EXHIBIT 10.21
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AGREEMENT FOR BRIDGE LOAN
[LOGO OF BANK OF AMERICA APPEARS HERE]
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This Agreement is entered into as of April 1, 1998 among BANK OF AMERICA
COMMUNITY DEVELOPMENT BANK and its successors and assigns ("Bank") and Prolong
Super Lubricants, Inc., a Nevada corporation ("Borrower").
Recitals
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A. Bank and Borrower have entered into a certain Standing Loan Agreement dated
as of April 1, 1998 (the Standing Loan Agreement").
B. Pursuant to the terms of the Standing Loan Agreement, Bank has agreed to
make a loan to Borrower in the principal amount of One Million Six Hundred
Ninety Two Thousand and No/100 Dollars $1,692,000.00 (the "Real Estate
Loan"). The Real Estate Loan will be used to finance a portion of the
purchase price of certain real property located at 6 Xxxxxx, Xxxxxx,
Xxxxxxxxxx, 00000 (together with all improvements now or hereafter located
thereon, the "Property"). The Real Estate Loan will be secured by a first
deed of trust (the First Deed of Trust") on the Property.
C. The balance of long term financing required in connection with the purchase
of the Property will be provided through the issuance of debentures (the
"Debentures") guaranteed by the U. S. Small Business Administration ("SBA")
pursuant to a Section 504 Authorization and Debenture Guaranty issued by
the SBA on February 2, 1998, as amended.
D. Pending issuance of the Debentures, Borrower has requested Bank to provide
a short term loan in the amount of Seven Hundred Twenty Nine Thousand and
No/100 Dollars $729,000.00 to finance a portion of the purchase price of
the Property. The short term loan will be repaid with the net proceeds from
the issuance of the Debentures.
E. Bank and Borrower hereby enter into this Agreement to set forth the terms
and conditions upon which Bank will make the short term loan requested by
Borrower.
Agreement
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1. Bank shall make a short term loan to Borrower in the principal amount of
Seven Hundred Twenty Nine Thousand and No/100 Dollars $729,000.00 (the
Bridge Loan"). Borrower shall use the Bridge Loan, in combination with the
Real Estate Loan to Borrower. The Bridge Loan will be evidenced by a
promissory note (the "Bridge Loan Note") payable to Bank in the original
principal amount of the Bridge Loan and will be secured by a second deed
of trust (the "Second Deed of Trust") on the Property. The interest rate
and payment terms applicable to the Bridge Loan are set forth in the Bridge
Loan Note.
2. Bank shall not be required to disburse the Bridge Loan to Borrower until
the following conditions are satisfied:
(a) Borrower has delivered to Bank duly executed and acknowledged, as
appropriate, originals of this Agreement, the Bridge Loan Note, and
the Second Deed of Trust.
(b) All conditions to disbursement of the Real Estate Loan set forth in
the Standing Loan Agreement have been satisfied.
(c) Borrower has provided an ALTA title insurance policy insuring Bank
that the Second Deed of Trust constitutes a valid and enforceable lien
on the Property subject and subordinate only to the First Deed of
Trust and to such liens or other matters as Bank has approved in
writing.
(d) Borrower has delivered to Bank a Payment Guaranty executed by Prolong
International Corporation, a Nevada corporation in the principal
amount of Seven Hundred Twenty Nine Thousand and No/100 Dollars
$729,000.00.
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(e) Borrower has paid Bank a loan fee in the amount of One Thousand and
No/100 Dollars $1,000.00.
In Witness Whereof, Bank and Borrower have executed this Agreement as of the day
and year first above written.
BORROWER:
Prolong Super Lubricants Inc.
a Nevada corporation
By: /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx,
Secretary
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[LOGO OF BANK OF AMERICA] PROMISSORY NOTE
REFERENCE RATE RELATED
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$729,000.00 Loan Number: 31243
April 1, 1998 SBA Loan Number: XXX-X-XX-000-000-00-00-XX
Xxxxxx Xxxxxxx, Xxxxxxxxxx
1. BORROWER'S PROMISE TO PAY
A. For value received, the undersigned ("Borrower") promises to pay to the
order of BANK OF AMERICA COMMUNITY DEVELOPMENT BANK ("Bank") at Bank's
Office at 00000 Xxxxx Xxxx Xxxx, Xxxxx 000, Xxxxxx Xxxxxxx, Xxxxxxxxxx,
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95670 the principal sum of Seven Hundred Twenty Nine Thousand and No/100
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Dollars ($729,000.00), plus interest, on August 1, 1998 ("Maturity Date").
B. This Note evidences a loan from Bank to Borrower made for the purpose of
financing a portion of the purchase price of certain real property located
at 6 Xxxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the "Property"), as more fully
described in an Agreement for Bridge Loan between Bank and Borrower dated
April 1, 1998. This Note will be secured by a second deed of trust on the
Property.
2. INTEREST RATE AND PAYMENT TERMS
A. Principal of this Note shall bear interest at a rate per year equal to the
rate of interest publicly announced from time to time by Bank of America
National Trust and Savings Association, an affiliate of Bank
("Affiliate"), in San Francisco, California, as its reference rate, plus
one and three-quarters percentage (1.75%) points. (The reference rate is
set by Affiliate based on various factors, including Affiliate's costs and
desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans. Loans may be priced at, above
or below the reference rate.) Any change in the interest rate of this Note
shall take effect at the opening of business on the day specified in the
public announcement of a change in said reference rate. The amount of each
year's interest on the Note will be calculated on the basis of a 360 day
year and the actual number of days principal has been outstanding. This
results in more interest than if a 365 day year is used.
B. Borrower shall make interest-only payments on June 1, 1998 and on the 1st
---
day of each month thereafter, and upon payment in full of principal of
this Note. Borrower shall pay all principal and accrued interest on or
before the Maturity Date.
3. EVENTS OF DEFAULT
If any of the following events occur, at the option of Bank, exercisable in
its sole discretion, all principal and interest of this Note shall become
immediately due and payable without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character:
(a) Borrower fails to perform any obligation under this Note to pay principal
or interest, and does not cure that failure within ten (10) days after
the date when due; or
(b) An Event of Default occurs under (and as defined in) that certain
Standing Loan Agreement dated as of April 1, 1998 between Bank and
Borrower.
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4. DEFAULT RATE; COMPOUNDING
A. From and after the stated maturity of this Note, or such earlier date as
all sums owing on this Note become due and payable by acceleration or
otherwise, all sums owing on this Note, at the option of Bank, shall bear
interest until paid in full at three (3) percentage points above the rate
at which interest would otherwise accrue under this Note.
B. Any accrued interest under this Note, if not paid when due, shall bear
interest (payable on demand) at the rate of interest applicable to the
principal of this Note.
5. MISCELLANEOUS
A. All amounts payable under this Note are payable in lawful money of the
United States. Checks constitute payment only when collected.
B. Borrower agrees to pay or reimburse Bank immediately upon demand for all
costs incurred in collecting on this Note, including all attorneys' fees
(including allocated expenses for services of in-house attorneys). In any
action or reference or arbitration proceeding is instituted to enforce
this Note, the prevailing party shall be entitled to such sums as the
court, referee or arbitrator may adjudge to be reasonable attorneys' fees
in the action or proceeding (including allocated expenses for services of
in house attorneys), in addition to costs and expenses otherwise allowed
by law.
C. This Note is governed by the laws of the State of California.
D. This Note inures to and binds the heirs, successors and assigns of
Borrower and Bank. Bank may assign its rights under this Note. However,
Borrower may not assign any rights under this Note without Bank's prior
written consent.
E. If more than one person or entity are signing this Note, their obligations
under this Note will be joint and several.
IN WITNESS WHEREOF, Borrower has duly executed and delivered this Note to Bank
as of the date first above written.
Borrower:
Prolong Super Lubricants, Inc.
a Nevada corporation
By: /s/ Xxxxx Xxxxxxxx
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Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
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Xxxxxx Xxxxxxxxx,
Secretary
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[LETTERHEAD OF BANK OF AMERICA]
DEED OF TRUST, ASSIGNMENT OF RENTS
AND FIXTURE FILING
[_] If this box is checked, this document is a CONSTRUCTION TRUST DEED securing
a construction loan.
This Deed of Trust is made as of April 1, 1998, by Prolong Super Lubricants,
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Inc., a Nevada corporation, as trustor ("Trustor"), to EQUITABLE DEED COMPANY,
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a California corporation, as trustee ("Trustee"), for the benefit of BANK OF
AMERICA COMMUNITY DEVELOPMENT BANK, a California state-chartered bank, as
beneficiary ("Beneficiary"). Trustee is a subsidiary of an affiliate of
Beneficiary.
1. GRANT IN TRUST
1.1 The Property. For the purpose of securing payment and performance of the
Secured Obligations defined in Section 2 below, Trustor hereby
irrevocably and unconditionally grants, conveys, transfers and assigns to
Trustee, in trust for the benefit of Beneficiary, with power of sale and
right of entry and possession, all estate, right, title and interest
which Trustor now has or may later acquire in the following property
(collectively, the "Property"):
(a) The real property located in the County of Orange, State of
California, as described in Exhibit "A" hereto;
(b) All buildings, structures, improvements, fixtures and appurtenances
now or hereafter placed on such real property, and all apparatus and
equipment now or hereafter attached in any manner to the real
property or any building on the real property, including all pumping
plants, engines, pipes, ditches and flumes, and also all gas,
electric, cooking, heating, cooling, air conditioning, lighting,
refrigeration and plumbing fixtures and equipment, all of which
shall be considered to the fullest extent of the law to be real
property for purposes of this Deed of Trust;
(c) All easements and rights of way appurtenant to such real property;
all crops (growing or to be grown on such real property); all
standing timber upon such real property; all development rights or
credits and air rights, all water and water rights (whether
riparian, appropriative, or otherwise, and whether or not
appurtenant to such real property) and shares of stock pertaining to
such water or water rights, ownership of which affect such real
property; all minerals, oil, gas, and other hydrocarbon substances
and rights thereto in, on, under, or upon such real property;
(d) All existing and future leases, subleases, subtenancies, licenses,
occupancy agreements and concessions relating to the use and
enjoyment of all or any part of such real property, and any and all
guaranties and other agreements relating to or made in connection
with any of the foregoing;
(e) All proceeds, including all claims to and demands for them, of the
voluntary or involuntary conversion of any of the real property,
buildings or the other property described above into cash or
liquidated claims, including proceeds of all present and future
fire, hazard or casualty insurance policies and all condemnation
awards or payments now or later to be made by any public body or
decree by any court of competent jurisdiction for any taking or in
connection with any condemnation or eminent domain proceeding, and
all causes of action and their proceeds for any breach of warranty,
misrepresentation, damage or injury to, or defect in, the real
property, buildings or the other property described above or any
part of them; and
(f) All proceeds of, additions and accretions to, substitutions and
replacements for, and changes in any of the property described
above.
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1.2 Fixture Filing. This Deed of Trust constitutes a financing statement
filed as a fixture filing under Section 9402(6) of the California
Uniform Commercial Code, as amended or recodified from time to time,
covering any Property which now is or later may become a fixture
attached to the real property described in Paragraph 1.1(a) or any
building located thereon.
2. THE SECURED OBLIGATIONS
2.1 Purpose of Securing. Trustor makes the grant, conveyance, transfer and
assignment set forth in Section 1 for the purpose of securing the
following obligations (the "Secured Obligations") in any order of
priority that Beneficiary may choose:
(a) Payment of all obligations of Trustor ("Obligor") to Beneficiary
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arising under the instrument(s) or agreement(s) described below (the
"Debt Instrument"):
[X] a promissory note dated as of April 1, 1998, payable by Obligor
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as maker in the stated principal amount of Seven Hundred Twenty
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Nine Thousand and No/100 Dollars ($729,000.00) to the order of
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Beneficiary.
[X] a certain Agreement for Bridge Loan dated as of April 1, 1998,
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between Obligor and Beneficiary which provides for extensions
of credit in a principal amount not exceeding Seven Hundred
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Twenty Nine Thousand and No/100 Dollars ($729,000.00).
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[_] a certain N/A Guaranty dated N/A, in the principal amount of
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-0- Dollars ($-0-) given by Obligor to Beneficiary in
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support of the obligations of N/A to Beneficiary.
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[_] (Describe).
This Deed of Trust also secures payment of all obligations of
Obligor under the Debt Instrument which arise after the Debt
Instrument is extended, renewed, modified or amended pursuant to any
written agreement between Obligor and Beneficiary, and all
obligations of Obligor under any successor agreement or instrument
which restates and supersedes the Debt instrument in its entirety.
(b) Payment and performance of all obligations of Trustor under this
Deed of Trust; and
(c) Payment and performance of all future advances and other obligations
that Trustor (or any successor in interest to Trustor) or Obligor
(if different from Trustor) may agree to pay and/or perform (whether
as principal, surety or guarantor) to or for the benefit of
Beneficiary, when a writing signed by Trustor (or any successor in
interest to Trustor) evidences said parties' agreement that such
advance or obligation be secured by this Deed of Trust.
This Deed of Trust does not secure any obligation which expressly states
that it is unsecured, whether contained in the foregoing Debt Instrument
or in any other document, agreement or instrument.
2.2 Terms of Secured Obligations. All persons who may have or acquire an
interest in all or any part of the Property will be considered to have
notice of, and will be bound by, the terms of the Debt Instrument
described in Paragraph 2.1(a) and each other agreement or instrument
made or entered into in connection with each of the Secured Obligations.
The Debt Instrument, among other things, provides for the following:
[_] a revolving line of credit to Obligor pursuant to which Obligor may
borrow, repay extensions of credit, and re-borrow amounts which have
been repaid. The unpaid balance of the revolving line of credit may
at certain times be zero. A zero balance does not affect
Beneficiary's agreement to make further extensions of credit under
the Debt Instrument. Beneficiary's interest under this Deed of Trust
will remain in full force and effect notwithstanding a zero balance
under the revolving line of credit.
[X] an interest rate which may vary from time to time on one or more of
the obligations arising under the Debt Instrument.
3. ASSIGNMENT OF RENTS
3.1 Assignment. Trustor hereby irrevocably, absolutely, presently and
unconditionally assigns to Beneficiary all rents, royalties, issues,
profits, revenue, income and proceeds of the Property, whether now due,
past due or to become due, including all prepaid rents and security
deposits (collectively, the "Rents"), and confers upon Beneficiary the
right to collect such Rents with or without taking possession of the
Property. In the event that anyone establishes and exercises any right
to develop, bore for or mine for
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any water, gas, oil or mineral on or under the surface of the Property,
any sums that may become due and payable to Trustor as bonus or royalty
payments, and any damages or other compensation payable to Trustor in
connection with the exercise of any such rights, shall also be
considered Rents assigned under this Paragraph. This is an absolute
assignment, not an assignment for security only.
3.2 Grant of License. Notwithstanding the provisions of Paragraph 3.1,
Beneficiary hereby confers upon Trustor a license ("License") to collect
and retain the Rents as they become due and payable, so long as no Event
of Default, as defined in Paragraph 5.2. shall exist and be continuing.
If an Event of Default has occurred and is continuing. Beneficiary shall
have the right, which it may choose to exercise in its sole discretion,
to terminate this License without notice to or demand upon Trustor, and
without regard to the adequacy of the security for the Secured
Obligations.
4. RIGHTS AND DUTIES OF THE PARTIES
4.1 Representations and Warranties. Trustor represents and warrants that
Trustor lawfully possesses and holds fee simple title to all of the
Property, unless Trustor's present interest in the Property is described
in Exhibit A as a leasehold interest, in which case Trustor lawfully
possesses and holds a leasehold interest in the Property as stated in
Exhibit A.
4.2 Taxes, Assessments, Liens and Encumbrances. Trustor shall pay prior to
delinquency all taxes, levies, charges and assessments, including
assessments on appurtenant water stock, imposed by any public or quasi-
public authority or utility company which are (or if not paid, may
become) a lien on all or part of the Property or any interest in it, or
which may cause any decrease in the value of the Property or any part of
it. Trustor shall immediately discharge any lien on the Property which
Beneficiary has not consented to in writing, and shall also pay when due
each obligation secured by or reducible to a lien, charge or encumbrance
which now or hereafter encumbers or appears to encumber all or part of
the Property, whether the lien, charge or encumbrance is or would be
senior or subordinate to this Deed of Trust.
4.3 Damages and Insurance and Condemnation Proceeds.
(a) Trustor hereby absolutely and irrevocably assigns to Beneficiary,
and authorizes the payor to pay to Beneficiary, the following
claims, causes of action, awards, payments and rights to payment
(collectively, the "Claims"):
(i) all awards of damages and all other compensation payable
directly or indirectly because of a condemnation, proposed
condemnation or taking for public or private use which
affects all or part of the Property or any interest in it;
(ii) all other awards, claims and causes of action, arising out
of any breach of warranty or misrepresentation affecting all
or any part of the Property, or for damage or injury to, or
defect in, or decrease in value of all or part of the
Property or any interest in it;
(iii) all proceeds of any insurance policies payable because of
loss sustained to all or part of the Property; and
(iv) all interest which may accrue on any of the foregoing.
(b) Trustor shall immediately notify Beneficiary in writing if:
(i) any damage occurs or any injury or loss is sustained to all
or part of the Property, or any action or proceeding
relating to any such damage, injury or loss is commenced; or
(ii) any offer is made, or any action or proceeding is commenced,
which relates to any actual or proposed condemnation or
taking of all or part of the Property.
If Beneficiary chooses to do so, it may in its own name appear in
or prosecute any action or proceeding to enforce any cause of
action based on breach of warranty or misrepresentation, or for
damage or injury to, defect in, or decrease in value of all or part
of the Property, and it may make any compromise or settlement of
the action or proceeding. Beneficiary, if it so chooses, may
participate in any action or proceeding relating to condemnation or
taking of all or part of the Property, and may join Trustor in
adjusting any loss covered by insurance.
(c) All proceeds of the Claims assigned to Beneficiary under this
Paragraph shall be paid to Beneficiary. In each instance,
Beneficiary shall apply those proceeds first toward reimbursement
of all of Beneficiary's costs and expenses of recovering the
proceeds, including attorneys' fees. Trustor further authorizes
Beneficiary, at Beneficiary's option and in Beneficiary's sole
discretion, and regardless of whether there is any impairment of
the Property, (i) to apply the balance of such proceeds, or any
portion of them, to pay or prepay some or all of the Secured
Obligations in such order or proportion as Beneficiary may
determine, or (ii) to hold the balance of such proceeds, or any
portion of them, in a non-interest-bearing account to be used for
the cost of reconstruction, repair or alteration of the Property,
or (iii) to release the balance of such proceeds, or any portion
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of them, to Trustor. If any proceeds are released to Trustor,
neither Beneficiary nor Trustee shall be obligated to see to,
approve or supervise the proper application of such proceeds. If
the proceeds are held by Beneficiary to be used to reimburse
Trustor for the costs of restoration and repair of the Property,
the Property shall be restored to the equivalent of its original
condition, or such other condition as Beneficiary may approve in
writing. Beneficiary may, at Beneficiary's option, condition
disbursement of the proceeds on Beneficiary's approval of such
plans and specifications prepared by an architect satisfactory to
Beneficiary, contractor's cost estimates, architect's
certificates, waivers of liens, sworn statements of mechanics and
materialmen, and such other evidence of costs, percentage of
completion of construction, application of payments, and
satisfaction of liens as Beneficiary may reasonably require.
4.4 Insurance. Trustor shall provide and maintain in force at all times all
risk property damage insurance on the Property and such other type of
insurance on the Property as may be required by Beneficiary in its
reasonable judgment. At Beneficiary's request, Trustor shall provide
Beneficiary with a counterpart original of any policy, together with a
certificate of insurance setting forth the coverage, the limits of
liability, the carrier, the policy number and the expiration date. Each
such policy of insurance shall be in an amount, for a term, and in form
and content satisfactory to Beneficiary, and shall be written only by
companies approved by Beneficiary. In addition, each policy of hazard
insurance shall include a Form 438BFU or equivalent loss payable
endorsement in favor of Beneficiary.
4.5 Maintenance and Preservation of Property.
(a) Trustor shall keep the Property in good condition and repair and shall
not commit or allow waste of the Property. Trustor shall not remove
or demolish the Property or any part of it, or alter, restore or add
to the Property, or initiate or allow any change in any zoning or
other land use classification which affects the Property or any part
of it, except with Beneficiary's express prior written consent in
each instance.
(b) If all or part of the Property becomes damaged or destroyed, Trustor
shall promptly and completely repair and/or restore the Property in a
good and workmanlike manner in accordance with sound building
practices, regardless of whether or not Beneficiary agrees to disburse
insurance proceeds or other sums to pay costs of the work of repair or
reconstruction under Paragraph 4.3.
(c) Trustor shall not commit or allow any act upon or use of the Property
which would violate any applicable law or order of any governmental
authority, whether now existing or later to be enacted and whether
foreseen or unforeseen, or any public or private covenant, condition,
restriction or equitable servitude affecting the Property. Trustor
shall not bring or keep any article on the Property or cause or allow
any condition to exist on it, if that could invalidate or would be
prohibited by any insurance coverage required to be maintained by
Trustor on the Property or any part of it under this Deed of Trust.
(d) If Trustor's interest in the Property is a leasehold interest, Trustor
shall observe and perform all obligations of Trustor under any lease
or leases and shall refrain from taking any actions prohibited by any
lease or leases. Trustor shall preserve and protect the leasehold
estate and its value.
(e) If the Property is agricultural, Trustor shall farm the Property in a
good and husbandlike manner. Trustor shall keep all trees, vines and
crops on the Property properly cultivated, irrigated, fertilized,
sprayed and fumigated, and shall replace all dead or unproductive
trees or vines with new ones. Trustor shall prepare for harvest,
harvest, remove and sell any crops growing on the Property. Trustor
shall keep all buildings, fences, ditches, canals, xxxxx and other
farming improvements on the Property in first class condition, order
and repair.
(f) Trustor shall perform all other acts which from the character or use
of the Property may be reasonably necessary to maintain and preserve
its value.
4.6 Releases, Extensions, Modifications and Additional Security. Without
affecting the personal liability of any person, including Trustor (or
Obligor, if different from Trustor), for the payment of the Secured
Obligations or the lien of this Deed of Trust on the remainder of the
Property for the unpaid amount of the Secured Obligations, Beneficiary and
Trustee are respectively empowered as follows:
(a) Beneficiary may from time to time and without notice:
(i) release any person liable for payment of any Secured Obligation;
(ii) extend the time for payment, or otherwise alter the terms of
payment, of any Secured Obligation;
(iii) accept additional real or personal property of any kind as
security for any Secured Obligation, whether evidenced by deeds
of trust, mortgages, security agreements or any other
instruments of security; or
(iv) alter, substitute or release any property securing the Secured
Obligations.
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(b) Trustee may perform any of the following acts when requested to do so
by Beneficiary in writing:
(i) consent to the making of any plat or map of the Property or any
part of it;
(ii) join in granting any easement or creating any restriction
affecting the Property;
(iii) join in any subordination or other agreement affecting this Deed
of Trust or the lien of it; or
(iv) reconvey the Property or any part of it without any warranty.
4.7 Reconveyance. When all of the Secured Obligations have been paid in full
and no further commitment to extend credit continues, Trustee shall
reconvey the Property, or so much of it as is then held under this Deed of
Trust, without warranty to the person or persons legally entitled to it.
In the reconveyance, the grantee may be described as "the person or
persons legally entitled thereto," and the recitals of any matters or
facts shall be conclusive proof of their truthfulness. Neither Beneficiary
nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance.
4.8 Compensation and Reimbursement of Costs and Expenses.
(a) Trustor agrees to pay fees in the maximum amounts legally permitted,
or reasonable fees as may be charged by Beneficiary and Trustee when
the law provides no maximum limit, for any services that Beneficiary
or Trustee may render in connection with this Deed of Trust, including
Beneficiary's providing a statement of the Secured Obligations or
Trustee's rendering of services in connection with a reconveyance.
Trustor shall also pay or reimburse all of Beneficiary's and Trustee's
costs and expenses which may be incurred in rendering any such
services.
(b) Trustor further agrees to pay or reimburse Beneficiary for all costs,
expenses and other advances which may be incurred or made by
Beneficiary or Trustee to protect or preserve the Property or to
enforce any terms of this Deed of Trust, including the exercise of any
rights or remedies afforded to Beneficiary or Trustee or both of them
under Paragraph 5.3, whether any lawsuit is filed or not, or in
defending any action or proceeding arising under or relating to this
Deed of Trust, including attorneys' fees and other legal costs, costs
of any sale of the Property and any cost of evidence of title.
(c) Trustor shall pay all obligations arising under this Paragraph
immediately upon demand by Trustee or Beneficiary. Each such
obligation shall be added to, and considered to be part of, the
principal of the Secured Obligations, and shall bear interest from the
date the obligation arises at the rate provided in any instrument or
agreement evidencing the Secured Obligations. If more than one rate of
interest is applicable to the Secured Obligations, the highest rate
shall be used for purposes hereof. If the instrument or agreement
evidencing the Secured Obligations does not state a rate of interest,
interest shall accrue at the rate of ten percent (10%) per annum.
4.9 Exculpation and Indemnification.
(a) Beneficiary shall not be directly or indirectly liable to Trustor or
any other person as a consequence of any of the following:
(i) Beneficiary's exercise of or failure to exercise any rights,
remedies or powers granted to it in this Deed of Trust;
(ii) Beneficiary's failure or refusal to perform or discharge any
obligation or liability of Trustor under any agreement related
to the Property or under this Deed of Trust;
(iii) Beneficiary's failure to produce Rents from the Property or to
perform any of the obligations of the lessor under any lease
covering the Property;
(iv) any waste committed by lessees of the Property or any other
parties, or any dangerous or defective condition of the
Property; or
(v) any loss sustained by Trustor or any third party resulting from
any act or omission of Beneficiary in operating or managing the
Property upon exercise of the rights or remedies afforded
Beneficiary under Paragraph 5.3, unless the loss is caused by
the wilful misconduct and bad faith of Beneficiary.
Trustor hereby expressly waives and releases all liability of the
types described above, and agrees that no such liability shall be
asserted against or imposed upon Beneficiary.
(b) Trustor agrees to indemnify Trustee and Beneficiary against and hold
them harmless from all losses, damages, liabilities, claims, causes of
action, judgments, court costs, attorneys' fees and other legal
expenses, cost of evidence of title, cost of evidence of value, and
other costs and expenses which either may suffer or incur in
performing any act required or permitted by this Deed of Trust or by
law or because of any failure of Trustor to perform any of its
obligations. This agreement by Trustor to indemnify Trustee and
Beneficiary shall survive the release and cancellation of any or all
of the Secured Obligations and the full or partial release and/or
reconveyance of this Deed of Trust.
4.10 Defense and Notice of Claims and Actions. At Trustor's sole expense.
Trustor shall protect, preserve and defend the Property and title to and
right of possession of the Property, and the security of this
________________________________________________________________________________
-5-
Deed of Trust and the rights and powers of Beneficiary and Trustee
created under it, against all adverse claims. Trustor shall give
Beneficiary and Trustee prompt notice in writing if any claim is
asserted which does or could affect any of these matters, or if any
action or proceeding is commenced which alleges or relates to any
such claim.
4.11 Substitution of Trustee. From time to time, Beneficiary may
substitute a successor to any Trustee named in or acting under this
Deed of Trust in any manner now or later to be provided at law, or by
a written instrument executed and acknowledged by Beneficiary and
recorded in the office of the recorder of the county where the
Property is situated. Any such instrument shall be conclusive proof
of the proper substitution of the successor Trustee, who shall
automatically upon recordation of the instrument succeed to all
estate, title, rights, powers and duties of the predecessor Trustee,
without conveyance from it.
4.12 Site Visits, Observation and Testing. Beneficiary shall have the
right at any reasonable time to enter and visit the Property for the
purposes of performing appraisals, observing the Property, taking and
removing soil or groundwater samples, and conducting tests on any
part of the Property. Beneficiary shall have no duty, however, to
visit or observe the Property or to conduct tests, and no site visit,
observation or testing by Beneficiary shall impose any liability on
Beneficiary. In no event shall any site visit, observation or testing
by Beneficiary be a representation that Hazardous Substances are or
are not present in, on or under the Property, or that there has been
or shall be compliance with any law, regulation or ordinance
pertaining to Hazardous Substances or any other applicable
governmental law. Neither Trustor nor any other party is entitled to
rely on any site visit, observation or testing by Beneficiary.
Beneficiary owes no duty of care to protect Trustor or any other
party against, or to inform Trustor or any other party of, any
Hazardous Substances or any other adverse condition affecting the
Property. Beneficiary shall give Trustor reasonable notice before
entering the Property. Beneficiary shall make reasonable efforts to
avoid interfering with Trustor's use of the Property in exercising
any rights provided in this Paragraph. For purposes of this
Paragraph, "Hazardous Substance" means any substance, material or
waste which is or becomes designated, classified or regulated as
being "toxic" or "hazardous" or which is or become similarly
designated, classified or regulated under any federal, state or local
law, regulation or ordinance.
4.13 Impound Account. At the request of Beneficiary, Trustor will monthly
pay to Beneficiary an amount equal to one-twelfth (1/12th) of the
annual costs of taxes and assessments on the Property plus the
estimated next insurance premiums on policies of insurance required
under Paragraph 4.4 of this Deed of Trust divided by the number of
months between the date of computation and the date the insurance
premiums are due. Beneficiary may release the amounts paid under this
Paragraph to Trustor for payment by Trustor of such taxes,
assessments and insurance premiums, or Beneficiary may use such
amounts to itself pay such taxes, assessments and insurance premiums,
at Beneficiary's option.
5. ACCELERATING TRANSFERS, DEFAULT AND REMEDIES
5.1 Accelerating Transfers.
(a) "Accelerating Transfer" means any sale, contract to sell,
conveyance, encumbrance, lease, or other transfer, whether
voluntary, involuntary, by operation of law or otherwise, of all
or any material part of the Property or any interest in it,
including any transfer or exercise of any right to drill for or
to extract any water (other than for Trustor's own use), oil, gas
or other hydrocarbon substances or any mineral of any kind on or
under the surface of the Property. If Trustor is a corporation,
"Accelerating Transfer" also means any transfer or transfers of
shares possessing, in the aggregate, more than fifty percent
(50%) of the voting power. If Trustor is a partnership,
"Accelerating Transfer" also means withdrawal or removal of any
general partner, dissolution of the partnership under California
law, or any transfer or transfers of, in the aggregate, more than
fifty percent (50%) of the partnership interests.
(b) Trustor agrees that Trustor shall not make any Accelerating
Transfer, unless the transfer is preceded by Beneficiary's
express written consent to the particular transaction and
transferee. Beneficiary may withhold such consent in its sole
discretion. If any Accelerating Transfer occurs, Beneficiary in
its sole discretion may declare all of the Secured Obligations to
be immediately due and payable, and Beneficiary and Trustee may
invoke any rights and remedies provided by Paragraph 5.3 of this
Deed of Trust.
5.2 Events of Default. The occurrence of any one or more of the following
events, at the option of Beneficiary, shall constitute an event of
default ("Event of Default") under this Deed of Trust:
(a) Obligor fails to make any payment, when due, under the Debt
Instrument (after giving effect to any applicable grace period),
or any other default occurs under and as defined in the Debt
________________________________________________________________________________
-6-
Instrument or in any other instrument or agreement evidencing any
of the Secured Obligations and such default continues beyond any
applicable cure period;
(b) Trustor fails to make any payment or perform any obligation which
arises under this Deed of Trust; or
(c) Any representation or warranty made in connection with this Deed
of Trust or the Secured Obligations proves to have been false or
misleading in any material respect when made; or
(d) Any default occurs under any other deed of trust on all or any
part of the Property, or under any obligation secured by such
deed of trust, whether such deed of trust is prior to or
subordinate to this Deed of Trust.
5.3 Remedies. At any time after the occurrence of an Event of Default,
Beneficiary and Trustee shall be entitled to invoke any and all of the
rights and remedies described below, as well as any other rights and
remedies authorized by law. All of such rights and remedies shall be
cumulative, and the exercise of any one or more of them shall not
constitute an election of remedies.
(a) Beneficiary may declare any or all of the Secured Obligations to
be due and payable immediately.
(b) Beneficiary may apply to any court of competent jurisdiction for,
and obtain appointment of, a receiver for the Property.
(c) Beneficiary, in person, by agent or by court-appointed receiver,
may enter, take possession of, manage and operate all or any part
of the Property, and in its own name or in the name of Trustor xxx
for or otherwise collect any and all Rents, including those that
are past due, and may also do any and all other things in
connection with those actions that Beneficiary may in its sole
discretion consider necessary and appropriate to protect the
security of this Deed of Trust. Such other things may include;
entering into, enforcing, modifying, or cancelling leases on such
terms and conditions as Beneficiary may consider proper; obtaining
and evicting tenants; fixing or modifying Rents; completing any
unfinished construction; contracting for and making repairs and
alterations; performing such acts of cultivation or irrigation as
necessary to conserve the value of the Property; and preparing for
harvest, harvesting and selling any crops that may be growing on
the property. Trustor hereby irrevocably constitutes and appoints
Beneficiary as its attorney-in-fact to perform such acts and
execute such documents as Beneficiary in its sole discretion may
consider to be appropriate in connection with taking these
measures, including endorsement of Trustor's name on any
instruments. Trustor agrees to deliver to Beneficiary all books
and records pertaining to the Property, including computer-
readable memory and any computer hardware or software necessary to
access or process such memory, as may reasonably be requested by
beneficiary in order to enable Beneficiary to exercise its rights
under this Paragraph.
(d) Either Beneficiary or Trustee may cure any breach or default of
Trustor, and if it chooses to do so in connection with any such
cure, Beneficiary or Trustee may also enter the Property and/or do
any and all other things which it may in its sole discretion
consider necessary and appropriate to protect the security of this
Deed of Trust. Such other things may include: appearing in and/or
defending any action or proceeding which purports to affect the
security of, or the rights or powers of Beneficiary or Trustee
under, this Deed of Trust; paying, purchasing, contesting or
compromising any encumbrance, charge, lien or claim of lien which
in Beneficiary's or Trustee's sole judgment is or may be senior in
priority to this Deed of Trust, such judgment of Beneficiary or
Trustee to be conclusive as among the parties to this Deed of
Trust; obtaining insurance and/or paying any premiums or charges
for insurance required to be carried under this Deed of Trust;
otherwise caring for and protecting any and all of the Property;
and/or employing counsel, accountants, contractors and other
appropriate persons to assist Beneficiary or Trustee. Beneficiary
and Trustee may take any of the actions permitted hereunder either
with or without giving notice to any person.
(e) Beneficiary may bring an action in any court of competent
jurisdiction to foreclose this instrument or to obtain specific
enforcement of any of the covenants or agreements of this Deed of
Trust.
(f) Beneficiary may cause the Property to be sold by Trustee as
permitted by applicable law. Before any such trustee's sale,
Beneficiary or Trustee shall give such notice of default and
election to sell as may then be required by law. When all time
periods then legally mandated have expired, and after such notice
of sale as may then be legally required has been given, Trustee
shall sell the Property, either as a whole or in separate parcels.
and in such order as Trustee may determine, at a public auction to
be held at the time and place specified in the notice of sale.
Neither Trustee nor Beneficiary shall have any obligation to make
demand on Trustor before any trustee's sale. From time to time in
accordance with then applicable law, Trustee may, and in any event
at Beneficiary's request shall, postpone any trustee's sale by
public announcement at the time and place noticed for that sale.
At any trustee's sale, Trustee shall sell to the highest bidder at
public auction for cash in lawful money of the United States. Any
person, including Trustor, Trustee or
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-7-
Beneficiary, may purchase at the trustee's sale. Trustee shall
execute and deliver to the purchaser(s) a deed or deeds conveying
the property being sold without any covenant or warranty
whatsoever, express or implied. The recitals in any such deed of
any matters or facts, including any facts bearing upon the
regularity or validity of any trustee's sale, shall be conclusive
proof of their truthfulness. Any such deed shall be conclusive
against all persons as to the facts recited in it.
5.4 Application of Sale Proceeds and Rents.
(a) Beneficiary and Trustee shall apply the proceeds of any sale of
the Property in the following manner: first, to pay the portion of
the Secured Obligations attributable to the costs, fees and
expenses of the sale, including costs of evidence of title in
connection with the sale; and, second, to pay all other Secured
Obligations in any order and proportions as Beneficiary in its
sole discretion may choose. The remainder, if any, shall be
remitted to the person or persons entitled thereto.
(b) Beneficiary shall apply any and all Rents collected by it, and any
and all sums other than proceeds of any sale of the Property which
Beneficiary may receive or collect under Paragraph 5.3, in the
following manner: first, to pay the portion of the Secured
obligations attributable to the costs and expenses of operation
and collection that may be incurred by Trustee, Beneficiary or any
receiver; and, second, to pay all other Secured Obligations in any
order and proportions as Beneficiary in its sole discretion may
choose. The remainder, if any, shall be remitted to the person or
persons entitled thereto. Beneficiary shall have no liability for
any funds which it does not actually receive.
6. MISCELLANEOUS PROVISIONS
6.1 No Waiver or Cure.
(a) Each waiver by Beneficiary or Trustee must be in writing, and no
waiver shall be construed as a continuing waiver. No waiver shall
be implied from any delay or failure by Beneficiary or Trustee to
take action on account of any default of Trustor. Consent by
Beneficiary or Trustee to any act or omission by Trustor shall not
be construed as a consent to any other or subsequent act or
omission or to waive the requirement for Beneficiary's or
Trustee's consent to be obtained in any future or other instance.
(b) If any of the events described below occurs, that event alone
shall not cure or waive any breach, Event of Default or notice of
default under this Deed of Trust or invalidate any act performed
pursuant to any such default or notice; or nullify the effect of
any notice of default or sale (unless all Secured Obligations then
due have been paid and performed); or impair the security of this
Deed of Trust; or prejudice Beneficiary, Trustee or any receiver
in the exercise of any right or remedy afforded any of them under
this Deed of Trust; or be construed as an affirmation by
Beneficiary of any tenancy, lease or option, or a subordination of
the lien of this Deed of Trust:
(i) Beneficiary, its agent or a receiver takes possession of all
or any part of the Property;
(ii) Beneficiary collects and applies Rents, either with or
without taking possession of all or any part of the
Property;
(iii) Beneficiary receives and applies to any Secured Obligation
proceeds of any Property, including any proceeds of
insurance policies, condemnation awards, or other claims,
property or rights assigned to Beneficiary under this Deed
of Trust;
(iv) Beneficiary makes a site visit, observes the Property and/or
conducts tests thereon;
(v) Beneficiary receives any sums under this Deed of Trust or
any proceeds of any collateral held for any of the Secured
Obligations, and applies them to one or more Secured
Obligations;
(vi) Beneficiary, Trustee or any receiver performs any act which
it is empowered or authorized to perform under this Deed of
Trust or invokes any right or remedy provided under this
Deed of Trust.
6.2 Powers of Beneficiary and Trustee.
(a) Trustee shall have no obligation to perform any act which it is
empowered to perform under this Deed of Trust unless it is
requested to do so in writing and is reasonably indemnified
against loss, cost, liability and expense.
(b) Beneficiary may take any of the actions permitted under Paragraphs
5.3(b) and/or 5.3(c) regardless of the adequacy of the security
for the Secured Obligations, or whether any or all of the Secured
Obligations have been declared to be immediately due and payable,
or whether notice of default and election to sell has been given
under this Deed of Trust.
________________________________________________________________________________
-8-
(c) From time to time, Beneficiary or Trustee may apply to any court
of competent jurisdiction for aid and direction in executing the
trust and enforcing the rights and remedies created under this
Deed of Trust. Beneficiary or Trustee may from time to time obtain
orders or decrees directing, confirming or approving acts in
executing this trust and enforcing these rights and remedies.
6.3 Nonborrower Trustor.
(a) If any Trustor ("Nonborrower Trustor") is not the Obligor under
the Debt Instrument described in Paragraph 2.1(a), such
Nonborrower Trustor authorizes Beneficiary to perform any of the
following acts at any time, all without notice to Nonborrower
Trustor and without affecting Beneficiary's rights or Nonborrower
Trustor's obligations under this Deed of Trust:
(i) Beneficiary may alter any terms of the Debt Instrument or
any part of it, including renewing, compromising, extending
or accelerating, or otherwise changing the time for payment
of, or increasing or decreasing the rate of interest on,
the Debt Instrument or any part of it;
(ii) Beneficiary may take and hold security for the Debt
Instrument, accept additional or substituted security for
the Debt Instrument, and subordinate, exchange, enforce,
waive, release, compromise, fail to perfect, sell or
otherwise dispose of any such security;
(iii) Beneficiary may apply any security now or later held for
the Debt Instrument in any order that Beneficiary in its
sole discretion may choose, and may direct the order and
manner of any sale of all or any part of it and bid at any
such sale;
(iv) Beneficiary may release Obligor of its liability for the
Debt Instrument or any part of it; and
(v) Beneficiary may substitute, add or release any one or more
guarantors or endorsers of the Debt Instrument.
(b) Nonborrower Trustor waives:
(i) Any right it may have to require Beneficiary to proceed
against Obligor, proceed against or exhaust any security
held from Obligor, or pursue any other remedy in
Beneficiary's power to pursue;
(ii) Any defense based on any legal disability of Obligor, any
discharge or limitation of the liability of Obligor to
Beneficiary, whether consensual or arising by operation of
law or any bankruptcy, reorganization, receivership,
insolvency, or debtor-relief proceeding, or from any other
cause, or any claim that Nonborrower Trustor's obligations
exceed or are more burdensome than those of Obligor;
(iii) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of
dishonor, notices of acceptance of this Deed of Trust and
of the existence, creation, or incurring of new or
additional indebtedness of Obligor, and demands and notices
of every kind;
(iv) Any defense based on or arising out of any defense that
Obligor may have to the payment or performance of the Debt
Instrument or any part of it; and
(v) All rights of subrogation, reimbursement, indemnification
and contribution (contractual, statutory or otherwise),
including any claim or right of subrogation under the
Bankruptcy Code (Title 11 of the U.S. Code) or any
successor statute, all rights to enforce any remedy that
the Beneficiary may have against Obligor, and all rights to
participate in any security now or later to be held by
Beneficiary for the Debt Instrument.
(c) Nonborrower Trustor assumes full responsibility for keeping
informed of Obligor's financial condition and business operations
and all other circumstances affecting Obligor's ability to pay and
perform its obligations to Beneficiary, and agrees that
Beneficiary shall have no duty to disclose to Nonborrower Trustor
any information which Beneficiary may receive about Obligor's
financial condition, business operations, or any other
circumstances bearing on its ability to perform.
(d) For purposes of this Paragraph 6.3, all references to the Debt
Instrument shall also include any instrument or agreement executed
by Obligor subsequent to the date of this Deed of Trust which is
secured by this Deed of Trust in accordance with the provisions of
Paragraph 2.1(c).
6.4 Merger. No merger shall occur as a result of Beneficiary's acquiring
any other estate in or any other lien on the Property unless
Beneficiary consents to a merger in writing.
6.5 Joint and Several Liability. If Trustor consists of more than one
person, each shall be jointly and severally liable for the faithful
performance of all of Trustor's obligations under this Deed of Trust.
6.6 Applicable Law. This Deed of Trust shall be governed by California
law.
________________________________________________________________________________
-9-
6.7 Successors in Interest. The terms, covenants and conditions of this
Deed of Trust shall be binding upon and inure to the benefit of the
heirs, successors and assigns of the parties. However, this Paragraph
does not waive the provisions of Paragraph 5.1.
6.8 Interpretation. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice
versa, and each gender will include any other gender. The captions of
the sections of this Deed of Trust are for convenience only and do
not define or limit any terms or provisions. The word "include(s)"
means "include(s), without limitation," and the word "including"
means "including, but not limited to." The word "obligations" is used
in its broadest and most comprehensive sense, and includes all
primary, secondary, direct, indirect, fixed and contingent
obligations. It further includes all principal, interest, prepayment
charges, late charges, loan fees and any other fees and charges
accruing or assessed at any time, as well as all obligations to
perform acts or satisfy conditions. No listing of specific instances,
items or matters in any way limits the scope or generality of any
language of this Deed of Trust. The Exhibits to this Deed of Trust
are hereby incorporated in this Deed of Trust.
6.9 In-House Counsel Fees. Whenever Trustor is obligated to pay or
reimburse Beneficiary or Trustee for any attorneys' fees, those fees
shall include the allocated costs for services of in-house counsel.
6.10 Waiver of Marshaling. Trustor waives all rights, legal and equitable,
it may now or hereafter have to require marshaling of assets or to
direct the order in which any of the Property will be sold in the
event of any sale under this Deed of Trust, including any rights
provided by California Civil Code Sections 2899 and 3433, as such
Sections may be amended from time to time. Each successor and assign
of Trustor, including any holder of a lien subordinate to this Deed
of Trust, by acceptance of its interest or lien agrees that it shall
be bound by the above waiver, as if it had given the waiver itself.
6.11 Severability. If any provision of this Deed of Trust should be held
unenforceable or void, that provision shall be deemed severable from
the remaining provisions and in no way affect the validity of this
Deed of Trust except that if such provision relates to the payment of
any monetary sum, then Beneficiary may, at its option, declare all
Secured Obligations immediately due and payable.
6.12 Notices. Trustor hereby requests that a copy of notice of default and
notice of sale be mailed to it at the address set forth below. That
address is also the mailing address of Trustor as debtor under the
California Uniform Commercial Code. Beneficiary's address given below
is the address for Beneficiary as secured party under the California
Uniform Commercial Code.
[_] If this box is checked, N/A signs as Trustor solely for the
---
purpose of subjecting any potential community property interest
in the Property to this Deed of Trust.
ADDRESSES WHERE NOTICES TO TRUSTOR(S) ARE TO BE SENT:
PROLONG SUPER LUBRICANTS, INC.
6 Xxxxxx
Xxxxxx, XX 00000
ADDRESS WHERE NOTICES TO BENEFICIARY ARE TO BE SENT:
BANK OF AMERICA COMMUNITY DEVELOPMENT BANK
X.X. Xxx 0000
Xxxxxx Xxxxxxx, XX 00000
TRUSTOR:
Prolong Super Lubricants, Inc.
a Nevada corporation
By: /s/ Xxxxx Xxxxxxxx
-------------------------
Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
-------------------------
Xxxxxx Xxxxxxxxx,
Secretary
________________________________________________________________________________
-10-
GENERAL ACKNOWLEDGMENT
(State of California )
(County of Orange )
On 04/14/98, before me, X. XXXX personally appeared Xxxxx Xxxxxxxx & Xxxxxx
Xxxxxxxxx, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
Signature /s/ X. XXXX
---------------------------
________________________________________________________________________________
-11-
________________________________________________________________________________
EXHIBIT/ATTACHMENT
TO DOCUMENTATION
EXHIBIT "A"
(Legal Description)
EXHIBIT A, ATTACHED TO AND FORMING A PART OF THAT CERTAIN DEED OF TRUST,
---------
ASSIGNMENT OF RENTS AND FIXTURE FILING DATED APRIL 1, 1998, EXECUTED BY TRUSTOR
IN FAVOR OF BANK OF AMERICA COMMUNITY DEVELOPMENT BANK.
ALL THAT CERTAIN LAND SITUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE,
DESCRIBED AS FOLLOWS:
Parcel 15 in the City of Irvine, County of Orange, State of California, as shown
on a Parcel Map filed in book 112, pages 17 to 25, inclusive of Parcel Maps, in
the office of the County Recorder of said County.
Except any and all oil, oil rights, minerals, mineral rights, natural gas
rights, and other hydrocarbons by whatsoever name known, geothermal steam, and
all products derived from any of the foregoing, that may be within or under the
land, together with the perpetual right of drilling, mining, exploring and
operating therefor and storing in and removing the same from the land or any
other land, including the right to whipstock or directionally drill and mine
from lands other than those hereby, oil or gas xxxxx, tunnels and shafts into,
through or across the subsurface of the land, and to bottom such whipstocked or
directionally drilled xxxxx, tunnels and shafts under and beneath or beyond the
exterior limits thereof, and to redrill, retunnel, equip, maintain, repair,
deepen and operate any such xxxxx or mines; without however, the right to drill,
mine, store, explore and operate through the surface or the upper 500 feet of
the subsurface of the land, as reserved in the deed from The Irvine Company, a
Michigan corporation, successor by merger with Irvine Industrial Complex, a
corporation, recorded August 8, 1979 in book 13260, page 763 of Official
Records.
Property Address:
6 Thomas
Xxxxxx, XX 00000
"This Deed of Trust, Assignment of Rents and Fixture Filing is second and
subordinate subject to the first Deed of Trust, Assignment of Rents and Fixture
Filing in the amount of $1,692,000.00, dated of even date herewith and recording
------------
concurrently herewith"
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-12-
===============================================================================
[LOGO OF BANK OF AMERICA APPEARS HERE] PAYMENT GUARANTY
(Commercial Real Estate)
_______________________________________________________________________________
This Payment Guaranty ("Guaranty") is made as of April 1, 1998 by Prolong
International Corporation, a Nevada corporation ("Guarantor") in favor of Bank
of America Community Development Bank and its successors and assigns ("Bank").
Factual Background
------------------
A. Guarantor is executing this Guaranty to induce Bank to make a bridge loan
(defined in Section 2 as the "Loan") to Prolong Super Lubricants, Inc., a
Nevada corporation ("Borrower") in the principal amount of Seven Hundred
Twenty Nine Thousand and No/100 Dollars $729,000.00. The Loan is being made
under an Agreement for Bridge Loan (the "Loan Agreement") entered into as
of April 1, 1998, between Bank and Borrower.
B. The Loan is evidenced by a promissory note (the "Note") made payable to
Bank in the principal amount of the Loan. The Note is secured by a deed of
trust ("Deed of Trust") covering certain real and personal property, as
therein described (all collectively, the "Property"). The Note may also be
secured by other collateral, as more fully explained in the Loan Agreement.
C. This Guaranty is one of several Loan Documents, as defined and designated
in the Loan Agreement. The Loan Documents also include the Loan Agreement,
the Note, the Deed of Trust and certain other specified instruments and
agreements.
Guaranty
--------
1. Guaranty of Loan. Guarantor unconditionally guaranties to Bank the full
----------------
payment of and performance of Borrower's obligations in connection with the
Loan, and unconditionally agrees to pay Bank the full amount of the Loan.
This is a guaranty of payment, not of collection. If Borrower defaults in
the payment when due of the Loan or any part of it, Guarantor shall in
lawful money of the United States pay to Bank or order, on demand, all sums
due and owing on the Loan, including all interest, charges, fees and other
sums, costs and expenses.
2. Loan. ln this Guaranty, the term "Loan" is broadly defined to mean and
----
include all primary, secondary, direct, indirect, fixed and contingent
obligations of Borrower to pay principal, interest, prepayment charges,
late charges, loan fees and any other fees, charges, sums, costs and
expenses which may be owing at any time under the Note or the other Loan
Documents, as any or all of them may from time to time be modified,
amended, extended or renewed. For purposes of this Guaranty, the Loan
includes any and all such obligations which may arise in connection with
(a) Hazardous Substances, as defined in the Loan Agreement, and (b) any
advances made before recording of the Deed of Trust. If the amount
outstanding under the Loan is determined by a court of competent
jurisdiction, that determination shall be conclusive and binding on
Guarantor, regardless of whether Guarantor was a party to the proceeding in
which the determination was made or not.
3. Rights of Bank. Guarantor authorizes Bank to perform any or all of the
--------------
following acts at any time in its sole discretion, all without notice to
Guarantor and without affecting Guarantor's obligations under this
Guaranty:
(a) Bank may alter any terms of the Loan or any part of it, including
renewing, compromising, extending or accelerating, or otherwise
changing the time for payment of, or increasing or decreasing the rate
of interest on, the Loan or any part of it.
(b) Bank may take and hold security for the Loan or this Guaranty, accept
additional or substituted security for either, and subordinate,
exchange, enforce, waive, release, compromise, fail to perfect and
sell or otherwise dispose of any such security.
________________________________________________________________________________
-1-
________________________________________________________________________________
(c) Bank may direct the order and manner of any sale of all or any part of
any security now or later to be held for the Loan or this Guaranty,
and Bank may also bid at any such sale.
(d) Bank may apply any payments or recoveries from Borrower, Guarantor or
any other source, and any proceeds of any security, to Borrower's
obligations under the Loan Documents in such manner, order and
priority as Bank may elect, whether or not those obligations are
guarantied by this Guaranty or secured at the time of the application.
(e) Bank may release Borrower of its liability for the Loan or any part of
it.
(f) Bank may substitute, add or release any one or more guarantors or
endorsers.
(g) In addition to the Loan, Bank may extend other credit to Borrower, and
may take and hold security for the credit so extended, all without
affecting Guarantor's liability under this Guaranty.
4. Guaranty to be Absolute. Guarantor expressly agrees that until the Loan is
-----------------------
paid and performed in full and each and every term, covenant and condition
of this Guaranty is fully performed, Guarantor shall not be released by or
because of:
(a) Any act or event which might otherwise discharge, reduce, limit or
modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or other act
or omission of Bank, or its failure to proceed promptly or otherwise
as against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance which might increase the
likelihood that Guarantor may be called upon to perform under this
Guaranty or which might affect the rights or remedies of Guarantor as
against Borrower; or
(d) Any dealings occurring at any time between Borrower and Bank, whether
relating to the Loan or otherwise.
Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts,
omissions, agreements, waivers or matters. It is the purpose and intent of
this Guaranty that the obligations of Guarantor under it shall be absolute
and unconditional under any and all circumstances.
5. Guarantor's Waivers. Guarantor waives:
-------------------
(a) All statutes of limitations as a defense to any action or proceeding
brought against Guarantor by Bank, to the fullest extent permitted by
law;
(b) Any right it may have to require Bank to proceed against Borrower,
proceed against or exhaust any security held from Borrower, or pursue
any other remedy in Bank's power to pursue;
(c) Any defense based on any claim that Guarantor's obligations exceed or
are more burdensome than those of Borrower;
(d) Any defense based on:
(i) any legal disability of Borrower,
(ii) any release, discharge, modification, impairment or limitation
of the liability of Borrower to Bank from any cause, whether
consented to by Bank or arising by operation of law or from any
bankruptcy or other voluntary or involuntary proceeding, in or
out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding") and
(iii) any rejection or disaffirmance of the Loan, or any part of it,
or any security held for it, in any such Insolvency Proceeding;
_______________________________________________________________________________
-2-
________________________________________________________________________________
(e) Any defense based on any action taken or omitted by Bank in any
Insolvency Proceeding involving Borrower, including any election to
have Bank's claim allowed as being secured, partially secured or
unsecured, any extension of credit by Bank to Borrower in any
Insolvency Proceeding, and the taking and holding by Bank of any
security for any such extension of credit;
(f) All presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional indebtedness, and demands and notices
of every kind except for any demand or notice by Bank to Guarantor
expressly provided for in Section 1; and
(g) Any defense based on or arising out of any defense that Borrower may
have to the payment or performance of the Loan or any part of it.
6. Waivers of Subrogation and Other Rights.
---------------------------------------
(a) Upon a default by Borrower, Bank in its sole discretion, without prior
notice to or consent of Guarantor, may elect to:
(i) foreclose either judicially or nonjudicially against any real
or personal property security it may hold for the Loan,
(ii) accept a transfer of any such security in lieu of foreclosure,
(iii) compromise or adjust the Loan or any part of it or make any
other accommodation with Borrower or Guarantor, or
(iv) exercise any other remedy against Borrower or any security. No
such action by Bank shall release or limit the liability of
Guarantor, who shall remain liable under this Guaranty after
the action, even if the effect of the action is to deprive
Guarantor of any subrogation rights, rights of indemnity, or
other rights to collect reimbursement from Borrower for any
sums paid to Bank, whether contractual or arising by operation
of law or otherwise. Guarantor expressly agrees that under no
circumstances shall it be deemed to have any right, title,
interest or claim in or to any real or personal property to be
held by Bank or any third party after any foreclosure or
transfer in lieu of foreclosure of any security for the Loan.
(b) Regardless of whether Guarantor may have made any payments to Bank,
Guarantor forever waives:
(i) all rights of subrogation, all rights of indemnity, and any
other rights to collect reimbursement from Borrower for any
sums paid to Bank, whether contractual or arising by operation
of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise,
(ii) all rights to enforce any remedy that Bank may have against
Borrower, and (iii) all rights to participate in any security
now or later to be held by Bank for the Loan.
7. Revival and Reinstatement. If Bank is required to pay, return or restore to
-------------------------
Borrower or any other person any amounts previously paid on the Loan
because of any Insolvency Proceeding of Borrower, any stop notice or any
other reason, the obligations of Guarantor shall be reinstated and revived
and the rights of Bank shall continue with regard to such amounts, all as
though they had never been paid.
8. Information Regarding Borrower and the Property. Before signing this
-----------------------------------------------
Guaranty, Guarantor investigated the financial condition and business
operations of Borrower, the present and former condition, uses and
ownership of the Property, and such other matters as Guarantor deemed
appropriate to assure itself of Borrower's ability to discharge its
obligations under the Loan Documents. Guarantor assumes full
responsibility for that due diligence, as well as for keeping informed of
all matters which may affect Borrower's ability to pay and perform its
obligations to Bank. Bank has no duty to disclose to Guarantor any
information which Bank may have or receive about Borrower's financial
condition or business operations, the condition or uses of the Property, or
any other circumstances bearing on Borrower's ability to perform.
______________________________________________________________________________
-3-
________________________________________________________________________________
9. Subordination. Any rights of Guarantor, whether now existing or later
-------------
arising, to receive payment on account of any indebtedness (including
interest) owed to it by Borrower or any subsequent owner of the Property,
or to withdraw capital invested by it in Borrower, or to receive
distributions from Borrower, shall at all times be subordinate as to lien
and time of payment and in all other respects to the full and prior
repayment to Bank of the Loan. Guarantor shall not be entitled to enforce
or receive payment of any sums hereby subordinated until the Loan has been
paid and performed in full and any such sums received in violation of this
Guaranty shall be received by Guarantor in trust for Bank. The foregoing
notwithstanding, Guarantor is not prohibited from receiving (a) such
reasonable management fees or reasonable salary from Borrower as Bank may
find acceptable from time to time, and (b) distributions from Borrower in
an amount equal to any income taxes imposed on Guarantor which are
attributable to Borrower's income from the Property.
10. Financial Information. Guarantor shall keep true and correct financial
---------------------
books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as Bank in its
reasonable judgment may find acceptable from time to time. Guarantor shall
provide Bank Guarantor's annual CPA-audited financial statements, including
------
a year-end balance sheet and annual profit and loss statement within 90
days of fiscal year-end and shall provide copies of its 10K annually within
30 days of filing. Guarantor shall promptly provide Bank with any
additional audited financial information that Guarantor may obtain, as well
as signed copies of any tax returns and such other information concerning
its affairs and properties as Bank may reasonably request.
Guarantor represents and warrants that:
(a) all financial statements and other financial information furnished or
to be furnished to Bank are or will be true and correct and do or will
fairly represent the financial condition of Guarantor (including all
contingent liabilities);
(b) all financial statements were or will be prepared in accordance with
generally accepted accounting principles, or such other accounting
principles as may be acceptable to Bank at the time of their
preparation, consistently applied; and
(c) there has been no material adverse change in Guarantor's financial
condition since the dates of the statements most recently furnished to
Bank.
11. Events of Default. Bank may declare Guarantor to be in default under this
-----------------
Guaranty upon the occurrence of any of the following events ("Events of
Default"):
(a) Guarantor fails to perform any of its obligations under this Guaranty;
or
(b) Guarantor revokes this Guaranty or this Guaranty becomes ineffective
for any reason; or
(c) Any representation or warranty made or given by Guarantor to Bank
proves to be false or misleading in any material respect; or
(d) Guarantor becomes insolvent or the subject of any Insolvency
Proceeding; or
(e) Guarantor dissolves or liquidates, or any of these events happens to
any of Guarantor's general partners or to its chief executive or
majority shareholder.
________________________________________________________________________________
-4-
________________________________________________________________________________
12. Reference and Arbitration.
-------------------------
(a) Judicial Reference. ln any judicial action between or among the
------------------
parties, including any action or cause of action arising out of or
relating to this Guaranty or the Loan Documents or based on or arising
from an alleged tort, all decisions of fact and law shall at the
request of any party be referred to a referee in accordance with
California Code of Civil Procedure Sections 638 et seq. The parties
------
shall designate to the court a referee or referees selected under the
auspices of the American Arbitration Association ("AAA") in the same
manner as arbitrators are selected in AAA-sponsored proceedings. The
presiding referee of the panel, or the referee if there is a single
referee, shall be an active attorney or retired judge. Judgment upon
the award rendered by such referee or referees shall be entered in the
court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.
(b) Mandatory Arbitration. After the Deed of Trust has been released,
---------------------
fully reconveyed or extinguished, any controversy or claim between or
among the parties, including those arising out of or relating to this
Guaranty or the Loan Documents and any claim based on or arising from
an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the
United States Arbitration Act (Title 9, U.S. Code), notwithstanding
any choice of law provision in this Guaranty, and under the Commercial
Rules of the AAA. The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in
any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary
remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial
relief.
(c) Real Property Collateral. Notwithstanding the provisions of subsection
------------------------
12(b), no controversy or claim shall be submitted to arbitration
without the consent of all parties if, at the time of the proposed
submission, such controversy or claim arises from or relates to an
obligation by Guarantor or Borrower to Bank which is secured by real
property collateral. If all parties do not consent to submission of
such a controversy or claim to arbitration, the controversy or claim
shall be determined by reference as provided in subsection 12(a).
(d) Provisional Remedies, Self-Help and Foreclosure. No provision of this
----------------------------------- -----------
Section 12 shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or
ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding.
The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At Bank's option, foreclosure
under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
13. Authorization; No Violation. Guarantor is authorized to execute, deliver
---------------------------
and perform under this Guaranty, which is a valid and binding obligation of
Guarantor. No provision or obligation of Guarantor contained in this
Guaranty violates any applicable law, regulation or ordinance, or any order
or ruling of any court or governmental agency. No such provision or
obligation conflicts with, or constitutes a breach or default under, any
agreement to which Guarantor is a party.
14. Additional and Independent Obligations. Guarantor's obligations under this
--------------------------------------
Guaranty are in addition to its obligations under any other existing or
future guaranties, each of which shall remain in full force and effect
until it is expressly modified or released in a writing signed by Bank.
Guarantor's obligations under this Guaranty are independent of those of
Borrower on the Loan. Bank may bring a separate action, or commence a
separate reference or arbitration proceeding against Guarantor without
first proceeding against Borrower, any other person or any security that
Bank may hold, and without pursuing any other remedy. Bank's rights under
this Guaranty shall not be exhausted by any action by Bank until the Loan
has been paid and performed in full.
_______________________________________________________________________________
-5-
________________________________________________________________________________
15. No Waiver; Consents; Cumulative Remedies. Each waiver by Bank must be in
----------------------------------------
writing, and no waiver shall be construed as a continuing waiver. No waiver
shall be implied from Bank's delay in exercising or failure to exercise any
right or remedy against Borrower, Guarantor or any security. Consent by
Bank to any act or omission by Borrower or Guarantor shall not be construed
as a consent to any other or subsequent act or omission, or as a waiver of
the requirement for Bank's consent to be obtained in any future or other
instance. All remedies of Bank against Borrower and Guarantor are
cumulative.
16. No Release. Guarantor shall not be released from its obligations under this
----------
Guaranty except by a writing signed by Bank.
17. Heirs, Successors and Assigns; Participations. The terms of this Guaranty
---------------------------------------------
shall bind and benefit the heirs, legal representatives, successors and
assigns of Bank and Guarantor; provided, however, that Guarantor may not
assign this Guaranty, or assign or delegate any of its rights or
obligations under this Guaranty, without the prior written consent of Bank
in each instance. Bank in its sole discretion may sell or assign
participations or other interests in the Loan and this Guaranty, in whole
or in part, all without notice to or the consent of Guarantor and without
affecting Guarantor's obligations under this Guaranty. Also without notice
to or the consent of Guarantor, Bank may disclose any and all information
in its possession concerning Guarantor, this Guaranty and any security for
this Guaranty to any actual or prospective purchaser of any securities
issued or to be issued by Bank, and to any actual or prospective purchaser
or assignee of any participation or other interest in the Loan and this
Guaranty.
18. Notices. All notices given under this Guaranty must be in writing and shall
-------
be effectively served upon delivery, or if mailed, upon the first to occur
of receipt or the expiration of forty-eight hours after deposit in
certified United States mail, postage prepaid, sent to the party at its
address given at the end of this Guaranty. Those addresses may be changed
by Bank or Guarantor by written notice to the other party. Service of any
notice on any one Guarantor signing this Guaranty shall be effective
service on Guarantor for all purposes.
19. Rules of Construction. In this Guaranty, the word "Borrower" includes both
---------------------
the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations
of the named Borrower on the Loan. The word "person" includes any
individual, company, trust or other legal entity of any kind. If this
Guaranty is executed by more than one person, the word "Guarantor" includes
all such persons. The word "include(s)" means "include(s), without
limitation," and the word "including" means "including, but not limited
to." When the context and construction so require, all words used in the
singular shall be deemed to have been used in the plural and vice versa. No
listing of specific instances, items or matters in any way limits the scope
or generality of any language of this Guaranty. All headings appearing in
this Guaranty are for convenience only and shall be disregarded in
construing this Guaranty.
20. Governing Law. This Guaranty shall be governed by, and construed in
-------------
accordance with, the laws of the State of California.
21. Costs and Expenses. If any lawsuit, reference or arbitration is commenced
------------------
which arises out of, or which relates to this Guaranty, the Loan Documents
or the Loan, the prevailing party shall be entitled to recover from each
other party such sums as the court, referee or arbitrator may adjudge to be
reasonable attorneys' fees (including allocated costs for services of in-
house counsel) in the action or proceeding, in addition to costs and
expenses otherwise allowed by law. In all other situations, including any
Insolvency Proceeding, Guarantor agrees to pay all of Bank's costs and
expenses, including attorneys' fees (including allocated costs for services
of Bank's in-house counsel) which may be incurred in any effort to collect
or enforce the Loan or any part of it or any term of this Guaranty. From
the time(s) incurred until paid in full to Bank, all sums shall bear
interest at the default rate provided in the Note.
22. Consideration. Guarantor acknowledges that it expects to benefit from
-------------
Bank's extension of the Loan to Borrower because of its relationship to
Borrower, and that it is executing this Guaranty in consideration of that
anticipated benefit.
_____________________________________________________________________________
-6-
________________________________________________________________________________
23. Integration; Modifications. This Guaranty (a) integrates all the terms and
--------------------------
conditions mentioned in or incidental to this Guaranty, (b) supersedes all
oral negotiations and prior writings with respect to its subject matter,
and (c) is intended by Guarantor and Bank as the final expression of the
agreement with respect to the terms and conditions set forth in this
Guaranty and as the complete and exclusive statement of the terms agreed to
by Guarantor and Bank. No representation, understanding, promise or
condition shall be enforceable against any party unless it is contained in
this Guaranty. This Guaranty may not be modified except in a writing signed
by both Bank and Guarantor.
24. Miscellaneous. The death or legal incapacity of any Guarantor shall not
-------------
terminate the obligations of such Guarantor or any other Guarantor under
this Guaranty, including its obligations with regard to future advances
under the Loan Documents. The liability of all persons who are in any
manner obligated under this Guaranty shall be joint and several. The
illegality or unenforceability of one or more provisions of this Guaranty
shall not affect any other provision. Any Guarantor who is married agrees
that Bank may look to all of his or her community property and separate
property to satisfy his or her obligations under this Guaranty. Time is of
the essence in the performance of this Guaranty by Guarantor.
GUARANTOR: Notices for Guarantor:
Prolong International Corporation, 6 Xxxxxx
a Nevada Corporation Xxxxxx, XX 00000
By: /s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx, Notices for Bank:
President
By: /s/ Xxxxxx Xxxxxxxxx, X.X. Xxx 0000
-------------------- Xxxxxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxxx,
Secretary
________________________________________________________________________________
-7-
--------------------------------------------------------------------------------
Secured and Unsecured
[LOGO OF BANK OF AMERICA] Indemnity Agreement
--------------------------------------------------------------------------------
This Secured and Unsecured Indemnity Agreement ("Agreement") is made as of April
1, 1998, by Prolong Super Lubricants, Inc., a Nevada corporation ("Indemnitor")
in favor of Bank of America Community Development Bank and its successors and
assigns ("Bank").
Factual Background
------------------
A. Indemnitor is executing this Agreement to induce Bank to make a bridge loan
(the "Loan") to Indemnitor in the principal amount of Seven Hundred Twenty
Nine Thousand and No/100 Dollars ($729,000.00). The loan is being made
under the Agreement for Bridge Loan (the "Loan Agreement") entered into as
of April 1, 1998, between Bank and Indemnitor.
B. The Loan is evidenced by a promissory note (the "Note") made payable to
Bank in the principal amount of the Loan. The Loan is secured by a deed of
trust ("Deed of Trust") and may also be secured by other collateral, as
more fully explained in the Loan Agreement.
C. Because Bank is making the Loan and obtaining the Deed of Trust, Bank may
potentially become subject to certain costs, risks and liabilities.
Among other things, Bank may become subject to liabilities or alleged
liabilities relating to environmental conditions as an "owner" or
"operator" under applicable environmental law. These costs and liabilities
may arise before or after repayment of the Loan, and before or after
foreclosure under the Deed of Trust. Because these costs and liabilities,
if they occur, will be the result of Bank's agreement to make the Loan, and
in consideration of that agreement, Bank and Indemnitor have agreed as set
forth below.
1. Definitions
-----------
In addition to any terms defined elsewhere in this Agreement, as used in
this Agreement:
1.1 "Hazardous Substance" means any substance, material or waste
(including petroleum and petroleum products) which is or becomes
designated, classified or regulated as being "toxic" or "hazardous"
or a "pollutant," or which is or becomes similarly designated,
classified or regulated, under any federal state or local law,
regulation or ordinance.
1.2 "Indemnified Costs" means all actual or threatened liabilities,
claims, actions, causes of action, judgments, orders, damages
(including foreseeable and unforeseeable consequential damages),
costs, expenses, fines, penalties and losses (including sums paid
in settlement of claims and all consultant, expert and legal fees and
expenses of Bank's counsel), including those incurred in connection
with any investigation of site conditions or any clean-up, remedial,
removal or restoration work (whether of the Property, as defined
below, or any other property), or any resulting damages, harm or
injuries to the person or property of any third parties or to any
natural resources.
1.3 "Indemnified Parties" means and includes Bank, its parent, subsidiary
and affiliated companies, assignees of any of Bank's interest in the
Loan or the Loan Documents, owners of participation or other
interests in the Loan or the Loan Documents, any purchasers of the
Property at any foreclosure sale or from Bank or any of its
affiliates, and the officers, directors, employees and agents of each
of them.
1.4 "Loan Documents" means the agreements, instruments and documents
defined and designated as such in the Loan Agreement. This Agreement
is one of the Loan Documents.
1.5 "Property" means all property that is or was at any time encumbered
by the Deed of Trust, which may later include any and all property
previously released from it.
1.6 "Note Rate" means the rate of interest defined as such in the Note.
--------------------------------------------------------------------------------
Bank of America Community Development Bank
IndeM1 CAR (rev 001 09 95) -1- RLD-107911
1.
1.1
--------------------------------------------------------------------------------
II. Secured Indemnity Agreement
---------------------------
2.1 Claims Under Secured Agreement
------------------------------
No Indemnified Party shall make any claim under this Article II
(except any rights asserted in a complaint for a deficiency judgment
in a then-pending judicial foreclosure action) after the earliest to
occur of:
(a) full and final repayment of the Loan; or
(b) the completion of a judicial or nonjudicial foreclosure sale
under the Deed of Trust; or
(c) the acquisition of the Property by Bank or an affiliate of Bank
by a conveyance in lieu of foreclosure.
2.2 Secured Recourse Obligation
---------------------------
All of the rights of the Indemnified Parties under this Article II
shall be secured by the Deed of Trust. Notwithstanding any provision
of the Loan Documents, the rights of the Indemnified Parties under
this Article II shall not be affected by any provision of the Loan
Documents limiting Bank's recourse or limiting Indemnitor's liability
for the Loan.
2.3 Indemnity Regarding Hazardous Substances
----------------------------------------
Indemnitor indemnifies and holds the Indemnified parties harmless
from and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from any Hazardous Substance being
present or released in, on or around any part of the Property, or in
the soil, groundwater or soil vapor on or under the Property,
including:
(a) any claim for such Indemnified Costs asserted by any federal,
state or local governmental agency, including the United States
Environmental Protection Agency and the California Department
of Health Services, and including any claim that any
Indemnified Party is liable for any such Indemnified Costs as
an "owner" or "operator" of the Property under any law relating
to Hazardous Substances; and
(b) any such Indemnified Costs claimed against any Indemnified
Party by any person other than a governmental agency, including
any person who may purchase or lease all or any portion of the
Property from Indemnitor, from any Indemnified Party, or from
any other purchaser or lessee; any person who may at any time
have any interest in all or any portion of the Property; any
person who may at any time be responsible for any clean-up
costs or other Indemnified Costs relating to the Property; and
any person claiming to have been injured in any way as a result
of exposure to any Hazardous Substance; and
(c) any such Indemnified Costs which any Indemnified Party
reasonably believes at any time must be incurred to comply with
any law, judgment, order, regulation or regulatory directive
relating to Hazardous Substances, or which any Indemnified
Party reasonably believes at any time must be incurred to
protect the public health or safety; and
(d) any such Indemnified Costs resulting from currently existing
conditions in, on or around the Property, whether known or
unknown by Indemnitor or the Indemnified Parties at the time
this Agreement is executed, and any such Indemnified Costs
resulting from the activities of Indemnitor, Indemnitor's
tenants, or any other person in, on or around the Property.
2.4 Indemnity Regarding Construction and Other Risks
------------------------------------------------
Indemnitor indemnifies and holds the Indemnified Parties harmless
from and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from construction of any improvements on
the Property, including any defective workmanship or materials; or
any failure to satisfy any requirements of any laws, regulations,
ordinances, governmental policies or standards, reports, subdivision
maps or development agreements that apply or pertain to the Property;
or breach of any representation or warranty made or given by
Indemnitor to any of the Indemnified Parties or to any prospective or
actual buyer of all or any portion of the Property; or any claim or
cause of action of any kind by any party that any Indemnified Party
is liable for any act or omission of Indemnitor or any other person
or entity in connection with the ownership, sale, operation or
development of the Property.
--------------------------------------------------------------------------------
Bank of America Community Development Bank
IndeM1 CAR (rev 001 09 95) -2- RLD-107911
2.5 Defense of Indemnified Parties
------------------------------
Upon demand by an Indemnified Party, Indemnitor shall defend any
investigation, action or proceeding involving any Indemnified Costs
which is brought or commenced against any Indemnified Party, whether
alone or together with Indemnitor or any other person, all at
Indemnitor's own cost and by counsel to be approved by the
Indemnified Party in the exercise of its reasonable judgment. In the
alternative, any Indemnified Party may elect to conduct its own
defense at the expense of Indemnitor.
2.6 Representation and Warranty Regarding Hazardous Substances
----------------------------------------------------------
Before signing this Agreement, Indemnitor researched and inquired
into the previous uses and owners of the Property. Based on that due
diligence, Indemnitor represents and warrants that to the best of
its knowledge, no Hazardous Substance has been disposed of or
released, or otherwise now exists, in, on, under or around the
Property, except as Indemnitor has disclosed to Bank in writing.
2.7 Compliance Regarding Hazardous Substances
-----------------------------------------
Indemnitor has complied, and shall comply and cause all tenants and
any other persons who may come upon the Property to comply, with all
laws, regulations and ordinances governing or applicable to
Hazardous Substances, including those requiring disclosures to
prospective and actual buyers of all or any portion of the Property.
Indemnitor also has complied and shall comply with the
recommendations of any qualified environmental engineer or other
expert which apply or pertain to the Property.
2.8 Notices Regarding Hazardous Substances
--------------------------------------
Indemnitor shall promptly notify Bank if it knows, suspects or
believes there may be any Hazardous Substance in or around the
Property, or in the soil, groundwater or soil vapor on or under the
Property, or that Indemnitor or the Property may be subject to any
threatened or pending investigation by any governmental agency under
any law, regulation or ordinance pertaining to any Hazardous
Substance.
2.9 Site Visits, Observations and Testing
-------------------------------------
The Indemnified Parties and their agents and representatives shall
have the right at any reasonable time to enter and visit the
Property for the purposes of observing the Property, taking and
removing soil or groundwater samples, and conducting tests on any
part of the Property. The Indemnified Parties have no duty, however,
to visit or observe the Property or to conduct tests, and no site
visit, observation or testing by any Indemnified Party shall impose
any liability on any Indemnified Party. In no event shall any site
visit, observation or testing by an Indemnified Party be a
representation that Hazardous Substances are or are not present in,
on or under the Property, or that there has been or shall be
compliance with any law, regulation or ordinance pertaining to
Hazardous Substances or any other applicable governmental law.
Neither Indemnitor nor any other party is entitled to rely on any
site visit, observation or testing by any Indemnified Party. The
Indemnified Parties owe no duty of care to protect Indemnitor or any
other party against, or to inform Indemnitor or any other party of,
any Hazardous Substances or any other adverse condition affecting
the Property. Any Indemnified Party shall give Indemnitor reasonable
notice before entering the Property. The Indemnified Party shall
make reasonable efforts to avoid interfering with Indemnitor's use
of the Property in exercising any rights provided in this Section.
2.10 Costs and Expenses
------------------
Indemnitor agrees to pay all of the Indemnified Parties' costs and
expenses, including attorneys' fees, which may be incurred in any
effort to enforce any term of this Agreement, including all such
costs and expenses which may be incurred by any Indemnified Party in
any legal action, reference or arbitration proceeding. From the
time(s) incurred until paid in full to the Indemnified Party, those
sums shall bear interest at the Note Rate.
III. Unsecured Indemnity Agreement
-----------------------------
3.1 Claims Under Unsecured Agreement
--------------------------------
No Indemnified Party shall make any claim under this Article III for
indemnity against any Indemnified Cost:
-3-
(a) which was actually known to the Indemnified Party prior
to the first to occur of:
(i) full and final repayment of the Loan; or
(ii) the completion of a judicial or nonjudicial
foreclosure sale under the Deed of Trust; or
(iii) the acquisition of the Property by Bank or an
affiliate of Bank by a conveyance in lieu of
foreclosure; and
(b) which could have been lawfully and properly included as
part of the secured indebtedness under the Deed of Trust
in proceedings for a deficiency judgment following a
judicial foreclosure sale of the Property.
3.2 Not Secured By Deed of Trust
----------------------------
Notwithstanding any provision of the Loan Agreement, the Deed
of Trust or any of the Loan Documents, the rights of the
Indemnified Parties under this Article III shall not be secured
by the Deed of Trust. Notwithstanding any provision of the Loan
Documents, the rights of the Indemnified Parties under this
Article III shall not be affected by any provision of the Loan
Documents limiting Bank's recourse or limiting Indemnitor's
liability for the Loan.
3.3 Indemnity Regarding Hazardous Substances
----------------------------------------
Indemnitor indemnifies and holds the Indemnified Parties
harmless from and against any and all Indemnified Costs
directly or indirectly arising out of or resulting from any
Hazardous Substance being present or released in, on or around
any part of the Property, or in the soil, groundwater or soil
vapor on or under the Property, including:
(a) any claim for such Indemnified Costs asserted by any
federal, state or local governmental agency, including
the United States Environmental Protection Agency and
the California Department of Health Services, and
including any claim that any Indemnified Party is liable
for any such Indemnified Costs as an "owner" or
"operator" of the Property under any law relating to
Hazardous Substances; and
(b) any such Indemnified Costs claimed against any
Indemnified Party by any person other than a
governmental agency, including any person who may
purchase or lease all or any portion of the Property
from Indemnitor, from any Indemnified Party, or from any
other purchaser or lessee; any person who may at any
time have any interest in all or any portion of the
Property; any person who may at any time be responsible
for any clean-up costs or other Indemnified Costs
relating to the Property; and any person claiming to
have been injured in any way as a result of exposure to
any Hazardous Substance; and
(c) any such Indemnified Costs which any Indemnified Party
reasonably believes at any time must be incurred to
comply with any law, judgment, order, regulation or
regulatory directive relating to Hazardous Substances,
or which any Indemnified Party reasonably believes at
any time must be incurred to protect the public health
or safety; and
(d) any such Indemnified Costs resulting from currently
existing conditions in, on or around the Property,
whether known or unknown by Indemnitor or the
Indemnified Parties at the time this Agreement is
executed, and any such Indemnified Costs resulting from
the activities of Indemnitor, Indemnitor's tenants, or
any other person in, on or around the Property.
3.4 Indemnity Regarding Construction and Other Risks
------------------------------------------------
Indemnitor indemnifies and holds the Indemnified Parties harmless
from and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from construction of any improvements on
the Property, including any defective workmanship or materials; or
any failure to satisfy any requirements of any laws, regulations,
ordinances, governmental policies or standards, reports, subdivision
maps or development agreements that apply or pertain to the Property;
or breach of any representation or warranty made or given by
Indemnitor to any of the Indemnified Parties or to any prospective or
actual buyer of all or any portion of the Property; or any claim or
cause of action of any kind by any party that any Indemnified Party
is liable for any act or omission of Indemnitor or any other person
or entity in connection with the ownership sale, operation or
development of the Property.
--------------------------------------------------------------------------------
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3.5 Defense of Indemnified Parties
------------------------------
Upon demand by any Indemnified Party, Indemnitor shall defend any
investigation, action or proceeding involving any Indemnified Costs
which is brought or commenced against any Indemnified Party, whether
alone or together with Indemnitor or any other person, all at
Indemnitor's own cost and by counsel to be approved by the
Indemnified Party in the exercise of its reasonable judgment. In the
alternative, any Indemnified Party may elect to conduct its own
defense at the expense of Indemnitor.
3.6 Representation and Warranty Regarding Hazardous Substances
----------------------------------------------------------
Before signing this Agreement, Indemnitor researched and inquired
into the previous uses and owners of the Property. Based on that due
diligence, Indemnitor represents and warrants that to the best of its
knowledge, no Hazardous Substance has been disposed of or released,
or otherwise now exists, in, on, under or around the Property, except
as Indemnitor has disclosed to Bank in writing.
3.7 Compliance Regarding Hazardous Substances
-----------------------------------------
Indemnitor has complied, and shall comply and cause all tenants and
any other persons who may come upon the Property to comply, with all
laws, regulations and ordinances governing or applicable to Hazardous
Substances, including those requiring disclosures to prospective and
actual buyers of all or any portion of the Property. Indemnitor also
has complied and shall comply with the recommendations of any
qualified environmental engineer or other expert which apply or
pertain to the Property.
3.8 Notices Regarding Hazardous Substances
--------------------------------------
Indemnitor shall promptly notify Bank if it knows, suspects or
believes there may be any Hazardous Substance in or around the
Property, or in the soil, groundwater or soil vapor on or under the
Property, or that Indemnitor or the Property may be subject to any
threatened or pending investigation by any governmental agency under
any law, regulation or ordinance pertaining to any Hazardous
Substance.
3.9 Site Visits, Observations and Testing
-------------------------------------
The Indemnified Parties and their agents and representatives shall
have the right at any reasonable time to enter and visit the Property
for the purposes of observing the Property, taking and removing soil
or groundwater samples, and conducting tests on any part of the
Property. The Indemnified Parties have no duty, however, to visit or
observe the Property or to conduct tests, and no site visit,
observation or testing by any Indemnified Party shall impose any
liability on any Indemnified Party. In no event shall any site visit,
observation or testing by any Indemnified Party be a representation
that Hazardous Substances are or are not present in, on or under the
Property, or that there has been or shall be compliance with any law,
regulation or ordinance pertaining to Hazardous Substances or any
other applicable governmental law. Neither Indemnitor nor any other
party is entitled to rely on any site visit, observation or testing
by any Indemnified Party. The Indemnified Parties owe no duty of care
to protect Indemnitor or any other party against, or to inform
Indemnitor or any other party of, any Hazardous Substances or any
other party against, or to inform Indemnitor or any other party of,
any Hazardous Substances or any other adverse condition affecting the
Property. Any Indemnified Party shall give Indemnitor reasonable
notice before entering the Property. The Indemnified Party shall make
reasonable efforts to avoid interfering with Indemnitor's use of the
Property in exercising any rights provided in this Section.
3.10 Costs and Expenses
------------------
Indemnitor agrees to pay all of the Indemnified Parties' costs and
expenses, including attorneys' fees, which may be incurred in any
effort to enforce any term of this Agreement, including all such
costs and expenses which may be incurred by any Indemnified Party in
any legal action, reference or arbitration proceeding. From the
time(s) incurred until paid in full to the Indemnified Party, those
sums shall bear interest at the Note Rate.
-5-
IV. General Provisions
------------------
4.1 Events of Default
-----------------
Bank may declare Indemnitor to be in default under this Agreement
upon the occurrence of any of the following events ("Events of
Default"):
(a) Indemnitor fails to perform any of its obligations under this
Agreement; or
(b) Indemnitor revokes this Agreement or this Agreement becomes
ineffective for any reason.
4.2 Reservation of Other Rights and Remedies
----------------------------------------
Nothing in this Agreement shall be construed to limit any claim or
right which any Indemnified Party may otherwise have at any time
against Indemnitor or any other person arising from any source
other than this Agreement, including any claim for fraud,
misrepresentation, waste or breach of contract other than this
Agreement, and any rights of contribution or indemnity under
federal or state environmental law or any other applicable law,
regulation or ordinance.
4.3 Delay; Cumulative Remedies
--------------------------
If any Indemnified Party delays in exercising or fails to exercise
any right or remedy against Indemnitor, that alone shall not be
construed as a waiver of such right or remedy. All remedies of any
Indemnified Party against Indemnitor are cumulative.
4.4 Rules of Construction
---------------------
In this Agreement, the word "person" includes any individual,
company, trust or other legal entity of any kind. If this Agreement
is executed by more than one person, the word "Indemnitor" includes
all such persons. The word "include(s)" means "include(s), without
limitation," and the word "including" means "including, but not
limited to." When the context and construction so require, all
words used in the singular shall be deemed to have been used in the
plural and vice versa. All headings appearing in this Agreement are
for convenience only and shall be disregarded in construing this
Agreement.
4.5 Reference and Arbitration
-------------------------
(a) Judicial Reference
------------------
In any judicial action between or among the parties,
including any action or cause of action arising out of or
relating to this Agreement or the Loan Documents or based on
or arising from an alleged tort, all decisions of fact and
law shall at the request of any party be referred to a
referee in accordance with California Code of Civil Procedure
Sections 638 et seq. The parties shall designate to the court
-- ---
a referee or referees selected under the auspices of the
American Arbitration Association ("AAA") in the same manner
as arbitrators are selected in AAA-sponsored proceedings. The
presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees
shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil
Procedure Sections 644 and 645.
(b) Mandatory Arbitration
---------------------
After the Deed of Trust has been released, fully reconveyed
or extinguished, any controversy or claim between or among
the parties, including those arising out of or relating to
this Agreement or the Loan Documents and any claim based on
or arising from an alleged tort, shall at the request of any
party be determined by arbitration. The arbitration shall be
conducted in accordance with the United States Arbitration
Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules
of the AAA. The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy
concerning whether an issue is arbitrable shall be determined
by the arbitrator(s). Judgment upon the arbitration award may
be entered in any court having jurisdiction. The institution
and maintenance of an action for judicial relief or pursuit
of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other
party contests such action for judicial relief.
(c) Real Property Collateral
------------------------
Notwithstanding the provisions of subsection 4.5(b), no controversy
or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such
controversy or claim arises from or relates to an obligation to Bank
which is secured by real property collateral. If all parties do not
consent to submission of such a controversy or claim to arbitration,
the controversy or claim shall be determined by reference as
provided in subsection 4.5(a).
(d) Provisional Remedies, Self-Help and Foreclosure
-----------------------------------------------
No provision of this Section 4.5 shall limit the right of any party
to this Agreement to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property
collateral or security, or to obtain provisional or ancillary
remedies from a court of competent jurisdiction before, after, or
during the pendency of any arbitration or other proceeding. The
exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At Bank's option, foreclosure
under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
4.6 Severability
------------
Every provision of this Agreement is intended to be severable. In the
event any term, provision, section or subsection of this Agreement is
declared to be illegal or invalid, for any reason whatsoever, by a court
of competent jurisdiction, such illegality or invalidity shall not
affect the other terms, provisions, sections or subsections of this
Agreement, which shall remain binding and enforceable.
4.7 In-House Counsel Fees
---------------------
Whenever Indemnitor is obligated to pay or reimburse any Indemnified
Party for any attorneys' fees, those fees shall include the allocated
costs for services of in-house counsel.
4.8 Integration; Modifications
--------------------------
The Loan Documents, including this Agreement, (a) integrate all the terms
and conditions mentioned in or incidental to this Agreement, (b)
supersede all oral negotiations and prior writings with respect to their
subject matter, and (c) are intended by the parties as the final
expression of the agreement with respect to the terms and conditions set
forth in the Loan Documents and as the complete and exclusive statement
of the terms agreed to by the parties. No representation, understanding,
promise or condition shall be enforceable against any party unless it is
contained in the Loan Documents. This Agreement may not be modified
except in a writing signed by both Bank and Indemnitor.
4.9 Miscellaneous
-------------
The provisions of this Agreement shall bind and benefit the heirs,
executors, administrators, legal representatives, successors and
assigns of Indemnitor and the Indemnified Parties; provided,
however, that Indemnitor may not assign this Agreement, or assign or
delegate any of its rights or obligations under this Agreement,
without the prior written consent of Bank in each instance. The
liability of all persons who are in any manner obligated under this
Agreement shall be joint and several. Any Indemnitor who is married
agrees that any Indemnified Party may look to all of his or her
community property and separate property to satisfy his or her
obligations under this Agreement. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of
California.
Indemnitor:
Prolong Super Lubricants, Inc.
a Nevada corporation
By: /s/ XXXXX XXXXXXXX
------------------
Xxxxx Xxxxxxxx,
President
By: /s/ XXXXXX XXXXXXXXX
--------------------
Xxxxxx Xxxxxxxxx,
Secretary
Address where notices to Indemnitor are to be sent:
6 Xxxxxx
Xxxxxx, XX 00000
-8-
