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EXHIBIT 10.8
[Xxxxx Fargo Bank letterhead]
BUSINESS LENDING DIVISION
CONFIRMATION LETTER
SEPTEMBER 25, 1997
CRL NETWORK SERVICES, INC.
XXX XXXXXX XXXXXX
XXX. 0000
XXX XXXXXXXXX, XX 00000-5501
RE: $500,000.00 Equipment Line
XXXXX FARGO BANK, N.A. ("Bank"), agrees to make available to CRL NETWORK
SERVICES, INC. ("Borrower") a Equipment Line ("Credit"). The Credit shall bear
interest and be repayable in accordance with the terms and conditions of the
Agreement. The Agreement consists of (1) this Confirmation Letter (this
"Letter"), (2) the Business Lending Disclosure dated August 01,1997 (the
"Disclosure") and (3) any Related Documents. All terms and conditions of the
Disclosure and Related Documents are incorporated herein by reference for all
purposes. All capitalized terms not defined in this Letter are defined in the
Disclosure.
PROMISE TO PAY. Borrower promises to pay to Bank, or order, the principal amount
of $500,000.00, or so much as may be advanced and outstanding from time to time,
together with interest on the unpaid outstanding principal balance of each
Advance. Interest shall be calculated from the date of each Advance until
repayment of each Advance. Borrower will pay Bank at Bank's address shown in
this letter or at such other place as Bank may designate in writing.
EQUIPMENTLINE; TERM. Your EquipmentLine is a credit facility under which you may
request loans and/or equipment leases to facilitate your acquisition of
equipment. During the term of this EquipmentLine, you may request and the Bank
may approve loans or leases in its discretion whenever you desire financing for
qualifying pieces of equipment. The total amount of such loans and leases may
not exceed your preapproved credit limit referenced above. This EquipmentLine
credit facility is available to you for a term of 12 months, commencing with the
date your EquipmentLine is opened by the Bank.
REPAYMENT OPTIONS. At the time of each Advance under an EquipmentLine. Borrower
shall choose between the following two interest rate/loan repayment options, or
in lieu of an Advance, may choose an Equipment Lease. In each instance, the
amount available under this Credit shall be reduced by the amount of the Advance
or Equipment Lease.
OPTION 1. FIXED OPTION.
If Borrower elects to have a fixed rate of interest apply to an Advance:
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FIXED INTEREST RATE: The interest rate applicable to the Advance shall
be the rate 5.000% above the Treasury Rate in effect as of the close of
business on the Thursday of the week preceding disbursement of the
Advance; provided, however, that such interest rate shall be rounded to
the nearest 0.05%.
PAYMENTS: Borrower shall pay principal of and interest on each Advance
on the fifth day of each month in equal successive monthly installments
sufficient to amortize the principal and accruing interest of such
Advance over a payment schedule of not less than 36 months or more than
96 months, as agreed by Borrower and Bank at the time of such Advance,
depending on the type of equipment financed and the interest rate
applicable at the time of such Advance. If the Advance occurs on or
before the eighteenth day of a month, the first payment due date shall
be the 5th day of the next month; if the Advance occurs after the
eighteenth day of a month, the first payment due date shall be the 5th
day of the second month following the Advance. All unpaid principal and
accrued and unpaid interest and any other amounts owed in connection
with this Credit shall be due and payable in full at maturity on the
final payment date.
PREPAYMENT TERMS. Borrower may prepay principal of the Credit as
follows:
If the original Credit amount is $10,000 or more, and there are (12)
months or more remaining until maturity, Borrower shall pay to Bank a
prepayment fee equal to (i) 5% of the amount prepaid if the remaining
term is five or more years, (ii) 4% of the amount prepaid if the
remaining term is four to five years, (iii) 3% of the amount prepaid if
the remaining term is three to four years, (iv) 2% of the amount prepaid
if the remaining term is two to three years, and (v) 1% of the amount
prepaid if the remaining term is one to two years. All prepayments of
principal shall be applied on the most remote principal installment or
installments then unpaid.
Borrower(s) Initials ________________
OPTION 2. VARIABLE OPTION.
If Borrower elects to have a variable rate of interest apply to an
Advance:
VARIABLE INTEREST RATE: The interest rate applicable to the Advance
shall be subject to change from time to time based on changes in the
Prime Rate. The Prime Rate currently is 8.500% per annum. The variable
interest rate to be applied to the unpaid principal balance of the
Advance will be 1.750% percentage points above the Prime Rate, resulting
in a currently applicable initial rate of 10.250% per annum.
PAYMENTS: Borrower shall pay principal on each Advance on the fifth day
of each month in equal successive monthly installments sufficient to
amortize the principal amount of such Advance over a payment schedule of
not less than 36
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months or more than 96 months, as agreed by Xxxxxxxx and Bank at the
time of such Advance, depending on the type of equipment financed and
the interest rate applicable at the time of such Advance. In addition,
Borrower shall pay all accrued unpaid interest on each payment date. If
the Advance occurs on or before the eighteenth day of a month, the first
payment due date shall be the 5th day of the next month; if the Advance
date occurs after the eighteenth day of a month, the first payment due
date shall be the 5th day of the second month following the Advance. All
unpaid principal and accrued and unpaid interest and any other amounts
owed in connection with this Credit shall be due and payable in full at
maturity on the final payment date.
PREPAYMENT TERMS. Borrower may prepay principal of the Credit at any
time, in any amount, without penalty.
Advances: Advances shall be subject to the following terms and conditions:
This Credit shall be a non-revolving line of credit. Once the total amount
available under the Credit has been advanced, Borrower shall not be entitled to
further Advances-
* Borrower shall deliver to Bank an acceptable purchase agreement or an
invoice from vendor - not more than 90 days old - for equipment to be
purchased in whole or in part with the Advance.
* Bank may fund Advances to Borrower or directly to vendor at Bank's sole
discretion.
* For new equipment the Advance shall not exceed 100% of the selling
price.
* For used equipment the Advance shall not exceed 75% of the selling
price, or the appraised liquidation value (if required), whichever is
less.
* If an Advance or Advances to acquire an item of used equipment
aggregate(s) $100,000.00 or more, Borrower shall obtain, at Borrower's
sole cost and expense, an appraisal to determine the liquidation value
of such equipment. The appraisal must be performed by an independent
appraiser satisfactory to Bank, at Bank's sole discretion.
* The minimum Advance shall be $5,000.00.
INTEREST ACCRUAL BASIS. Interest shall be computed on a 365/360 simple interest
basis; that is, by multiplying the ratio of the annual interest rate over a year
of 360 days, times the outstanding principal balance, times the actual number of
days the principal is outstanding.
AUTOMATIC DEBIT OF PAYMENTS. At the time of an Advance, Borrower may elect to
have Bank automatically debit payments and other amounts owed in connection with
this Credit from Borrower's Account, or Borrower can request Bank to invoice
Borrower for payments.
DISBURSEMENT INFORMATION. Bank is not obligated to make an Advance under the
Agreement until Borrower delivers to Bank an acceptable purchase agreement or
invoice from vendor - not
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more than 90 days old - for equipment to be purchased with the Advance. Bank
shall disburse to Borrower or directly to the vendor at Bank's sole discretion.
COLLATERAL. Subject to the terms and conditions of the Disclosure, as security
for the obligations set forth in Section 2.1 of the Disclosure, CRL NETWORK
SERVICES, INC., as Grantor, pledges and grants to Bank a first priority security
interest in the following personal property, whether existing or hereafter
arising, now owned or hereafter acquired, and wherever located, and all Proceeds
of the foregoing (including insurance):
Any property described in Exhibit(s) (if any) attached hereto and made a
part hereof. (NONE)
All equipment purchased or acquired in whole or in part with an Advance.
COMMITMENT FEES. Borrower shall pay a commitment fee of $2,500.00 for the
availability of the Credit through the maturity date.
THIRD PARTY FEES. Borrower shall pay an estimated fee of:
$50.00 UCC Filing Fee
PAYMENT OF FEES. Payments and fees will be paid as follows:
Commitment Fee From Account 0524033941
EXTENSIONS, RENEWALS AND INCREASES. The Credit may be extended, renewed or
increased at Bank's sole discretion. Bank will notify Borrower in writing of any
modification and the terms of any such modification will be deemed to have been
accepted if Borrower does not deliver to Bank a written rejection within 10 days
from the date of notification, or draws additional funds at any time following
the date of notification.
INSURANCE. Borrower shall provide and maintain insurance coverage as required by
the Disclosure and any Related Documents.
COUNTERPART. This document may be signed in any number of separate copies, each
of which shall be effective as an original, but all of which taken together
shall constitute a single document.
FACSIMILE. An electronic transmission or other facsimile of this Letter or any
signed document shall be deemed an original and shall be admissible as evidence
of the document and the signer's execution.
PURPOSE. The proceeds of the Credit shall be used primarily for business or
commercial purposes.
At the time the Agreement is signed and delivered to Bank, the persons signing
below, including without limitation the Borrower(s), any Grantors(s) and any
Guarantor(s), acknowledge receipt
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of the Agreement, including the Disclosure and Related Documents, and accept all
terms and conditions contained in them. Unless a fully signed copy of this
Letter and all Related Documents is received by Bank within 30 days, this offer
to extend credit will expire. This offer is not transferable or assignable, and
may be withdrawn or modified at any time prior to Bank's receipt of the above
fully signed documents.
ALL STATES (EXCEPT OREGON). THIS LETTER, THE DISCLOSURE, AND ANY RELATED
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES RELATING TO THIS CREDIT.
OREGON ONLY. STATUTORY DISCLOSURE TO OREGON RESIDENTS: UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY A LENDER AFTER OCTOBER 3, 1989,
CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDER TO BE ENFORCEABLE.
If you have any questions, please contact me at (000) 000-0000. For future
reference, please send all correspondence to the Bank to the following address:
Business Lending Division, 000 Xxxx Xxxxxx Xxxxx, XXX #0000-000, Xxx Xxxx, XX
00000.
XXXXX FARGO BANK, N.A. ("Bank")
By: /S/ X. Xxxxxxx Xxxxx
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Name: X. Xxxxxxx Xxxxx
Title: Commercial Loan Officer
Dated: September 25,1997
GUARANTOR ACKNOWLEDGMENT:
By signing below, Guarantor acknowledges receipt of a copy of the Disclosure,
guarantees the Credit, and agrees to the terms and provisions of this Letter and
Chapter 3 of the Disclosure. The guaranty amount is $500,000.00. The Guarantor's
address is: 00 Xxxxxxx Xxxxx, Xxxx Xxxxxx, XX 00000.
XXXXX XXXXX
By:/S/ Xxxxx Xxxxx 9/26/97 By:
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Name: Xxxxx Xxxxx
Title: Individual
XXXXXXXX AND GRANTOR ACKNOWLEDGMENT AND ACCEPTANCE:
By signing below, Xxxxxxxx and Xxxxxxx acknowledge receipt of the Agreement,
including the Disclosure and Related Documents, and agree to the terms and
provisions contained in them.
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CRL NETWORK SERVICES, INC., a Corporation
By:/S/ Xxxxx Xxxxx 9/26/97 By:
---------------------------------------- -------------------------
Name: Xxxxx Xxxxx
Title: President
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[WELL FARGO BANK LOGO]
SIMPLYDOCS[TM]
BUSINESS LENDING DISCLOSURE
We appreciate the opportunity to do business with you. Your time is valuable,
and we know you have choices. This folder contains our SimplyDocs[TM] business
loan disclosure. This disclosure is written in a straightforward easy to read
fashion and covers the loan for which you are applying. We designed it so save
you time and to make your loan agreement easy to understand.
IF YOU SELECT XXXXX FARGO, THIS DISCLOSURE, ALONG WITH A CONFIRMATION LETTER
AND ANY RELATED DOCUMENTS, WILL CONSTITUTE YOUR LOAN AGREEMENT. PLEASE REVIEW
AND RETAIN THESE MATERIALS FOR YOUR FUTURE REFERENCE.
Your business success is important to us. In fact, Xxxxx Fargo specializes in
lending to small companies. We are the only small business lender to be
endorsed by the National Association of Women Business Owners, and we support
our commitment to helping small business grow through SBA lending. We have a
wide range of products and services to offer you, and our commercial loan
officers can customize a financing option for your specific needs.
We are available to serve you through our Business Banking Officers, our
24-hour customer service telephone center, and Business Gateway - on-line
banking just for small businesses. Of course, we are also happy to serve you
at any of our local Xxxxx Fargo branches. You may also visit us on the Internet
at xxx.xxxxxxxxxx.xxx.
Thank you for choosing Xxxxx Fargo.
Sincerely yours
/s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
Executive Vice President
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TABLE OF CONTENTS
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This Business Lending Disclosure is one part of the Agreement regarding the
Credit. The other parts include the Confirmation Letter and any Related
Documents. Parties to the Agreement are encouraged to read the Agreement in its
entirety. Capitalized terms are defined in the Glossary at the end of this
Disclosure.
Section 1 ....................... TERMS AND CONDITIONS THAT APPLY TO ALL CREDITS
Section 2 ................................................... SECURITY AGREEMENT
Section 3 ............................................................. GUARANTY
Appendix A ............................................ MISCELLANEOUS PROVISIONS
Appendix B ................................................. ARBITRATION PROGRAM
Appendix C ............................................ TRADE FINANCE SUBFEATURE
Appendix D ........................... ACCOUNTS RECEIVABLE & INVENTORY PRIMELINE
Glossary ............................... DEFINITIONS OF TERMS USED IN DISCLOSURE
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SECTION 1 TERMS & CONDITIONS THAT APPLY TO ALL CREDITS
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By signing the Confirmation Letter, Xxxxxxxx agrees, unless otherwise
disclosed to and acknowledged by Bank in writing, that the following is
true now, and at the time of each advance will be true:
1.1 REPRESENTATIONS MADE BY BORROWER
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FINANCIAL AND OTHER INFORMATION
Each financial statement submitted by Xxxxxxxx gives a full and complete
picture of Xxxxxxxx's financial condition as of the statement's date,
including all material contingent obligations, and there has been no
significant adverse change to Borrower's financial condition since the
date of the most recent statement; all information furnished by Borrower to
Bank in connection with the application for credit was true and accurate in
every significant respect as of the date of the information; and no
material facts were omitted so as to make the information incomplete or
misleading.
PROPERTIES
Xxxxxxxx owns and has good title to all of Xxxxxxxx's properties, and the
titles to the properties are all in Borrower's legal name. Borrower has
used due diligence in investigating Xxxxxxxx's properties for Hazardous
Substances.
COMPLIANCE, LITIGATION AND CLAIMS
Borrower is in compliance with all applicable laws, ordinances, rules and
regulations; no litigation, claim, investigation, arbitration,
administrative proceeding, or similar action against Borrower is pending
or threatened (including any concerning unpaid taxes or Hazardous
Substances); and no other event has occurred or is expected to occur which
might have a significant adverse affect on Borrower's financial condition
or properties. Any use, generation, manufacture, storage, treatment,
disposal, release, or threatened release of any Hazardous Substance by
anyone at the properties while Borrower has owned the properties was
conducted in full compliance with all applicable federal, state, and local
laws, regulations, and ordinances, except as disclosed on the loan
application by Xxxxxxxx. Borrower is not aware of any violations of any
such local laws, regulations, and ordinances with respect to Hazardous
Substances by previous owners or occupants of the properties.
TAXES
Xxxxxxxx has filed all required tax returns and reports and paid all
taxes, assessments, and other governmental charges -- except any contested
by Borrower in good faith in the ordinary course of business, and for
which adequate reserves have been provided.
PRINCIPAL OFFICE
Xxxxxxxx's principal office is located at the address specified in the
Confirmation Letter.
CONTINUATION AND SURVIVAL
The foregoing representations are continuing and shall remain true and in
full force and effect at all times until the Credit is paid in full, or
until this Agreement is terminated, whichever is the last to occur.
1.2 RESPONSIBILITIES OF BORROWER
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FINANCIAL AND OTHER INFORMATION
Borrower will maintain its financial books and records in accordance with
generally accepted accounting principles, consistently applied; and when
requested by Bank, Borrower, at no cost to Bank, will furnish additional
information and statements relating to Xxxxxxxx's (including its general
partners, if any) financial condition and business operations, including
tax returns, and verification of use of loan proceeds. Borrower will
permit, at Bank's request, employees or agents of Bank to examine or audit
Xxxxxxxx's books, accounts, and records; and make copies and memoranda of
Xxxxxxxx's books, accounts, and records. If Xxxxxxxx maintains any records
in the possession of a third party (including computer-generated records
and computer
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software programs used to generate the records), at Bank's request,
Xxxxxxxx will notify the party to give Bank open access, at not cost to
Bank, to the records at all reasonable times and to provide Bank with
copies of any records it requests.
OPERATION OF BUSINESS
Borrower will comply with all applicable laws, ordinances, rules and
regulations; notify Bank in writing prior to any change in any aspect of
Borrower's business that directly or indirectly relates to any agreements
between Borrower and Bank; and permit Bank to inspect any and all of
Borrower's property.
Borrower will maintain fire, other hazard, public liability and such other
insurance policies as is customary for businesses similar to Borrower's,
each in form, amounts, coverages and with an Acceptable Insurance Company.
Borrower will not: (a) engage in any business activities substantially
different from those in which Borrower is presently engaged; (b) dissolve,
cease operations, liquidate, merge, transfer, acquire, or consolidate with
any other entity, or change ownership, location or name; (c) transfer or
sell any of its assets out of the ordinary course of business except for
fair consideration; (d) purchase or retire any of Borrower's outstanding
shares, or alter or amend Borrower's capital structure; and (e) if Borrower
is a Trust, terminate or revoke the Trust, in whole or in part.
HAZARDOUS SUBSTANCES
Xxxxxxxx agrees that any use, generation, manufacture, storage, treatment,
disposal, release, or threatened release of any Hazardous Substance by any
occupant or user of any of Borrower's properties will be conducted in
compliance with all applicable federal, state, and local laws, regulations,
and ordinances. Bank and its agents may make any inspections and tests of
the properties that Bank considers appropriate in order to determine
compliance with this section of the Disclosure. Borrower will indemnify and
hold Bank harmless against any and all claims, losses, liabilities,
damages, penalties, and expenses that Bank may directly or indirectly
sustain or suffer as a consequence of any use, generation, manufacture,
storage, disposal, release, or threatened release occurring prior to or
during Borrower's ownership, control or interest in the properties, whether
or not this was or should have been known to Borrower. Xxxxxxxx releases
and waives any future claims against Bank for damages, indemnity or
contribution in connection with Hazardous Substances. The provisions of
this section of the Disclosure, including the obligation to indemnify, will
survive the repayment of the Credit and the termination or expiration of
the Agreement and will not be affected by Bank's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
ADDITIONAL ASSURANCES
Xxxxxxxx agrees to do all things deemed necessary by Bank in order to
evidence the Credit, cure any defects in the execution, delivery, or
substance of the Agreement, secure the Credit and perfect all security
interests (if any) granted to Bank.
1.3 GENERAL TERMS AND CONDITIONS
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EXTENSIONS, RENEWALS AND INCREASES
The Credit may be extended, renewed or increased at Bank's sole
discretion. Bank will notify Borrower in writing of any modifications and
the terms of any such modification will be deemed to have been accepted if
Borrower does not deliver to Bank a written rejection within 10 days from
the date of notification, or draws additional funds at any time following
the date of notification.
INTEREST
If Borrower fails to maintain its Primary Deposit Account with Bank or if
Bank is not able to collect all payments related to the Credit by charging
Borrower's deposit account with Bank, whether because Borrower cancels the
authorization to Bank to do so, or Borrower fails at any time to maintain
sufficient immediately available funds in the Primary Deposit Account, or
the account is closed by Borrower or Bank or for any other reason. Bank
may increase the interest rate up to one percent (1%) per annum
immediately or anytime thereafter and without notice.
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Under no circumstances shall interest taken, reserved, contracted for,
charged or received under this loan exceed the maximum permitted by
applicable law. The Bank does not agree or intend to contract for, charge,
collect, reserve, take or receive any amount of interest, fees, penalties
or other charges, which would in any way or event (including demand,
prepayment, or acceleration) exceed the maximum permitted by applicable
law. Any excess interest shall be applied first to reduce the true
indebtedness, and any remaining excess interest or other unauthorized
amounts will be refunded. For Texas borrower's, all sums paid or agreed to
be paid to Bank for the use, forbearance or detention of sums due
hereunder shall be amortized prorated, allocated and spread throughout the
full term of the Credit, including renewals, if any, until payment in full
for purposes of determining the effective rate of interest.
PAYMENTS AND LATE CHARGES
Unless otherwise agreed, all sums received from Borrower may be applied to
interest, fees, principal or any other amounts due to Bank in any order at
Bank's sole discretion. For each payment of principal, interest and or
fees which has not been paid in full within fifteen days after its date
due. Borrower will pay to Bank a late charge of $15.00 or five percent
(5%) of the amount due, whichever is greater.
1.4 EVENTS OF DEFAULT
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This section describes the events that, should they occur, would cause
Borrower to be in default of the Agreement: (a) Borrower fails to pay any
principal, interest, fees, or charges when due under the terms of the
Agreement; (b) a petition is filed by or against Borrower under the
Bankruptcy Code (Title 11 of the United States Code, as amended), or any
other law relating to bankruptcy, insolvency, reorganization, or other
relief for debtors; (c) a receiver, trustee, custodian, or liquidator of
any assets or property of Xxxxxxxx is appointed; (d) Xxxxxxxx becomes
insolvent, or makes a general assignment for the benefit of creditors, or
is generally not paying debts as they become due; (e) any property of
Borrower is attached, garnished, or similarly levied; (f) Borrower is
dissolved or liquidated; (g) Borrower dies or becomes incapacitated; (h)
a change in ownership of twenty-five percent (25%) or more of the common
stock/ownership interests of Borrower occurs; (i) if Borrower is a Trust,
a revocation or termination of the Trust or transfer of a substantial
part of the assets of the Trust occurs; (j) Borrower fails to comply with
all terms and conditions of the Agreement; (k) Borrower fails to comply
with all terms and conditions of any agreement with any bank or anyone
else, which failure may materially affect any of Borrower's property or
Borrower's ability to repay this Credit or perform Borrower's obligations
under this Credit or any of the Related Documents; (l) Bank, in good
faith, believes any or all of the Collateral is in danger or misuse,
dissipation, commingling, loss, theft, damage, or destruction, or is
otherwise in jeopardy or unsatisfactory in character or value; (m) Bank
believes the prospect of payment or performance under the Agreement is
impaired; or (n) if any of the preceding events occurs with respect to
any Guarantor, Grantor, or member or general partner of Borrower or with
respect to any party to any Related Documents, or any such party revokes
or disputes the validity of, or his/her/its liability under, any such
agreement.
1.5 BANK REMEDIES
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If a default occurs: (a) any obligation of Bank to permit further
borrowings will immediately end and (b) Bank may, at its sole option,
declare the entire balance of principal, interest, fees, and charges
immediately due and payable. However, if the default is for bankruptcy or
insolvency, as described above, such acceleration will be automatic and
not optional; and (c) Bank may use any other remedies available to it
under the Agreement or otherwise provided by law.
To the extent not prohibited by applicable law, following acceleration
after default or the maturity of a Credit, Bank may at its option
increase the interest rate applicable to such Credit by up to five
percent (5%) per annum.
1.6 ARBITRATION
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Bank, Borrower, and any other party to this Agreement agree to be bound
by the terms and provisions of Arbitration Program set forth in Appendix
B of this Disclosure, by which Disputes shall be resolved by binding
arbitration upon the request of any party.
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1.6 MISCELLANEOUS
ADVANCES
With respect to disbursements and advances under the Credit, Xxxxxxxx will
be liable for sums credited to any of Xxxxxxxx's accounts with Bank or
advanced according to the written, verbal, telephone, or electronic
request of any person believed by Bank in good faith to be authorized to
make the request. Bank will have no liability for any such transfers.
Borrower will indemnify and hold Bank harmless from and against damages,
liabilities, costs or expenses (including attorney's fees) arising out of
any claim by Borrower or any third party against Bank in connection with
Bank's performance of transfers as described above.
CONSENT TO SELL THE CREDIT OBLIGATION
Borrower agrees: (a) Bank may sell or transfer all or part of the Credit
to one or more purchasers, whether related or unrelated to Bank; (b) Bank
may provide to any purchaser, or potential purchaser, any information or
knowledge Bank may have about Borrower or about any other matter relating
to this credit obligation, and Borrower waives any rights to privacy it
may have with respect to such matters; (c) the purchaser of a Credit will
be considered its absolute owner and will have all the rights granted
under the Agreement or agreements governing the sale of the Credit; and
(d) the purchaser of a Credit may enforce its interests irrespective of
any claims or defenses that Borrower may have against Bank.
Borrower waives all notices of sale of a Credit, as well as all notices of
any repurchase, and all rights of offset or counterclaim that Borrower may
have now or later against Bank or against any purchaser of a Credit.
DEPOSIT ACCOUNTS
Borrower grants to Bank a security interest in Xxxxxxxx's accounts with
Bank (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 IRAs, Xxxxx
accounts, and trust accounts to the extent a security interest would be
invalid or prohibited by law.
OTHER
Time is of the essence in the performance of the Agreement. In addition,
Bank, Borrower, and any other party to this Agreement agree to be bound by
the miscellaneous provisions set forth in Appendix A of this Disclosure.
SECTION 2 SECURITY AGREEMENT
Grantor Grants Bank a security interest in Collateral as described in the
Confirmation Letter.
By signing the Confirmation Letter, Xxxxxxx agrees, unless otherwise
disclosed to and acknowledged by Bank in writing, that the following is
true now, and at the time of each advance will be true:
2.1 OBLIGATIONS SECURED
The obligations secured are the payment and performance of all present and
future Credits, all rights of Bank and obligations of Borrower and/or
Grantor under the Agreement, and all present and future obligations of
Borrower to Bank of other kinds.
2.2 REPRESENTATIONS MADE BY THE GRANTOR
Grantor represents: (a) Grantor owns the Collateral and has possession or
right of possession of the Collateral (other than rights to payment and
securities) and is not in the business of selling equipment of the kind
included within the Collateral; (b) Grantor has the right to pledge and
grant a security interest in the Collateral; (c) Collateral is genuine,
free from liens, adverse claims, setoffs, default, prepayment, defenses
and conditions precedent of any kind or character, except as previously
disclosed to Bank in writing; (d) insurance on the Collateral against all
risks commonly insured by owners of similar Collateral has been obtained
with loss payable to Bank; (e) no financing statement covering any of the
Collateral, and naming any secured party
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other than Bank, is on file in any public office; and (f) all information
furnished by Grantor to Bank is true and accurate in every significant
respect as of the date of the information. The foregoing representations
are continuing and shall remain true at all times until the Credit is paid
in full, or until this Agreement is terminated, whichever is the last to
occur.
2.3 RESPONSIBILITIES OF THE GRANTOR
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GENERAL
While the Agreement is in effect, Grantor will; (a) indemnify Bank against
all losses, claims, demands, and liabilities of every kind caused by or
relating to the Collateral; (b) not change its chief place of business or
the place where any of the Collateral or Grantor's records concerning the
Collateral is kept, without giving Bank advance written notice of the new
address; (c) operate, maintain and use the Collateral in accordance with
all applicable statutes, rules, and regulations relating to the
Collateral; (d) pay when due all license fees, registration fees, and
other charges in connection with the Collateral; (e) not use the
Collateral for any unlawful purpose nor use it in any way that would void
any insurance required to be carried under the Agreement; (f) do all
things necessary to maintain, preserve and protect the Collateral; (g)
keep the Collateral in good and salable condition and repair; (h) deal
with the Collateral according to the standards and practices generally
adhered to by owners of similar Collateral; (i) maintain complete and
accurate records regarding all Collateral, in accordance with generally
accepted accounting principles, consistently applied; (j) not commingle
Collateral with other property; (k) give only normal allowances and
credits and, when they are given, advise Bank immediately in writing; (l)
provide any service and do all things necessary to keep the Collateral
free and clear of all defenses, rights of offset, and counterclaims; (m)
on demand, deliver to Bank returned property resulting from, or payment
equal to, any allowances or credits on rights to payment and execute such
documents and do such things as Bank may reasonably request for the
purpose of perfecting, preserving and enforcing its security interest in
such returned property; (n) from time to time when requested by Bank,
prepare and deliver a schedule of all rights to payment, inventory, and
proceeds and assign in writing and deliver to Bank all such Collateral;
(o) not remove the Collateral from Grantor's premises without the prior
written consent of Bank, unless the Collateral consists of mobile goods as
defined in the Uniform Commercial Code, in which case, Grantor agrees not
to remove or permit the removal of the Collateral from its present
location, as shown in the Confirmation Letter, for a period in excess of
thirty (30) calendar days; (p) not sell, offer to sell, hypothecate,
assign, rent, lease, charter or otherwise transfer the Collateral, or any
part of it or any interest in it, except sales in the ordinary course of
Grantor's business, without the prior written consent of Bank; (q) clean,
feed, shelter, water, medicate, fertilize, cultivate, irrigate, prune, and
otherwise deal with Collateral in accordance with the standards and
practices generally adhered to by owners of similar Collateral; and (r)
allow inspections of the Collateral by Bank or its agents.
INSURANCE
Per the terms of this Agreement, if so indicated in the Confirmation
Letter, Grantor agrees to provide Bank with copies of all insurance
policies covering the Collateral (or other proof that appropriate
insurance has been purchased) and maintain insurance on the Collateral
issued by an Acceptable Insurance Company against all risks commonly
insured by owners of similar Collateral at the lesser of the fair market
value of the Collateral or the loan amount, and specify Bank as the loss
payee with such lender's loss payable or other endorsements as Bank may
require.
WARNING: UNLESS YOU PROVIDE BANK WITH EVIDENCE OF THE INSURANCE COVERAGE
AS REQUIRED BY THIS AGREEMENT, BANK MAY PURCHASE INSURANCE AT YOUR EXPENSE
TO PROTECT BANK'S INTEREST. THIS INSURANCE MAY, BUT NEED NOT, ALSO PROTECT
YOUR INTEREST, IF A COVERED LOSS OR CLAIM OCCURS, THE COVERAGE BANK
PURCHASED MAY NOT PAY ANY CLAIM YOU MAKE OR ANY CLAIM MADE AGAINST YOU.
YOU MAY LATER CANCEL THIS COVERAGE BY PROVIDING EVIDENCE THAT YOU HAVE
OBTAINED PROPER COVERAGE ELSEWHERE.
YOU ARE RESPONSIBLE FOR THE COST OF ANY INSURANCE PURCHASED BY BANK. THE
COST OF THIS INSURANCE MAY BE ADDED TO YOUR LOAN BALANCE. IF THE COST IS
ADDED TO THE LOAN BALANCE, THE INTEREST RATE ON THE UNDERLYING LOAN WILL
APPLY TO THIS ADDED AMOUNT. THE EFFECTIVE DATE OF COVERAGE MAY BE THE DATE
YOUR PRIOR COVERAGE LAPSED OR THE DATE YOU FAILED TO PROVIDE PROOF OF
COVERAGE.
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THE COVERAGE BANK PURCHASES MAY BE CONSIDERABLY MORE EXPENSIVE THAN
INSURANCE YOU CAN OBTAIN ON YOUR OWN AND MAY NOT SATISFY ANY NEED FOR
PROPERTY DAMAGE COVERAGE OR ANY STATE MANDATORY LIABILITY INSURANCE LAWS.
If Texas insurance law applies. YOU UNDERSTAND THAT INSURANCE IS REQUIRED
IN CONNECTION WITH THE LOAN AND THAT YOU MAY FURNISH THE REQUIRED INSURANCE
WHETHER THROUGH EXISTING POLICIES OWNED OR CONTROLLED BY YOU OR THROUGH
EQUIVALENT INSURANCE FROM ANY INSURANCE COMPANY AUTHORIZED TO TRANSACT
BUSINESS IN THE STATE OF TEXAS IF INSURANCE IS OBTAINED BY BANK FOR SUCH
COLLATERAL AND IS SOLD FOR A PREMIUM NOT FIXED OR APPROVED BY THE TEXAS
STATE BOARD OF INSURANCE. YOU WILL BE SO NOTIFIED AT THE TIME OF PURCHASE
THEREOF AND MAY CANCEL SUCH INSURANCE WITHOUT CHARGE WITHIN FIVE (5) DAYS
FROM THE DATE OF SUCH NOTICE IF YOU PROVIDE SUBSTITUTE EQUIVALENT COVERAGE
FROM A COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS.
2.4 POWERS OF BANK
Grantor authorizes Bank to do the following: (a) Perform any obligation of
Grantor under the Agreement in Grantor's name or otherwise: (b) Give notice
of Bank's rights in the Collateral, enforce those rights, and make
extension agreements with respect to them; (c) Release Collateral; (d)
Resort to Collateral in any order; (e) Receive, open and read mail
addressed to Grantor; (f) Take cash, notes, and instruments for the payment
of money, and other property to which Bank is entitled; (g) Verify facts
concerning the Collateral by inquiry of the obligors or others in Bank's
own name or a fictitious name; and (h) Exercise all rights, powers and
remedies which Grantor would have - but for the Agreement - relating to the
Collateral subject to the Agreement.
Grantor appoints Bank its true attorney in fact to perform the following
actions on behalf of Grantor; (a) release persons liable on Collateral,
give receipts and acquittances, and compromise disputes in connection with
Collateral; (b) prepare, execute, file, record, or deliver credits,
assignments, schedules, designation statements, financing statements,
continuation statements, termination statements, statements of assignment,
applications for registration, or like papers to perfect, preserve, or
release Bank's interests in the Collateral; (c) endorse, collect, deliver,
and receive payment under instruments for the payment of money constituting
or relating to Collateral; (d) prepare, adjust, execute, deliver, and
receive payment under insurance claims; collect and receive payment of -
and endorse any instrument in payment of - loss or returned premiums or any
other insurance refund or return; and apply such amounts received by Bank,
at Bank's sole option, toward repayment of the Credit or replacement of the
Collateral; (e) make withdrawals from and close deposit or other accounts
with any financial institution, wherever located, into which Collateral may
have been deposited, and apply those funds to payment of the Credit; (f)
preserve or release the interest evidenced by chattel paper to which Bank
is entitled and endorse and deliver evidences of title incident thereto;
(g) collect all dividends, interest, principal or other sums now or in the
future payable upon or on account of the Collateral; (h) enter into any
extension, reorganization, deposit, merger, or consolidation agreement, or
any other agreement relating to or affecting the Collateral, and in
connection with such agreement, deposit or surrender control of the
Collateral, accept other property in exchange for Collateral, or make any
compromise or settlement Bank deems desirable or proper regarding the
Collateral; (i) cause any Collateral to be transferred to Bank's name or
the name of Bank's nominee; and (j) do all things - and execute all
documents in the name of Grantor or otherwise - Bank deems necessary,
proper, or convenient in order to preserve, perfect, or enforce its rights
in the Collateral.
Bank's officers and employees may exercise these powers from time to time,
whether or not Borrower is in default. Grantor may not revoke these powers
so long as the Agreement is in effect.
2.5 BANK's CARE AND DELIVERY
Bank's obligation with respect to Collateral in its possession will be
strictly limited to taking reasonable care of and preserving the
Collateral. Bank will have no obligation to ascertain, take any action with
respect to, or inform Grantor of maturity dates, conversion, call, exchange
rights, offers to purchase the Collateral or any similar matters whether or
not Bank has any knowledge of them.
Bank will have no duty to take any steps necessary to preserve the rights
of Grantor against prior parties, or to initiate any action to protect
against the possibility of a decline in the market value of the Collateral.
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Bank will not be obligated to take any action with respect to the
Collateral requested by Grantor unless the request is made in writing and
Bank determines, in its sole discretion, that the action would not
unreasonably jeopardize the value of the Collateral. Bank may at any time
deliver the Collateral, or any part of it, to any Grantor, and the receipt
thereof by any Grantor will be a complete and full acquittance for the
Collateral delivered. Bank will then have no further liability or
responsibility for the Collateral delivered.
2.6 REMEDIES
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If a default occurs Bank may: (a) direct Grantor not to dispose of the
Collateral except on terms approved by Bank; (b) direct Grantor to
assemble and deliver all Collateral and related books and records to Bank
at a reasonably convenient place designated by Bank; (c) to the extent
allowable by the law, Bank may, without notice to Grantor, enter on to
Grantor's premises and take possession of the Collateral; (d) at any time
and at Bank's sole option, liquidate any time deposits pledged to Bank,
whether or not the deposits have matured and notwithstanding the fact that
such liquidation may give rise to penalties for early withdrawal of funds;
(e) liquidate the Collateral and apply all Proceeds toward repayment of
the credit obligation in such order of application as Bank may from time
to time elect or, at Bank's sole option, place any Proceeds in the cash
collateral account; (f) without notice to Grantor, enter on to Grantor's
premises and care for and harvest any or Grantor's Collateral that is
growing crops, with all expenses of care and harvesting to be paid by
Grantor; and (g) exercise all rights of a secured party under the
Commercial Code and other applicable law.
To the extent allowable by the law, it is agreed that public or private
sales (for cash or on credit, to a wholesaler, retailer, investor, or user
of collateral of the types subject to the Agreement) or public auction are
all commercially reasonable.
2.7 DISPOSITION OF COLLATERAL
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Any proceeds of any disposition of any of the Collateral may be applied by
Bank to the payment of expenses incurred by Bank in connection with the
disposition, including reasonable attorney's fees; the balance of such
proceeds may be applied by Bank toward the payment of the Credit and in
such order of application as Bank may from time to time elect. Any money
received by Bank in respect of the Collateral will, for all purposes, be
deemed Collateral and may, at Bank's option, be retained in a non-interest
bearing cash collateral account. While Borrower is not in default, Bank
will -- except to the amount of contingent liabilities secured -- either
release or apply to any debt secured by the Agreement, at Bank's option,
all security in the form of cash or irrevocable bank credit. Any sums
withheld to secure contingent liabilities may be deposited at Bank's
option in a non-interest bearing account over which Grantor will have no
control.
2.8 TRANSFER OF COLLATERAL
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Upon the transfer of all or any part of the Credit, Bank may transfer all
or any part of the Collateral and will have no liability and
responsibility with respect to the Collateral so transferred. The
transferee will be vested with all the rights of Bank under the Agreement
with respect to the Collateral; but with respect to any part of the
Collateral not transferred. Bank shall retain all rights, powers,
privileges and remedies granted under this Agreement.
2.9 ARBITRATION
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Bank, Grantor, and any other party to this Agreement agree to be bound by
the terms and provisions of Arbitration Program set forth in Appendix B of
this Disclosure, by which Disputes shall be resolved by binding
arbitration upon the request of any party.
2.10 MISCELLANEOUS
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The obligations of Grantor are joint and several. Grantor hereby waives
any right to require Bank to make any presentment or demand, or give any
notice of nonpayment or nonperformance, protest, notice of protest, notice
of dishonor, notice of intention to accelerate or notice of acceleration
hereunder, to direct the application of payments or security for credit
obligation(s) of Borrower under the Agreement, or indebtedness owed to
customers of Borrower, and to require proceedings against others or to
require exhaustion of security.
Grantor consents to extensions, forbearances, or alterations of the terms
of the Credit, the release or substitution of Collateral, and the release
of Guarantors.
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Until the Credit is paid in full, Grantor will have no right of
subrogation or contribution, and Grantor hereby waives any benefit of or
any right to participate in any Collateral or other security whatsoever
now or hereafter held by Bank.
In addition, Bank, Grantor, and any other party to this Agreement agree to
be bound by the miscellaneous provisions set forth in Appendix A of this
Disclosure.
2.11 ADDITIONAL TERMS FOR SPECIFIC TYPES OF COLLATERAL
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The following additional terms and conditions apply only to specific types
of Collateral and are in addition to -- and not a substitute for -- those
listed in the other sections of this Disclosure.
INVENTORY
RESPONSIBILITIES OF GRANTOR:
Grantor agrees: (a) not to remove inventory from Grantor's premises
without the prior written consent of Bank and upon such terms and
conditions as Bank may require -- except sales to buyers in the ordinary
course of business and inventory that consists of mobile goods as defined
in the Uniform Commercial Code, in which case, Grantor agrees not to
remove or permit the removal of the inventory from its current location as
shown in the Confirmation Letter for a period in excess of thirty (30)
calendar days; and (b) to furnish reports to Bank of all acquisitions,
returns, sales, and other dispositions of the inventory in such form and
detail and at such times as Bank may require.
REMEDIES:
With respect to any sale by Bank of any inventory subject to the
Agreement, Grantor expressly grants to Bank the right to sell the
inventory using any or all of Grantor's trade names, trade name rights,
and/or proprietary labels or marks.
SECURITIES
RESPONSIBILITIES OF GRANTOR:
Grantor agrees: (a) to vote the securities and to give consents, waivers,
and ratifications with respect to them -- provided that no vote will be
cast or consent, waiver or ratification given or action taken that would
impair Bank's interests in the Collateral; (b) if requested by Bank, to
receive and use reasonable diligence to collect securities, rights to
payment, and proceeds, in trust and as the property of Bank, and
immediately endorse (if appropriate) and deliver them to Bank daily in the
exact form in which they are received together with a collection report in
a form satisfactory to Bank; and (c) in the event Bank elects to receive
payments of securities, rights to payment, or proceeds, to pay all expenses
incurred by Bank in receiving and processing them, including expenses of
accounting, correspondence, collection efforts, reporting to account or
contract debtors, filing, recording, record keeping, and incidental related
expenses.
REMEDIES:
If an event of default has occurred and is continuing, Bank will be under
no obligation to delay a sale of any portion of the securities for the
period of time necessary to permit the issuer of the securities to
register them for public sale under any applicable state or federal law --
even if the issuer would agree to do so. Any or all Collateral consisting
of securities may be registered, without notice, in the name of Bank or
its nominee, and thereafter Bank or its nominee may exercise, without
notice: (a) all voting and corporate rights at any meeting of the
shareholders of the securities issuer; and (b) any and all rights of
conversion, exchange, or subscription, or any other rights, privileges or
options pertaining to any Collateral, as if it were the absolute owner of
the securities. The foregoing shall include, without limitation, the right
of Bank or its nominee to exchange, at its discretion, any and all
Collateral upon the merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof, or upon the
exercise by the issuer thereof or Bank of any right, privilege or option
pertaining to any shares of the Collateral, and in connection therewith,
the right to deposit and deliver any and all of the Collateral with any
committee, depository, transfer agent, registrar or other designated
agency upon such terms and conditions as Bank may determine.
All of these rights, privileges, and options may be exercised without
liability, except to account for property actually received by Bank. Bank
will have no duty to exercise any of the foregoing -- or any other rights,
privileges, or options -- and will not be responsible for any failure to
do so or delay in so doing.
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SECTION 3 GUARANTY
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By signing the Confirmation Letter, Xxxxxxxxx agrees, unless otherwise
disclosed to and acknowledged by Bank in writing, that the following is true
now, and at the time of each advance will be true:
3.1 CONTINUING GUARANTY
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For valuable consideration, Guarantor absolutely and unconditionally
guarantees and promises to pay to Bank or its order, the indebtedness of
Borrower to Bank on the terms and conditions set forth in the Agreement.
IF MORE THAN ONE GUARANTOR EXECUTES THE AGREEMENT, THE LIABILITY OF EACH
AND EVERY GUARANTOR (COLLECTIVELY REFERRED TO HEREIN AS "GUARANTOR") SHALL
BE JOINT AND SEVERAL. The maximum liability of each Guarantor under this
Agreement shall not exceed the sum of the principal amount set forth in
the Confirmation Letter for such Guarantor, plus all interest thereon,
plus all of Bank's costs, expenses, and attorney's fees incurred in
connection with or relating to the collection of the Indebtedness, the
collection and sale of any collateral for the Indebtedness or this
Agreement, and the enforcement of this Agreement.
The above limitation on liability is not a restriction on the amount of
the Indebtedness of Borrower to Bank either in the aggregate or at any one
time. If Bank presently holds one or more guaranties, or hereafter
receives additional guaranties from Guarantor, the rights of Bank under
all guaranties shall be cumulative. This Guaranty shall not (unless
specifically provided below to the contrary) affect or invalidate any such
other guaranties. Guarantor's liability under this Guaranty shall be open
and continuous for so long as this Guaranty remains in force. Guarantor
intends to guaranty at all times the performance and prompt payment when
due, whether at maturity or earlier by reason of acceleration or
otherwise, of all Indebtedness within the limits (if any) of the Guaranty
set forth in this Agreement. Accordingly, no payments made upon the
Indebtedness will discharge or diminish the continuing liability of
Guarantor in connection with any remaining portions of the Indebtedness or
any of the Indebtedness which subsequently arises or is thereafter
incurred or contracted. Any married person who signs this Guaranty as the
Guarantor hereby expressly agrees that recourse may be had against both
his or her separate property and community property.
3.2 DURATION OF GUARANTY
--------------------------------------------------------------------------------
This Guaranty will take effect when received by Bank without the necessity
of any acceptance by Bank, or any notice to Guarantor or to Borrower, and
will continue in full force until all Indebtedness incurred or contracted
before receipt by Bank or any notice of revocation shall have been fully
and finally paid and satisfied, and all other obligations of Guarantor
under this Guaranty shall have been performed in full.
If Guarantor elects to revoke this Guaranty, Guarantor may only do so in
writing. Guarantor's written notice of revocation must be mailed to Bank,
by certified mail, at the address of Bank listed on the Confirmation
Letter or such other place as Bank may designate in writing. Written
revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Bank of Guarantor's written
revocation. For this purpose and without limitation, the term "new
Indebtedness" does not include Indebtedness which at the time of notice of
revocation is contingent, unliquidated, undetermined or not due and which
later becomes absolute, liquidated, determined or due. This Guaranty will
continue to bind Guarantor for all Indebtedness incurred by Xxxxxxxx or
committed by Bank prior to receipt of Guarantor's written notice of
revocation, including any extensions, renewals, substitutions or
modifications of such Indebtedness.
This Guaranty shall bind the estate of Guarantor as to Indebtedness
created both before and after the death or incapacity of Guarantor,
regardless of Bank's actual notice of Guarantor's death. Subject to the
foregoing, Guarantor's executor or administrator or other legal
representative may terminate this Guaranty in the same manner in which
Guarantor might have terminated it and with the same effect. Release of
any other Guarantor or termination of any other Guaranty of the
Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation received by Bank from any one or more Guarantor's
shall not affect the liability of any remaining Guarantor(s) under
this Guaranty.
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it is anticipated that fluctuations may occur in the aggregate amount of
Indebtedness covered by this Guaranty and it is specifically acknowledged
and agreed by Guarantor that reductions in the amount of Indebtedness even
to zero dollars ($0.00), prior to written revocation in this Guaranty by
Guarantor shall not constitute a termination of this Guaranty.
3.3 GUARANTOR'S AUTHORIZATION TO BANK
Guarantor authorizes Bank, either before or after any revocation hereof,
without notice or demand and without lessening Guarantor's liability under
this Guaranty, from time to time: (a) prior to revocation as set forth
above to make one or more additional secured or unsecured loans to
Borrower, to lease property to Borrower, or otherwise to extend additional
credit to Borrower; (b) to alter, compromise, renew, extend, accelerate or
otherwise change the time for payment or other terms of the Indebtedness
or any part of the Indebtedness including increases and decreases of the
rate of interest on the Indebtedness; extensions may be repeated and may
be for longer than the original loan term; (c) to take and hold security
for the payment of this Guaranty or the Indebtedness, and exchange,
enforce, waive, subordinate, fail or decide not to perfect, and release any
such security, with or without the substitution of new Collateral; (d) to
release, substitute, agree not to sue, settle or deal with any one or more
of Borrower's sureties, endorsers or other Guarantors on any terms or in
any manner Bank may choose; (e) to determine how, when and what
application of payments and credits shall be made on the Indebtedness;
(f) to apply such security and direct the order or manner of sale thereof,
including without limitation, any nonjudicial sale permitted by the terms
of any security agreement or deed of trust, as Bank in its discretion may
determine; and (g) to assign or transfer this Guaranty in whole or in part.
3.4 GUARANTOR'S REPRESENTATIONS AND WARRANTIES
Guarantor represents and warrants to Bank that: (a) no representations or
agreements of any kind have been made to Guarantor as to the credit
worthiness of Borrower which would limit or qualify in any way the terms of
this Guaranty; (b) upon Bank's request Guarantor will provide to Bank
financial and credit information in form acceptable to Bank, and all such
financial information which currently has been, and all future financial
information which will be provided to Bank is and will be true and correct
in all material respects and fairly present the financial condition of
Guarantor as of the dates the financial information is provided; (c) no
material adverse change has occurred in Guarantor's financial condition
since the date of the most recent financial statements provided to Bank and
no event has occurred which may materially adversely affect Guarantor's
financial condition, and Guarantor agrees to the extent possible to not do
or allow anything in the future which would adversely affect the
Guarantor's financial condition; and (d) Guarantor has established adequate
means of obtaining from Borrower on a continuing basis information
regarding Borrower's financial condition and will keep adequately informed
from such means of any facts, events or circumstances which might in any
way affect Guarantor's risks under this Guaranty. Bank shall have no
obligation to disclose to Guarantor any information or documents acquired
by Bank in the course of its relationship with Borrower.
3.5 GUARANTOR'S WAIVERS
Except as prohibited by applicable law, Guarantor waives any right to
require Bank to: (a) make any presentmemt, protest, demand or notice of
any kind, including notice of change of any terms of repayment of the
Indebtedness, default by Borrower or any other guarantor or surety, any
action or nonaction taken by Borrower, Bank or any other guarantor or
surety of Borrower, or the creation of new or additional Indebtedness;
(b) proceed against any Collateral or any person, including Borrower,
before proceeding against Guarantor; (c) apply any payments or proceeds
received against the Indebtedness in any order; (d) give notice of the
terms, time and place of any sale of the Collateral pursuant to the Uniform
Commercial Code or any other law governing such sale; (e) disclose any
information about the Indebtedness, Borrower, the Collateral, or any other
guarantor or surety, or about any action or nonaction of Bank; or
(f) pursue any remedy or course of action in Bank's power whatsoever.
Guarantor also waives any and all rights or defenses arising by reason of:
(a) any disability or other defense of Borrower, any other guarantor or
surety or any other person; (b) the cessation from any cause whatsoever,
other than payment in full, of the Indebtedness; (c) the application of
proceeds of the Indebtedness by Borrower for purposes other than the
purposes understood and intended by Guarantor and Bank; (d) any act of
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omission or commission by Bank which directly or indirectly results in or
contributes to the discharge of Borrower or any other guarantor or surety,
or the Indebtedness, or the loss or release of any Collateral by operation
of law or otherwise: (e) any statutes of limitations in any action under
this Guaranty or on the Indebtedness; or (f) any modification or change in
terms of the Indebtedness whatsoever, including without limitation, the
renewal, extension, acceleration or other change in the time payment of the
Indebtedness is due and any change in the interest rate, and including any
such modification or change in terms after revocation of this Guaranty on
Indebtedness incurred prior to such revocation.
Until all Indebtedness is paid in full, Guarantor waives all rights and any
defenses Guarantor may have arising out of an election of remedies by Bank
even though that election of remedies, such as a nonjudicial foreclosure
with respect to security for a guarantied obligation, has destroyed
Guarantor's rights of subrogation and reimbursement against Borrower or any
other guarantor or surety by operation of Section 580a, 580b, 580d and 726
of the California Code of Civil Procedure or otherwise. This waiver
includes, without limitation, any loss of rights Guarantor may suffer by
reason of any rights or protections of Borrower in connection with any
anti-deficiency laws or other laws limiting or discharging the Indebtedness
or Borrower's obligations (including, without limitation, Sections 726,
580a, 580b, and 580d of the California Code of Civil Procedure). Guarantor
waives all rights and protections of any kind which Guarantor may have for
any reason, which would affect or limit the amount of any recovery by Bank
from Guarantor following a nonjudicial sale or judicial foreclosure of any
real or personal property security for the Indebtedness including, but not
limited to, the right to any fair market value hearing pursuant to
California Code of Civil Procedure Section 580a.
Xxxxxxxxx understands and agrees that the foregoing waivers are waivers of
substantive rights and defenses to which Guarantor might otherwise be
entitled under state and federal law. The rights and defenses waived
include, without limitation, those provided by California laws of
suretyship and guaranty, anti-deficiency laws, and the Uniform Commercial
Code. Guarantor acknowledges that Guarantor has provided these waivers of
rights and defenses with the intention that they be fully relied upon by
Bank. Until all Indebtedness is paid in full, Guarantor waives any right to
enforce any remedy Bank may have against Borrower or any other guarantor,
surety, or other person, and further, Guarantor waives any right to
participate in any Collateral for the Indebtedness now or hereafter held by
Bank.
Guarantor warrants and agrees that each of the waivers set forth above is
made with Guarantor's full knowledge of its significance and consequences
and that under the circumstances, the waivers are reasonable and not
contrary to public policy or law. If any such waiver is determined to be
contrary to any applicable law or public policy, such waiver shall be
effective only to the extent permitted by law or public policy.
3.6 BANK'S RIGHT OF SETOFF
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In addition to all liens upon and rights of setoff against the moneys,
securities or other property of Guarantor given to Bank by law, Bank shall
have, with respect to Guarantor's obligations to Bank under this Guaranty
and to the extent permitted by law, a contractual possessory security
interest in and a right of setoff against, and Guarantor hereby assigns,
conveys, delivers, pledges and transfers to Bank all of Guarantor's right,
title and interest in and to, all deposits, moneys, securities and other
property of Guarantor now or hereafter in the possession or on deposit
with Bank, whether held in a general or special account or deposit, whether
held jointly with someone else, or whether held for safekeeping or
otherwise, excluding however all IRA and Xxxxx accounts. Every such
security interest and right of setoff may be exercised without demand upon
or notice to Guarantor.
3.7 SUBORDINATION OF XXXXXXXX'S DEBTS TO GUARANTOR
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Guarantor agrees that the Indebtedness of Borrower to Bank, whether now
existing or hereafter created, shall be prior to any claim that Guarantor
may now have or hereafter acquire against Borrower, whether or not Xxxxxxxx
becomes insolvent. Guarantor hereby expressly subordinates any claim
Guarantor may have against Xxxxxxxx, upon any account whatsoever, to any
claim that Bank may now or hereafter have against Borrower. In the event of
insolvency and consequent liquidation of the assets of Borrower, through
bankruptcy, by an assignment for the benefit of creditors, by voluntary
liquidation, or otherwise, the assets of Borrower applicable to the payment
of the claims of both Bank and Guarantor shall be paid to Bank and shall
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be first applied by Bank to the indebtedness of Borrower to Bank.
Guarantor does hereby assign to Bank all claims which it may have or
acquire against Borrower or against any assignee or trustee in bankruptcy
of Borrower; provided however, that such assignment shall be effective
only for the purpose of assuring to Bank full payment in legal tender of
the Indebtedness. If Bank so requests, any notes or credit agreements now
or hereafter evidencing any debts or obligations of Borrower to Guarantor
shall be marked with a legend that the same are subject to this Guaranty
and shall be delivered to Bank. Xxxxxxxxx agrees, and Bank hereby is
authorized, in the name of Guarantor, from time to time to execute and
file financing statements and continuation statements and to execute such
other documents and to take such other actions as Bank deems necessary or
appropriate to perfect, preserve and enforce its rights under this
Guaranty.
3.8 ARBITRATION
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Bank, Guarantor, and any other party to this Agreement agree to be bound
by the terms and provisions of Arbitration Program set forth in Appendix B
of this Disclosure, by which Disputes shall be resolved by binding
arbitration upon the request of any party.
3.9 MISCELLANEOUS
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The following miscellaneous provisions are a part of this Guaranty:
The obligations of Guarantor are joint and several. Guarantor hereby
waives any right to require Bank to make any presentment or demand, or
give any notice of nonpayment or nonperformance, protest, notice of
protest, notice of dishonor, notice of intention to accelerate or notice
of acceleration hereunder, to direct the application of payments or
security for credit obligation(s) of Borrower under the Agreement, or
indebtedness owed to customers of Borrower, and to require proceedings
against others or to require exhaustion of security.
Guarantor consents to extensions, forbearances, or alterations of the
terms of the Credit, the release or substitution of Collateral, and the
release of Borrower, Grantor, and any Guarantors.
Until the Credit is paid in full, Guarantor will have no right of
subrogation or contribution, and Guarantor hereby waives any benefit of or
any right to participate in any Collateral or other security whatsoever
now or hereafter held by Bank.
In addition, Bank, Guarantor, and any other party to this Agreement agree
to be bound by the miscellaneous provisions set forth in Appendix A of
this Disclosure.
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APPENDIX A MISCELLANEOUS PROVISIONS
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In addition to the general terms and conditions set forth above, the following
additional provisions are included as a part of Sections 1, 2, and 3 of this
Business Lending Disclosure, wherein the term "you" means and refers to
Borrower, Grantor, and Guarantor, respectively.
CREDIT INQUIRIES
You and any of your Authorized Representative signing the Confirmation Letter
agree that Bank may obtain business and/or personal credit reports and tax
returns on you and each of them.
INTEGRATION, AMENDMENT, ASSIGNMENT
This Agreement supersedes all prior negotiations, communications, discussions,
and correspondence concerning these matters. The terms of this Agreement may be
amended or modified only by a written instrument signed by both Bank and the
party or parties to be bound by the change. This Agreement will be binding on
and may be enforced by the respective successors, assigns, administrators,
executors and heirs of you and Bank; however, you may not assign or transfer
any interest or rights without the prior written consent of Bank.
APPLICABLE LAW
If the Confirmation Letter identifies Bank as Xxxxx Fargo Bank, N.A., this
Agreement will be governed by the laws of the State of California and
applicable federal law. If the Confirmation Letter identifies Bank as Xxxxx
Fargo Bank (Texas), N.A., this Agreement will be governed by the laws of the
State of Texas and applicable federal law, with respect to lines of credit, the
parties agree that Chapter 15 of the Texas Credit Code shall not apply. To the
extent that Bank has greater rights or remedies under federal law, the choice
of state law will not be deemed to deprive Bank of the rights and remedies
available under federal law. If the Bank enforces its rights and/or initiates
collection of any amounts that become due to Bank under the Agreement, to the
extent that Bank has greater rights or remedies under the law of the forum
state, the choice of state law will not be deemed to deprive Bank of the rights
and remedies available under the law of the forum state.
ATTORNEY'S FEES AND EXPENSES
You agree to pay upon demand all of Bank's costs and expenses incurred in
connection with the enforcement of the Bank's rights regarding your obligations
under this Agreement, including attorney's fees, Bank's legal expenses, amounts
paid to third parties that assist the Bank in such enforcement efforts, and any
other costs and expenses of such enforcement efforts. Costs and expenses
include, among other things, Bank's attorney's fees (outside counsel fees as
well as allocated costs of Bank's in-house counsel), and legal expenses whether
or not there is a lawsuit, including attorney's fees and legal expenses for
bankruptcy proceedings (and including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services, to the extent allowed by applicable law. You also shall pay any
court costs and such additional fees as may be directed by the court or
arbitrator. Any amounts not immediately paid shall accrue interest at the
interest rate applicable to the Credit.
OBLIGATIONS OF MARRIED PERSONS
In addition to the rights of Bank under applicable community property laws,
anyone signing the Confirmation Letter who is married expressly agrees that
recourse may be had against his or her separate property for all of his or her
obligations to Bank, in addition to the other property that may be subject to
rights of Bank.
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NOTICES
All notices, requests, and demands required under the Agreement must be in
writing addressed to the applicable party at the address specified in the
Confirmation Letter or Related Document(s), as applicable, or to another
address as designated by written notice to the other party, and will be
deemed to have been given or made upon the earlier of: when actually
delivered physically or by facsimile and received at the address specified:
or two days being deposited in the United States mail, first class postage
prepaid: or two days after being given to a nationally recognized courier
service, delivery prepaid. You agree to keep Bank informed at all times of
your current address and the address of the Collateral.
INTERPRETATION
In all cases where there is more than one Borrower, Grantor or Guarantor,
then all words used in this Agreement in the singular shall be deemed to
have been used in the plural where the context and construction so require:
and where there is more than one Borrower, Grantor or Guarantor named in
this Agreement or when this Agreement is executed by more than one Borrower,
Grantor or Guarantor, the word "Borrower", "Grantor", and "Guarantor" shall
mean all and any one or more of them. If any provision of this Agreement is
held to be prohibited or invalid under applicable law, the provision will be
ineffective only to the extent of such prohibition or invalidity - and will
not invalidate the remainder of the provision or any other provisions of
this Agreement. Caption headings in this Agreement are for convenience
purposes only and are not be used to interpret or define the provisions of
this Agreement.
AUTHORITY OF SIGNERS
If any one or more of you are corporations or partnerships, it is not
necessary for Bank to inquire into the powers of such entities or of the
officers, directors, partners, or agents acting or purporting to act on
their behalf; and any indebtedness and agreements made or created in
reliance upon the professed exercise of such powers shall be valid and
enforceable.
WAIVER
Bank shall not be deemed to have waived any rights under this Agreement
unless such waiver is given in writing and signed by Bank. No delay or
omission on the part of Bank in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Bank of a provision of
this Agreement shall not prejudice or constitute a waiver of Bank's right
otherwise to demand strict compliance with that provision or any other
provision of this Agreement. No prior waiver by Bank, nor any course of
dealing between you and Bank, shall constitute a waiver of any of Bank's
rights or of any of your obligations as to any future transactions. Whenever
the consent of Bank is required under this Agreement, the granting of such
consent by Bank in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of Bank.
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APPENDIX B ARBITRATION PROGRAM
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In addition to the General Terms and Conditions set forth above, the following
terms and conditions also apply to the Disclosure, Confirmation Letter, and
other Related Documents.
BINDING ARBITRATION
Any of the Bank, Borrower, Guarantor, Grantor, or any other party to the
Disclosure, the Confirmation Letter, or any other Related Document may
require that any Dispute be resolved by binding arbitration in accordance
with the terms of this Arbitration Program, administered by the American
Arbitration Association (the "AAA") pursuant to its Commercial Arbitration
Rules and the Federal Arbitration Act (Title 9 of the United States Code).
DISPUTES SUBMITTED TO ARBITRATION ARE NOT RESOLVED IN COURT BY A JUDGE OR
JURY. Any party who fails to submit to binding arbitration following a
lawful demand by the opposing party shall bear all costs and expenses
incurred by the opposing party in compelling arbitration of a Dispute.
Arbitration may be demanded at any time, and may be compelled by summary
proceedings in Court.
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ARBITRATORS; PRESERVATION OF REMEDIES
A Dispute involving claims or amounts in controversy of $5,000,000 or less
shall be decided by a single arbitrator who shall not render an award of
greater than $5,000,000 (including damages, costs, fees and expenses), and
each party expressly waives any right or claim to recover more than
$5,000,000 in such cases. A Dispute involving greater amounts shall be
heard by and decided by a majority vote of a panel of three (3)
arbitrators. Every arbitrator must be a retired member of the state or
federal judiciary or a practicing attorney experienced and knowledgeable
in the substantive laws applicable to the subject matter of the Dispute.
Arbitrator(s) (i) may grant any remedy or relief within the scope hereof
that a court of competent jurisdiction could, including ancillary relief
as is necessary to make effective any award, (ii) shall have the power to
award recovery of all costs and fees, and (iii) may impose sanctions and
take other actions as they deem necessary to the same extent a judge
could. The determination of the arbitrator(s) shall be binding on all
parties and shall not be subject to further review or appeal except as
otherwise allowed by applicable law. Judgment upon an award made hereunder
may be entered in any court having jurisdiction. Any claim or dispute
related to the exercise of any self-help, auxiliary or other rights under
this paragraph shall be a Dispute hereunder. However, no provision of, nor
the exercise of any rights under, this Arbitration Program shall limit the
right of any party to seek, use, and employ ancillary or preliminary
remedies, judicial or otherwise, for the purposes of (i) preserving,
foreclosing, or obtaining possession of real or personal property, (ii)
exercising self-help remedies including setoff and repossession rights, or
(iii) obtaining provisional or ancillary remedies such as injunctive
relief, sequestration, attachment, garnishment, or the appointment of a
receiver from a court having jurisdiction. Such rights can be exercised at
any time, unless contrary to a final award or decision in an arbitration
proceeding, and shall not constitute a waiver of the arbitration rights of
any party. The involvement of any party in judicial or other proceedings
as plaintiff or in any other capacity shall not impair such party's rights
to demand arbitration of the Dispute at any reasonable time. Any party may
proceed against all liable persons, or against any one or more of them,
and may release or settle with any of them, without impairing rights
against other liable persons.
JUDICIAL REVIEW; REAL PROPERTY COLLATERAL; JUDICIAL REFERENCE
Notwithstanding anything herein to the contrary, in any arbitration in
which the amount in controversy exceeds $25,000,000, the arbitrators shall
be required to make specific, written findings of fact and conclusions of
law. In such arbitrations (i) the arbitrators shall not have the power to
make any award which is not supported by substantial evidence or which is
based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under applicable substantive law, and
(iii) the parties shall have, in addition to the grounds referred to in
the Federal Arbitration Act for vacating, modifying or correcting an
award, the right to judicial review of whether the findings of fact
rendered by the arbitrators are supported by substantial evidence, and
whether the conclusions of law are erroneous under applicable substantive
law. Judgment confirming an award in such a proceeding may be entered only
if a court determines the award is supported by substantial evidence and
not based on legal error under applicable substantive law. Notwithstanding
contrary provisions herein, no Dispute shall be submitted to arbitration
if the Dispute concerns indebtedness secured by real property and if
arbitration of the Dispute would preclude enforcement of a mortgage, lien
or security interest securing such indebtedness, unless the holder of such
mortgage, lien or security interest specifically elects in writing to
proceed with the arbitration. If such a Dispute is not submitted to
arbitration under such circumstances, the Dispute shall be determined by
Judicial Reference at the election of any Party. If such an election is
made, the Dispute shall be determined by a reference in accordance with
California Code of Civil Procedure Section 638, et seq., or the judicial
reference procedures of some other state if such state in which the real
property is located offers a comparable judicial reference procedure. A
referee shall be selected pursuant to AAA procedures and must meet the
selection criteria set forth herein for an arbitrator.
MISCELLANEOUS
To the maximum extent practicable, the AAA, the arbitrator and the parties
shall act to assure that any arbitration proceeding shall be concluded
within 180 days of the filing of the Dispute with the AAA. Arbitration
proceedings hereunder shall be conducted at a location mutually agreeable
to the parties, or if they cannot agree, then in the state of the
applicable substantive law designated in the Documents relating to the
Dispute at a location selected by the AAA. All discovery activities shall
be expressly limited to matters directly relevant
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to the Dispute. No party or arbitrator may disclose the existence,
content or results of any arbitration hereunder, except for disclosures
of information required in the ordinary course of a party's business or
by applicable law or regulation. The parties agree that by engaging in
activities with or involving each other as described above, they are
participating in transactions involving interstate commerce. This
Arbitration Program shall be administered and construed in accordance
with the Federal Arbitration Act, other applicable Federal law, and to
the extent inapplicable or unenforceable, other applicable law providing
for arbitration. If there is any inconsistency between the terms hereof
and any governing rules or statutes, the terms hereof shall control. This
Arbitration Program constitutes the entire agreement of the parties and
supersedes all prior arrangements and other communications on dispute
resolution concerning Disputes relating to the Business Banking Group of
Bank. In the event more than one arbitration program entered into by the
parties is potentially applicable to a Dispute, the one most directly
related to the Documents or transaction that is the subject of the
Dispute shall control. The provisions of this Arbitration Program shall
survive any termination, amendment, or expiration of the Documents or
relationships of the parties.
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APPENDIX C TRADE FINANCE SUBFEATURE
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In addition to the General Terms and Conditions set forth above, the following
terms and conditions also apply to Trade Finance Subfeature (if any)
established in the Confirmation Letter.
LETTERS OF CREDIT
Bank agrees to issue -- or cause to be issued by an affiliate of Bank --
commercial and/or stand-by letters of credit for the account of Borrower from
time to time during the term of the Agreement.
- The form and substance of each letter of credit will be subject to
approval by Bank. Each letter of credit will be issued for a term
designated by Xxxxxxxx; however, no letter of credit will have an
expiration date later than the last day of the Availability Period
specified in the Confirmation Letter.
- Each letter of credit will be subject to the terms and conditions of the
letter of credit agreement required by Bank for the issuing of letters of
credit.
- The amount of all outstanding letters of credit will be reserved and not
available for Advances under the Credit and shall not exceed the
subfeature limit, if any, specified in the Confirmation Letter.
- The amounts reserved against outstanding letters of credit, the amounts
reserved against foreign exchange contracts, and the principal amounts of
any advances outstanding under the Credit will at no time exceed the
principal amount specified in the Confirmation Letter unless otherwise
authorized by Bank and Bank's full discretion.
- Each draft paid by Bank under a letter of credit will be deemed an
Advance and will be repaid by Borrower according to the terms and
conditions of the Agreement. If for any reason there are not sufficient
funds available to fund such an Advance, the full amount of such
insufficiency shall be immediately due and payable, together with
interest thereon, from the date such amount is paid by Bank to the date
such amount is fully repaid by Borrower, at the rate of interest
applicable to the Credit. In such event, Xxxxxxxx agrees that Bank, at
Bank's sole discretion, may debit Xxxxxxxx's deposit account with Bank
for the amount of any such insufficiency.
- Each Letter of Credit shall be issued for a term designated by Borrower
and no Letter of Credit shall have an expiration subsequent to the
maturity of the Credit.
FOREIGN EXCHANGE
Subject to the terms, conditions and renewal process of the Agreement and
Related Documents, Bank hereby agrees to make available to Borrower a foreign
exchange facility under which Bank, from time to time up to and including the
maturity date of the Credit, will enter into foreign exchange contracts for the
account of Borrower for the purchase and/or sale by Borrower in United States
Dollars of the foreign currency or currencies specified in the foreign exchange
agreement required by Bank for the establishment of the foreign exchange
facility.
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- The amount of all outstanding contracts multiplied by the reserve
percentage specified in the Confirmation Letter will be reserved and not
available for Advances under the Line of Credit and shall not exceed the
Subfeature Limit, if any, specified in the Confirmation Letter.
- The amount reserved against outstanding letters of credit, the amounts
reserved against foreign exchange contracts, and the principal amounts of
any advances outstanding under the Credit will at no time exceed the
principal amount specified in the Confirmation Letter unless otherwise
authorized by Bank at Bank's full discretion.
- Each foreign exchange transaction will be subject to the terms and
conditions of the foreign exchange agreement.
- Bank agrees to send Xxxxxxxx a confirmation of each transaction duly
requested by Xxxxxxxx and agreed to by Bank.
- Upon receipt of confirmation, Xxxxxxxx agrees to promptly sign and return
a copy of the confirmation to Bank.
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APPENDIX D ACCOUNTS RECEIVABLE & INVENTORY PRIMELINE
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In addition to the General Terms and Conditions set forth above, the following
terms and conditions also apply to Accounts Receivable and Inventory PrimeLines.
ADVANCE RATE
Amounts outstanding under the Credit, to a maximum of the Credit Limit, shall
not at any time exceed the sum of:
- Accounts Receivable Advance Rate times Borrower's Eligible Accounts
Receivable (as defined below); plus
- If applicable, Inventory Advance Rate times Borrower's Eligible Inventory
(as defined below); however, the outstanding principal balance of all
advances against Xxxxxxxx's Eligible Inventory shall not at any time
exceed the aggregate sum identified in the Confirmation Letter as the
Maximum Inventory Advance.
ELIGIBILITY
Eligible Accounts Receivable shall consist solely of trade accounts which have
been created in the ordinary course of Xxxxxxxx's business and upon which
Xxxxxxxx's right to receive payment is absolute and not contingent upon the
fulfillment of any condition whatsoever, excluding:
- any account which is past due more than twice Borrower's standard selling
terms; provided however the Borrower has provided extended payment terms
not to exceed 180 days, then any such account shall be ineligible if it is
more than thirty (30) days past due;
- any account which represents an obligation of any account debtor when
twenty percent (20%) or more of Borrower's accounts from such account
debtor are not eligible pursuant to past due restrictions covered in the
immediately proceeding item;
- any account for which there exists any right of setoff, defense or
discount (except regular discounts allowed in the ordinary course of
business to promote prompt payment) or for which any defense or
counterclaim has been asserted;
- any account which represents an obligation of any state or municipal
government or of the United States government or any political
subdivision thereof;
- any account which represents an obligation of any account debtor located in
a foreign country; with the exception of the Canadian provinces of
Manitoba, Ontario and Saskatchewan, Alberta, British Columbia, and the
Yukon territory and the U.S. territories of Guam, Northern Mariana Islands
and the Virgin Islands;
- any account which represents an obligation of an employee, affiliate,
partner, parent or subsidiary of Borrower;
- that portion of any account which represents interim or progress xxxxxxxx
or retention rights on the part of the account debtor.
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o that portion of an account debtors total Eligible Accounts Receivable
payable to Borrower which exceeds 25% of Borrower's total accounts; or
o any account deemed ineligible by Bank in its sole discretion, based upon
unsatisfactory creditworthiness or financial condition of the account
debtor or the industry in which the account debtor is engaged.
Borrower acknowledges that the Advance Rate for Eligible Accounts Receivable
was established by Bank with the understanding that, among other items, the
aggregate of all returns, rebates, discounts, credits and allowances for the
immediately preceding three (3) months at all times shall be less than five
percent (5%) of Borrower's gross sales for preceding three (3) months. If such
dilution of borrower's accounts for the immediately preceding three (3) months
at any time exceeds five percent (5%) of Borrower's gross sales for said
period, or if there at any time exists any other matters, event, conditions or
contingencies which Bank reasonably believes may affect payment of any portion
of Borrower's accounts, Bank, in its sole discretion, may reduce said Advance
Rate to a percentage appropriate to reflect such additional dilution and/or
establish additional reserves against Xxxxxxxx's Eligible Accounts Receivable.
Eligible inventory shall consist solely of goods that in Bank's determination
have broad, well-defined markets and for which grading and valuation are
standardized, excluding:
o goods with limited liquidation value, including but not limited to, work in
process, and goods that are obsolete, damaged, slow moving, custom, private
labeled, proprietary or perishable, packaging materials, supplies, samples,
demos, prototypes or cost capitalized to inventory for tax purposes;
o goods over which Borrower has limited control, including but not limited
to, goods consigned to others, goods not on Borrower's premises and goods
in transit; or
o goods subject to legal restrictions, including but not limited to, goods
consigned to Borrower by others, goods located in foreign nations, U.S.
territories or possessions, bill and hold inventory, goods subject to a
vendor's purchase money security interest or other lien, goods in which
there are questions of title, and unsubordinated grower payables.
Eligible Inventory shall be valued at the lower of cost or market value,
exclusive of raw material, work-in-process and inventory which is obsolete,
unsalable or damaged as determine by Bank upon receipt and review of collateral
reports and documents as Bank may require.
XXXXXXXX'S RESPONSIBILITIES
Xxxxxxxx agrees to:
o maintain accounts receivable, accounts payable, inventory, books and
records and audit system acceptable to Bank in its sole discretion;
o prepare accounts receivable aging, accounts payable aging, inventory
listing and Borrowing Base Certificate as of each month and deliver them to
Bank and within fifteen (15) days after the end of each month; and
o submit to Bank a list of the names and addresses of all Borrower's account
debtors effective at and as of each year end or upon request from Bank.
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GLOSSARY
ACCEPTABLE INSURANCE An insurer listed in the current Best's Insurance Guide
COMPANY - Property and Casualty with a B+ or better rating and
$25 million or more in policyholder surplus.
ADJUSTMENT DATE Date the 12th payment is due and annually thereafter.
ADVANCE RATE The percentage rate(s) applied to Eligible Accounts
Receivable and Eligible Inventory (if applicable) to
determine the eligible credit availability on an
Accounts Receivable PrimeLine or Accounts
Receivable/Inventory PrimeLine. If applicable, the
Advance Rate(s) will be identified in the Confirmation
Letter.
ADVANCES The individual borrowings under a revolving or
non-revolving Credit.
AGREEMENT The Disclosure, the Confirmation Letter and any Related
Documents.
AMERICAN ARBITRATION The American Arbitration Association (the "AAA") is a
ASSOCIATION public service non-profit organization that offers a
broad range of dispute resolution services, with offices
in most major cities throughout the United States. It
was founded in 1926 and is one of the largest, most
respected and best known organizations of its kind.
AMORTIZED The process of reducing principal (and interest, if
applicable) through equal installment payments over a
set period of time. The amortization of a loan may
exceed the Term of a loan resulting in a Balloon Payment
at the end of the Term.
ARBITRATION PROGRAM The terms and provisions governing arbitration of
disputes specified in Appendix B of this Disclosure.
ASSIGNED VALUE The Assigned Value of a marketable security is the
security's currently market value multiplied by a
percentage, as determined by Bank. The percentage
applied differs among the various types of securities
that Bank takes as Collateral.
ASSUMED BUSINESS NAME The name(s) sometimes used by individuals or entities as
a "store front", "trade", or day to day business name
which is not the legal name of the individual or
business entity.
AUTHORIZED Designated officers, partners, members, trustees or
REPRESENTATIVES representatives empowered to take action on behalf of
the business.
AVAILABILITY PERIOD For lines of credit the period during which Xxxxxxxx may
request advances from Bank as specified in the
Confirmation Letter. The Availability Period commences
upon the later of satisfaction of all conditions to or
the boarding of the Credit. At the end of the
Availability Period as specified in Confirmation Letter,
no more advances will be made.
BANK Xxxxx Fargo Bank, N.A.; or Xxxxx Fargo Bank (Texas),
N.A., as so designated in the Confirmation Letter.
BORROWER The individual or entity specified in the Confirmation
Letter as Borrower.
BORROWING BASE A report completed by Borrower, subject to Bank's review
CERTIFICATE and approval, on which eligible credit availability on
an Accounts Receivable or Accounts Receivable/Inventory
PrimeLine is calculated.
COLLATERAL With respect to each Grantor, the real or personal
property of such Grantor securing the Credit and all
Proceeds thereof, as specified in the Confirmation
Letter.
CONFIRMATION LETTER A letter from Bank to Borrower stating the terms and
conditions in which Credit will be extended, in
accordance with the Agreement.
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CONVERSION DATE An adjustment date on which the Borrower elects to fix
the rate of interest to maturity.
CONVERTIBLE LOANS A term loan featuring an option to change to a fixed
rate once during the Term of the loan.
CREDIT The loan or line of credit described in the
Confirmation Letter made available to Borrower
pursuant to the terms of the Agreement. Credit
includes any and all advances, debts, obligations and
liabilities of Borrower to Bank, arising in connection
with the Confirmation Letter, existing now or in the
future, whether voluntary or involuntary and however
arising, whether due or not due, absolute or
contingent, liquidated or unliquidated, determined or
undetermined, and whether Borrower may be liable
individually or jointly, or whether recovery upon such
Credit may now be or later become unenforceable.
CREDIT LIMIT The maximum dollar amount of a Credit, not necessarily
the available amount of Credit if an Advance Rate
applies. However, the Bank in its sole discretion may
allow the Credit Limit to be exceeded, and such
amounts shall be a part of the Indebtedness subject to
this Agreement.
DEFAULT An event as described in the section entitled Events
of Default.
DISPUTE Any action, disagreement, claim or controversy of any
kind, whether in contract or in tort, legal or
equitable, now existing or hereafter arising between
the parties relating in any way to this Agreement or
any related agreement incorporating the Arbitration
Program, and all past, present, or future loans,
transactions, contracts, agreements, relationships,
incidents or injuries of any kind whatsoever relating
to or involving the Bank's Business Group or any
successor group or department of Bank.
ELIGIBLE ACCOUNTS The amount of Xxxxxxxx's Accounts Receivable available
RECEIVABLE as identified in Appendix D of this Disclosure.
ELIGIBLE INVENTORY The amount of Borrower's inventory available as
identified in Appendix D of this Disclosure.
GRANTOR The owner(s) of Collateral identified in the
Confirmation Letter as Grantor.
GUARANTOR An individual or entity which promises jointly and
severally to pay the Credit(s) or perform
obligation(s) for Borrower if Borrower fails to
perform as agreed.
GUARANTY The guaranty described in Section 3 of the Disclosure.
HAZARDOUS SUBSTANCES Terms used in this Disclosure that refer to hazardous
substances, including "hazardous substance,"
"hazardous waste," "disposal," "release" and
"threatened release," will have the broadest meaning
given by the following laws:
o Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C.
Section 9601 and following
o "CERCLA," the Superfund Amendment and
Reauthorization Act of 1986, Publication L.
No. 99-499
o "XXXX," the Hazardous Materials Transportation
Act, 49 U.S.C. Section 1801 and following
o The Resource Conservation and Recovery Act, 49
U.S.C. Section 6901 and following
o Other applicable state and federal laws, rules,
and regulations, adopted pursuant to the foregoing
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INDEBTEDNESS The word "Indebtedness" is used in its most
comprehensive sense and means and includes any and all
of Borrower's liabilities, obligations, debts and
indebtedness to a Bank, now existing or hereinafter
incurred or created, including, without limitation,
all loans, advances, interest, costs, debts, overdraft
indebtedness, credit card indebtedness, lease
obligations, other obligations and liabilities of
Borrower, or any of them, and any present or future
judgments against Borrower, or any of them; and
whether any such indebtedness is voluntarily or
involuntarily incurred, due or not due, absolute or
contingent, liquidated or unliquidated, determined or
undetermined; whether Borrower may be liable
individually or jointly with others, or primarily or
secondarily, or as guarantor or surety; whether
recovery on the Indebtedness is or may become barred
or unenforceable against Borrower for any reason
whatsoever; and whether the Indebtedness arises from
transactions which may be voidable on account of
infancy, insanity, ultra xxxxx or otherwise.
MAXIMUM INVENTORY A dollar amount set by Bank, identified in the
ADVANCE Confirmation Letter, which is the maximum amount
available for advances against Eligible Inventory
under any Accounts Receivable/Inventory PrimeLine.
PRIMARY DEPOSIT ACCOUNT The deposit account into which substantially all of
Borrower's receipts from its operations are deposited
and from which substantially all of Borrower's
disbursements for its operations are made.
PRIME RATE A base rate set periodically by Bank that serves as
the basis upon which effective rates of interest are
calculated for certain credit obligations and
effective as of the date of each announcement. The
Prime Rate is not necessarily the lowest or best rate
at which Bank makes loans.
PROCEEDS Proceeds consist of whatever is receivable or received
when any Collateral (or Proceeds of Collateral) are
sold, leased, collected, exchanged, or otherwise
disposed of -- whether the disposition is voluntary or
involuntary -- including, without limitation:
o all accounts, deposit accounts, contract rights,
chattel paper, instruments, documents, general
intangibles and rights to payment of every kind now
or at any time in the future arising out of any
such disposition of any of the Collateral.
o all rights to payment, including returned premiums,
with respect to any insurance relating to any of
the Collateral.
o all rights to payment with respect to any cause of
action affecting or relating to any of the
Collateral.
o any stock rights, rights to subscribe, stock
splits, liquidating dividends, cash dividends,
dividends paid in stock, new securities, or other
property of any kind which Borrower is or may in
the future be entitled to receive on account of any
securities pledged as Collateral.
RELATED DOCUMENTS All instruments, agreements and documents other than
the disclosure and the Confirmation Letter which have
been or will be signed in connection with the
Agreement, or which otherwise relate to the Credit.
SECURITY AGREEMENT The security agreement described in Section 2 of the
Disclosure.
SELLING PRICE Selling price as evidenced by an invoice or bill of
sale net of credits and other allowances.
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TERM The period of time commencing with the availability of a
Credit and ending at the maturity of a Credit.
THIRD PARTY FEES Fees charged to cover non-bank expense, recordation fees,
and bank handling expense. For example, UCC filing fees,
appraisal fees, county recording fees, etc.
TREASURY CONSTANT The term "Treasury Constant Maturity Index" means the weekly
MATURITY INDEX average rate on United States Treasury Securities adjusted
to a constant maturity of one year, as quoted by the Federal
Reserve Board in the Federal Reserve Statistical Release
H.15(519), rounded to the nearest .05%. If the Index becomes
unavailable during the term of the Credit, Bank may
designate a substitute index, with notice to Borrower.
TREASURY RATE The term "Treasury Rate" means yield to maturity at the
asked price of the most recently auctioned U.S. Treasury
obligation with a maturity date matching the Credit maturity
date. However, if the Term of an Advance is a number of
months that is not a multiple of twelve, the total number of
months for determining the term of the matching U.S.
Treasury obligation will be rounded up to the next largest
number which is a multiple of twelve (12), or the maturity
closes to a multiple of twelve (12). Yield to maturity will
be those quoted in The Wall Street Journal or similar
publications as of the date of the Advance.
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