1
LOAN AGREEMENT
Principal Loan Date Maturity Loan No Call Collateral
$6,000,000.00 04-01-1997 04-30-1999 815-190 00012 365
Account Officer Initials
7155425480 62186
References in the shaded area are for Lender's use only and do not limit
the applicability of this document to any particular loan or item.
Borrower: ▇.▇. ▇▇▇▇▇▇▇▇, Inc. Lender: U.S. BANK OF CALIFORNIA
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 12A California Corporate Banking
ESPARTO, CA 95627 ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS LOAN AGREEMENT between ▇.▇. ▇▇▇▇▇▇▇▇, INC.
("Borrower") and U.S. BANK OF CALIFORNIA ("Lender") is made
and executed on the following terms and conditions. Borrower has
received prior commercial loans from Lender or has applied to Lender
for a commercial loan or loans and other financial accommodations,
including those which may be described on any exhibit or schedule
attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial
accommodations from Lender to Borrower, are referred to in this
Agreement individually as the "Loan" and collectively as the "Loans."
Borrower understands and agrees that: (a) in granting, renewing, or
extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this
Agreement; (b) the granting, renewing, or extending of any Loan by
Lender at all times shall be subject to ▇▇▇▇▇▇'s sole judgment and
discretion; and (c) all such Loans shall be and shall remain subject to
the following terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of April 1, 1997, and shall
continue thereafter until all indebtedness of Borrower to Lender has
been performed in full and the parties terminate this Agreement in
writing.
DEFINITIONS. The following words shall have the following
meanings when used in this Agreement. Terms not otherwise defined in
this Agreement shall have the meanings attributed to such terms in the
Uniform Commercial Code. All references to dollar amounts shall mean
amounts in lawful money of the United States of America.
Agreement. The word "Agreement" means this Loan
Agreement, as this Loan Agreement may be amended or modified from
time to time, together with all exhibits and schedules attached to this
Loan Agreement from time to time.
Account. The word "Account" means a trade account, account
receivable, or other right to payment for goods sold or services
rendered owing to Borrower (or to a third party grantor acceptable to
Lender).
Account Debtor. The words "Account Debtor" mean the person
or entity obligated upon an Account.
Advance. The word "Advance" means a disbursement of Loan
funds under this Agreement.
Borrower. The word "Borrower" means ▇.▇. ▇▇▇▇▇▇▇▇, INC.
The word "Borrower" also includes, as applicable, all subsidiaries and
affiliates of Borrower as provided below in the paragraph titled
"Subsidiaries and Affiliates."
Borrowing Base. The words "Borrowing Base" mean, as
determined by Lender from time to time, the lesser of (a)
$6,000,000.00; or (b) the sum of (c) 80.000% of the aggregate amount
of Eligible Accounts, plus (ii) 55.000% of the aggregate amount of
Eligible Inventory (not to exceed in corresponding Loan amount based
on Eligible inventory $5,000,000).
Business Day. The words "Business Day" mean a day on which
commercial banks are open for business in the State of California.
CERCLA. The word "CERCLA" means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
Cash Flow. The words "Cash Flow" mean net income after
taxes, and exclusive of extraordinary gains and income, plus
depreciation and amortization.
Collateral. The word "Collateral" means and includes without
limitation all property and assets granted as collateral security for a
Loan, whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted in
the form of a security interest, mortgage, deed of trust, assignment,
pledge, chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, Lien, charge, lien or title retention
contract, lease or consignment intended as a security device, or any
other security or lien interest whatsoever, whether created by law,
contract, or otherwise. The word "Collateral" includes without
limitation all collateral described below in the section titled
"COLLATERAL."
Debt. The word "Debt" means all of Borrower's liabilities
excluding Subordinated Debt.
Eligible Accounts. The words "Eligible Accounts" mean, at any
time, all of Borrower's Accounts which contain selling terms and
conditions acceptable to Lender. The net amount of any Eligible
Account against which Borrower may borrow shall exclude all returns,
discounts, credits, and offsets of any nature. Unless otherwise agreed to
by ▇▇▇▇▇▇ in writing, Eligible Accounts do not include:
(a) Accounts with respect to which the Account Debtor is an
officer, an employee or agent of ▇▇▇▇▇▇▇▇.
(b) Accounts with respect to which the Account Debtor is a
subsidiary of, or affiliated with or related to Borrower or its
shareholders, officers, or directors.
(c) Accounts with respect to which goods are placed on
consignment, guaranteed sale, or other terms by reason of which the
payment by the Account Debtor may be conditional.
(d) Accounts with respect to which the Account Debtor is not a
resident of the United States, except to the extent such Accounts are
supported by insurance, bonds or other assurances satisfactory to
Lender.
(e) Accounts with respect to which Borrower is or may become
liable to the Account Debtor for goods sold or services rendered by the
Account Debtor to Borrower.
(f) Accounts which are subject to dispute, counterclaim, or
setoff.
(g) Accounts with respect to which the goods have not been
shipped or delivered, or the services have not been rendered, to the
Account Debtor.
(h) Accounts with respect to which ▇▇▇▇▇▇, in its sole
discretion, deems the creditworthiness or financial condition of the
Account Debtor to be unsatisfactory.
(c) Accounts of any Account Debtor who has filed or has had
filed against it a petition in bankruptcy or an application for relief under
any provision of any state or federal bankruptcy, insolvency, or debtor-
in-relief acts; or who has had appointed a trustee, custodian, or receiver
for the assets of such Account Debtor; or who has made an assignment
for the benefit of creditors or has become insolvent or fails generally to
pay its debts (including its payrolls) as such debts become due.
(j) Accounts with respect to which the Account Debtor is the
United States government or any department or agency of the United
States.
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Loan No 815-190 (Continued)
(k) Accounts which have not been paid in full within 90 DAYS
from the invoice date. The entire balance of any Account of any single
Account debtor will be ineligible whenever the portion of the Account
which has not been paid within 90 DAYS from the invoice date is in
excess of 10.000% of the total amount outstanding on the Account.
(l) That portion of the Accounts of any single Account Debtor
which exceeds 10.000% of all of Borrower's Accounts.
(m) DATINGS, PROGRESS BILLINGS, RETAINAGES,
CASH SALES, COD, SERVICE CHARGES.
Eligible Inventory. The words "Eligible Inventory" mean, at any
time, all of Borrower's inventory as defined below except:
(a) Inventory which is not owned by Borrower free and clear of
all security interests, liens, encumbrances, and claims of third parties.
(b) Inventory which Lender, in its sole discretion, deems to be
obsolete, unsalable, damaged, defective, or unfit for further processing.
ERISA. The word "ERISA means the Employee Retirement
Income Security Act of 1974, as amended.
Event of Default. The words "Event of Default" mean and
include without limitation any of the Events of Default set forth below
in the section titled "EVENTS OF DEFAULT."
Expiration Date. The words "Expiration Date" mean the date of
termination of ▇▇▇▇▇▇'s commitment to lend under this Agreement.
Grantor. The word "Grantor" means and includes without
limitation each and all of the persons or entities granting a Security
interest in any Collateral for the Indebtedness, including without
limitation all Borrowers granting such a Security Interest.
Guarantor. The word Guarantor" means and includes without
limitation each and all of the guarantors, sureties, and accommodation
parties in connection with any indebtedness.
Indebtedness. The word "Indebtedness" means and includes
without limitation all Loans, together with all other obligations, debts
and liabilities of Borrower to Lender, or any one or more of them, as
well as all claims by Lender against Borrower, or any one or more of
them; whether now or hereafter existing, voluntary or involuntary, due
or not due, obsolete or contingent, liquidated or unliquidated; whether
Borrower may be liable individually or jointly with others; whether
Borrower may be obligated as a guarantor, surety, or otherwise;
whether recovery upon such indebtedness may be or hereafter may
become barred by any statute of limitations; and whether such
indebtedness may be or hereafter may become otherwise unenforceable.
Inventory. The word "Inventory" means all of Borrower's raw
materials, work in process, finished goods, merchandise, parts and
supplies, of every kind and description, and goods held for sale or lease
or furnished under contracts of service in which Borrower now has or
hereafter acquires any right, whether held by Borrower or others, and
all documents of title, warehouse receipts, bills of lading, and all other
documents of every type covering all or any part of the foregoing.
Inventory includes inventory temporarily out of ▇▇▇▇▇▇▇▇'s custody or
possession and all returns on Accounts.
Lender. The word "Lender" means U.S. BANK OF
CALIFORNIA, its successors and assigns.
Line of Credit. The words "Line of Credit" mean the credit
facility described in the Section titled "LINE OF CREDIT" below.
Liquid Assets. The words "Liquid Assets" mean Borrower's
cash on hand plus Borrower's readily marketable securities.
Loan. The word "Loan" or "Loans" means and includes without
limitation any and all commercial loans and financial accommodations
from Lender to Borrower, whether now or hereafter existing, and
however evidenced, including without limitation those loans and
financial accommodations described herein or described on any exhibit
or schedule attached to this Agreement from time to time.
Note. The word "Note" means and includes without limitation
Borrower's promissory note or notes, if any, evidencing Borrower's
Loan obligations in favor of Lender, as well as any substitute,
replacement or refinancing note or notes therefor.
Permitted Liens. The words "Permitted Liens" mean: (a) liens
and security interests securing Indebtedness owed by Borrower to
Lender; (b) liens for taxes, assessments, or similar charges either not
yet due or being contested in good faith; (c) liens of material men,
mechanics, warehousemen, or carriers, or other like liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent; (d) purchase money liens or purchase money security
interests upon or in any property acquired or held by Borrower in the
ordinary course of business to secure indebtedness outstanding on the
date of this Agreement or permitted to be incurred under the paragraph
of this Agreement titled "Indebtedness and Liens"; (e) liens and security
interests which, as of the date of this Agreement, have been disclosed
to and approved by the Lender in writing; and (f) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of
▇▇▇▇▇▇▇▇'s assets.
Related Documents. The words "Related Documents" mean and
include without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security
agreements, mortgages, deeds of trust, and all other instruments,
agreements and documents, whether now or hereafter existing,
executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean
and include without limitation any agreements, promises, covenants,
arrangements, understandings or other agreements, whether created by
law, contract, or otherwise, evidencing, governing, representing, or
creating a Security interest.
Security Interest. The words "Security Interest" mean and
include without limitation any type of collateral security, whether in the
form of a lien, charge, mortgage, deed of trust, assignment, pledge,
chattel mortgage, chattel trust, factor's lien, equipment trust
conditional sale, trust receipt, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
▇▇▇▇. The word "▇▇▇▇" means the Superfund Amendments
and Reauthorization Act of 1986 as now or hereafter amended.
Subordinated Debt. The words "Subordinated Debt" mean
indebtedness and liabilities of Borrower which have been subordinated
by written agreement to indebtedness owed by Borrower to Lender in
form and substance acceptable to Lender.
Tangible net Worth. The words "Tangible Net Worth" mean
Borrower's total assets excluding all intangible assets (i.e., goodwill,
trademarks, patents, copyrights, organizational expenses, and similar
intangible items, but including leaseholds and leasehold improvements)
less total Debt.
Working Capital. The words "Working Capital" mean
Borrower's current assets, excluding prepaid expenses, less Borrower's
current liabilities.
LINE OF CREDIT. ▇▇▇▇▇▇ agrees to make Advances to Borrower
from time to time from the date of this Agreement to the Expiration
Date, provided the aggregate amount of such Advances outstanding at
any time does not exceed the Borrowing Base. Within the foregoing
limits, Borrower may borrow, partially or wholly prepay, and reborrow
under this Agreement as follows.
Conditions Precedent to Each Advance. ▇▇▇▇▇▇'s obligation to
make any Advance to or for the account of Borrower under this
Agreement is subject to the following conditions precedent, with all
documents, instruments, opinions, reports, and other items required
under this Agreement to be in form and substance satisfactory to
Lender:
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Loan No 815-190 (Continued)
(a) Lender shall have received evidence that this Agreement and
all Related Documents have been duly authorized, executed, and
delivered by ▇▇▇▇▇▇▇▇ to Lender.
(b) ▇▇▇▇▇▇ shall have received such opinions of counsel,
supplemental opinions, and documents as ▇▇▇▇▇▇ may request.
(c) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall be in
full force and effect.
(d) All guaranties required by Lender for the Line of Credit
shall have been executed by each Guarantor, delivered to Lender, and
be in full force and effect.
(e) Lender, at its option and for its sole benefit, shall have
conducted an audit of Borrower's Accounts, Inventory, books, records,
and operations, and Lender shall be satisfied as to their condition.
(f) Borrower shall have paid to Lender all fees, costs, and
expenses specified in this Agreement and the Related Documents as are
then due and payable.
(g) There shall not exist at the time of any Advance a condition
which would constitute an Event of Default under this Agreement, and
Borrower shall have delivered to Lender the compliance certificate
called for in the paragraph below titled "Compliance Certificate."
Making Loan Advances. Advances under the Line of Credit
may be requested either orally or in writing by authorized persons.
Lender may, but need not, require that all oral requests be confirmed in
writing. Each Advance shall be conclusively deemed to have been made
at the request of and for the benefit of Borrower (a) when credited to
any deposit account of ▇▇▇▇▇▇▇▇ maintained with Lender or (b) when
advanced in accordance with the instructions of an authorized person.
Lender, at its option, may set a cutoff time, after which all requests for
Advances will be treated as having been requested on the next
succeeding Business Day.
Mandatory Loan Repayments. If at any time the aggregate
principal amount of the outstanding Advances shall exceed the
applicable Borrowing Base, Borrower, immediately upon written or
oral notice from Lender, shall pay to Lender an amount equal to the
difference between the outstanding principal balance of the Advances
and the Borrowing Base. On the Expiration Date, Borrower shall pay
to Lender in full the aggregate unpaid principal amount of all Advances
then outstanding and all accrued unpaid interest, together will all other
applicable fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of
account in which Lender shall make entries for each Advance ans such
other debits and credits as shall be appropriate in connection with the
credit facility. Lender shall provide Borrower with periodic statements
of ▇▇▇▇▇▇▇▇'s account, which statements shall be considered to be
correct and conclusively binding on Borrower unless Borrower notifies
Lender to the contrary within thirty (30) days after ▇▇▇▇▇▇▇▇'s receipt
of any such statement which Borrower deems to be incorrect.
Collateral. To secure payment of the Line of Credit and performance of
all other Loans, obligations and duties owed by Borrower to Lender,
Borrower (and others, if required) shall grant to Lender Security
interests in such property and assets as Lender may require (the
"Collateral"), including without limitation Borrower's present and
future Accounts, general intangibles, and Inventory. Lender's Security
Interests in the Collateral shall be continuing liens and shall include the
proceeds and products of the Collateral, including without limitation
the proceeds of any insurance. With respect to the Collateral, ▇▇▇▇▇▇▇▇
agrees and represents and warrants to ▇▇▇▇▇▇:
Perfection of Security Interests. ▇▇▇▇▇▇▇▇ agrees to execute
such financing statements and to take whatever other actions are
requested by ▇▇▇▇▇▇ to perfect and continue ▇▇▇▇▇▇'s Security Interest
in the Collateral. Upon request of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ will deliver to
Lender any and all of the documents evidencing or constituting the
Collateral, and Borrower will note ▇▇▇▇▇▇'s interest upon any and all
chattel paper if not delivered to Lender for possession by ▇▇▇▇▇▇.
Contemporaneous with the execution of this Agreement, ▇▇▇▇▇▇▇▇ will
execute one or more UCC financing statements and any similar
statements as may be required by applicable law, and will file such
financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby appoints ▇▇▇▇▇▇ as its
irrevocable attorney-in-fact for the purpose of executing any
documents necessary to perfect or to continue any Security Interest.
Lender may at any time, and without further authorization form
Borrower, file a carbon, photograph, facsimile, or other reproduction
of any financing statement for use as a financing statement. Borrower
will reimburse Lender for all expenses for the perfection, termination,
and the continuation of the perfection of ▇▇▇▇▇▇'s security interest in
the Collateral. Borrower promptly will notify Lender of any change in
▇▇▇▇▇▇▇▇'s name including any change to the assumed business names
of ▇▇▇▇▇▇▇▇. Borrower also promptly will notify Lender of any change
in Borrower's Social Security Number or employer Identification
Number. ▇▇▇▇▇▇▇▇ further agrees to notify ▇▇▇▇▇▇ in writing prior to
any change in address or location of ▇▇▇▇▇▇▇▇'s principal governance
office or should Borrower merge or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times
hereafter shall, keep correct and accurate records of the Collateral, all
of which records shall be available to Lender or ▇▇▇▇▇▇'s representative
upon demand for inspection and copying at any reasonable time. With
respect to the Accounts, ▇▇▇▇▇▇▇▇ agrees to keep and maintain such
records as Lender may require, including without limitation information
concerning Eligible Accounts and Account Balances and agings. With
respect to the Inventory, ▇▇▇▇▇▇▇▇ agrees to keep and maintain such
records as Lender may require, including without limitation information
concerning Eligible Inventory and records itemizing and describing the
kind, type, quality, and quantity of Inventory, Borrower's Inventory
costs and selling prices, and the daily withdrawals and additions to
Inventory.
Collateral Schedules. Concurrently with the execution and
delivery of this Agreement, ▇▇▇▇▇▇▇▇ shall execute and deliver to
Lender Schedules of Accounts and Inventory and Eligible Accounts
and Eligible Inventory, in form and substance satisfactory to the
Lender. Thereafter Borrower shall execute and deliver to Lender such
supplemental schedules of Eligible Accounts and Eligible Inventory and
such other matters and information relating to the Accounts and
Inventory as Lender may request. Supplemental schedules shall be
delivered according to the following schedule: ▇▇▇▇▇▇▇▇ AGREES
TO SUBMIT TO LENDER MONTHLY ACCOUNTS PAYABLE
AGING, ACCOUNTS RECEIVABLE AGING AND BORROWER
CERTIFICATE NO LATER THAN 20 DAYS AFTER EACH
MONTH END.
Representations and Warranties Concerning Accounts. With
respect to the Accounts, Borrower represents and warrants to Lender:
(a) Each Account represented by Borrower to be an Eligible Account
for purposes of the Agreement conforms to the requirements of the
definition of an Eligible Account; (b) All Account information listed on
schedules delivered to Lender will be true and correct, subject to
immaterial variance; and (c) Lender, its assigns, or agents shall have the
right at any time and at Borrower's expense to inspect, examine, and
audit ▇▇▇▇▇▇▇▇'s records and to confirm with Account Debtors the
accuracy of such Accounts.
Representations and Warranties Concerning Inventory. With
respect to the Inventory, Borrower represents and warrants to Lender:
(a) all Inventory represented by Borrower to be Eligible Inventory for
purposes of this Agreement conforms to the requirements of the
definition of Eligible Inventory; (b) All Inventory values listed on
schedules delivered to Lender will be true and correct, subject to
immaterial variance; (c) The value of the Inventory will be determined
on a consistent accounting basis; (d) Except as agreed to the contrary
by ▇▇▇▇▇▇ in writing all Eligible Inventory is now and at all times
hereafter will be in Borrower's physical possession and shall not be
held by others on consignment, sale on approval, or sale or return; (e)
Except as reflected in the Inventory schedules delivered to Lender, all
Eligible Inventory is now and at all times hereafter will be of good and
merchantable quality, free from defects; (f) Eligible Inventory is not
now and will not at any time hereafter be stored with a bailee
warehouseman, or similar party without ▇▇▇▇▇▇'s prior written consent,
and, in such event, Borrower will concurrently at the time of bailment
cause any such bailee, warehouseman, or similar party to issue and
deliver to Lender, in form acceptable to Lender, warehouse receipts in
Lender's
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Loan No 815-190 (Continued)
name evidencing the storage of Inventory; and (g) Lender, its assigns,
or agents shall have the right at any time and at Borrower's expense to
inspect and examine the Inventory and to check and test the same as to
quality, quantity, value and condition.
REPRESENTATIONS AND WARRANTIES. Borrower represents
and warrants to Lender, as of the date of this Agreement, as of the date
of each disbursement of Loan proceeds, as of the date of any renewal,
extension or modification of any Loan, and at all times any
Indebtedness exists:
Organization. Borrower is a corporation which is duly
organized, validly existing, and in good standing under the laws of the
state of Borrower's incorporation and is validly existing and in good
standing in all states in which Borrower is doing business. Borrower
has the full power and authority to own its properties and to transact
the businesses in which it is presently engaged or presently proposes to
engage. Borrower also is duly qualified as a foreign corporation and is
in good standing in all states in which the failure to so qualify would
have a material adverse effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly
authorized by all necessary action by Borrower; do not require the
consent or approval of any other person, regulatory authority or
governmental body; and do not conflict with, result in a violation of; or
constitute a default under (a) any provision of its articles of
incorporation or organization, or bylaws, or any agreement or other
instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of ▇▇▇▇▇▇▇▇
supplied to Lender truly and completely disclosed ▇▇▇▇▇▇▇▇'s financial
condition as of the date of the statement, and there has been no material
adverse change in Borrower's financial condition subsequent to the
date of the most recent financial statement supplied to Lender.
Borrower has no material contingent obligations except as disclosed in
such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or
agreement required hereunder to be given by ▇▇▇▇▇▇▇▇ when delivered
will constitute, legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective terms.
Properties. Except for Permitted Liens, ▇▇▇▇▇▇▇▇ owns and has
good title to all of Borrower's properties free and clear of all Security
Interests, and has not executed any security documents, or financing
statements relating to such properties. All of ▇▇▇▇▇▇▇▇'s properties are
titled in Borrower's legal name, and ▇▇▇▇▇▇▇▇ has not used, or filed a
financing statement under, any other name for at least the last five (5)
years.
Hazardous Substances. The terms "hazardous waste,"
Hazardous substance," "disposal," "release," and "threatened release,"
as used in this Agreement, shall have the same meanings as set forth in
the "CERCLA," "▇▇▇▇," the Hazardous Materials Transportation Act,
49 U.S.C. Section 1801, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through
7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. Except as
disclosed to and acknowledged by ▇▇▇▇▇▇ in writing, ▇▇▇▇▇▇▇▇
represents and warrants that: (a) during the period of Borrower's
ownership of the properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release, or threatened release
of any hazardous waste or substance by any person on, under, about or
from any of the properties. (b) Borrower has no knowledge of, or
reason to believe that there has been (i) any use, generation,
manufacture, storage, treatment, disposal, release or threatened release
of any hazardous waste or substance on, under about or from the
properties by any prior owners or occupants of any of the properties, or
(ii) any actual or threatened litigation or claims of any kind by any
person relating to such matters. (c) Neither Borrower nor any tenant,
contractor, agent or other authorized user of any of the properties shall
use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in compliance with
all applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances
described above. Borrower authorizes Lender and its agents to enter
upon the properties to make such inspections and tests as Lender may
deem appropriate to determine compliance of the properties with this
section of the Agreement. Any inspections or tests made by Lender
shall be at Borrower's expenses and for Lender's purposes only and
shall not be construed to create any responsibility or liability on the part
of Lender to Borrower or to any other person. The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the properties for hazardous waste and hazardous
substances. Borrower hereby (a) releases and waives any future claims
against Lender for indemnity or contribution in the event Borrower
becomes liable for cleanup or other costs under any such laws, and (b)
agrees to indemnify and hold harmless Lender against any and all
claims, losses, liabilities, damages, penalties, and expenses which
Lender may directly or indirectly sustain or suffer resulting from a
breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened
release occurring prior to Borrower's ownership or interest in the
properties, whether or not the same was or should have been known to
Borrower. The provisions of this section of the Agreement, including
the obligation to indemnify, shall survive the payment of the
indebtedness and the termination on expiration of this Agreement and
shall not be affected by Lender's acquisition of any interest in any of
the properties, whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or Threatened, and no other event
has occurred which may materially adversely affect Borrower's
financial condition or properties, other than litigation, claims, or other
events, if any, that have been disclosed to and acknowledged by ▇▇▇▇▇▇
in writing.
Taxes. To the best of ▇▇▇▇▇▇▇▇'s knowledge, all tax returns
and reports of Borrower that are or where required to be filed, have
been filed, and all taxes, assessments and other governmental charges
have been paid in full, except those presently being or to be contested
by Borrower in good faith in the ordinary course of business and for
which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender
in writing, ▇▇▇▇▇▇▇▇ has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security
Interest on or affecting any of the Collateral directly or indirectly
securing repayment of Borrower's Loan and Note, that would be prior
or that may in any way be superior to Lender's Security Interests and
rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security
Agreements directly or indirectly securing repayment of ▇▇▇▇▇▇▇▇'s
Loan and Note and all of the Related Documents are binding upon
Borrower as well as upon ▇▇▇▇▇▇▇▇'s successors, representatives and
assigns, and are legally enforceable in accordance with their respective
terms.
Commercial Purposes. Borrower intends to use the Loan
proceeds solely for business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to
which Borrower may have any liability complies in all material respects
with all applicable requirements of law and regulations, and (i) no
Reportable Event nor Prohibited Transaction (as defined in ERISA) has
occurred with respect to any such plan, (ii) Borrower has not
withdrawn from any such plan or initiated steps to do so. (iii) no steps
have been taken to terminate any such plan, and (iv) there are no
unfunded liabilities other than those previously disclosed to Lender in
writing.
Location of ▇▇▇▇▇▇▇▇'s Offices and Records. ▇▇▇▇▇▇▇▇'s place
of business, or ▇▇▇▇▇▇▇▇'s Chief executive office, if ▇▇▇▇▇▇▇▇ has
more than one place of business, is located at ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless Borrower has designated
otherwise in writing this location is also the office or offices where
Borrower keeps its records concerning the Collateral.
Information. All information heretofore or contemporaneously
herewith furnished by Borrower to Lender for the purposes of or in
connection with this Agreement or any transaction contemplated
hereby is, and all information hereafter furnished by or on behalf of
Borrower to Lender will be, true and accurate in every material respect
on the date as of which such information is dated or certified; and none
of such information is or will be
5
04-01-1997 LOAN AGREEMENT Page 5
Loan No 815-190 (Continued)
incomplete by omitting to state any
material fact necessary to make such information not misleading.
Survival of Representations and Warranties. ▇▇▇▇▇▇▇▇
understands and agrees that ▇▇▇▇▇▇, without independent investigation,
is relying upon the above representations and warranties in extending
Loan Advances to Borrower. ▇▇▇▇▇▇▇▇ further agrees that the
foregoing representations and warranties shall be continuing in nature
and shall remain in full force and effect until such time as Borrower's
Indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to
occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with
▇▇▇▇▇▇ that, while this Agreement is in effect, Borrower will:
Litigation. Promptly inform ▇▇▇▇▇▇ in writing of (a) all material
adverse changes in Borrower's financial condition, and (b) all existing
and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor
which could materially affect the financial condition of Borrower or the
financial condition of any Guarantor.
Financial Records. Maintain its books and records in
accordance with generally accepted accounting principles, applied on a
consistent basis, and permit ▇▇▇▇▇▇ to examine and audit ▇▇▇▇▇▇▇▇'s
books and records at all reasonable times.
Financial Statements. Furnish Lender with, as soon as available,
but in no event later than one hundred twenty (120) days after the end
of each fiscal year, ▇▇▇▇▇▇▇▇'s balance sheet and income statement for
the year ended, audited by a certified public accountant satisfactory to
Lender, and, as soon as available, but in no event later than forty (45)
days after the end of each fiscal quarter, Borrower's balance sheet and
profit and loss statement for the period ended, prepared and certified as
correct to the best knowledge and belief by ▇▇▇▇▇▇▇▇'s chief financial
officer or other officer or person acceptable to ▇▇▇▇▇▇. All financial
reports required to be provided under this Agreement shall be prepared
in accordance with generally accepted accounting principles, applied on
a consistent basis, and certified by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to ▇▇▇▇▇▇▇▇'s financial condition and business
operations as Lender may request from time to time.
Financial Covenants and Ratios. Comply with the following
covenants and ratios:
Net Worth Ratio. Maintain a ratio of Total Liabilities to
Tangible Net Worth of less than 2.00 to 1.00.
Working Capital. Maintain Working Capital in excess of
$1,800,000.00
Current Ratio. Maintain a ratio of Current Assets to
Current Liabilities in excess of 1.30 to 1.00.
Cash Flow Requirements. Maintain Cash Flow at not
less than the following level: 1.25:1.0 DEFINED AS: NET PROFIT
AFTER TAX PLUS DEPRECIATION/AMORTIZATION PLUS
INTEREST EXPENSE PLUS ADDITIONAL CAPITAL DIVIDED
BY CURRENT PORTION OF LONG TERM DEBT PLUS
DIVIDENDS/WITHDRAWALS PLUS INTEREST EXPENSE PLUS
INTERNALLY FUNDED FIXED ASSETS; MEASURED
ANNUALLY.
The following provisions shall apply for purposes of
determining compliance with the foregoing financial covenants and
ratios: BORROWER UNDERSTAND AND AGREES THAT ALL
COVENANTS AND RATIOS WILL BE MONITORED
QUARTERLY AND COMPLIANCE WILL BE TESTED
QUARTERLY. Except as provided above, all computations made to
determine compliance with the requirements contained in this
paragraph shall be made in accordance with generally accepted
accounting principles, applied on a consistent basis, and certified by
Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect
to Borrower's properties and operations, in form, amounts, coverages
and with insurance companies reasonably acceptable to Lender.
Borrower, upon request of ▇▇▇▇▇▇, will deliver to Lender from time to
time the policies or certificates of insurance in form satisfactory to
Lender, including stipulations that coverages will not be canceled or
diminished without at least ten (10) days' prior written notice to
Lender. Each insurance policy also shall include an endorsement
providing that coverage in favor of Lender will not be impaired in any
way by any act, omission or default of Borrower or any other person.
In connection with all policies covering assets in which Lender holds or
is offered a security interest for the Loans, Borrower will provide
Lender with such loss payable or other endorsements as Lender may
require.
Insurance Reports. Furnish to Lender, upon request of Lender,
reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the
following: (a) the name of the insurer; (b) the risks insured; (c) the
amount of the policy; (d) the properties insured; (e) the then current
property values on the basis of which insurance has been obtained, and
the manner of determining those values; and (f) the expiration date of
the policy. In addition, upon request of Lender (however not more
often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be
paid by Borrower.
Other Agreements. Comply with all terms and conditions of all
other agreements, whether now or hereafter existing, between
Borrower and any other party and notify Lender immediately in writing
of any default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for ▇▇▇▇▇▇▇▇'s
business operations, unless specifically consented to the contrary by
▇▇▇▇▇▇ in writing.
Taxes, Charges and Liens. Pay and discharge when
due all of its indebtedness and obligations, including without
limitation all assessments, taxes, governmental charges, levies
and liens, of every kind and nature, imposed upon Borrower or
its properties, income, or profits, prior to the date on which
penalties would attach, and all lawful claims that, if unpaid,
might become a lien or charge upon any of Borrower's
properties, income, or profits. Provided however, ▇▇▇▇▇▇▇▇ will
not be required to pay and discharge any such assessment, tax,
charge, ▇▇▇▇, ▇▇▇▇ or claim so long as (a) the legality of the
same shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with
generally accepted accounting practices. ▇▇▇▇▇▇▇▇, upon
demand of Lender, will furnish to Lender evidence of payment
of the assessments, taxes, charges, levies, liens and claims
and will authorize the appropriate governmental official to
deliver to Lender at any time a written statement of any
assessments, taxes, charges, levies, liens and claims against
▇▇▇▇▇▇▇▇'s properties, income, or profits.
Performance. Perform and comply with all terms,
conditions, and provisions set forth in this Agreement and in the
Related Documents in a timely manner, and promptly notify
▇▇▇▇▇▇ if ▇▇▇▇▇▇▇▇ learns of the occurrence of any event which
constitutes an Event of Default under this Agreement or under
any of the Related Documents.
Operations. Maintain executive and management
personnel with substantially the same qualifications and
experience as the present executive and management
personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business
affairs in a reasonable and prudent manner and in compliance
with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties,
charters, businesses and operations, including without
limitation, compliance with the Americans With Disabilities Act
and with all minimum funding standards and other requirements
of ERISA and other laws applicable to Borrower's employee
benefit plans.
Inspection. Permit employees or agents of Lender at
any reasonable time to inspect any and all Collateral for the
Loan or Loans and ▇▇▇▇▇▇▇▇'s other properties and to examine
or audit ▇▇▇▇▇▇▇▇'s books, accounts, and records and to make
copies and memoranda of ▇▇▇▇▇▇▇▇'s books,
6
04-01-1997 LOAN AGREEMENT Page 6
Loan No 815-190 (Continued)
accounts, and records. If Borrower now or at any time hereafter
maintains any records (including without limitation computer
generated records and computer software programs for the
generation of such records) in the possession of a third party,
Borrower, upon request of ▇▇▇▇▇▇, shall notify such party to
permit Lender free access to such records at all reasonable
times and to provide Lender with copies of any records it may
request, all at Borrower's expense.
Compliance Certificate. Unless waived in writing by
▇▇▇▇▇▇, provide Lender QUARTERLY and at the time of each
disbursement of Loan proceeds with a certificate executed by
▇▇▇▇▇▇▇▇'s chief financial officer, or other officer or person
acceptable to ▇▇▇▇▇▇, certifying that the representations and
warranties set forth in this Agreement are true and correct as of
the date of the certificate and further certifying that, as of the
date of the certificate, no Event of Default exists under this
Agreement.
Environmental Compliance and Reports. Borrower shall
comply in all respects with all environmental protection federal,
state and local laws, statutes, regulations and ordinances; not
cause or permit to exist, as a result of an intentional or
unintentional action or omission on its part or on the part of any
third party, on property owned and/or occupied by Borrower,
any environmental activity where damage may result to the
environment, unless such environmental activity is pursuant to
and in compliance with the conditions of a permit issued by the
appropriate federal, state or local governmental authorities;
shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any
intentional or unintentional action or omission on Borrower's
part in connection with any environmental activity whether or
not there is damage to the environment and/or other natural
resources.
Additional Assurances. Make, execute and deliver to
Lender such promissory notes, mortgages, deeds of trust,
security agreements, financing statements, instruments,
documents and other agreements as Lender or its attorneys
may reasonably request to evidence and secure the Loans and
to perfect all Security Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition
of or any change in any law, rule, regulation or guideline, or the
interpretation or application of any thereof by any court or
administrative or governmental authority (including any request
or policy not having the force of law) shall impose, modify or
make applicable any taxes (except U.S. federal, state or local
income or franchise taxes imposed on Lender), reserve
requirements, capital adequacy requirements or other
obligations which would (a) increase the cost to Lender for
extending or maintaining the credit facilities to which this
Agreement relates, (b) reduce the amounts payable to Lender
under this Agreement or the Related Documents, or (c) reduce
the rate of return on Lender's capital as a consequence of
Lender's obligations with respect to the credit facilities to which
this Agreement relates, then Borrower agrees to pay Lender
such additional amounts as will compensate Lender therefor,
within five (5) days after Lender's written demand for such
payment, which demand shall be accompanied by an
explanation of such imposition or charge and a calculation in
reasonable detail of the additional amounts payable by
Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
NEGATIVE COVENANTS. Borrower covenants and
agrees with Lender that while this Agreement is in effect,
Borrower shall not, without the prior written consent of Lender:
Indebtedness and Liens. (a) Except for trade debt
incurred in the normal course of business and indebtedness to
Lender contemplated by this Agreement, create, incur or
assume indebtedness for borrowed money, including capital
leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security
interest in, or encumber any of Borrower's assets, or (c) sell
with recourse any of Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business
activities substantially different than those in which Borrower is
presently engaged, (b) cease operations, liquidate, merge,
transfer, acquire or consolidate with any other entity, change
ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any
dividends on Borrower's stock (other than dividends payable in
its stock), provided, however that notwithstanding the foregoing,
but only so long as no Event of Default has occurred and is
continuing or would result from the payment of dividends, if
Borrower is a "Subchapter S Corporation" (as defined in the
Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to
time in amounts necessary to enable the shareholders to pay
income taxes and make estimated income tax payments to
satisfy their liabilities under federal and state law which arise
solely from their status as Shareholders of a Subchapter S
Corporation because of their ownership of shares of stock of
Borrower, or (d) purchase or retire any of Borrower's
outstanding shares or alter or amend Borrower's capital
structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in
or advance money or assets, (b) purchase, create or acquire
any interest in any other enterprise or entity, or (c) incur any
obligation as surety or guarantor other than in the ordinary
course of business.
CESSATION OF ADVANCES. If Lender has made any
commitment to make any Loan to Borrower, whether under this
Agreement or under any other agreement, Lender shall have no
obligation to make Loan Advances or to disburse Loan
proceeds if: (a) Borrower or any Guarantor is in default under
the terms of this Agreement or any of the Related Documents or
any other agreement that Borrower or any Guarantor has with
Lender; (b) Borrower or any Guarantor becomes insolvent, files
a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in
Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan;
(d) any Guarantor seeks, claims or otherwise attempts to limit,
modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good ▇▇▇▇▇ ▇▇▇▇▇ itself
insecure, even though no Event of Default shall have occurred.
ACCESS LAWS. Without limiting the generality of any
provision of this agreement requiring Borrower to comply with
applicable laws, rules, and regulations, Borrower agrees that it
will at all times comply with applicable laws relating to disabled
access including, but not limited to, all applicable titles of the
Americans with Disabilities Act of 1990.
ADDITIONAL OPERATING PROVISIONS.
▇▇▇▇▇▇▇▇ AGREES TO SUBMIT TO LENDER MONTHLY
WINE INVENTORY VALUATIONS ON A COST BASIS AND
QUARTERLY VALUATIONS ON A MARKET BASIS,
INCLUDING COPIES OF THE THEN-CURRENT PRICES AS
PUBLISHED BY SOURCES ACCEPTABLE TO LENDER
▇▇▇▇▇▇▇▇ AGREES TO SUBMIT TO LENDER AN ANNUAL
STATEMENT, PREPARE BY A WINE EXPERT ACCEPTABLE
TO LENDER, CERTIFYING THE QUALITY AND CONDITION
OF THE INVENTORY
▇▇▇▇▇▇▇▇ AGREES TO SUBMIT TO LENDER 10-K'S AND
10-Q'S WITHIN 30 DAYS OF FILING WITH SECURITY
EXCHANGE COMMISSION
▇▇▇▇▇▇▇▇ AGREES THAT INELIGIBLE INVENTORY
SHALL INCLUDE RED AND WHITE WINES AGED OVER 60
MONTHS AND 36 MONTHS, RESPECTIVELY
▇▇▇▇▇▇▇▇ AGREES THE ELIGIBLE INVENTORY WILL BE
REDUCED BY THOSE HAVING LIEN RIGHTS AND STORAGE
ACCOUNTS PAYABLE
▇▇▇▇▇▇▇▇ AGREES THAT THE LOCATIONS OF ALL
INVENTORY INCLUDE ESPARTO, LIVERMORE AND ST.
HELENA, CALIFORNIA
▇▇▇▇▇▇▇▇ AGREES THAT METHOD OF CALCULATING
UNIT PRICE FOR BORROWING PURPOSES WILL BE
DETERMINED BY PUBLISHED SOURCES ACCEPTABLE TO
BANK AND NOT TO EXCEED 100% OF COST
7
04-01-1997 LOAN AGREEMENT Page 7
Loan No 815-190 (Continued)
▇▇▇▇▇▇▇▇ AGREES THAT ADVANCE RATES ON
INVENTORY ARE 55% ON BULK AND BOTTLED WINE AND
30% ON SUPPLIES (DEFINE AS NON WINE INVENTORY
USED IN BOTTLING); FMV ADJUSTMENT MADE ON A
QUARTERLY BASIS
▇▇▇▇▇▇▇▇ AGREES THAT ▇.▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇
IMPORTS AND WINE WAREHOUSE ACCOUNTS
RECEIVABLES HAVE A 25% DCL UP TO $500,000.
ADDITIONAL EVENTS OF DEFAULT. IN ADDITION TO
THE EVENTS OF DEFAULT SPECIFIED IN THE EVENTS OF
DEFAULT PARAGRAPH OF THIS AGREEMENT, THE
OCCURRENCE OF ANY EVENT OF DEFAULT UNDER ANY
AGREEMENT BETWEEN METROPOLITAN LIFE INSURANCE
AND BORROWER, INCLUDING WITHOUT LIMITATION THE
LOAN AGREEMENT AND PROMISSORY NOTE DATED
4-1-97, SHALL BE AN EVENT OF DEFAULT HEREUNDER.
UPON THE OCCURRENCE OF SUCH AN EVENT OF
DEFAULT, LENDER MAY, AT ITS OPTION, EXERCISE ANY
ONE OR MORE OF THE RIGHTS AND REMEDIES
AVAILABLE UNDER THIS AGREEMENT OR UNDER
APPLICABLE LAW.
ADDITIONAL FINANCIAL REQUIREMENTS.
▇▇▇▇▇▇▇▇ AGREES TO MAINTAIN A WORKING CAPITAL
IN EXCESS OF $1,800,000.00 WHICH IS TO INCLUDE THE
LINE OF CREDIT IN THE CALCULATIONS
▇▇▇▇▇▇▇▇ AGREES TO MAINTAIN A RATIO OF 1.30 TO
1.00 OF CURRENT ASSETS TO CURRENT LIABILITIES
WHICH IS TO INCLUDE THE LINE OF CREDIT IN THE
CALCULATIONS.
AGRICULTURAL BUDGET. Borrower will provide
Lender with a monthly expense recap to budget and will remain
within peak debt.
RIGHT OF SETOFF. Borrower grants to Lender a
contractual possessory security interest in, and hereby assigns,
conveys, delivers, pledges, and transfers to Lender all
Borrower's right, title and interest in and to, ▇▇▇▇▇▇▇▇'s
accounts with Lender (whether checking, savings, or some
other account), including without limitation all accounts held
jointly with someone else and all accounts Borrower may open
in the future, excluding however all IRA and ▇▇▇▇▇ accounts,
and all trust accounts for which the grant of a security interest
would be prohibited by law. ▇▇▇▇▇▇▇▇ authorizes ▇▇▇▇▇▇, to the
extent permitted by applicable law, to charge or setoff all sums
owing on the Indebtedness against any and all such accounts,
and, at ▇▇▇▇▇▇'s option, to administratively freeze all such
accounts to allow Lender to protect ▇▇▇▇▇▇'s charge and setoff
rights provided on this paragraph.
EVENTS OF DEFAULT. Each of the following shall
constitute an Event of Default under this Agreement:
Default on Indebtedness. Failure of Borrower to make
any payment when due on the Loans.
Other Defaults. Failure of Borrower or any Grantor to
comply with or to perform when due any other term, obligation,
covenant or condition contained in this Agreement or in any of
the Related Documents, or failure of Borrower to comply with or
to perform any other term, obligation, covenant or condition
contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Should Borrower or
any Grantor default under any loan, extension of credit, security
agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related
Documents.
False Statements. Any warranty, representation or
statement made or furnished to Lender by or on behalf of
Borrower or any Grantor under this Agreement or the Related
Documents is false or misleading in any material respect at the
time made or furnished, or becomes false or misleading at any
time thereafter.
Defective Collateralization. This Agreement or any of
the Related Documents ceases to be in full force and effect
(including failure of any Security Agreement to create a valid
and perfected Security Interest) at any time and for any reason.
Insolvency. The dissolution or termination of ▇▇▇▇▇▇▇▇'s
existence as a going business, the insolvency of ▇▇▇▇▇▇▇▇, the
appointment of a receiver for any part of ▇▇▇▇▇▇▇▇'s property,
any assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any proceeding under any
bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of
foreclosure or forfeiture proceedings, whether by judicial
proceeding, self-help, repossession or any other method, by
any creditor of Borrower, any creditor of any Grantor against
any collateral securing the Indebtedness, or by any
governmental agency. This includes a garnishment,
attachment, or levy on or of any of Borrower's deposit accounts
with Lender.
Events Affecting Guarantor. Any of the preceding events
occurs with respect to any Guarantor of any of the
Indebtedness or any Guarantor dies or becomes incompetent,
or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
Change In Ownership. Any change in ownership of
twenty-five percent (25%) or more of the common stock of
Borrower.
Adverse Change. A material adverse change occurs in
Borrower's financial condition, or ▇▇▇▇▇▇ believes the prospect
of payment or performance of the Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of
Default shall occur, except where otherwise provided in this
Agreement or the Related Documents, all commitments and
obligations of Lender under this Agreement or the Related
Documents or any other agreement immediately will terminate
(including any obligation to make Loan Advances or
disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of
any kind to Borrower, except that in the case of an Event of
Default of the type described in the "Insolvency" subsection
above, such acceleration shall be automatic and not optional.
In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in
equity, or otherwise. Except as may be prohibited by applicable
law, all of Lender's rights and remedies shall be cumulative and
may be exercised singularly or concurrently. Election by
▇▇▇▇▇▇ to pursue any remedy shall not exclude pursuit of any
other remedy, and an election to make expenditures or to take
action to perform an obligation of Borrower or of any Grantor
shall not affect ▇▇▇▇▇▇'s right to declare a default and to
exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following
miscellaneous provisions are a part of this Agreement:
Amendments. This Agreement, together with any
Related Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in this
Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing and signed by the party
or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to
Lender and accepted by Lender in the State of California. If
there is a lawsuit, ▇▇▇▇▇▇▇▇ agrees upon ▇▇▇▇▇▇'s request
to submit to the jurisdiction of the courts of Sacramento
County, the State of California. Subject to the provisions
on arbitration, this Agreement shall be governed by and
construed in accordance with the laws of the State ofCalifornia.
Arbitration. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ agree that all
disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this
Agreement or otherwise, including without limitation
contract and tort disputes, shall be arbitrated pursuant to
the Rules of the American Arbitration Association, upon
request of either party. No act to take or dispose of any
Collateral shall constitute a
8
04-01-1997 LOAN AGREEMENT Page 8
Loan No 815-190 (Continued)
waiver of this arbitration agreement or be prohibited by this
arbitration agreement. This includes, without limitation,
obtaining injunctive relief or a temporary restraining order;
invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including
taking or disposing of such property with or without judicial
process pursuant to Article 9 of the Uniform Commercial Code.
Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any
right, concerning any Collateral, including any claim to rescind,
reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no
arbitrator shall have the right or the power to enjoin or restrain
any act of any party. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ agree that in the
event of an action for judicial foreclosure pursuant to California
Code of Civil Procedure Section 726, or any similar provision in
any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall
refer to arbitration as much of such action, including
counterclaims, as lawfully may be referred to arbitration.
Judgment upon any award rendered by any arbitrator may be
entered in any court having jurisdiction. Nothing in this
Agreement shall preclude any party from seeking equitable
relief from a court of competent jurisdiction. The statute of
limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed
the commencement of an action for these purposes. The
Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
Caption Headings. Caption headings in this Agreement
are for convenience purposes only and are not to be used to
interpret or define the provisions of this Agreement.
Multiple Parties; Corporate Authority. All obligations of
Borrower under this Agreement shall be joint and several, and
all references to Borrower shall mean each and every Borrower.
This means that each of the persons signing below is
responsible for all obligations in this Agreement.
Consent to Loan Participation. ▇▇▇▇▇▇▇▇ agrees and
consents to ▇▇▇▇▇▇'s sale or transfer, whether now or later, of
one or more participation interests in the Loans to one or more
purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or
more purchasers, or potential purchasers, any information or
knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any
rights to privacy it may have with respect to such matters.
Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase
of such participation interests. ▇▇▇▇▇▇▇▇ also agrees that the
purchasers of any such participation interests will be
considered as the absolute owners of such interests in the
Loans and will have all the rights granted under the
participation agreement or agreements governing the sale of
such participation interests. Borrower further waives all rights
of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest
and unconditionally agrees that either Lender or such
purchaser may enforce ▇▇▇▇▇▇▇▇'s obligation under the Loans
irrespective of the failure or insolvency of any holder of any
interest in the Loans. ▇▇▇▇▇▇▇▇ further agrees that the
purchaser of any such participation interests may enforce its
interests irrespective of any personal claims or defenses that
Borrower may have against ▇▇▇▇▇▇.
Costs and Expenses. ▇▇▇▇▇▇▇▇ agrees to pay upon
demand all of ▇▇▇▇▇▇'s expenses, including without limitation
attorneys' fees, incurred in connection with the preparation,
execution, enforcement, modification and collection of this
Agreement or in connection with the Loans made pursuant to
this Agreement. ▇▇▇▇▇▇ may pay someone else to help collect
the Loans and to enforce this Agreement, and Borrower will pay
that amount. This includes, subject to any limits under
applicable law, ▇▇▇▇▇▇'s attorneys' fees and ▇▇▇▇▇▇'s legal
expenses, whether or not there is a lawsuit, including attorneys'
fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. ▇▇▇▇▇▇▇▇ also
will pay any court costs, in addition to all other sums provided
by law.
Notices. All notices required to be given under this
Agreement shall be given in writing, may be sent by
telefacsimile, and shall be effective when actually delivered or
when deposited with a nationally recognized overnight courier
or deposited in the United States mail, first class, postage
prepaid, addressed to the party to whom the notice is to be
given at the address shown above. Any party may change its
address for notices under this Agreement by giving formal
written notice to the other parties, specifying that the purpose of
the notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one Borrower,
notice to any Borrower will constitute notice to all Borrowers.
For notice purposes, Borrower will keep Lender informed at all
times of ▇▇▇▇▇▇▇▇'s current address(es).
Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or unenforceable
as to any person or circumstance, such finding shall not render
that provision invalid or unenforceable as to any other persons
or circumstances. If feasible, any such offending provision shall
be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other
provisions of this Agreement in all other respects shall remain
valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent
the context of any provisions of this Agreement makes it
appropriate, including without limitation any representation,
warranty or covenant, the word "Borrower" as used herein shall
include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no
circumstances shall this Agreement be construed to require
Lender to make any Loan or other financial accommodation to
any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and
agreements contained by or on behalf of Borrower shall bind its
successors and assigns and shall inure to the benefit of Lender,
its successors and assigns. Borrower shall not, however, have
the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants
made by Borrower in this Agreement or in any certificate or
other instrument delivered by Borrower to Lender under this
Agreement shall be considered to have been relied upon by
▇▇▇▇▇▇ and will survive the making of the Loan and delivery to
Lender of the Related Documents, regardless of any
investigation made by ▇▇▇▇▇▇ or on ▇▇▇▇▇▇'s behalf.
Time Is of the Essence. Time is of the essence in the
performance of this Agreement.
Waiver. Lender shall not be deemed to have waived any
rights under this Agreement unless such waiver is given in
writing and signed by ▇▇▇▇▇▇. No delay or omission on the part
of Lender in exercising any right shall operate as a waiver of
such right or any other right. A waiver by ▇▇▇▇▇▇ of a provision
of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior
waiver by ▇▇▇▇▇▇, nor any course of dealing between ▇▇▇▇▇▇
and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future
transactions. Whenever the consent of Lender is required
under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent in
subsequent instances where such consent is required, and in
all cases such consent may be granted or withheld in the sole
discretion of Lender.
9
04-01-1997 LOAN AGREEMENT Page 9
Loan No 815-190 (Continued)
▇▇▇▇▇▇▇▇ ACKNOWLEDGES HAVING READ ALL THE
PROVISIONS OF THIS LOAN AGREEMENT, AND ▇▇▇▇▇▇▇▇
AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
APRIL 1, 1997.
BORROWER:
▇. ▇. ▇▇▇▇▇▇▇▇, INC.
By://s// ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
TITLE CFO
By://s// ▇▇▇▇ ▇▇▇▇▇▇▇▇
TITLE VP Operations
LENDER:
U.S. BANK
By: //s// ▇▇▇▇▇ ▇. ▇▇▇▇
Authorized Officer
10
DISBURSEMENT REQUEST AND AUTHORIZATION
Principal Loan Date Maturity Loan No Call Collateral
$6,000,000.00 04-01-1997 04-30-1999 815-190 00012 365
Account Officer Initials
7155425480 62186
Borrower: ▇. ▇. ▇▇▇▇▇▇▇▇, INC.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Lender: U.S. BANK
California Corporate Banking
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
LOAN TYPE. This is a Variable Rate (at LENDER'S PRIME RATE.
THIS IS THE RATE OF INTEREST WHICH LENDER FROM
TIME TO TIME ESTABLISHES AS ITS PRIME RATE AND IS
NOT, FOR EXAMPLE, THE LOWEST RATE OF INTEREST
WHICH LENDER COLLECTS FROM ANY BORROWER OR
CLASS OF BORROWERS), Revolving Line of Credit Loan to a
Corporation for $6,000,000.00 due on April 30, 1999. This is a
secured renewal loan.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan
is for:
Personal, Family, or Household Purposes or Personal
Investment.
X Business (Including Real Estate Investment).
SPECIFIC PURPOSE. The specific purpose of this loan is:
SUPPORT SHORT-TERM OPERATING AND CASH FLOW
NEEDS.
DISBURSEMENT INSTRUCTIONS. ▇▇▇▇▇▇▇▇ understands that
no loan proceeds will be disbursed until all of ▇▇▇▇▇▇'s conditions for
making the loan have been satisfied. Please disburse the loan proceeds
of $6,000,000.00 as follows:
Undisbursed Funds: $6,000,000.00
Note Principal: $6,000,000.00
CHARGES PAID IN CASH. ▇▇▇▇▇▇▇▇ has paid or will pay in cash
as agreed the following charges:
Prepaid Finance Charges Paid in Cash: $15,000.00
$15,000.00 LOAN FEES
Total Charges Paid in Cash: $15,000.00
TAX IDENTIFICATION CERTIFICATION. The Tax
Identification Number for ▇.▇. ▇▇▇▇▇▇▇▇, INC. is ▇▇-▇▇▇▇▇▇▇. I
certify under penalties of perjury the above tax identification
information is correct.
PAYMENT BY AUTOMATIC DEDUCTION. Borrower hereby
authorizes Lender to automatically deduct the amount of all principal
and/or interest payments on this Note from Borrower's account number
8110-012690 with Lender or such other account as Borrower may
designate in writing. If there are insufficient funds in the account to
pay the automatic deduction in full, Lender may allow the account to
become overdrawn, or Lender may reverse the automatic deduction.
Borrower will pay all fees on the account which result from the
automatic deductions, including any overdraft/NSF charges. If for any
reason ▇▇▇▇▇▇ does not charge the account for a payment, or if an
automatic payment is reversed, the payment is still due according to
this Note. If the account is a Money Market Account, the number of
withdrawals from that account is limited as set out in the account
agreement. Lender may cancel the automatic deduction at any time in
its discretion.
COMMERCIAL SWEEP ACCOUNT LINE OF CREDIT
ADDENDUM. An exhibit, titled "COMMERCIAL SWEEP
ACCOUNT LINE OF CREDIT ADDENDUM," is attached to this
Agreement and by this reference is made a part of this Agreement just
as if all the provisions, terms and conditions of the Exhibit had been
fully set forth in this Agreement.
FINANCIAL CONDITION. BY SIGNING THIS
AUTHORIZATION, ▇▇▇▇▇▇▇▇ REPRESENTS AND
WARRANTS TO LENDER THAT THE INFORMATION
PROVIDED ABOVE IS TRUE AND CORRECT AND THAT
THERE HAS BEEN NO MATERIAL ADVERSE CHANGE IN
BORROWER'S FINANCIAL CONDITION AS DISCLOSED IN
BORROWER'S MOST RECENT FINANCIAL STATEMENT TO
▇▇▇▇▇▇. THIS AUTHORIZATION IS DATED APRIL 1, 1997.
BORROWER:
▇. ▇. ▇▇▇▇▇▇▇▇, INC.
By: //s// ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: //s// ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
TITLE VP Operations TITLE CFO
11
ALTERNATIVE RATE OPTIONS
PROMISSORY NOTE
(PRIME RATE, IBOR)
$ 6,000,000.00 Date: APRIL 1, 1997
▇. ▇. ▇▇▇▇▇▇▇▇, INC. ("Borrower")
U. S. BANK ("Lender")
1. TYPE OF CREDIT. This note is given to evidence
▇▇▇▇▇▇▇▇'s obligation to repay all sums which ▇▇▇▇▇▇ may from
time to time advance to Borrower ("Advances") under a:
single disbursement loan. ▇▇▇▇▇▇▇ loaned to Borrower
hereunder will be disbursed in a single Advance in the
amount shown in Section 2.
revolving line of credit. No Advances shall be made which
create a maximum amount outstanding at any one time
which exceeds the maximum amount shown in Section 2.
However, Advances hereunder may be borrowed, repaid
and reborrowed, and the aggregate Advances loaned
hereunder from time to time may exceed such maximum
amount.
non-revolving line of credit. Each Advance made from time
to time hereunder shall reduce the maximum amount
available shown in Section 2. Advances loaned hereunder
which are repaid may not be reborrowed.
2. PRINCIPAL BALANCE. The unpaid principal balance of
all Advances outstanding under this note ("Principal Balance") at
one time shall not exceed $6,000,000.00.
3. PROMISE TO PAY. For value received Borrower promises
to pay to Lender or order at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ , the Principal Balance of this note, with
interest thereon at the rate(s) specified in Sections 4 and 11
below.
4. INTEREST RATE. The interest rate on the Principal
Balance outstanding may vary from time to time pursuant to the
provisions of this note. Subject to the provisions of this note,
Borrower shall have the option from time to time of choosing to
pay interest at the rate or rates and for the applicable periods of
time based on the rate options provided herein; provided,
however, that once Borrower notifies Lender of the rate option
chosen in accordance with the provisions of this note, such notice
shall constitute Borrower's irrevocable request for an Advance
hereunder at the rate option specified in such notice. The rate
options are the Prime Borrowing Rate and the IBOR Borrowing
Rate, each as defined herein.
(a) The Prime Borrowing Rate.
(i) The Prime Borrowing Rate is a per annum rate equal
to ▇▇▇▇▇▇'s prime rate plus 0.00% per annum.
(ii) Whenever Borrower desires to use the Prime
Borrowing Rate option, Borrower shall give Lender notice orally or
in writing in accordance with Section 15 of this note, which notice
shall specify the requested disbursement date and principal
amount of the Advance, and that Borrower has chosen the Prime
Borrowing Rate option.
(iii) Prepayments of all or any part of the Principal Balance
bearing interest at the Prime Borrowing Rate may be made at any
time without penalty. Upon prepayment of any such principal
amount, Borrower also must pay all accrued interest thereon to
the date of prepayment.
(iv) Subject to Section 11 of this note, interest shall accrue
on the unpaid Principal Balance at the Prime Borrowing Rate
unless and except to the extent that the IBOR Borrowing Rate is
in effect.
(b) The IBOR Borrowing Rate.
(i) The following terms shall have the following meanings:
"Business Day" means any day other than a Saturday,
Sunday, or other day that commercial banks in Portland, Oregon
or New York City are authorized or required by law to close.
"IBOR Amount" means each principal amount for
which Borrower chooses to have the IBOR Borrowing Rate apply
for any specified IBOR Interest Period.
"IBOR Interest Period" means as to any IBOR Amount,
a period of 1, 2, or 3 months commencing on the date the IBOR
Borrowing Rate becomes applicable thereto; provided, however,
that: (A) no IBOR Interest Period shall be selected which would
extend beyond April 30, 1999; (B) no IBOR Interest Period shall
extend beyond the date of any principal payment required under
Section 6 of this note, unless the sum of the principal amounts
bearing interest at the Prime Borrowing Rate, plus IBOR Amounts
with IBOR Interest Periods ending on or before the scheduled
date of such principal payment, plus principal amounts remaining
unborrowed under a line of credit, equals or exceeds the amount
of such principal payment; (C) any IBOR Interest Period which
would otherwise expire on a day which is not a Business Day,
shall be extended to the next succeeding Business Day, unless
the result of such extension would be to extend such IBOR
Interest Period into another calendar month, in which event the
IBOR Interest Period shall end on the immediately preceding
Business Day; and (D) any IBOR Interest Period that begins on
the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month
at the end of such IBOR Interest Period) shall end on the last
Business Day of a calendar month.
(ii) The IBOR Borrowing Rate is ▇▇▇▇▇▇'s IBOR Rate plus
2.00% per annum. ▇▇▇▇▇▇'s IBOR Rate for any IBOR Interest
Period is the rate per annum (computed on the basis of a 360-day
year and the actual number of days elapsed) equal to the
arithmetic average (rounded upward to the nearest 1/16 of 1%) of
the rates per annum determined by Lender as of the times
specified in Section 4(b)(iii) on the date two (2) Business Days
prior to the first day of such IBOR Interest Period as the rates
offered to Lender by three Eurodollar money market dealers in
such Eurodollar market as may be selected by Lender for U.S.
dollar deposits to be delivered on the first day of such IBOR
Interest Period for the number of months therein; provided,
however, that Lender's IBOR Rate shall be adjusted to take into
account the maximum reserves required to be maintained for
Eurocurrency liabilities by banks during each such IBOR Interest
Period as specified in Regulation D of the Board of Governors of
the Federal Reserve System or any successor regulation.
(iii) Borrower may obtain IBOR Borrowing Rate quotes
from Lender between 8:00 a.m. and 12:00 noon (Portland, Oregon
time) on any Business Day. Any IBOR Borrowing Rate quoted
(A) before 10:00 a.m. shall be based on Lender's IBOR Rate
determined as of approximately 8:00 a.m. on such day, and
Borrower may request an Advance at such rate only by giving
Lender notice in accordance with Section 4(b)(iv) before 10:00
a.m. on such day; and (B) between 10:00 a.m. and 12:00 noon
shall be based on Lender's IBOR Rate determined as of
approximately 10:00 a.m. on such day, and Borrower may request
an Advance at such rate only by giving Lender notice in
accordance with Section 4(b)(iv) not later than 12:00 noon on
such day.
(iv) Whenever Borrower desires to use the IBOR
Borrowing Rate option, Borrower shall give Lender irrevocable
notice (either in writing or orally and promptly confirmed in writing)
between 8:00 a.m. and 12:00 noon (Portland, Oregon time) two
(2) Business Days in advance of the desired effective date of such
rate. Any oral notice shall be given by, and any written notice or
confirmation of an oral notice shall be signed by, the person(s)
authorized in Section 15 of this note, and shall specify the
requested effective date of the rate, IBOR Interest Period and
IBOR Amount, and whether Borrower is requesting a new
Advance at the IBOR Borrowing Rate under a line of credit,
conversion of any portion of the Principal Balance bearing interest
at the Prime Borrowing Rate to an IBOR Amount, or a new IBOR
Interest Period for an outstanding IBOR Amount. Notwithstanding
any other term of this
Page 1 of 4
12
note, Borrower may elect the IBOR Borrowing Rate in the
minimum principal amount of $ 500,000.00 and in integral
multiples of $ 100,000.00; provided, however, that no more than
10 separate IBOR Interest Periods may be in effect at any one
time.
(v) Borrower may not prepay all or any part of any IBOR
Amount(s).
(vi) If at any time ▇▇▇▇▇▇'s IBOR Rate is unascertainable
or unavailable to Lender or if IBOR Rate loans become unlawful,
the option to select the IBOR Borrowing Rate shall terminate
immediately. If the IBOR Borrowing Rate is then in effect, (A) it
shall terminate automatically with respect to all IBOR Amounts
(i) on the last day of each then applicable IBOR Interest Period,
if Lender may lawfully continue to maintain such loans, or
(ii) immediately if Lender may not lawfully continue to maintain
such loans through such day, and (B) subject to Section 11, the
Prime Borrowing Rate automatically shall become effective as to
such amounts upon such termination.
(vii) If at any time after the date hereof (A) any revision in
or adoption of any applicable law, rule, or regulation or in the
interpretation or administration thereof (i) shall subject Lender or
its Eurodollar lending office to any tax, duty, or other charge, or
change the basis of taxation of payments to Lender with respect
to any loans bearing interest based on Lender's IBOR Rate, or
(ii) shall impose or modify any reserve, insurance, special deposit,
or similar requirements against assets of, deposits with or for the
account of, or credit extended by Lender or its Eurodollar lending
office, or impose on Lender or its Eurodollar lending office any
other condition affecting any such loans, and (B) the result of any
of the foregoing is (i) to increase the cost to Lender of making or
maintaining any such loans or (ii) to reduce the amount of any
sum receivable under this note by Lender or its Eurodollar lending
office, Borrower shall pay Lender within 15 days after demand by
Lender such additional amount as will compensate Lender for
such increased cost or reduction. The determination hereunder
by ▇▇▇▇▇▇ of such additional amount shall be conclusive in the
absence of manifest error. If ▇▇▇▇▇▇ demands compensation
under this Section 4(b)(vii), Borrower may upon three (3) Business
Days' notice to Lender pay the accrued interest on all IBOR
Amounts, together with any additional amounts payable under
Section 4(b)(viii). Subject to Section 11, upon ▇▇▇▇▇▇▇▇'s paying
such accrued interest and additional costs, the Prime Borrowing
Rate immediately shall be effective with respect to the unpaid
principal balance of such IBOR Amounts.
(viii) Upon any termination of any IBOR Borrowing Rate
(including but not limited to conversion to another rate) or
payment of all or any portion of any IBOR Amount on a date other
than the last day of the then applicable IBOR Interest Period,
including without limitation (A) acceleration under Section 11 or
(B) repayment in response to a notice under Section 4(b)(vii),
Borrower shall pay to Lender on demand such amount as Lender
reasonably determines (determined as though 100% of the
applicable IBOR Amount had been funded in the applicable
Eurodollar market) is equivalent to all direct or indirect losses,
expenses, liabilities, or reductions in yield to Lender resulting
therefrom, whether incurred in connection with liquidation or
reemployment of funds or otherwise.
(ix) If Borrower chooses the IBOR Borrowing Rate,
Borrower shall pay interest based on such rate, plus any other
applicable taxes or charges hereunder, even though ▇▇▇▇▇▇ may
have obtained the funds loaned to Borrower from sources other
than the applicable Eurodollar market. ▇▇▇▇▇▇'s determination of
the IBOR Borrowing Rate and any such taxes or charges shall be
conclusive in the absence of manifest error.
(x) Notwithstanding any other term of this note, Borrower
may not select the IBOR Borrowing Rate if an event of default
hereunder has occurred and is continuing.
(xi) Nothing contained in this note, including without
limitation the determination of any IBOR Interest Period or
Lender's quotation of any IBOR Borrowing Rate, shall be
construed to prejudice Lender's right, if any, to decline to make
any requested Advance or to require payment on demand.
5. COMPUTATION OF INTEREST. All interest under Section
4 and Section 11 will be computed at the applicable rate based on
a 360-day year and applied to the actual number of days elapsed.
6. PAYMENT SCHEDULE.
(a) Principal. Principal shall be paid:
on demand.
on demand, or if no demand, on April 30, 1999.
on .
subject to Section 7, in installments of
each, plus accrued interest
each including accrued interest
beginning on and on the same day of each
thereafter until when the entire Principal Balance
plus interest thereon shall be due and payable.
(b) Interest.
(i) Interest on all amounts bearing interest at the Prime
Borrowing Rate shall be paid:
on the 15th day of April, 1997 and on the same
day of each month thereafter prior to maturity and at maturity.
at maturity.
at the time each principal installment is due and
at maturity.
(ii) Interest on all IBOR Borrowing Rate Amounts shall be
paid:
on the last day of the applicable IBOR Interest
Period, and if such IBOR Interest Period is
longer than three months, on the last day of
each three month period occurring during such
IBOR Interest Period, and at maturity.
on the 15th day of April, 1997 and on the same
day of each MONTH thereafter prior to
maturity and at maturity.
at maturity.
at the time each principal installment is due and
at maturity.
7. CHANGE IN PAYMENT AMOUNT. If the interest rate on
this note is subject to change in accordance with Section 4, the
holder of this note may, from time to time, in holder's sole
discretion, increase or decrease the amount of each of the
installments remaining unpaid at the time of each change in rate
to an amount holder in its sole discretion deems necessary to
continue amortizing the Principal Balance at the same rate
established by the installment amounts specified in Section 6(a),
whether or not a "balloon" payment may also be due upon
maturity of this note. Holder shall notify the undersigned of each
such change in writing. Whether or not the installment amount is
increased under this Section 7, Borrower understands that, as a
result of increases in the rate of interest in accordance with
Section 4, the final payment due, whether or not a "balloon"
payment, shall include the entire Principal Balance and interest
thereon then outstanding, and may be substantially more than the
installment specified in Section 6.
8. ALTERNATE PAYMENT DATE. Notwithstanding any other
term of this note, if in any month there is no day on which a
scheduled payment would otherwise be due (e.g. February 31),
such payment shall be paid on the last banking day of that month.
9. PAYMENT BY AUTOMATIC CHARGE.
Please automatically deduct the amount of all principal and
interest payments from account number 8110-012690. If there are
insufficient funds in the account to pay the automatic deduction in
full, Lender may allow the account to become overdrawn, or
Lender may reverse the automatic deduction. Borrower will pay
all the fees on the account which result from the automatic
deductions, including any overdraft/NSF charges. If for any
reason ▇▇▇▇▇▇ does not charge the account for a payment, or if an
automatic payment is reversed, the payment is still due according
to this note. If the account is a Money
Page 2 of 4
13
Market Account, the number of withdrawals from that account is
limited as set out in the agreement. Lender may cancel the
automatic deduction at any time in its discretion.
Provided, however, if no account number is entered above,
Borrower does not want to make payments by automatic charge.
10. LENDER'S PRIME RATE. ▇▇▇▇▇▇'s prime rate is the rate
of interest which Lender from time to time establishes as its prime
rate and is not, for example, the lowest rate of interest which
Lender collects from any borrower or class of borrowers. When
▇▇▇▇▇▇'s prime rate is applicable under Section 4(a) or 11(b), the
interest rate hereunder shall be adjusted without notice effective
on the day Lender's prime rate changes, but in no event shall the
rate of interest be higher than allowed by law.
11. DEFAULT .
(a) Without prejudice to any right of Lender to require payment
on demand or to decline to make any requested Advance, each of
the following shall be an event of default: (i) Borrower fails to
make any payment when due. (ii) Borrower fails to perform or
comply with any term, covenant or obligation in this note or any
agreement related to this note, or in any other agreement or loan
Borrower has with Lender. (iii) Borrower defaults under any loan,
extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor
or person that may materially affect any of Borrower's property or
▇▇▇▇▇▇▇▇'s ability to repay this note or perform Borrower's
obligations under this note or any related documents. (iv) Any
representation or statement made or furnished to Lender by
Borrower or on Borrower's behalf is false or misleading in any
material respect. (v) ▇▇▇▇▇▇▇▇ becomes insolvent, a receiver is
appointed for any part of ▇▇▇▇▇▇▇▇'s property, ▇▇▇▇▇▇▇▇ makes an
assignment for the benefit of creditors, or any proceeding is
commenced either by Borrower or against borrower under any
bankruptcy or insolvency laws. (vi) Any creditor tries to take any
of ▇▇▇▇▇▇▇▇'s property on or in which ▇▇▇▇▇▇ has a lien or security
interest. This includes a garnishment of any of ▇▇▇▇▇▇▇▇'s
accounts with ▇▇▇▇▇▇. (vii) Any of the events described in this
default section occurs with respect to any guarantor of this note
or any guaranty of Borrower's indebtedness to Lender ceases to
be, or is asserted not to be, in full force and effect. (viii) Lender
in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure. If this note is payable on
demand, the inclusion of specific events of default shall not
prejudice Lender's right to require payment on demand or to
decline to make any requested Advance.
(b) Without prejudice to any right of Lender to require payment
on demand, upon the occurrence of an event of default, ▇▇▇▇▇▇
may declare the entire unpaid Principal Balance on this note and
all accrued unpaid interest immediately due and payable, without
notice. Upon default, including failure to pay upon final maturity,
Lender, at its option, may also, if permitted under applicable law,
increase the interest rate on this note to a rate equal to the Prime
Borrowing Rate plus 5%. The interest rate will not exceed the
maximum rate permitted by applicable law. In addition, if any
payment of principal or interest is 15 or more days past due,
Borrower will be charged a late charge of 5% of the delinquent
payment.
12. EVIDENCE OF PRINCIPAL BALANCE; PAYMENT ON
DEMAND. ▇▇▇▇▇▇'s records shall, at any time, be conclusive
evidence of the unpaid Principal Balance and interest owing on
this note. Notwithstanding any other provisions of this note, in the
event holder makes Advances hereunder which result in an
unpaid Principal Balance on this note which at any time exceeds
the maximum amount specified in Section 2, ▇▇▇▇▇▇▇▇ agrees that
all such Advances, with interest, shall be payable on demand.
13. LINE OF CREDIT PROVISIONS. If the type of credit
indicated in Section 1 is a revolving line of credit or a non-
revolving line of credit, ▇▇▇▇▇▇▇▇ agrees that ▇▇▇▇▇▇ is under no
obligation and has not committed to make any Advances
hereunder. Each Advance hereunder shall be made at the sole
option of Lender.
14. DEMAND NOTE. If this note is payable on demand,
▇▇▇▇▇▇▇▇ acknowledges and agrees that (a) Lender is entitled to
demand Borrower's immediate payment in full of all amounts
owing hereunder and (b) neither anything to the contrary
contained herein or in any other loan documents (including but not
limited to, provisions relating to defaults, rights of cure, default
rate of interest, installment payments, late charges, periodic
review of Borrower's financial condition, and covenants) nor any
act of Lender pursuant to any such provisions shall limit or impair
▇▇▇▇▇▇'s right or ability to require ▇▇▇▇▇▇▇▇'s payment in full of all
amounts owing hereunder immediately upon ▇▇▇▇▇▇'s demand.
15. REQUESTS FOR ADVANCES.
(a) Any Advance may be made or interest rate option selected
upon the request of Borrower (if an individual), any of the
undersigned (if Borrower consists of more than one individual),
any person or persons authorized in subsection (b) of this Section
15, and any person or persons otherwise authorized to execute
and deliver promissory notes to Lender on behalf of Borrower.
(b) Borrower hereby authorizes any one of the following
individuals to request Advances and to select interest rate
options:
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, OR ▇▇▇▇ ▇▇▇▇▇
unless ▇▇▇▇▇▇ is otherwise instructed in writing.
(c) All Advances made pursuant to this Section 15 shall be
disbursed by deposit directly to Borrower's account with ▇▇▇▇▇▇,
or by cashier's check issued to Borrower.
(d) ▇▇▇▇▇▇▇▇ agrees that ▇▇▇▇▇▇ shall have no obligation to
verify the identity of any person making any request pursuant to
Section 15, and ▇▇▇▇▇▇▇▇ assumes all risks of the validity and
authorization of such requests. In consideration of Lender
agreeing, at its sole discretion, to make Advances upon such
requests, ▇▇▇▇▇▇▇▇ promises to pay holder, in accordance with the
provisions of this note, the Principal Balance together with interest
thereon and other sums due hereunder, although any Advances
may have been requested by a person or persons not authorized
to do so.
16. PERIODIC REVIEW. Lender will review ▇▇▇▇▇▇▇▇'s credit
accommodations periodically. At the time of the review, Borrower
will furnish Lender with any additional information regarding
Borrower's financial condition and business operations that
Lender requests. This information may include but is not limited
to, financial statements, tax returns, lists of assets and liabilities,
agings of receivables and payable, inventory schedules, budgets
and forecasts. If upon review, Lender, in its sole discretion,
determines that there has been a material adverse change in
Borrower's financial condition, Borrower will be in default. Upon
default, Lender shall have all rights specified herein.
17. NOTICES. Any notice hereunder may be given by ordinary
mail, postage paid and addressed to ▇▇▇▇▇▇▇▇ at the last known
address of ▇▇▇▇▇▇▇▇ as shown on holder's records. If Borrower
consists of more than one person, notification of any of said
persons shall be complete notification of all. Notice may be given
either before or reasonably soon after the effective date of the
change.
18. ATTORNEY FEES. Whether or not litigation or arbitration
is commenced, ▇▇▇▇▇▇▇▇ promises to pay all costs of collecting
overdue amounts. Without limiting the foregoing, in the event that
holder consults an attorney regarding the enforcement of any of
its rights under this note or any document securing the same, or
if this note is placed in the hands of an attorney for collection or
if suit or litigation is brought to enforce this note or any document
securing the same, Borrower promises to pay all costs thereof
including such additional sums as the court or arbitrator(s) may
adjudge reasonable as attorney fees, including without limitation,
costs and attorney fees incurred in any appellate court, in any
proceeding under the bankruptcy code, or in any receivership and
post-judgment attorney fees incurred in enforcing any judgment.
19. WAIVERS; CONSENT. Each party hereto, whether maker,
co-maker, guarantor or otherwise, waives diligence, demand,
presentment for payment, notice of non-payment, protest and
notice of protest and waives all defenses based on suretyship or
impairment of collateral. Without notice to Borrower and without
diminishing or affecting ▇▇▇▇▇▇'s rights or ▇▇▇▇▇▇▇▇'s obligations
hereunder, ▇▇▇▇▇▇ may deal in any manner with any person who
at any time is liable for, or provides any real or personal property
collateral for, any indebtedness of Borrower to Lender, including
the indebtedness evidenced by this note. Without limiting the
foregoing, Lender may, in its sole discretion: (a) make secured or
unsecured loans to Borrower and agree to any number of waivers,
modifications, extensions and renewals of any length of such
loans, including the loan evidenced by this note; (b) impair,
release (with or without substitution of new collateral), fail to
perfect a security interest in, fail to preserve the value of, fail to
dispose of in accordance with applicable law, any collateral
provided by any person; (c) ▇▇▇, fail to sue, agree not to sue,
release, and settle or compromise with, any person.
20. JOINT AND SEVERAL LIABILITY. All undertakings of the
undersigned Borrowers are joint and several and are binding upon
any marital community of which any of the undersigned are
members. ▇▇▇▇▇▇'s rights and remedies under this note shall be
cumulative.
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21. ARBITRATION.
(a) Either Lender or Borrower may require that all disputes,
claims, counterclaims and defenses, including those based on or
arising from any alleged tort ("Claims") relating in any way to this
note or any transaction of which this note is a part (the "Loan"), be
settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association and Title
9 of the U.S. Code. All Claims will be subject to the statutes of
limitation applicable if they were litigated. This provision is void
if the Loan, at the time of the proposed submission to arbitration,
is secured by real property located outside of Oregon or
Washington, or if the effect of the arbitration procedure (as
opposed to any Claims of Borrower) would be to materially impair
▇▇▇▇▇▇'s ability to realize on any collateral securing the Loan.
(b) If arbitration occurs and each party's Claim is less than
$100,000, one neutral arbitrator will decide all issues; if any
party's Claim is $100,000 or more, three neutral arbitrators will
decide all issues. All arbitrators will be active California State Bar
members in good standing. All arbitration hearings will be held in
Seattle, Washington. In addition to all other powers, the
arbitrator(s) shall have the exclusive right to determine all issues
of arbitrability. Judgment on any arbitration award may be
entered in any court with jurisdiction.
(c) If either party institutes any judicial proceeding relating to the
Loan, such action shall not be a waiver of the right to submit any
Claim to arbitration. In addition, each has the right before, during
and after any arbitration to exercise any number of the following
remedies, in any order or concurrently: (i) setoff; (ii) self-help
repossession; (iii) judicial or non-judicial foreclosure against real
or personal property collateral; and (iv) provisional remedies,
including injunction, appointment of receiver, attachment, claim
and delivery and replevin.
22. GOVERNING LAW.
This note shall be governed by and construed and enforced in
accordance with the laws of the State of Washington without
regard to conflicts of law principles; provided, however, that to the
extent that Lender has greater rights or remedies under Federal
law, this provision shall not be deemed to deprive Lender of such
rights and remedies as may be available under Federal law.
EACH OF THE UNDERSIGNED HEREBY ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THIS DOCUMENT.
▇. ▇. ▇▇▇▇▇▇▇▇, INC.
Borrower Name (Corporation, Partnership or other Entity)
By //s// ▇▇▇▇ ▇▇▇▇▇▇▇▇ Title VP Operations
By //s// ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Title CFO
For valuable consideration, ▇▇▇▇▇▇ agrees to the terms of the
arbitration provision set forth in this note.
Lender Name: U.S. BANK
By: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
Date: 4-1-97
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