxing
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authorities all amounts the Company is required to withhold with respect to any
such bonus.
16. Personal Tax Information. Xxxxxxxxx shall from time to time at the
request of the Company provide to the accountants designated by the Company
access to his personal tax information sufficient to enable the accountants to
calculate and inform the Company of the effective federal, state and local
income tax rates at which any amount payable to or for the benefit of Xxxxxxxxx
under this Agreement will be taxable to Xxxxxxxxx.
17. Investment Intent; Capacity to Protect Interests. Xxxxxxxxx represents
and warrants to the Company with respect to the Conversion Shares: Xxxxxxxxx is
obtaining the Conversion Shares solely for his own account for investment and
not with a view to or for sale in connection with any distribution of the
Conversion Shares or any portion thereof and not with any present intention of
selling, offering to sell or otherwise disposing of or distributing the
Conversion Shares or any portion thereof in any transaction other than a
transaction registered under or exempt from registration under the Act.
Xxxxxxxxx is obtaining the entire legal and beneficial interest in the
Conversion Shares, and such legal and beneficial interest will be held for
Santorufo's account only and neither in whole or in part for any other person.
Xxxxxxxxx, as an officer and employee of the Company, has a pre-existing
business relationship with the Company, and, by reason of his business or
financial experience, can reasonably be assumed to have the capacity to evaluate
the merits and risks of an investment in the Company and to protect his own
interests in connection with this transaction. Xxxxxxxxx recognizes that the
Conversion Shares are subject to purchase by the Company pursuant to the
Repurchase Option and that the Company will have full recourse against Xxxxxxxxx
under the Notes and that for these and other reasons investment in and ownership
of the Conversion Shares involves a high degree of risk.
18. Legends. In addition to the legend provided for under the Restrictive
Agreement, all certificates evidencing any of the Conversion Shares shall
contain the following legends:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, ASSIGNED, PLEDGED OR
OTHERWISE TRANSFERRED FOR VALUE UNLESS THEY ARE REGISTERED UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR COLUMBIA SPORTSWEAR
COMPANY RECEIVES AN OPINION OF COUNSEL SATISFACTORY TO IT, OR
OTHERWISE SATISFIES ITSELF, THAT REGISTRATION IS NOT REQUIRED.
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT TO WHICH THE
REGISTERED HOLDER IS PARTY, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF COLUMBIA SPORTSWEAR COMPANY.
19. Governing Law. This Agreement shall be governed by and construed under
the laws of the State of Oregon (except as to choice of law matters) as applied
to contracts entered into and to be performed entirely within Oregon.
20. Counterparts. This Agreement may be executed in counterparts, which
together shall constitute a single instrument.
21. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the matters set forth herein, and supersedes all
prior discussions or agreements of the parties and, as provided in Section 1,
the Participation Agreement.
22. Amendment; Waiver. This Agreement may be amended only by the written
consent of the parties. No waiver of any provision of this Agreement shall be
effective unless in writing and signed by the waiving party.
23. Assignment. The rights and benefits of this Agreement shall inure to
the benefit of and be enforceable by the Company and its successors and assigns.
The rights and obligations of Xxxxxxxxx under this Agreement may not be assigned
without the prior written consent of the Company but this Agreement shall bind
any successor to Xxxxxxxxx, including upon death or incapacity.
IN WITNESS WHEREOF, the parties hereto have executed this Deferred
Compensation Conversion Agreement as of the date first written above.
COLUMBIA SPORTSWEAR COMPANY
By
------------------------------------------
Xxxxxxx Xxxxx, President
--------------------------------------------
Xxx Xxxxxxxxx
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EXHIBIT A
[Shareholder Signature Page]
SHAREHOLDER SIGNATURE PAGE
This Shareholder Signature Page to the Restrictive Agreement dated as
of May 1, 1993 (the "Restrictive Agreement") pertaining to Columbia Sportswear
Company, an Oregon corporation (the "Corporation"), is executed and delivered as
of the date set forth below.
For and in consideration of the mutual covenants, conditions,
stipulations and agreements set forth in the Restrictive Agreement, and other
valuable consideration, the receipt of which is hereby acknowledged, the
undersigned hereby consents and agrees to all of the terms, restrictions and
conditions of the Restrictive Agreement, and, by execution of this signature
page, and acceptance by the Corporation of this signature page by the
countersignature of the Corporation, is hereby designated a party to and a
"Shareholder" for purposes of, and agrees to be bound by, each and all terms of
the Restrictive Agreement.
Dated this 31st day of December, 1996.
SHAREHOLDER: --------------------------------------------
Xxx Xxxxxxxxx
ACCEPTED: COLUMBIA SPORTSWEAR COMPANY
By
------------------------------------------
Title: President
EXHIBIT B
[Amendment No. 1]
AMENDMENT NO. 1
TO
RESTRICTIVE AGREEMENT
COLUMBIA SPORTSWEAR COMPANY
The undersigned, the parties to that certain Restrictive Agreement dated as
of May 1, 1993, (the "Restrictive Agreement") pertaining to Columbia Sportswear
Company, an Oregon corporation (the "Corporation"), hereby agree as follows:
1. Section 19 of the Restrictive Agreement is amended to read in its
entirety as follows:
19. Alteration, Amendment or Termination. This Restrictive
Agreement may be altered, amended or terminated by a written
instrument executed by the Corporation and all the then Shareholders.
In all events, this Restrictive Agreement shall terminate and be of no
further force and effect upon the earliest to occur of (a) an initial
firm underwritten public offering of common stock of the Corporation
solely for cash (which shall not include a registration relating
solely to the sale of securities to participants in a Company stock
plan or a registration on any form which does not include
substantially the same information as would be required to be included
in a registration statement covering the sale of the common stock by
holders), (b) the bankruptcy or dissolution of the Corporation or (c)
the twenty-first (21st) anniversary of the death of the last to die of
the members of the group consisting of Gert, Xxx and Xxxxx and such of
their issue as are living on the date of this Restrictive Agreement.
Notwithstanding the preceding provisions of this Paragraph 19, no
alteration, amendment or termination of this Restrictive Agreement
shall have the effect of relieving any person of any obligation that
has accrued hereunder by reason of any event or circumstance occurring
or existing prior to the effective date of such termination, nor shall
any such alteration, amendment or termination have the
effect of terminating or modifying any option, privilege or other
right that has arisen hereunder by reason of such pre-existing event
or circumstance.
2. The Restrictive Agreement is in all other respects ratified and
affirmed.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1
to Restrictive Agreement effective December 31, 1996.
COLUMBIA SPORTSWEAR COMPANY,
an Oregon corporation
By
------------------------------------------
President
--------------------------------------------
Xxxxxxxx Xxxxx
--------------------------------------------
Xxxxxxx Xxxxx
--------------------------------------------
Xxxxx X. Xxxx
--------------------------------------------
Xxx Xxxxxxxxx
The undersigned spouses hereby consent to the foregoing Amendment No. 1:
-----------------------------------
Xxxx Xxxxx
-----------------------------------
Xxxxx Xxxx
-----------------------------------
Xxxxxx Xxxxxxxxx
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EXHIBIT C
[Spousal Agreement]
SPOUSAL AGREEMENT
SPOUSAL AGREEMENT ("this Agreement") dated as of December 31, 1996
between COLUMBIA SPORTSWEAR COMPANY, an Oregon corporation (the "Corporation"),
and XXXXXX XXXXXXXXX (herein referred to as "XXXXXX"), the spouse of Xxx
Xxxxxxxxx (herein referred to as the "Shareholder"), a shareholder in the
Corporation.
RECITALS:
A. The Shareholder is the owner of record of shares of voting common stock
and shares of nonvoting common stock of the Corporation. These shares are
subject to that certain Restrictive Agreement among the Corporation, Xxxxxxxx
Xxxxx, Xxxxxxx Xxxxx and Xxxxx X. Xxxx (and such additional Shareholders as may
later become parties thereto) dated as of May 1, 1993 (as the same may be
amended, supplemented or otherwise modified from time to time, the "Restrictive
Agreement").
B. XXXXXX is the spouse of the Shareholder, having been married to the
Shareholder in the County of Multnomah, Oregon on the 1st day of February, 1986.
C. The parties to this Agreement believe that it is in their best interest
to enter into this Agreement in order to assure that the Corporation remains a
family-owned enterprise and to assure the continued ease of administration of
the Corporation's business. XXXXXX specifically recognizes and acknowledges the
significant economic value and benefit to the Shareholder and the Shareholder's
family from the terms and provisions of the Restrictive Agreement governing the
purchase and sale of stock in the circumstances therein described, and that said
value and benefit is adequate consideration to support this Agreement.
Furthermore, XXXXXX hereby acknowledges that she is entering into this Agreement
after conferring with an attorney of her own choosing.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, conditions, stipulations, and assignments hereafter contained, the
parties hereto do mutually covenant and agree as follows:
AGREEMENT:
1. The above recitals are hereby incorporated into this Agreement by this
reference.
2. XXXXXX hereby acknowledges that she has read the Restrictive Agreement
and has conferred with an attorney of her own choosing to determine its meaning
and legal effect. Specifically, XXXXXX has read the provisions contained in
Paragraphs 2, 3, 4, 5, 6, 7, 9 and 10 of the Restrictive Agreement pertaining to
restrictions on the transfer of the Shareholder's shares of stock in the
Corporation and to the rights of the Corporation and other shareholders of the
Corporation to purchase any or all shares of stock which may come into her
possession or ownership, as a Transferee (within the meaning of the Restrictive
Agreement) or as a personal representative, heir or beneficiary of the
Shareholder's estate.
3. XXXXXX hereby agrees to abide by the provisions of the Restrictive
Agreement and, without limiting the generality of the foregoing, she
specifically agrees that if any shares of the stock of the Corporation are
transferred to or for her benefit under an order or decree of divorce,
dissolution, annulment or separate maintenance, or if she is appointed guardian
or conservator of the estate of the Shareholder, or if she becomes the legal or
beneficial owner of any shares of common stock of the Corporation by reason of
the death of the Shareholder, or by reason of any other circumstance or event,
she shall comply with the provisions of the Restrictive Agreement and shall
offer to sell any and all of her interest in the said shares of stock of the
Corporation to the Corporation or the Remaining Shareholders (as such term is
defined in the Restrictive Agreement), as the case may be, on the terms and
under the conditions provided for by the Restrictive Agreement.
4. XXXXXX hereby agrees and acknowledges that she shall have no rights or
recourse under the Restrictive Agreement, except those provided for in the
provisions of Paragraphs 9 and 10 of the Restrictive Agreement pertaining to the
purchase price and payment for shares. XXXXXX hereby agrees to be bound by the
arbitration provisions contained in the Restrictive Agreement. XXXXXX hereby
relinquishes and forever disclaims any other right, as a third party beneficiary
or otherwise, under the Restrictive Agreement.
5. This Agreement shall be subject to and governed by the laws of the State
of Oregon.
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6. If any party to this Agreement should institute legal proceedings to
enforce such party's rights under this Agreement or to rescind or disaffirm this
Agreement in whole or in part, the prevailing party shall recover, in addition
to all other costs and damages awarded, and the losing party shall pay, the
prevailing party's reasonable attorneys' fees and costs at trial, on appeal,
upon petition for review, or in any bankruptcy proceeding, whether or not such
fees or costs are prescribed by statute, as determined by the court at trial or
upon any appeal.
7. The parties acknowledge that an interest in the stock of the Corporation
is unique, and they accordingly agree that, in the event of a breach of this
Agreement, in addition to any other available remedies, any award or judgment
may include the remedy of specific performance.
IN WITNESS WHEREOF, the parties hereby have executed this Spousal
Agreement as of the day and year first above written.
COLUMBIA SPORTSWEAR COMPANY,
an Oregon corporation
By
------------------------------------------
President
--------------------------------------------
Xxxxxx Xxxxxxxxx
EXHIBIT D
[Initial Promissory Note]
PROMISSORY NOTE
Portland, Oregon
$3,818,316 December 31, 1996
FOR VALUE RECEIVED, Xxx Xxxxxxxxx ("Maker"), promises to pay to the order
of Columbia Sportswear Company, an Oregon corporation, at 0000 X. Xxxxxxxxx,
Xxxxxxxx, Xxxxxx 00000, the sum of Three Million Eight Hundred Eighteen Thousand
Three Hundred Sixteen and no/100 Dollars ($3,818,316), with interest thereon,
compounded annually, at the applicable federal rate under the Internal Revenue
Code of 1986, as amended, on the date hereof. The principal amount of this Note
shall be payable in full, with all accrued and unpaid interest thereon, on
December 31, 2001 or upon any earlier acceleration of this Note (except as
provided in clause (c) in the case of partial acceleration thereunder). Interest
accrued on the outstanding balance shall be due and payable on the first
anniversary of the date of this Note and on each December 31 thereafter on which
any principal amount continues to be outstanding under this Note. Each payment
made on this Note shall be applied first against accrued interest and then
against principal.
This Note is delivered pursuant to that certain Deferred Compensation
Conversion Agreement dated the date hereof between Maker and the holder
identified above (the "Conversion Agreement"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Conversion
Agreement.
At the election of the holder of this Note, the entire outstanding
principal balance of this Note (or such lesser amount as is provided for under
clause (c) below in the circumstances therein described), together with all
accrued interest, shall become immediately due and payable on the happening of
any one or more of the following events, each of which shall be considered an
acceleration event:
(a) Maker fails to make any payment under this Note on the due date
thereof (unless by reason of any failure by the Company to perform its
obligations under this Agreement) or otherwise breaches the Conversion
Agreement, including in respect of the assignment provided for in Section
13 or the escrow and pledge provided for in Section 14;
(b) Maker becomes insolvent; any of Maker's assets are attached,
levied, or seized; Maker institutes or has instituted against him any
bankruptcy or similar proceeding; or any receiver or trustee is appointed
for any of Maker's property; or
1
(c) Maker receives proceeds in an IPO (in which event the principal
balance of this Note up to but not exceeding the amount of the net proceeds
received by Maker after payment of all taxes owed on the proceeds received
by Maker, shall at the option of the holder of this Note be accelerated).
If this Note is placed in the hands of an attorney for collection, Maker
promises and agrees to pay the reasonable attorneys' fees and collection costs
of the holder of this Note, whether or not such fees or costs are prescribed by
statute, even though no suit or action is filed hereon; however, if a suit or
action is filed, the amount of such reasonable attorneys' fees and collection
costs shall be fixed by the court or courts in which such suit or action,
including any appeal therein or petition for review or bankruptcy proceeding, is
tried, heard or decided.
Maker reserves the right to prepay at any time or from time to time,
without premium or penalty, all or any portion of the balance owing on this
Note. Any such sum so prepaid, after application of any payment against accrued
interest, shall be applied to the principal then owing on this Note.
In the event any amount due under this Note (including all amounts due on
acceleration or maturity) is not paid as and when due, the entire unpaid
principal balance of this Note, together with all accrued interest, and all
other sums owing by Maker to the holder of this Note, shall bear interest from
the date of default at an annual rate equal to 18% per annum or the highest rate
allowed by law, whichever is lower ("Default Rate"). Such Default Rate shall
continue for so long as any amounts then due remain unpaid and any other default
remains uncured. The holder of this Note may levy and collect interest at the
Default Rate in addition to all other remedies allowed under this Note or any
other instrument. Collection of interest at the Default Rate shall not waive the
breach caused by the late payment or other default or acceleration.
No delay or omission on the part of the holder of this Note in the exercise
of any right or remedy, whether before or after an event of default or
acceleration, shall impair any such right or remedy or operate as a waiver of
such right or remedy or of any default or acceleration under this Note.
This Note shall be governed by and construed in accordance with the laws of
the State of Oregon.
--------------------------------------------
Xxx Xxxxxxxxx
2
EXHIBIT E
[Second Promissory Note]
PROMISSORY NOTE
Portland, Oregon
$1,906,466 April 15, 1997
FOR VALUE RECEIVED, Xxx Xxxxxxxxx ("Maker"), promises to pay to the order
of Columbia Sportswear Company, an Oregon corporation, at 0000 X. Xxxxxxxxx,
Xxxxxxxx, Xxxxxx 00000, the sum of One Million Nine Hundred Six Thousand Four
Hundred Sixty Six and no/100 Dollars ($1,906,466), with interest thereon,
compounded annually, at the applicable federal rate under the Internal Revenue
Code of 1986, as amended, on the date hereof. The principal amount of this Note
shall be payable in full, with all accrued and unpaid interest thereon, on April
15, 2002 or upon any earlier acceleration of this Note (except as provided in
clause (c) in the case of partial acceleration thereunder). Interest accrued on
the outstanding balance shall be due and payable on the first anniversary of the
date of this Note and on each April 15 thereafter on which any principal amount
continues to be outstanding under this Note. Each payment made on this Note
shall be applied first against accrued interest and then against principal.
This Note is delivered pursuant to that certain Deferred Compensation
Conversion Agreement dated the date hereof between Maker and the holder
identified above (the "Conversion Agreement"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Conversion
Agreement.
At the election of the holder of this Note, the entire outstanding
principal balance of this Note (or such lesser amount as is provided for under
clause (c) below in the circumstances therein described), together with all
accrued interest, shall become immediately due and payable on the happening of
any one or more of the following events, each of which shall be considered an
acceleration event:
(a) Maker fails to make any payment under this Note on the due date
thereof (unless by reason of any failure by the Company to perform its
obligations under this Agreement) or otherwise breaches the Conversion
Agreement, including in respect of the assignment provided for in Section
13 or the escrow and pledge provided for in Section 14;
(b) Maker becomes insolvent; any of Maker's assets are attached,
levied, or seized; Maker institutes or has instituted against him any
bankruptcy or similar proceeding; or any receiver or trustee is appointed
for any of Maker's property; or
1
(c) Maker receives proceeds in an IPO (in which event the principal
balance of this Note up to but not exceeding the amount of the net proceeds
received by Maker after payment of all taxes owed on the proceeds received
by Maker, shall at the option of the holder of this Note be accelerated).
If this Note is placed in the hands of an attorney for collection, Maker
promises and agrees to pay the reasonable attorneys' fees and collection costs
of the holder of this Note, whether or not such fees or costs are prescribed by
statute, even though no suit or action is filed hereon; however, if a suit or
action is filed, the amount of such reasonable attorneys' fees and collection
costs shall be fixed by the court or courts in which such suit or action,
including any appeal therein or petition for review or bankruptcy proceeding, is
tried, heard or decided.
Maker reserves the right to prepay at any time or from time to time,
without premium or penalty, all or any portion of the balance owing on this
Note. Any such sum so prepaid, after application of any payment against accrued
interest, shall be applied to the principal then owing on this Note.
In the event any amount due under this Note (including all amounts due on
acceleration or maturity) is not paid as and when due, the entire unpaid
principal balance of this Note, together with all accrued interest, and all
other sums owing by Maker to the holder of this Note, shall bear interest from
the date of default at an annual rate equal to 18% per annum or the highest rate
allowed by law, whichever is lower ("Default Rate"). Such Default Rate shall
continue for so long as any amounts then due remain unpaid and any other default
remains uncured. The holder of this Note may levy and collect interest at the
Default Rate in addition to all other remedies allowed under this Note or any
other instrument. Collection of interest at the Default Rate shall not waive the
breach caused by the late payment or other default or acceleration.
No delay or omission on the part of the holder of this Note in the exercise
of any right or remedy, whether before or after an event of default or
acceleration, shall impair any such right or remedy or operate as a waiver of
such right or remedy or of any default or acceleration under this Note.
This Note shall be governed by and construed in accordance with the laws of
the State of Oregon.
--------------------------------------------
Xxx Xxxxxxxxx
2
EXHIBIT F
[Additional Promissory Note]
PROMISSORY NOTE
Portland, Oregon
$
--------------------------- ----------------------, ----
FOR VALUE RECEIVED, Xxx Xxxxxxxxx ("Maker"), promises to pay to the order
of Columbia Sportswear Company, an Oregon corporation, at 0000 X. Xxxxxxxxx,
Xxxxxxxx, Xxxxxx 00000, the sum of ____________________ Dollars
($_______________), with interest thereon, compounded annually, at the
applicable federal rate under the Internal Revenue Code of 1986, as amended, on
the date hereof. The principal amount of this Note shall be payable in full,
with all accrued and unpaid interest thereon, on the fifth anniversary of the
date of this Note or upon any earlier acceleration of this Note (except as
provided in clause (c) in the case of partial acceleration thereunder). Interest
accrued on the outstanding balance shall be due and payable commencing on the
first anniversary of the date of this Note and on each ___________ thereafter on
which any principal amount continues to be outstanding under this Note. Each
payment made on this Note shall be applied first against accrued interest and
then against principal.
This Note is delivered pursuant to that certain Deferred Compensation
Conversion Agreement dated the date hereof between Maker and the holder
identified above (the "Conversion Agreement"). Capitalized terms not otherwise
defined herein shall have the meanings ascribed thereto in the Conversion
Agreement.
At the election of the holder of this Note, the entire outstanding
principal balance of this Note (or such lesser amount as is provided for under
clause (c) below in the circumstances therein described), together with all
accrued interest, shall become immediately due and payable on the happening of
any one or more of the following events, each of which shall be considered an
acceleration event:
(a) Maker fails to make any payment under this Note on the due date
thereof (unless by reason of any failure by the Company to perform its
obligations under this Agreement) or otherwise breaches the Conversion
Agreement, including in respect of the assignment provided for in Section
13 or the escrow and pledge provided for in Section 14;
(b) Maker becomes insolvent; any of Maker's assets are attached,
levied, or seized; Maker institutes or has instituted against him any
bankruptcy or similar proceeding; or any receiver or trustee is appointed
for any of Maker's property; or
(c) Maker receives proceeds in an IPO (in which event the principal
balance of this Note up to but not exceeding the amount of the net proceeds
received by Maker after payment of all taxes owed on the proceeds received
by Maker, shall at the option of the holder of this Note be accelerated).
If this Note is placed in the hands of an attorney for collection, Maker
promises and agrees to pay the reasonable attorneys' fees and collection costs
of the holder of this Note, whether or not such fees or costs are prescribed by
statute, even though no suit or action is filed hereon; however, if a suit or
action is filed, the amount of such reasonable attorneys' fees and collection
costs shall be fixed by the court or courts in which such suit or action,
including any appeal therein or petition for review or bankruptcy proceeding, is
tried, heard or decided.
Maker reserves the right to prepay at any time or from time to time,
without premium or penalty, all or any portion of the balance owing on this
Note. Any such sum so prepaid, after application of any payment against accrued
interest, shall be applied to the principal then owing on this Note.
In the event any amount due under this Note (including all amounts due on
acceleration or maturity) is not paid as and when due, the entire unpaid
principal balance of this Note, together with all accrued interest, and all
other sums owing by Maker to the holder of this Note, shall bear interest from
the date of default at an annual rate equal to 18% per annum or the highest rate
allowed by law, whichever is lower ("Default Rate"). Such Default Rate shall
continue for so long as any amounts then due remain unpaid and any other default
remains uncured. The holder of this Note may levy and collect interest at the
Default Rate in addition to all other remedies allowed under this Note or any
other instrument. Collection of interest at the Default Rate shall not waive the
breach caused by the late payment or other default or acceleration.
No delay or omission on the part of the holder of this Note in the exercise
of any right or remedy, whether before or after an event of default or
acceleration, shall impair any such right or remedy or operate as a waiver of
such right or remedy or of any default or acceleration under this Note.
This Note shall be governed by and construed in accordance with the laws of
the State of Oregon.
--------------------------------------------
Xxx Xxxxxxxxx
2
