EXHIBIT 10.20
================================================================================
[LOGO OF BANK OF AMERICA APPEARS HERE] STANDING LOAN AGREEMENT
________________________________________________________________________________
This Standing Loan Agreement dated as of April 1, 1998, is between Prolong Super
------------- -------------
Lubricants, Inc., a Nevada corporation ("Borrower") and Bank of America
--------------------------------------
Community Development Bank and its successors and assigns ("Bank").
AGREEMENT
I. Loan Terms
----------
1.1 Amount and Purpose
------------------
Bank shall make a loan to Borrower in the principal amount of One
---
Million Six Hundred Ninety Two Thousand and No/100 Dollars
--------------------------------------------------
($1,692,000.00) (the "Loan") to be used for the following purpose: to
--------------- --
finance the purchase of real property. The Loan will be evidenced by a
-------------------------------------
promissory note (the "Note") payable to Bank in the original principal
amount of the Loan and will be secured by a Deed of Trust with
Assignment of Rents and Fixture Filing ("Deed of Trust") covering
certain real property commonly known as 6 Xxxxxx, Irvine, California,
-----------------------------
92618 (together with all improvements now or hereafter located
-----
thereon, the "Property") and certain personal property and other
collateral. Prolong International Corporation, a Nevada corporation
-------------------------------------------------------
("Guarantor") will guaranty Borrower's obligations under this
Agreement pursuant to a Payment Guaranty of even date herewith (the
----------------
"Guaranty") (If "Not Applicable" is indicated in the previous
sentence, the Loan will not be guaranteed and all references to
"Guaranties" and "Guarantors" in this Agreement may be disregarded.)
In addition, Borrower has agreed to indemnify Bank against certain
------------------------------------------------------------------
environmental hazards pursuant to a Secured and Unsecured Indemnity
-------------------------------------------------------------------
Agreement. The term "Guarantor" shall include this party and the term
---------------------------------------------------------------------
"Guaranty" shall include this indemnity agreement. This Agreement, the
-------------------------------------------------
Note, the Deed of Trust, the Guaranties, if any, and all other
documents evidencing, securing or otherwise pertaining to the Loan
will be referred to as the "Loan Documents."
1.2 Documentation
-------------
At the closing of this transaction, Borrower will deliver the
following documents and other items, executed and acknowledged as
appropriate, all in form and substance satisfactory to Bank: (a) this
Agreement; (b) the Note; (c) the Deed of Trust; (d) a UCC-1 Financing
Statement perfecting a first. position lien on all personal property
collateral, if any; (e) the Guaranties, if any; (f) an ALTA title
insurance policy insuring Bank that the Deed of Trust constitutes a
valid and enforceable lien on the Property subject and subordinate
only to such liens or other matters as Bank has approved in writing;
(g) if the Deed of Trust is to be junior to any other lien or deed of
trust on the Property, a Beneficiary's Statement from the holder of
such prior lien or deed of trust; (h) evidence of the casualty and
other insurance coverage required under this Agreement; (i) if
Borrower is anything other than a natural person, evidence of
Borrower's due formation and good standing, as well as due
authorization and execution of the Loan Documents; (j) if applicable,
Subordination Agreements and Estoppels from tenants leasing space in
the Property; (k) if the Property is to be leased to third parties,
Borrower's pro forma lease form; (1) an SBA participation fee in the
amount of $25,380.00; (m) the Environmental Questionnaire - Real
----------
Estate Secured Loans prepared and certified by Borrower, and, if Bank
requires, an environmental survey of the Property prepared by an
environmental consultant satisfactory to Bank; and (n) such other
documents, Property information and other assurances as Bank may
require.
1.3 Disbursement Procedures
-----------------------
Bank shall disburse the Loan proceeds as follows:
On or about April 15, 1998, we will federal wire transfer an amount
not to exceed $2,421,000.00 (the "Loan Proceeds") to Commonwealth Land
Title Company, 000 Xxxx Xxxxx Xxx Xxxxxxxxx, Xxxxx Xxx, Xxxxxxxxxx,
00000 through Union Bank of California, 000 X. Xxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxx, 00000 (the "Holder"), ABA 000-000-000; Account No.91
00000000; In the name of Commonwealth
________________________________________________________________________________
-1-
Land Title Company - Escrow Trust Account; Escrow 000000.XX; ATTN:
Xxxxxx Xxxxx, Escrow Officer.
II. Covenants of the Borrower
-------------------------
Borrower promises to keep each of the following covenants:
2.1 Compliance with Law
-------------------
Borrower shall comply with all existing and future laws, regulations,
orders, building restrictions and requirements of, and all agreements
with and commitments to, all governmental, judicial or legal
authorities having jurisdiction over the Property and Borrower's
business.
2.2 Conditional Sales Contracts
---------------------------
Without Bank's prior written consent, Borrower shall not purchase any
materials, equipment, furnishings or fixtures to be installed on the
Property under any agreement where the seller reserves title or the
right of removal or repossession after such items are installed on the
Property.
2.3 Site Visits
-----------
Borrower shall allow Bank access to the Property at any reasonable
time for the purposes of performing an appraisal, inspecting the
Property, taking soil or groundwater samples, and conducting tests,
among other things, to investigate for the presence of Hazardous
Substances, as defined in Article IV. Borrower shall also allow Bank
to examine, copy and audit its books and records. Bank is under no
duty to visit or observe the Property, or to examine any books or
records. Any site visit, observation or examination by Bank shall be
solely for the purpose of protecting Bank's security and preserving
Bank's rights under the Loan Documents. Bank owes no duty of care to
protect Borrower or any other party against, or to inform Borrower or
any other party of, any adverse condition affecting the Property,
including any defects in the design or construction of any
improvements on the Property or the presence of any Hazardous
Substances on the Property.
2.4 Insurance
---------
Borrower shall maintain the following insurance:
(a) All risk property damage insurance in nonreporting form on the
Property, with a policy limit in an amount not less than the full
insurable value of the Property on a replacement cost basis,
including tenant improvements, if any. The policy shall include a
business interruption (or rent loss, if more appropriate)
endorsement, taxes and insurance premiums, a lender's loss
payable endorsement (438 BFU) in favor of Bank, and any other
endorsements required by Bank.
(b) Comprehensive General Liability coverage with such limits as Bank
may require. This policy shall name Bank as an additional
insured. Coverage shall be written on an occurrence basis, not
claims made.
(c) Such other insurance as Bank may reasonably require, which may
include earthquake, if available at commercially reasonably rates
and flood.
All policies of insurance required by Bank must be issued by companies
approved by Bank and otherwise be acceptable to Bank as to amounts,
forms, risk coverages and deductibles. In addition, each policy
(except workers' compensation) must provide Bank at least thirty (30)
days' prior notice of cancellation, non-renewal or modification. If
Borrower fails to keep any such coverage in effect while the Loan is
outstanding, Bank may procure the coverage at Borrower's expense.
Borrower shall reimburse Bank, on demand, for all premiums advanced by
Bank, which advances shall be considered to be additional loans to
Borrower secured by the Deed of Trust and bearing interest at the
default rate provided in the Note.
2.5 Payment of Expenses
-------------------
Borrower shall pay all costs and expenses incurred by Bank in
connection with the making, disbursement and administration of the
Loan, as well as any revisions, extensions, renewals or "workouts" of
the Loan, and in the exercise of any of Bank's rights or remedies
under this
________________________________________________________________________________
-2-
Agreement. Such costs and expenses include title insurance, recording
and escrow charges, fees for appraisal, environmental services, legal
fees and expenses of Bank's counsel and any other reasonable fees and
costs for services, regardless of whether such services are furnished
by Bank's employees or by independent contractors. Borrower
acknowledges that the Loan fee does not include amounts payable by
Borrower under this section. All such sums incurred by Bank and not
immediately reimbursed by Borrower shall be considered an additional
loan to Borrower secured by the Deed of Trust and bearing interest at
the default rate provided in the Note.
2.6 Financial and Other Information
-------------------------------
If Borrower or any Guarantor is other than a natural person or a
trust, Borrower shall provide Bank, its and each such Guarantor's
annual CPA-audited financial statements, including a year-end balance
------
sheet and annual profit and loss statement within 90 days of fiscal
year-end and shall provide copies of its and each such Guarantor's tax
returns, together with all supporting schedules within 30 days of
filing. Borrower shall also provide an annual operating statement
on the Property in form and substance satisfactory to Bank. On
request, Borrower shall promptly provide Bank with any other financial
or other information concerning its and each Guarantor's affairs and
properties as Bank may request.
2.7 Notices
-------
Borrower shall promptly notify Bank in writing of:
(a) any litigation affecting Borrower, any Guarantor or the Property,
and, if Borrower or any Guarantor is other than a natural person
or trust, any general partner or controlling shareholder of
Borrower or such Guarantor;
(b) any notice that the Property or Borrower's or Guarantor's
business fails in any respect to comply with any applicable law,
regulation or court order; and
(c) any material adverse change in the physical condition of the
Property or Borrower's or any Guarantor's financial condition or
operations or other circumstance that adversely affects
Borrower's intended use of the Property or Borrower's ability to
repay the Loan.
2.8 Indemnity
---------
Borrower agrees to indemnify, defend with counsel acceptable to Bank,
and hold Bank harmless from and against all liabilities, claims,
actions, damages, costs and expenses (including all legal fees and
expenses of Bank's counsel) arising out of or resulting from the
ownership, operation, or use of the Property, whether such claims are
based on theories of derivative liability, comparative negligence or
otherwise. Notwithstanding anything to the contrary in any other Loan
Document, the provisions of this Section 2.8 shall not be secured by
the Deed of Trust, and shall survive the termination of this
Agreement, repayment of the Loan and foreclosure of the Deed of Trust
or similar proceedings.
2.9 Preservation of Rights; Maintenance of Properties
-------------------------------------------------
Borrower shall obtain and preserve all rights, privileges and
franchises necessary or desirable for the operation of the Property
and the conduct of Borrower's business. Borrower shall maintain all
its properties in good condition.
2.10 Transfer of Assets
------------------
Borrower will not transfer assets to a trust unless the trust
agreement is reviewed by the Bank and judged acceptable and the
trustee issues a guarantee of payment.
2.11 Negative Covenants
------------------
Without Bank's prior written consent, Borrower shall not:
(a) engage in any business activities substantially different
from Borrower's present business;
(b) liquidate or dissolve Borrower's business;
________________________________________________________________________________
-3-
(c) lease or dispose of all or a substantial part of Borrower's
business or Borrower's assets;
(d) sell any assets for less than fair market price; or
(e) enter into any consolidation, merger, pool, joint venture,
syndicate or other combination.
2.12 Performance of Acts
-------------------
Upon request by Bank, Borrower shall perform all acts which may be
necessary or advisable to perfect any lien or security interest
provided for in the Loan Documents or to carry out the intent of the
Loan Documents.
2.13 Keeping Guarantor Informed
--------------------------
Borrower shall keep each Guarantor, and any third party executing the
Deed of Trust or any other security instrument securing the Loan,
informed of Borrower's financial condition and business operations
and all other circumstances which may affect Borrower's ability to
pay and perform its obligations under the Loan Documents. In
addition, Borrower shall deliver to each such person all of the
financial information required to be furnished to Bank hereunder.
III. Use or Leasing of the Property
------------------------------
3.1 Use of the Property
-------------------
(a) Borrower shall occupy the Property for the conduct of its
regular business. Borrower shall not change its intended use of
the Property without Bank's prior written approval.
3.2 Income from Property
--------------------
Borrower shall first apply all income derived from the Property,
including all income from leases, to pay costs and expenses
associated with the ownership, maintenance, operation and leasing of
the Property, including all amounts then required to be paid under
the Loan Documents, before using or applying such income for any
other purpose. No such income shall be distributed or paid to any
partner, shareholder or, if Borrower is a trust, to any beneficiary
or trustee, unless all such costs and expenses which are then due
have been paid in full.
IV. Hazardous Substances
--------------------
Notwithstanding any provision in the Deed of Trust or any other Loan
Document, the provisions of this Article IV shall not be secured by the
Deed of Trust and shall survive termination of this Agreement, repayment of
the Loan, and foreclosure of the Deed of Trust or similar proceedings.
4.1 Definition of Hazardous Substance
---------------------------------
For purposes of this Agreement, a "Hazardous Substance" is defined to
mean any substance, material or waste, including asbestos and
petroleum (including crude oil or any fraction thereof), which is or
becomes designated, classified or regulated as "toxic," "hazardous," a
"pollutant" or similar designation under any federal, state or local
law, regulation or ordinance.
4.2 Indemnity Regarding Hazardous Substances
----------------------------------------
Borrower agrees to indemnify, defend with counsel acceptable to Bank,
and hold Bank, its parent and affiliated companies, and their
respective officers, directors, employees and agents, harmless from
and against all actual or threatened liabilities, claims, actions,
damages (including foreseeable and unforeseeable consequential
damages), penalties, costs, expenses (including attorney's fees) and
losses directly or indirectly arising out of or resulting from the
presence of any Hazardous Substance in or around any part of the
Property or in the soil or groundwater under the Property, including
(1) any expenses incurred in connection with any investigation of site
conditions or any clean-up, remedial, removal or restoration work, and
(2) any resulting damages or injuries to the person or
________________________________________________________________________________
-4-
property of any third parties or to any natural resources. In
addition, Borrower shall similarly indemnify, defend and hold harmless
any persons purchasing the Property through a foreclosure sale or
following a foreclosure sale, and any persons purchasing the Loan or
any portion of or interest in it.
4.3 Representation and Warranty
---------------------------
Before signing this Agreement, Borrower researched and inquired into
the previous, current and contemplated uses and ownership of the
Property. Based on that due diligence, Borrower represents and
warrants that, to the best of its knowledge, no Hazardous Substance
has been or will be disposed of, released onto or otherwise exists in,
on, or under the Property, except as Borrower has disclosed to Bank in
writing.
4.4 Compliance with Law; Notices
----------------------------
Borrower has complied, and shall comply and cause all occupants of the
Property to comply, with all laws, regulations and ordinances
governing or applicable to Hazardous Substances as well as the
recommendations of any qualified environmental engineer or other
expert. Borrower shall promptly notify Bank if it knows or suspects
there may be any Hazardous Substance in or around the Property, or in
the soil or groundwater under the Property, or if any action or
investigation by any governmental agency or third party pertaining to
Hazardous Substances is pending or threatened.
V. Representations and Warranties
------------------------------
Borrower promises that each representation and warranty set forth below is
true, accurate and correct.
5.1 Formation; Authority
--------------------
If Borrower is anything other than a natural person, it has complied
with all laws and regulations concerning its organization, existence
and the transaction of its business, and is in good standing in each
state in which it conducts its business. Borrower is authorized to
execute, deliver and perform its obligations under each of the Loan
Documents.
5.2 No Violation
------------
Neither Borrower nor the Property is in violation of, nor do the terms
of this Agreement conflict with, any regulation or ordinance, any
order of any court or governmental entity, or any covenant or
agreement affecting Borrower or the Property. There are no claims,
actions, proceedings or investigations pending or threatened against
Borrower or affecting the Property except for those previously
disclosed by Borrower to Bank in writing.
5.3 Financial Information
---------------------
All financial information which has been and will be delivered to
Bank, including all information relating to the financial condition of
Borrower, any of its partners, shareholders, or other principals, any
Guarantor, and the Property, does and will fairly and accurately
represent the financial condition being reported on. All such
information was and will be prepared in accordance with generally
accepted accounting principles consistently applied, unless otherwise
noted. As of the date hereof, there has been no material adverse
change in any financial condition reported at any time to Bank.
5.4 Borrower Not a "Foreign Person"
------------------------------
Borrower is not a "foreign person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code of 1986, as amended from time
to time.
5.5 Disclosure to Guarantor
-----------------------
Before each Guarantor, and, if applicable, each third party executing
the Deed of Trust or other instrument securing the Loan, became
obligated in connection with the Loan, Borrower made full disclosure
to that person regarding Borrower's financial condition and business
operations and all other circumstances bearing upon Borrower's ability
to pay and perform its obligations under the Loan Documents.
VI. Default and Remedies
--------------------
________________________________________________________________________________
-5-
6.1 Events of Default
-----------------
Borrower will be in default under this Agreement upon the occurrence
of any one or more of the following events ("Event of Default"):
(a) Borrower fails to make any payment due under the Note, or fails
to make any payment demanded by Bank under any Loan Document,
within ten (10) days after the date due or demanded; or
(b) Borrower fails to comply with any covenant contained in this
Agreement other than those referred to in clause (a), and does
not either cure that failure within thirty (30) days after
written notice from Bank, or, if the default cannot be cured in
thirty days, within a reasonable time; or
(c) Borrower or any Guarantor, or Borrower's managing general partner
if it is a partnership or its majority shareholder if it is a
corporation, becomes insolvent or the subject of any bankruptcy
or other voluntary or involuntary proceeding, in or out of court,
for the adjustment of debtor-creditor relationships; or
(d) Borrower or any Guarantor dissolves or liquidates, or any of
these events happens to Borrower's managing general partner if it
is a partnership or to its chief executive or majority
shareholder if it is a corporation, or, if Borrower or any
Guarantor is a trust, the trust is revoked or materially modified
or there is a change or substitution of the trustee; or
(e) Borrower or any Guarantor dies or becomes permanently disabled,
or any of these events happens to Borrower's or any Guarantor's
managing general partner, if it is a partnership, its chief
executive officer, if it is a corporation, or its trustee, if it
is a trust; or
(f) Any representation or warranty made or given in any of the Loan
Documents proves to be false or misleading in any material
respect; or
(g) Any Guarantor revokes its Guaranty or any Guaranty becomes
ineffective for any reason; or
(h) An event of default occurs under any of the Loan Documents; or
(i) Bank fails to have an enforceable first lien on or security
interest in any property given as security for the Loan (except
as approved by Bank in writing); or
(j) A lawsuit or suits are filed against Borrower or any Guarantor,
or a judgment or judgments are entered against Borrower or any
Guarantor, or any government authority takes action that
materially adversely affects Borrower's intended use of the
Property or Borrower's or any Guarantor's ability to repay the
Loan; or
(k) Borrower, any Guarantor or any person affiliated with Borrower or
any Guarantor fails to meet the conditions of, or fails to
perform any obligation under, any other agreement Borrower has
with Bank or any affiliate of Bank, including without limitation
that certain loan made by Bank in the amount of $729,000.00
secured by a junior deed of trust on the Property. For the
purposes of this section, "affiliated with" means in control of,
controlled by or under common control with; or
(l) Borrower, any Guarantor or any person affiliated with Borrower or
any Guarantor defaults in connection with any credit such person
has with any lender, if the default consists of the failure to
make a payment when due or gives the other lender the right to
accelerate the obligation, or if the obligation is secured by a
lien on the Property. For the purposes of this section,
"affiliated with" means in control of, controlled by or under
common control with; or
(m) There is a material adverse change in Borrower's or any
Guarantor's financial condition, or event or condition that
materially impairs Borrower's intended use of the Property or
Borrower's or any Guarantor's ability to repay the Loan.
6.2 Remedies
--------
________________________________________________________________________________
-6-
If an Event of Default occurs under this Agreement.
(a) Bank may exercise any right or remedy which it has under any of
the Loan Documents, or which is otherwise available at law or in
equity or by statute, and all of Bank's rights and remedies shall
be cumulative. All of borrower's obligations under the Loan
Documents shall become immediately due and payable without notice
of default, presentment or demand for payment, protest or notice
of nonpayment or dishonor, or other notices or demands of any
kind or character, all at Bank's option, exercisable in its sole
discretion.
(b) Bank shall have the right in its sole discretion to enter the
Property and take possession of it, whether in person, by agent
or by court-appointed receiver, collect rents and otherwise
protect its collateral. If Bank exercises any of the rights or
remedies provided in this clause (b), that exercise shall not
make Bank a partner or joint venturer of Borrower. All sums which
are expended by Bank in preserving its collateral shall be
considered an additional loan to Borrower secured by the Deed of
Trust and bearing interest at the default rate provided in the
Note.
VII. Reference and Arbitration
-------------------------
7.1 Judicial Reference
------------------
In any judicial action between or among the parties, including but not
limited to any action or cause of action arising out of or relating to
this Agreement or the Loan Documents or based on or arising from an
alleged tort, all decisions of fact and law shall at the request of
any party be referred to a referee in accordance with California Code
of Civil Procedure Sections 638 et seq. The parties shall designate to
-- ---
the court a referee or referees selected under the auspices of the
American Arbitration Association ("AAA") in the same manner as
arbitrators are selected in AAA-sponsored proceedings. The presiding
referee of the panel, or the referee if there is a single referee,
shall be an active attorney or retired judge. Judgment upon the award
rendered by such referee or referees shall be entered in the court in
which such proceeding was commenced in accordance with California Code
of Civil Procedure Sections 644 and 645.
7.2 Mandatory Arbitration
---------------------
After the Deed of Trust has been released, fully reconveyed, or
extinguished, any controversy or claim between or among the parties,
including those arising out of or relating to this Agreement or the
Loan Documents and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The
arbitration shall be conducted in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of
law provision in this Agreement, and under the Commercial Rules of the
AAA. The arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or
pursuit of a provisional or ancillary remedy shall not constitute a
waiver of the right of any party, including the plaintiff, to submit
the controversy or claim to arbitration if any other party contests
such action for judicial relief.
7.3 Real Property Collateral
------------------------
Notwithstanding the provisions of Section 7.2, no controversy or claim
shall be submitted to arbitration without the consent of all parties
if, at the time of the proposed submission, such controversy or claim
arises from or relates to an obligation to Bank which is secured by
real property collateral. If all parties do not consent to submission
of such a controversy or claim to arbitration, the controversy or
claim shall be determined as provided in Section 7.1.
7.4 Provisional Remedies, Self-Help and Foreclosure
-----------------------------------------------
No provision of this Article VII shall limit the right of any party to
this Agreement to exercise self-help remedies such as setoff,
foreclosure against or sale of any real or personal property
collateral or security, or obtaining provisional or ancillary remedies
from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a
remedy does not waive the right of either party to resort to
arbitration or reference. At Bank's option, foreclosure
________________________________________________________________________________
-7-
under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
VIII. Miscellaneous Provisions
------------------------
8.1 No Waiver; Consents
-------------------
No alleged waiver by Bank shall be effective unless in writing, and
no waiver shall be construed as a continuing waiver. No waiver shall
be implied from any delay or failure by Bank to take action on
account of any default of Borrower. Consent by Bank to any act or
omission by Borrower shall not be construed as a consent to any other
or subsequent act or omission.
8.2 No Third Parties Benefited
--------------------------
This Agreement is made and entered into for the sole protection and
benefit of Bank and Borrower and their successors and assigns. No
trust fund is created by this Agreement and no other persons or
entities shall have any right of action under this Agreement or any
right to the Loan funds.
8.3 Notices
-------
All notices given under this Agreement shall be in writing and shall
be effectively served upon delivery, or if mailed, upon the first to
occur of receipt or the expiration of forty-eight hours after deposit
in first-class or certified United States mail, postage prepaid, sent
to the party at its address appearing below its signature. Those
addresses may be changed by either party by notice to the other
party.
8.4 Attorneys' Fees
---------------
If any lawsuit, reference or arbitration is commenced which arises
out of, or which relates to this Agreement, the Loan Documents or the
Loan, including any alleged tort action, regardless of which party
commences the action, the prevailing party shall be entitled to
recover from each other party such sums as the court, referee or
arbitrator may adjudge to be reasonable attorneys' fees in the action
or proceeding, in addition to costs and expenses otherwise allowed by
law. In all other situations, including any bankruptcy or other
voluntary or involuntary proceeding, in or out of court, for the
adjustment of debtor-creditor relationships, Borrower agrees to pay
all of Bank's costs and expenses, including attorneys' fees, which
may be incurred in any effort to collect or enforce the Loan or any
part of it or any term of any Loan Document. From the time(s)
incurred until paid in full to Bank, all sums shall bear interest at
the default rate provided in the Note.
8.5 Heirs, Successors and Assigns
-----------------------------
The terms of this Agreement shall bind and benefit the heirs, legal
representatives, successors and assigns of the parties; provided,
however, that Borrower may not assign this Agreement without the
prior written consent of Bank. Bank shall have the right to transfer
the Loan to any other persons or entities without the consent of or
notice to Borrower. Without the consent of or notice to Borrower,
Bank may disclose to any prospective purchaser of any securities
issued by Bank, and to any prospective or actual purchaser of any
interest in the Loan or any other loans made by Bank to Borrower, any
financial or other information relating to Borrower, the Loan or the
Property.
8.6 Interpretation
--------------
The language of this Agreement shall be construed as a whole
according to its fair meaning, and not strictly for or against any
party. The word "include(s)" means "include(s), without limitation,"
and the word "including" means "including, but not limited to."
Whenever Borrower is obligated to pay or reimburse Bank for any
attorneys' fees, those fees shall include the allocated costs for
services of in-house counsel.
8.7 Miscellaneous
-------------
This Agreement may not be modified or amended except by a written
agreement signed by the parties. The invalidity or unenforceability
of any one or more provisions of this Agreement shall in no way
affect any other provision. If Borrower consists of more than one
person or entity, each shall be
________________________________________________________________________________
-8-
jointly and severally liable to Bank for the faithful performance of
this Agreement and the other Loan Documents. Time is of the essence
in the performance of this Agreement and the other Loan Documents.
This Agreement shall be governed by California law.
8.8 Integration and Relation to Loan Commitment
-------------------------------------------
The Loan Documents fully state all of the terms and conditions of the
parties' agreement regarding the matters mentioned in or incidental
to this Agreement. The Loan Documents supersede all oral negotiations
and prior writings concerning the subject matter of the Loan
Documents, including any loan commitment issued to Borrower.
8.9 Relationships with Other Bank Customers
---------------------------------------
From time to time, Bank may have business relationships with
Borrower's customers, suppliers, contractors, tenants, partners,
shareholders, officers or directors, with businesses offering
products or services similar to those of Borrower, or with persons
seeking to invest in, borrow from or lend to Borrower. Borrower
agrees that in no event shall Bank be obligated to disclose to
Borrower any information concerning any other Bank customer. Borrower
further agrees that Bank may extend credit to those parties and may
take any action it may deem necessary to collect any such credit,
regardless of any effect the extension or collection of such credit
may have on Borrower's financial condition or operations.
________________________________________________________________________________
-9-
Borrower:
Prolong Super Lubricants, Inc.
a Nevada Corporation
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxxx,
Secretary
Address of Borrower:
6 Xxxxxx
Xxxxxx, XX 00000
Bank:
BANK OF AMERICA COMMUNITY DEVELOPMENT BANK
By: /s/ XXXXXXX X. XXXXXXX
----------------------
Xxxxxxx X. Xxxxxxx,
Vice President
Address of Bank:
00000 Xxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxxxx, XX 00000
________________________________________________________________________________
-10-
PROMISSORY NOTE
(STANDING LOAN)
(FIXED RATE)
$1,692,000.00 Loan No.31243
April 1, 0000 Xxxxxx Xxxxxxx, Xxxxxxxxxx
1. BORROWER'S PROMISE TO PAY.
-------------------------
For value received, Prolong Super Lubricants, lnc., a Nevada corporation
----------------------------------------------------
(the "Borrower") promises to pay One Million Six Hundred Ninety Two Thousand and
-----------------------------------------------
No/100 Dollars ($1,692,000.00), plus interest, to the order of BANK OF AMERICA
------ -------------
COMMUNITY DEVELOPMENT BANK (the "Bank") at P 0 Box 1186, Rancho Xxxxxxx,
-----------------------------
California, 95741 or at such other place as the holder of this Note may from
-----------------
time to time require.
This Note evidences a Standing Loan (the "Loan") from Bank to Borrower made
-------------
pursuant to a Standing Loan Agreement (the "Loan Agreement") between Bank and
-----------------------
Borrower of even date herewith. This Note is secured by a deed of trust (the
"Deed of Trust") covering certain real property and other collateral.
2. INTEREST RATE AND MONTHLY PAYMENTS.
----------------------------------
A. Interest Rate. Interest shall accrue at the rate of 7.875% per year
-------------
(the "Note Rate").
B. Monthly Payments. If the Deed of Trust records on any day but the
----------------
first day of a month, Borrower will pay interest in advance from the date of
recording to the first day of the next month. Thereafter, principal and interest
shall be payable in equal monthly installments of Thirteen Thousand Fifty and
32/100 Dollars ($13,050.32), beginning on the first day of June, 1998 and
----------
continuing on the first day of each month thereafter, with a final payment of
all remaining unpaid principal, interest and other sums due under this Note due
and payable on May 1, 2008 (the "Maturity Date").
-----------
C. Interest Calculation. Interest will be computed on the basis of a
--------------------
three hundred sixty (360) day year and actual days elapsed, which results in
more interest than if a three hundred sixty~five (365) day year were used.
3. PRINCIPAL PREPAYMENTS.
---------------------
A. Prepayments. Borrower may prepay principal on the Note in whole or in
-----------
part in minimum amounts equal to or greater than twenty percent (20%) of the
face amount of this Note in accordance with the terms of this Section.
Prepayments which are less than twenty percent (20%) of the face amount of this
Note are not permitted. Borrower shall give Bank irrevocable written notice of
Borrower's intention to make the prepayment, specifying the date and amount of
the prepayment. The notice must be received by Bank at least five (5) Banking
Days in advance of the prepayment. All prepayments of principal on the Note
shall be applied to the most remote principal installment or installments then
unpaid. Each prepayment, whether voluntary, by reason of acceleration or
otherwise, must be accompanied by payment of all accrued interest on the amount
prepaid and the prepayment fee ("Prepayment Fee") described below. Bank will
submit a certificate to Borrower setting forth its determination of any
Prepayment Fee, which certificate shall be conclusive and binding in the absence
of manifest error.
B. Prepayment Fee. The Prepayment Fee will be the sum of the following:
---------------
-1-
(1) $250; plus
----
(2) the sum of the fees calculated separately as of each Original
Payment Date as follows:
(a) subtract the applicable Reinvestment Rate from the Cost of
Funds Rate;
(b) divide the difference of (a) by twelve (12);
(c) multiply the quotient of (b) by the Original Loan Balance on
the Original Payment Date;
(d) determine the present value of the product from (c) using
the Reinvestment Rate.
(e) add together the amounts calculated in (d) as of each
Original Payment Date; if the prepayment is a partial prepayment,
multiply this sum by the Prepaid Percentage;
(f) If the amount determined under (e) is less than zero (0),
the component of the Prepayment Fee calculated under this subpart (2)
is zero (0); plus
----
(3) an amount equal to all costs and expenses Bank reasonably expects
to incur in liquidation and reinvestment of the prepaid funds.
C. Definitions. For purposes of this Note, the capitalized terms used
-----------
herein and not otherwise defined in the Note have the following meanings.
(1) "Banking Day" means a day, other than a Saturday or Sunday, on
which Bank is open for business for all banking functions in California.
(2) "Cost of Funds Rate" means the fixed interest rate of 5.95% per
annum.
(3) "Money Market" means one or more wholesale funding markets
available to Bank, including domestic certificates of deposit, Eurodollar
deposits, bank deposit notes or other appropriate money market instruments
selected by Bank.
(4) "Money Market Rate" means the fixed interest rate per annum,
determined solely by Bank on the date of prepayment, that Bank could obtain
by investing funds in the Money Market and that approximates a period of
time starting on the date of the prepayment and ending on the applicable
Original Payment Date.
(5) "Original Loan Balance" means the principal balance of the Loan
which would have been outstanding on a single Original Payment Date if
there had been no prepayment.
(6) "Original Payment Dates" means the dates on which principal of
the Loan would have been paid under the terms of this Note if there had
been no prepayment.
(7) "Prepaid Percentage" means the quotient derived by dividing the
amount of the prepayment by the principal amount of the Loan outstanding
immediately prior to the prepayment.
-2-
(8) "Reinvestment Rate" means the Money Market Rate (if an Original
Payment Date is less than five (5) years from the date of the prepayment),
or the Treasury Rate plus one~quarter of one percentage point (0.25%) (if
an Original Payment Date is more than five (5) years from the date of the
prepayment).
(9) "Treasury Rate" means the interest rate yield which Bank
determines could be obtained by investing funds in obligations of the U.S.
Treasury from the date of prepayment through the applicable Original
Payment Date (or if a quoted rate for that term is not readily available,
Bank's reasonable approximation of the interest rate yield for that term).
D. Determination of Reinvestment Rates. Bank may adjust the Treasury Rate
-----------------------------------
and Money Market Rate to reflect the compounding, accrual basis, or other costs
of the Loan. Each of the rates is Bank's estimate only, and Bank is under no
obligation to actually reinvest any prepayment. The rates shall be based on
information from either the Telerate or Reuters information services, or other
information sources the Bank deems appropriate.
4. BORROWER'S WAIVER OF PREPAYMENT RIGHT.
-------------------------------------
By its signature below, Borrower expressly waives any right to prepay the
Loan except on the express terms set forth above. Borrower agrees to pay the
Prepayment Fee even if the prepayment is made following Bank's acceleration of
the Note due to a default by Borrower, or by reason of any transfer giving Bank
the right to accelerate the maturity of this Note pursuant to the terms of the
Deed of Trust. Borrower acknowledges that prepayment of the Loan may result in
Bank incurring additional costs (including lost opportunity costs), expenses or
liabilities. Borrower therefore agrees that the Prepayment Fee represents a
reasonable estimate of the prepayment costs, expenses or liabilities Bank may
suffer on a prepayment. Borrower agrees that Bank's willingness to offer the
interest rate described in this Note is sufficient and independent consideration
for this waiver. Borrower understands that Bank would not offer such interest
rate to Borrower absent this waiver.
Borrower:
Prolong Super Lubricants,Inc.,
a Nevada Corporation
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx,
----------------------------
Xxxxxx Xxxxxxxxx,
Secretary
5. DEFAULT RATE.
------------
From and after the Maturity Date, or such earlier date as all sums
owing on this Note become due and payable by acceleration or otherwise, all sums
owing on this Note, at the option of Bank, shall bear interest until paid in
full at three (3) percentage points above the rate at which interest would
otherwise accrue under this Note.
-3-
6. LATE PAYMENTS.
-------------
A. Late Charge for Overdue Payments. If Bank has not received the full
--------------------------------
amount of any monthly payment by the end of ten (10) calendar days after the
date it is due, Borrower will pay a late charge to Bank in the amount of six
percent (6%) of the overdue payment. Borrower will pay this late charge only
once on any late payment.
7. MISCELLANEOUS.
-------------
A. Payments. All amounts payable under this Note are payable in lawful
--------
money of the United States. Checks constitute payment only when collected.
B. Joint and Several. If more than one person or entity are signing this
-----------------
Note as Borrower, their obligations under this Note will be joint and several.
C. Loan Agreement. This Note is subject to the terms and conditions of
--------------
the Loan Agreement, which, among other things, contains provisions for
acceleration of the maturity of this Note.
IN WITNESS WHEREOF, Borrower has duly executed and delivered this Note to
Bank as of the date first above written.
Borrower:
Prolong Super Lubricants, Inc.,
a Nevada Corporation
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Xxxxxx Xxxxxxxxx,
Secretary
-4-
[LETTERHEAD OF BANK OF AMERICA APPEARS HERE]
________________________________________________________________________________
DEED OF TRUST, ASSIGNMENT OF RENTS
AND FIXTURE FILING
[_] If this box is checked, this document is a CONSTRUCTION TRUST DEED
securing a construction loan.
This Deed of Trust is made as of April 1, 1998, by Prolong Super Lubricants,
-------------- ------------------------
Inc., a Nevada corporation, as trustor ("Trustor"), to EQUITABLE DEED COMPANY,
--------------------------
a California corporation, as trustee ("Trustee"), for the benefit of BANK OF
AMERICA COMMUNITY DEVELOPMENT BANK, a California state-chartered bank, as
beneficiary ("Beneficiary"). Trustee is a subsidiary of an affiliate of
Beneficiary.
1. GRANT IN TRUST
1.1 The Property. For the purpose of securing payment and performance of
the Secured Obligations defined in Section 2 below, Trustor hereby
irrevocably and unconditionally grants, conveys, transfers and assigns
to Trustee, in trust for the benefit of Beneficiary, with power of
sale and right of entry and possession, all estate, right, title and
interest which Trustor now has or may later acquire in the following
property (collectively, the "Property"):
(a) The real property located in the County of Orange, State of
California, as described in Exhibit "A" hereto;
(b) All buildings, structures, improvements, fixtures and
appurtenances now or hereafter placed on such real property, and
all apparatus and equipment now or hereafter attached in any
manner to the real property or any building on the real property,
including all pumping plants, engines, pipes, ditches and flumes,
and also all gas, electric, cooking, heating, cooling, air
conditioning, lighting, refrigeration and plumbing fixtures and
equipment, all of which shall be considered to the fullest extent
of the law to be real property for purposes of this Deed of
Trust;
(c) All easements and rights of way appurtenant to such real
property; all crops (growing or to be grown on such real
property); all standing timber upon such real property; all
development rights or credits and air rights; all water and water
rights (whether riparian, appropriative, or otherwise, and
whether or not appurtenant to such real property) and shares of
stock pertaining to such water or water rights, ownership of
which affect such real property; all minerals, oil, gas, and
other hydrocarbon substances and rights thereto in, on, under, or
upon such real property;
(d) All existing and future leases, subleases, subtenancies,
licenses, occupancy agreements and concessions relating to the
use and enjoyment of all or any part of such real property, and
any and all guaranties and other agreements relating to or made
in connection with any of the foregoing;
(e) All proceeds, including all claims to and demands for them, of
the voluntary or involuntary conversion of any of the real
property, buildings or the other property described above into
cash or liquidated claims, including proceeds of all present and
future fire, hazard or casualty insurance policies and all
condemnation awards or payments now or later to be made by any
public body or decree by any court of competent jurisdiction for
any taking or in connection with any condemnation or eminent
domain proceeding, and all causes of action and their proceeds
for any breach of warranty, misrepresentation, damage or injury
to, or defect in, the real property, buildings or the other
property described above or any part of them; and
(f) All proceeds of, additions and accretions to, substitutions and
replacements for, and changes in any of the property described
above.
________________________________________________________________________________
-1-
1.2 Fixture Filing. This Deed of Trust constitutes a financing statement
filed as a fixture filing under Section 9402(6) of the California
Uniform Commercial Code, as amended or recodified from time to time,
covering any Property which now is or later may become a fixture
attached to the real property described in Paragraph 1.1(a) or any
building located thereon.
2. THE SECURED OBLIGATIONS
2.1 Purpose of Securing. Trustor makes the grant, conveyance, transfer and
assignment set forth in Section 1 for the purpose of securing the
following obligations (the "Secured Obligations") in any order of
priority that Beneficiary may choose:
(a) Payment of all obligations of Trustor ("Obligor") to Beneficiary
-------
arising under the instrument(s) or agreement(s) described below (the
"Debt Instrument"):
[X] a promissory note dated as of April 1, 1998, payable by
--------------
Obligor as maker in the stated principal amount of One
---
Million Six Hundred Ninety Two Thousand and No/100 Dollars
--------------------------------------------------
($1,692,000.00) to the order of Beneficiary.
-------------
[X] a certain Standing Loan Agreement dated as of April 1, 1998,
----------------------- -------------
between Obligor and Beneficiary which provides for
extensions of credit in a principal amount not exceeding One
---
Million Six Hundred Ninety Two Thousand and No/100 Dollars
--------------------------------------------------
($1,692,000.00).
-------------
[_] a certain N/A Guaranty dated N/A, in the principal amount
--- ---
of -0- Dollars ($-O-) given by Obligor to Beneficiary in
--- ----
support of the obligations of N/A to Beneficiary.
---
[_] (Describe).
This Deed of Trust also secures payment of all obligations of
Obligor under the Debt Instrument which arise after the Debt
Instrument is extended, renewed, modified or amended pursuant to
any written agreement between Obligor and Beneficiary, and all
obligations of Obligor under any successor agreement or
instrument which restates and supersedes the Debt Instrument in
its entirety.
(b) Payment and performance of all obligations of Trustor under this
Deed of Trust; and
(c) Payment and performance of all future advances and other
obligations that Trustor (or any successor in interest to
Trustor) or Obligor (if different from Trustor) may agree to pay
and or perform (whether as principal, surety or guarantor) to or
for the benefit of Beneficiary, when a writing signed by Trustor
(or any successor in interest to Trustor) evidences said parties'
agreement that such advance or obligation be secured by this Deed
of Trust.
This Deed of Trust does not secure any obligation which expressly
states that it is unsecured, whether contained in the foregoing Debt
Instrument or in any other document, agreement or instrument.
2.2 Terms of Secured Obligations. All persons who may have or acquire an
interest in all or any part of the Property will be considered to have
notice of, and will be bound by, the terms of the Debt Instrument
described in Paragraph 2.1(a) and each other agreement or instrument
made or entered into in connection with each of the Secured
Obligations. The Debt Instrument, among other things, provides for the
following:
[_] a revolving line of credit to Obligor pursuant to which Obligor
may borrow, repay extensions of credit, and re-borrow amounts
which have been repaid. The unpaid balance of the revolving line
of credit may at certain times be zero. A zero balance does not
affect Beneficiary's agreement to make further extensions of
credit under the Debt Instrument. Beneficiary's interest under
this Deed of Trust will remain in full force and effect
notwithstanding a zero balance under the revolving line of
credit.
[_] an interest rate which may vary from time to time on one or more
of the obligations arising under the Debt Instrument.
3. ASSIGNMENT OF RENTS
3.1 Assignment. Trustor hereby irrevocably, absolutely, presently and
unconditionally assigns to Beneficiary all rents, royalties, issues,
profits, revenue, income and proceeds of the Property, whether now
due, past due or to become due, including all prepaid rents and
security deposits (collectively, the "Rents" ) and confers upon
Beneficiary the right to collect such Rents with or without taking
possession of the Property. In the event that anyone establishes and
exercises any right to develop, bore for or mine for
________________________________________________________________________________
-2-
any water, gas, oil or mineral on or under the surface of the
Property, any sums that may become due and payable to Trustor as bonus
or royalty payments, and any damages or other compensation payable to
Trustor in connection with the exercise of any such rights, shall also
be considered Rents assigned under this Paragraph. This is an absolute
assignment, not an assignment for security only.
3.2 Grant of License. Notwithstanding the provisions of Paragraph 3.1,
Beneficiary hereby confers upon Trustor a license ("License") to
collect and retain the Rents as they become due and payable, so long
as no Event of Default, as defined in Paragraph 5.2, shall exist and
be continuing. If an Event of Default has occurred and is continuing,
Beneficiary shall have the right, which it may choose to exercise in
its sole discretion, to terminate this License without notice to or
demand upon Trustor, and without regard to the adequacy of the
security for the Secured Obligations.
4. RIGHTS AND DUTIES OF THE PARTIES
4.1 Representations and Warranties. Trustor represents and warrants that
Trustor lawfully possesses and holds fee simple title to all of the
Property, unless Trustor's present interest in the Property is
described in Exhibit A as a leasehold interest, in which case Trustor
lawfully possesses and holds a leasehold interest in the Property as
stated in Exhibit A.
4.2 Taxes, Assessments, Liens and Encumbrances. Trustor shall pay prior to
delinquency all taxes, levies, charges and assessments, including
assessments on appurtenant water stock, imposed by any public or
quasi-public authority or utility company which are (or if not paid,
may become) a lien on all or part of the Property or any interest in
it, or which may cause any decrease in the value of the Property or
any part of it. Trustor shall immediately discharge any lien on the
Property which Beneficiary has not consented to in writing, and shall
also pay when due each obligation secured by or reducible to a lien,
charge or encumbrance which now or hereafter encumbers or appears to
encumber all or part of the Property, whether the lien, charge or
encumbrance is or would be senior or subordinate to this Deed of
Trust.
4.3 Damages and Insurance and Condemnation Proceeds.
(a) Trustor hereby absolutely and irrevocably assigns to Beneficiary,
and authorizes the payor to pay to Beneficiary, the following
claims, causes of action, awards, payments and rights to payment
(collectively, the "Claims"):
(i) all awards of damages and all other compensation payable
directly or indirectly because of a condemnation, proposed
condemnation or taking for public or private use which
affects all or part of the Property or any interest in it;
(ii) all other awards, claims and causes of action, arising out
of any breach of warranty or misrepresentation affecting
all or any part of the Property, or for damage or injury
to, or defect in, or decrease in value of all or part of
the Property or any interest in it;
(iii) all proceeds of any insurance policies payable because of
loss sustained to all or part of the Property; and
(iv) all interest which may accrue on any of the foregoing.
(b) Trustor shall immediately notify Beneficiary in writing if:
(i) any damage occurs or any injury or loss is sustained to
all or part of the Property, or any action or proceeding
relating to any such damage, injury or loss is commenced;
or
(ii) any offer is made, or any action or proceeding is
commenced, which relates to any actual or proposed
condemnation or taking of all or part of the Property.
If Beneficiary chooses to do so, it may in its own name appear in
or prosecute any action or proceeding to enforce any cause of
action based on breach of warranty or misrepresentation, or for
damage or injury to, defect in, or decrease in value of all or
part of the Property, and it may make any compromise or
settlement of the action or proceeding. Beneficiary, if it so
chooses, may participate in any action or proceeding relating to
condemnation or taking of all or part of the Property, and may
join Trustor in adjusting any loss covered by insurance.
(c) All proceeds of the Claims assigned to Beneficiary under this
Paragraph shall be paid to Beneficiary. In each instance,
Beneficiary shall apply those proceeds first toward reimbursement
of all of Beneficiary's costs and expenses of recovering the
proceeds, including attorneys' fees. Trustor further authorizes
Beneficiary, at Beneficiary's option and in Beneficiary's sole
discretion, and regardless of whether there is any impairment of
the Property, (i) to apply the balance of such proceeds, or any
portion of them, to pay or prepay some or all of the Secured
Obligations in such order or proportion as Beneficiary may
determine, or (ii) to hold the balance of such proceeds, or any
portion of them, in a non-interest-bearing account to be used for
the cost of reconstruction, repair or alteration of the Property,
or (iii) to release the balance of such proceeds, or any portion
________________________________________________________________________________
-3-
of them, to Trustor. If any proceeds are released to Trustor, neither
Beneficiary nor Trustee shall be obligated to see to, approve or
supervise the proper application of such proceeds. If the proceeds are
held by Beneficiary to be used to reimburse Trustor for the costs of
restoration and repair of the Property, the Property shall be restored
to the equivalent of its original condition, or such other condition
as Beneficiary may approve in writing. Beneficiary may, at
Beneficiary's option, condition disbursement of the proceeds on
Beneficiary's approval of such plans and specifications prepared by an
architect satisfactory to Beneficiary, contractor's cost estimates,
architect's certificates, waivers of liens, sworn statements of
mechanics and materialmen, and such other evidence of costs,
percentage of completion of construction, application of payments, and
satisfaction of liens as Beneficiary may reasonably require.
4.4 Insurance. Trustor shall provide and maintain in force at all times all
risk property damage insurance on the Property and such other type of
insurance on the Property as may be required by Beneficiary in its
reasonable judgment. At Beneficiary's request, Trustor shall provide
Beneficiary with a counterpart original of any policy, together with a
certificate of insurance setting forth the coverage, the limits of
liability, the carrier, the policy number and the expiration date. Each
such policy of insurance shall be in an amount, for a term, and in form and
content satisfactory to Beneficiary, and shall be written only by companies
approved by Beneficiary. In addition, each policy of hazard insurance shall
include a Form 438BFU or equivalent loss payable endorsement in favor of
Beneficiary.
4.5 Maintenance and Preservation of Property.
(a) Trustor shall keep the Property in good condition and repair and shall
not commit or allow waste of the Property. Trustor shall not remove or
demolish the Property or any part of it, or alter, restore or add to
the Property, or initiate or allow any change in any zoning or other
land use classification which affects the Property or any part of it,
except with Beneficiary's express prior written consent in each
instance.
(b) If all or part of the Property becomes damaged or destroyed, Trustor
shall promptly and completely repair and/or restore the Property in a
good and workmanlike manner in accordance with sound building
practices, regardless of whether or not Beneficiary agrees to disburse
insurance proceeds or other sums to pay costs of the work of repair or
reconstruction under Paragraph 4.3.
(c) Trustor shall not commit or allow any act upon or use of the Property
which would violate any applicable law or order of any governmental
authority, whether now existing or later to be enacted and whether
foreseen or unforeseen, or any public or private covenant, condition,
restriction or equitable servitude affecting the Property. Trustor
shall not bring or keep any article on the Property or cause or allow
any condition to exist on it, if that could invalidate or would be
prohibited by any insurance coverage required to be maintained by
Trustor on the Property or any part of it under this Deed of Trust.
(d) If Trustor's interest in the Property is a leasehold interest, Trustor
shall observe and perform all obligations of Trustor under any lease
or leases and shall refrain from taking any actions prohibited by any
lease or leases. Trustor shall preserve and protect the leasehold
estate and its value.
(e) If the Property is agricultural, Trustor shall farm the Property in a
good and husbandlike manner. Trustor shall keep all trees, vines and
crops on the Property properly cultivated, irrigated, fertilized,
sprayed and fumigated, and shall replace all dead or unproductive
trees or vines with new ones. Trustor shall prepare for harvest,
harvest, remove and sell any crops growing on the Property. Trustor
shall keep all buildings, fences, ditches, canals, xxxxx and other
farming improvements on the Property in first class condition, order
and repair.
(f) Trustor shall perform all other acts which from the character or use
of the Property may be reasonably necessary to maintain and preserve
its value.
4.6 Releases, Extensions, Modifications and Additional Security. Without
affecting the personal liability of any person, including Trustor (or
Obligor, if different from Trustor), for the payment of the Secured
Obligations or the lien of this Deed of Trust on the remainder of the
Property for the unpaid amount of the Secured Obligations, Beneficiary and
Trustee are respectively empowered as follows:
(a) Beneficiary may from time to time and without notice:
(i) release any person liable for payment of any Secured
Obligation;
(ii) extend the time for payment, or otherwise alter the terms of
payment, of any Secured Obligation;
(iii) accept additional real or personal property of any kind as
security for any Secured Obligation, whether evidenced by deeds
of trust, mortgages, security agreements or any other
instruments of security; or
(iv) alter, substitute or release any property securing the Secured
Obligations.
________________________________________________________________________________
-4-
(b) Trustee may perform any of the following acts when requested to
do so by Beneficiary in writing:
(i) consent to the making of any plat or map of the Property
or any part of it;
(ii) join in granting any easement or creating any restriction
affecting the Property;
(iii) join in any subordination or other agreement affecting
this Deed of Trust or the lien of it; or
(iv) reconvey the Property or any part of it without any
warranty.
4.7 Reconveyance. When all of the Secured Obligations have been paid in
full and no further commitment to extend credit continues, Trustee
shall reconvey the Property, or so much of it as is then held under
this Deed of Trust, without warranty to the person or persons legally
entitled to it. In the reconveyance, the grantee may be described as
"the person or persons legally entitled thereto," and the recitals of
any matters or facts shall be conclusive proof of their truthfulness.
Neither Beneficiary nor Trustee shall have any duty to determine the
rights of persons claiming to be rightful grantees of any
reconveyance.
4.8 Compensation and Reimbursement of Costs and Expenses.
(a) Trustor agrees to pay fees in the maximum amounts legally
permitted, or reasonable fees as may be charged by Beneficiary
and Trustee when the law provides no maximum limit, for any
services that Beneficiary or Trustee may render in connection
with this Deed of Trust, including Beneficiary's providing a
statement of the Secured Obligations or Trustee's rendering of
services in connection with a reconveyance. Trustor shall also
pay or reimburse all of Beneficiary's and Trustee's costs and
expenses which may be incurred in rendering any such services.
(b) Trustor further agrees to pay or reimburse Beneficiary for all
costs, expenses and other advances which may be incurred or made
by Beneficiary or Trustee to protect or preserve the Property or
to enforce any terms of this Deed of Trust, including the
exercise of any rights or remedies afforded to Beneficiary or
Trustee or both of them under Paragraph 5.3, whether any lawsuit
is filed or not, or in defending any action or proceeding arising
uiider or relating to this Deed of Trust, including attorneys'
fees and other legal costs, costs of any sale of the Property and
any cost of evidence of title.
(c) Trustor shall pay all obligations arising under this Paragraph
immediately upon demand by Trustee or Beneficiary. Each such
obligation shall be added to, and considered to be part of, the
principal of the Secured Obligations, and shall bear interest
from the date the obligation arises at the rate provided in any
instrument or agreement evidencing the Secured Obligations. If
more than one rate of interest is applicable to the Secured
Obligations, the highest rate shall be used for purposes hereof.
If the instrument or agreement evidencing the Secured Obligations
does not state a rate of interest, interest shall accrue at the
rate of ten percent (10%) per annum.
4.9 Exculpation and lndemnification.
(a) Beneficiary shall not be directly or indirectly liable to Trustor
or any other person as a consequence of any of the following;
(i) Beneficiary's exercise of or failure to exercise any
rights, remedies or powers granted to it in this Deed of
Trust;
(ii) Beneficiary's failure or refusal to perform or discharge
any obligation or liability of Trustor under any agreement
related to the Property or under this Deed of Trust;
(iii) Beneficiary's failure to produce Rents from the Property
or to perform any of the obligations of the lessor under
any lease covering the Property;
(iv) any waste committed by lessees of the Property or any
other parties, or any dangerous or defective condition of
the Property; or
(v) any loss sustained by Trustor or any third party resulting
from any act or omission of Beneficiary in operating or
managing the Property upon exercise of the rights or
remedies afforded Beneficiary under Paragraph 5.3, unless
the loss is caused by the wilful misconduct and bad faith
of Beneficiary.
Trustor hereby expressly waives and releases all liability of the
types described above, and agrees that no such liability shall be
asserted against or imposed upon Beneficiary.
(b) Trustor agrees to indemnify Trustee and Beneficiary against and
hold them harmless from all losses, damages, liabilities, claims,
causes of action, judgments, court costs, attorneys' fees and
other legal expenses, cost of evidence of title, cost of evidence
of value, and other costs and expenses which either may suffer or
incur in performing any act required or permitted by this Deed of
Trust or by law or because of any failure of Trustor to perform
any of its obligations. This agreement by Trustor to indemnify
Trustee and Beneficiary shall survive the release and
cancellation of any or all of the Secured Obligations and the
full or partial release and/or reconveyance of this Deed of
Trust.
4.10 Defense and Notice of Claims and Actions. At Trustor's sole expense,
Trustor shall protect, preserve and defend the Property and title to
and right of possession of the Property, and the security of this
________________________________________________________________________________
-5-
Deed of Trust and the rights and powers of Beneficiary and Trustee
created under it, against all adverse claims. Trustor shall give
Beneficiary and Trustee prompt notice in writing if any claim is
asserted which does or could affect any of these matters, or if any
action or proceeding is commenced which alleges or relates to any
such claim.
4.11 Substitution of Trustee. From time to time, Beneficiary may
substitute a successor to any Trustee named in or acting under this
Deed of Trust in any manner now or later to be provided at law, or by
a written instrument executed and acknowledged by Beneficiary and
recorded in the office of the recorder of the county where the
Property is situated. Any such instrument shall be conclusive proof
of the proper substitution of the successor Trustee, who shall
automatically upon recordation of the instrument succeed to all
estate, title, rights, powers and duties of the predecessor Trustee,
without conveyance from it.
4.12 Site Visits, Observation and Testing. Beneficiary shall have the
right at any reasonable time to enter and visit the Property for the
purposes of performing appraisals, observing the Property, taking and
removing soil or groundwater samples, and conducting tests on any
part of the Property. Beneficiary shall have no duty, however, to
visit or observe the Property or to conduct tests, and no site visit,
observation or testing by Beneficiary shall impose any liability on
Beneficiary. In no event shall any site visit, observation or testing
by Beneficiary be a representation that Hazardous Substances are or
are not present in, on or under the Property, or that there has been
or shall be compliance with any law, regulation or ordinance
pertaining to Hazardous Substances or any other applicable
governmental law. Neither Trustor nor any other party is entitled to
rely on any site visit, observation or testing by Beneficiary.
Beneficiary owes no duty of care to protect Trustor or any other
party against, or to inform Trustor or any other party of, any
Hazardous Substances or any other adverse condition affecting the
Property. Beneficiary shall give Trustor reasonable notice before
entering the Property. Beneficiary shall make reasonable efforts to
avoid interfering with Trustor's use of the Property in exercising
any rights provided in this Paragraph. For purposes of this
Paragraph, "Hazardous Substance" means any substance, material or
waste which is or becomes designated, classified or regulated as
being "toxic" or "hazardous" or which is or become similarly
designated, classified or regulated under any federal, state or local
law, regulation or ordinance.
4.13 Impound Account. At the request of Beneficiary, Trustor will monthly
pay to Beneficiary an amount equal to one-twelfth (1/12th) of the
annual costs of taxes and assessments on the Property plus the
estimated next insurance premiums on policies of insurance required
under Paragraph 4.4 of this Deed of Trust divided by the number of
months between the date of computation and the date the insurance
premiums are due. Beneficiary may release the amounts paid under this
Paragraph to Trustor for payment by Trustor of such taxes,
assessments and insurance premiums, or Beneficiary may use such
amounts to itself pay such taxes, assessments and insurance premiums,
at Beneficiary's option.
5. ACCELERATING TRANSFERS, DEFAULT AND REMEDIES
5.1 Accelerating Transfers.
(a) "Accelerating Transfer" means any sale, contract to sell,
conveyance, encumbrance, lease, or other transfer, whether
voluntary, involuntary, by operation of law or otherwise, of all
or any material part of the Property or any interest in it,
including any transfer or exercise of any right to drill for or
to extract any water (other than for Trustor's own use), oil, gas
or other hydrocarbon substances or any mineral of any kind on or
under the surface of the Property. If Trustor is a corporation,
"Accelerating Transfer" also means any transfer or transfers of
shares possessing, in the aggregate, more than fifty percent
(50%) of the voting power. If Trustor is a partnership,
"Accelerating Transfer" also means withdrawal or removal of any
general partner, dissolution of the partnership under California
law, or any transfer or transfers of, in the aggregate, more than
fifty percent (50%) of the partnership interests.
(b) Trustor agrees that Trustor shall not make any Accelerating
Transfer, unless the transfer is preceded by Beneficiary's
express written consent to the particular transaction and
transferee. Beneficiary may withhold such consent in its sole
discretion. If any Accelerating Transfer occurs, Beneficiary in
its sole discretion may declare all of the Secured Obligations to
be immediately due and payable, and Beneficiary and Trustee may
invoke any rights and remedies provided by Paragraph 5.3 of this
Deed of Trust.
5.2 Events of Default. The occurrence of any one or more of the following
events, at the option of Beneficiary, shall constitute an event of
default ("Event of Default") under this Deed of Trust:
(a) Obligor fails to make any payment, when due, under the Debt
Instrument (after giving effect to any applicable grace period),
or any other default occurs under and as defined in the Debt
________________________________________________________________________________
-6-
Instrument or in any other instrument or agreement evidencing any
of the Secured Obligations and such default continues beyond any
applicable cure period;
(b) Trustor fails to make any payment or perform any obligation which
arises under this Deed of Trust; or
(c) Any representation or warranty made in connection with this Deed
of Trust or the Secured Obligations proves to have been false or
misleading in any material respect when made; or
(d) Any default occurs under any other deed of trust on all or any
part of the Property, or under any obligation secured by such
deed of trust, whether such deed of trust is prior to or
subordinate to this Deed of Trust.
5.3 Remedies. At any time after the occurrence of an Event of Default,
Beneficiary and Trustee shall be entitled to invoke any and all of the
rights and remedies described below, as well as any other rights and
remedies authorized by law. All of such rights and remedies shall be
cumulative, and the exercise of any one or more of them shall not
constitute an election of remedies.
(a) Beneficiary may declare any or all of the Secured Obligations to
be due and payable immediately.
(b) Beneficiary may apply to any court of competent jurisdiction for,
and obtain appointment of, a receiver for the Property.
(c) Beneficiary, in person, by agent or by court-appointed receiver,
may enter, take possession of, manage and operate all or any part
of the Property, and in its own name or in the name of Trustor
xxx for or otherwise collect any and all Rents, including those
that are past due, and may also do any and all other things in
connection with those actions that Beneficiary may in its soie
discretion consider necessary and appropriate to protect the
security of this Deed of Trust. Such other things may include:
entering into, enforcing, modifying, or cancelling leases on such
terms and conditions as Beneficiary may consider proper;
obtaining and evicting tenants; fixing or modifying Rents;
completing any unfinished construction; contracting for and
making repairs and alterations; performing such acts of
cultivation or irrigation as necessary to conserve the value of
the Property; and preparing for harvest, harvesting and selling
any crops that may be growing on the property. Trustor hereby
irrevocably constitutes and appoints Beneficiary as its
attorney-in-fact to perform such acts and execute such documents
as Beneficiary in its sole discretion may consider to be
appropriate in connection with taking these measures, including
endorsement of Trustor's name on any instruments. Trustor agrees
to deliver to Beneficiary all books and records pertaining to the
Property, including computer-readable memory and any computer
hardware or software necessary to access or process such memory,
as may reasonably be requested by Beneficiary in order to enable
Beneficiary to exercise its rights under this Paragraph.
(d) Either Beneficiary or Trustee may cure any breach or default of
Trustor, and if it chooses to do so in connection with any such
cure, Beneficiary or Trustee may also enter the Property and/or
do any and all other things which it may in its sole discretion
consider necessary and appropriate to protect the security of
this Deed of Trust. Such other things may include: appearing in
and/or defending any action or proceeding which purports to
affect the security of, or the rights or powers of Beneficiary or
Trustee under, this Deed of Trust; paying, purchasing, contesting
or compromising any encumbrance, charge, lien or claim of lien
which in Beneficiary's or Trustee's sole judgment is or may be
senior in priority to this Deed of Trust, such judgment of
Beneficiary or Trustee to be conclusive as among the parties to
this Deed of Trust; obtaining insurance and/or paying any
premiums or charges for insurance required to be carried under
this Deed of Trust; otherwise caring for and protecting any and
all of the Property; and/or employing counsel, accountants,
contractors and other appropriate persons to assist Beneficiary
or Trustee. Beneficiary and Trustee may take any of the actions
permitted hereunder either with or without giving notice to any
person.
(e) Beneficiary may bring an action in any court of competent
jurisdiction to foreclose this instrument or to obtain specific
enforcement of any of the covenants or agreements of this Deed of
Trust.
(f) Beneficiary may cause the Property to be sold by Trustee as
permitted by applicable law. Before any such trustee's sale,
Beneficiary or Trustee shall give such notice of default and
election to sell as may then be required by law. When all time
periods then legally mandated have expired, and after such notice
of sale as may then be legally required has been given, Trustee
shall sell the Property, either as a whole or in separate
parcels, and in such order as Trustee may determine, at a public
auction to be held at the time and place specified in the notice
of sale. Neither Trustee nor Beneficiary shall have any
obligation to make demand on Trustor before any trustee's sale.
From time to time in accordance with then applicable law, Trustee
may, and in any event at Beneficiary's request shall, postpone
any trustee's sale by public announcement at the time and place
noticed for that sale. At any trustee's sale, Trustee shall sell
to the highest bidder at public auction for cash in lawful money
of the United States. Any person, including Trustor, Trustee or
________________________________________________________________________________
-7-
Beneficiary, may purchase at the trustee's sale. Trustee shall
execute and deliver to the purchaser(s) a deed or deeds conveying
the property being sold without any covenant or warranty
whatsoever, express or implied. The recitals in any such deed of
any matters or facts, including any facts bearing upon the
regularity or validity of any trustee's sale, shall be conclusive
proof of their truthfulness. Any such deed shall be conclusive
against all persons as to the facts recited in it.
5.4 Application of Sale Proceeds and Rents.
(a) Beneficiary and Trustee shall apply the proceeds of any sale of
the Property in the following manner: first, to pay the portion
of the Secured Obligations attributable to the costs, fees and
expenses of the sale, including costs of evidence of title in
connection with the sale; and, second, to pay all other Secured
Obligations in any order and proportions as Beneficiary in its
sole discretion may choose. The remainder, if any, shall be
remitted to the person or persons entitled thereto.
(b) Beneficiary shall apply any and all Rents collected by it, and
any and all sums other than proceeds of any sale of the Property
which Beneficiary may receive or collect under Paragraph 5.3, in
the following manner: first, to pay the portion of the Secured
Obligations attributable to the costs and expenses of operation
and collection that may be incurred by Trustee, Beneficiary or
any receiver; and, second, to pay all other Secured Obligations
in any order and proportions as Beneficiary in its sole
discretion may choose. The remainder, if any, shall be remitted
to the person or persons entitled thereto. Beneficiary shall have
no liability for any funds which it does not actually receive.
6. MISCELLANEOUS PROVISIONS
6.1 No Waiver or Cure.
(a) Each waiver by Beneficiary or Trustee must be in writing, and no
waiver shall be construed as a continuing waiver. No waiver shall
be implied from any delay or failure by Beneficiary or Trustee to
take action on account of any default of Trustor. Consent by
Beneficiary or Trustee to any act or omission by Trustor shall
not be construed as a consent to any other or subsequent act or
omission or to waive the requirement for Beneficiary's or
Trustee's consent to be obtained in any future or other instance.
(b) If any of the events described below occurs, that event alone
shall not cure or waive any breach, Event of Default or notice of
default under this Deed of Trust or invalidate any act performed
pursuant to any such default or notice; or nullify the effect of
any notice of default or sale (unless all Secured Obligations
then due have been paid and performed); or impair the security of
this Deed of Trust; or prejudice Beneficiary, Trustee or any
receiver in the exercise of any right or remedy afforded any of
them under this Deed of Trust; or be construed as an affirmation
by Beneficiary of any tenancy, lease or option, or a
subordination of the lien of this Deed of Trust:
(i) Beneficiary, its agent or a receiver takes possession of
all or any part of the Property;
(ii) Beneficiary collects and applies Rents, either with or
without taking possession of all or any part of the
Property;
(iii) Beneficiary receives and applies to any Secured Obligation
proceeds of any Property, including any proceeds of
insurance policies, condemnation awards, or other claims,
property or rights assigned to Beneficiary under this Deed
of Trust;
(iv) Beneficiary makes a site visit, observes the Property
and/or conducts tests thereon;
(v) Beneficiary receives any sums under this Deed of Trust or
any proceeds of any collateral held for any of the Secured
Obligations, and applies them to one or more Secured
Obligations;
(vi) Beneficiary, Trustee or any receiver performs any act
which it is empowered or authorized to perform under this
Deed of Trust or invokes any right or remedy provided
under this Deed of Trust.
6.2 Powers of Beneficiary and Trustee.
(a) Trustee shall have no obligation to perform any act which it is
empowered to perform under this Deed of Trust unless it is
requested to do so in writing and is reasonably indemnified
against loss, cost, liability and expense.
(b) Beneficiary may take any of the actions permitted under
Paragraphs 5.3(b) and/or 5.3(c) regardless of the adequacy of the
security for the Secured Obligations, or whether any or all of
the Secured Obligations have been declared to be immediately due
and payable, or whether notice of default and election to sell
has been given under this Deed of Trust.
________________________________________________________________________________
-8-
(c) From time to time, Beneficiary or Trustee may apply to any court
of competent jurisdiction for aid and direction in executing the
trust and enforcing the rights and remedies created under this
Deed of Trust. Beneficiary or Trustee may from time to time
obtain orders or decrees directing, confirming or approving acts
in executing this trust and enforcing these rights and remedies.
6.3 Nonborrower Trustor.
(a) If any Trustor ("Nonborrower Trustor") is not the Obligor under
the Debt Instrument described in Paragraph 2.1(a), such
Nonborrower Trustor authorizes Beneficiary to perform any of the
following acts at any time, all without notice to Nonborrower
Trustor and without affecting Beneficiary's rights or Nonborrower
Trustor's obligations under this Deed of Trust:
(i) Beneficiary may alter any terms of the Debt Instrument or
any part of it, including renewing, compromising,
extending or accelerating, or otherwise changing the time
for payment of, or increasing or decreasing the rate of
interest on, the Debt Instrument or any part of it;
(ii) Beneficiary may take and hold security for the Debt
Instrument, accept additional or substituted security for
the Debt Instrument, and subordinate, exchange, enforce,
waive, release, compromise, fail to perfect, sell or
otherwise dispose of any such security;
(iii) Beneficiary may apply any security now or later held for
the Debt Instrument in any order that Beneficiary in its
sole discretion may choose, and may direct the order and
manner of any sale of all or any part of it and bid at any
such sale;
(iv) Beneficiary may release Obligor of its liability for the
Debt Instrument or any part of it; and
(v) Beneficiary may substitute, add or release any one or more
guarantors or endorsers of the Debt Instrument.
(b) Nonborrower Trustor waives:
(i) Any right it may have to require Beneficiary to proceed
against Obligor, proceed against or exhaust any security
held from Obligor, or pursue any other remedy in
Beneficiary's power to pursue;
(ii) Any defense based on any legal disability of Obligor, any
discharge or limitation of the liability of Obligor to
Beneficiary, whether consensual or arising by operation of
law or any bankruptcy, reorganization, receivership,
insolvency, or debtor-relief proceeding, or from any other
cause, or any claim that Nonborrower Trustor's obligations
exceed or are more burdensome than those of Obligor;
(iii) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of
dishonor, notices of acceptance of this Deed of Trust and
of the existence, creation, or incurring of new or
additional indebtedness of Obligor, and demands and
notices of every kind;
(iv) Any defense based on or arising out of any defense that
Obligor may have to the payment or performance of the Debt
Instrument or any part of it; and
(v) All rights of subrogation, reimbursement, indemnification
and contribution (contractual, statutory or otherwise),
including any claim or right of subrogation under the
Bankruptcy Code (Title 11 of the U.S. Code) or any
successor statute, all rights to enforce any remedy that
the Beneficiary may have against Obligor, and all rights
to participate in any security now or later to be held by
Beneficiary for the Debt Instrument.
(c) Nonborrower Trustor assumes full responsibility for keeping
informed of Obligor's financial condition and business operations
and all other circumstances affecting Obligor's ability to pay
and perform its obligations to Beneficiary, and agrees that
Beneficiary shall have no duty to disclose to Nonborrower Trustor
any information which Beneficiary may receive about Obligor's
financial condition, business operations, or any other
circumstances bearing on its ability to perform.
(d) For purposes of this Paragraph 6.3, all references to the Debt
Instrument shall also include any instrument or agreement
executed by Obligor subsequent to the date of this Deed of Trust
which is secured by this Deed of Trust in accordance with the
provisions of Paragraph 2.1(c).
6.4 Merger. No merger shall occur as a result of Beneficiary's acquiring
any other estate in or any other lien on the Property unless
Beneficiary consents to a merger in writing.
6.5 Joint and Several Liability. If Trustor consists of more than one
person, each shall be jointly and severally liable for the faithful
performance of all of Trustor's obligations under this Deed of Trust.
6.6 Applicable Law. This Deed of Trust shall be governed by California
law.
________________________________________________________________________________
-9-
6.7 Successors in Interest. The terms, covenants and conditions of this
Deed of Trust shall be binding upon and inure to the benefit of the
heirs, successors and assigns of the parties. However, this Paragraph
does not waive the provisions of Paragraph 5.1.
6.8 Interpretation. Whenever the context requires, all words used in the
singular will be construed to have been used in the plural, and vice
versa, and each gender will include any other gender. The captions of
the sections of this Deed of Trust are for convenience only and do not
define or limit any terms or provisions. The word include(s)" means
"include(s), without limitation," and the word "including" means
"including, but not limited to." The word "obligations" is used in its
broadest and most comprehensive sense, and includes all primary,
secondary, direct, indirect, fixed and contingent obligations. It
further includes all principal, interest, prepayment charges, late
charges, loan fees and any other fees and charges accruing or assessed
at any time, as well as all obligations to perform acts or satisfy
conditions. No listing of specific instances, items or matters in any
way limits the scope or generality of any language of this Deed of
Trust. The Exhibits to this Deed of Trust are hereby incorporated in
this Deed of Trust.
6.9 In-House Counsel Fees. Whenever Trustor is obligated to pay or
reimburse Beneficiary or Trustee for any attorneys' fees, those fees
shall include the allocated costs for services of in-house counsel.
6.10 Waiver of Marshaling. Trustor waives all rights, legal and equitable,
it may now or hereafter have to require marshaling of assets or to
direct the order in which any of the Property will be sold in the
event of any sale under this Deed of Trust, including any rights
provided by California Civil Code Sections 2899 and 3433, as such
Sections may be amended from time to time. Each successor and assign
of Trustor, including any holder of a lien subordinate to this Deed of
Trust, by acceptance of its interest or lien agrees that it shall be
bound by the above waiver, as if it had given the waiver itself.
6.11 Severability. If any provision of this Deed of Trust should be held
unenforceable or void, that provision shall be deemed severable from
the remaining provisions and in no way affect the validity of this
Deed of Trust except that if such provision relates to the payment of
any monetary sum, then Beneficiary may, at its option, declare all
Secured Obligations immediately due and payable.
6.12 Notices. Trustor hereby requests that a copy of notice of default and
notice of sale be mailed to it at the address set forth below. That
address is also the mailing address of Trustor as debtor under the
California Uniform Commercial Code. Beneficiary's address given below
is the address for Beneficiary as secured party under the California
Uniform Commercial Code.
[_] If this box is checked, N/A signs as Trustor solely for the
---
purpose of subjecting any potential community property interest
in the Property to this Deed of Trust.
ADDRESSES WHERE NOTICES TO TRUSTOR(S) ARE TO BE SENT:
PROLONG SUPER LUBRICANTS, INC.
6 Thomas
Xxxxxx, XX 00000
ADDRESS WHERE NOTICES TO BENEFIClARY ARE TO BE SENT:
BANK OF AMERICA COMMUNITY DEVELOPMENT BANK
X.X. Xxx 0000
Xxxxxx Xxxxxxx, XX 00000
TRUSTOR:
Prolong Super Lubricants, Inc.
A Nevada corporation
By: /s/ Xxxxx Xxxxxxxx
---------------------------------
Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Xxxxxx Xxxxxxxxx,
Secretary
________________________________________________________________________________
-10-
GENERAL ACKNOWLEDGMENT
(State of California )
(County of Orange )
On 04/14/98, before me, X. XXXX personally appeared Xxxxx Xxxxxxxx & Xxxxxx
Xxxxxxxxx, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
(Seal)
Signature: /s/ X. XXXX
---------------------
[SEAL APPEARS HERE]
________________________________________________________________________________
-11-
EXHIBIT/ATTACHMENT
TO DOCUMENTATION
EXHIBIT "A"
(Legal Description)
EXHIBIT A, ATTACHED TO AND FORMING A PART OF THAT CERTAIN DEED OF TRUST,
---------
ASSIGNMENT OF RENTS AND FLXTURE FILING DATED APRIL 1, 1998, EXECUTED BY TRUSTOR
IN FAVOR OF BANK OF AMERICA COMMUNITY DEVELOPMENT BANK.
ALL THAT CERTAIN LAND SLTUATED IN THE STATE OF CALIFORNIA, COUNTY OF ORANGE,
DESCRIBED AS
FOLLOWS:
Parcel 15 in the City of Irvine, County of Orange, State of California, as shown
on a Parcel Map filed in book 112, pages 17 to 25, inclusive of Parcel Maps, in
the office of the County Recorder of said County.
Except any and all oil, oil rights, minerals, mineral rights, natural gas
rights, and other hydrocarbons by whatsoever name known, geothermal steam, and
all products derived from any of the foregoing, that may be within or under the
land, together with the perpetual right of drilling, mining, explorIng and
operating therefor and storing in and removing the same from the land or any
other land, including the right to whipstock or directionally drill and mine
from lands other than those hereby, oil or gas xxxxx, tunnels and shafts into,
through or across the subsurface of the land, and to bottom such whipstocked or
directionally drilled xxxxx, tunnels and shafts under and beneath or beyond the
exterior limits thereof, and to redrill, retunnel, equip, maintain, repair,
deepen and operate any such xxxxx or mines; without however, the right to drill,
mine, store, explore and operate through the surface or the upper 500 feet of
the subsurface of the land, as reserved in the deed from The Irvine Company, a
Michigan corporation successor by merger with Irvine Industrial Complex, a
corporation, recorded August 8, 1979 in book 13260, page 763 of Official
Records.
Property Address:
6 THOMAS
Xxxxxx, XX 00000
________________________________________________________________________________
-12-
================================================================================
[LOGO OF BANK OF AMERICA APPEARS HERE] PAYMENT GUARANTY
(COMMERICAL REAL ESTATE)
________________________________________________________________________________
This Payment Guaranty ("Guaranty") is made as of April 1, 1998 by Prolong
International Corporation, a Nevada corporation ("Guarantor") in favor of Bank
of America Community Development Bank and its successors and assigns ("Bank").
Factual Background
------------------
A. Guarantor is executing this Guaranty to induce Bank to make a standing loan
(defined in Section 2 as the "Loan") to Prolong Super Lubricants, Inc., a
Nevada corporation ("Borrower") in the principal amount of One Million Six
Hundred Ninety Two Thousand and No/100 Dollars $1,692,000.00. The Loan is
being made under a Standing Loan Agreement (the "Loan Agreement") entered
into as of April 1, 1998, between Bank and Borrower.
B. The Loan is evidenced by a promissory note (the "Note") made payable to
Bank in the principal amount of the Loan. The Note is secured by a deed of
trust ("Deed of Trust") covering certain real and personal property, as
therein described (all collectively, the "Property"). The Note may also be
secured by other collateral, as more fully explained in the Loan Agreement.
C. This Guaranty is one of several Loan Documents, as defined and designated
in the Loan Agreement. The Loan Documents also include the Loan Agreement,
the Note, the Deed of Trust and certain other specified instruments and
agreements.
Guaranty
--------
1. Guaranty of Loan. Guarantor unconditionally guaranties to Bank the full
----------------
payment of and performance of Borrower's obligations in connection with the
Loan, and unconditionally agrees to pay Bank the full amount of the Loan.
This is a guaranty of payment, not of collection. If Borrower defaults in
the payment when due of the Loan or any part of it, Guarantor shall in
lawful money of the United States pay to Bank or order, on demand, all sums
due and owing on the Loan, including all interest, charges, fees and other
sums, costs and expenses.
2. Loan. In this Guaranty, the term "Loan" is broadly defined to mean and
----
include all primary, secondary, direct, indirect, fixed and contingent
obligations of Borrower to pay principal, interest, prepayment charges,
late charges, loan fees and any other fees, charges, sums, costs and
expenses which may be owing at any time under the Note or the other Loan
Documents, as any or all of them may from time to time be modified,
amended, extended or renewed. For purposes of this Guaranty, the Loan
includes any and all such obligations which may arise in connection with
(a) Hazardous Substances, as defined in the Loan Agreement, and (b) any
advances made before recording of the Deed of Trust. If the amount
outstanding under the Loan is determined by a court of competent
jurisdiction, that determination shall be conclusive and binding on
Guarantor, regardless of whether Guarantor was a party to the proceeding in
which the determination was made or not.
3. Rights of Bank. Guarantor authorizes Bank to perform any or all of the
--------------
following acts at any time in its sole discretion, all without notice to
Guarantor and without affecting Guarantor's obligations under this
Guaranty:
(a) Bank may alter any terms of the Loan or any part of it, including
renewing, compromising, extending or accelerating, or otherwise
changing the time for payment of, or increasing or decreasing the rate
of interest on, the Loan or any part of it.
(b) Bank may take and hold security for the Loan or this Guaranty, accept
additional or substituted security for either, and subordinate,
exchange, enforce, waive, release, compromise, fail to perfect and
sell or otherwise dispose of any such security.
________________________________________________________________________________
-1-
________________________________________________________________________________
(c) Bank may direct the order and manner of any sale of all or any part of
any security now or later to be held for the Loan or this Guaranty,
and Bank may also bid at any such sale.
(d) Bank may apply any payments or recoveries from Borrower, Guarantor or
any other source, and any proceeds of any security, to Borrower's
obligations under the Loan Documents in such manner, order and
priority as Bank may elect, whether or not those obligations are
guarantied by this Guaranty or secured at the time of the application.
(e) Bank may release Borrower of its liability for the Loan or any part of
it.
(f) Bank may substitute, add or release any one or more guarantors or
endorsers.
(g) In addition to the Loan, Bank may extend other credit to Borrower, and
may take and hold security for the credit so extended, all without
affecting Guarantor's liability under this Guaranty.
4. Guaranty to be Absolute. Guarantor expressly agrees that until the Loan is
-----------------------
paid and performed in full and each and every term, covenant and condition
of this Guaranty is fully performed, Guarantor shall not be released by or
because of:
(a) Any act or event which might otherwise discharge, reduce, limit or
modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or other act
or omission of Bank, or its failure to proceed promptly or otherwise
as against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance which might increase the
likelihood that Guarantor may be called upon to perform under this
Guaranty or which might affect the rights or remedies of Guarantor as
against Borrower; or
(d) Any dealings occurring at any time between Borrower and Bank, whether
relating to the Loan or otherwise.
Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts,
omissions, agreements, waivers or matters. It is the purpose and intent of
this Guaranty that the obligations of Guarantor under it shall be absolute
and unconditional under any and all circumstances.
5. Guarantor's Waivers. Guarantor waives:
-------------------
(a) All statutes of limitations as a defense to any action or proceeding
brought against Guarantor by Bank, to the fullest extent permitted by
law;
(b) Any right it may have to require Bank to proceed against Borrower,
proceed against or exhaust any security held from Borrower, or pursue
any other remedy in Bank's power to pursue;
(c) Any defense based on any claim that Guarantor's obligations exceed or
are more burdensome than those of Borrower;
(d) Any defense based on:
(i) any legal disability of Borrower,
(ii) any release, discharge, modification, impairment or limitation
of the liability of Borrower to Bank from any cause, whether
consented to by Bank or arising by operation of law or from
any bankruptcy or other voluntary or involuntary proceeding,
in or out of court, for the adjustment of debtor-creditor
relationships ("Insolvency Proceeding") and
(iii) any rejection or disaffirmance of the Loan, or any part of it,
or any security held for it, in any such Insolvency
Proceeding;
________________________________________________________________________________
-2-
________________________________________________________________________________
(e) Any defense based on any action taken or omitted by Bank in any
Insolvency Proceeding involving Borrower, including any election to
have Bank's claim allowed as being secured, partially secured or
unsecured, any extension of credit by Bank to Borrower in any
Insolvency Proceeding, and the taking and holding by Bank of any
security for any such extension of credit;
(f) All presentments, demands for performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or
incurring of new or additional indebtedness, and demands and notices
of every kind except for any demand or notice by Bank to Guarantor
expressly provided for in Section 1; and
(g) Any defense based on or arising out of any defense that Borrower may
have to the payment or performance of the Loan or any part of it.
6. Waivers of Subrogation and Other Rights.
---------------------------------------
(a) Upon a default by Borrower, Bank in its sole discretion, without prior
notice to or consent of Guarantor, may elect to:
(i) foreclose either judicially or nonjudicially against any real
or personal property security it may hold for the Loan,
(ii) accept a transfer of any such security in lieu of foreclosure,
(iii) compromise or adjust the Loan or any part of it or make any
other accommodation with Borrower or Guarantor, or
(iv) exercise any other remedy against Borrower or any security. No
such action by Bank shall release or limit the liability of
Guarantor, who shall remain liable under this Guaranty after
the action, even if the effect of the action is to deprive
Guarantor of any subrogation rights, rights of indemnity, or
other rights to collect reimbursement from Borrower for any
sums paid to Bank, whether contractual or arising by operation
of law or otherwise. Guarantor expressly agrees that under no
circumstances shall it be deemed to have any right, title,
interest or claim in or to any real or personal property to be
held by Bank or any third party after any foreclosure or
transfer in lieu of foreclosure of any security for the Loan.
(b) Regardless of whether Guarantor may have made any payments to Bank,
Guarantor forever waives:
(i) all rights of subrogation, all rights of indemnity, and any
other rights to collect reimbursement from Borrower for any
sums paid to Bank, whether contractual or arising by operation
of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise,
(ii) all rights to enforce any remedy that Bank may have against
Borrower, and (iii) all rights to participate in any security
now or later to be held by Bank for the Loan.
7. Revival and Reinstatement. If Bank is required to pay, return or restore to
-------------------------
Borrower or any other person any amounts previously paid on the Loan
because of any Insolvency Proceeding of Borrower, any stop notice or any
other reason, the obligations of Guarantor shall be reinstated and revived
and the rights of Bank shall continue with regard to such amounts, all as
though they had never been paid.
8. Information Regarding Borrower and the Property. Before signing this
-----------------------------------------------
Guaranty, Guarantor investigated the financial condition and business
operations of Borrower, the present and former condition, uses and
ownership of the Property, and such other matters as Guarantor deemed
appropriate to assure itself of Borrower's ability to discharge its
obligations under the Loan Documents. Guarantor assumes full
responsibility for that due diligence, as well as for keeping informed of
all matters which may affect Borrower's ability to pay and perform its
obligations to Bank. Bank has no duty to disclose to Guarantor any
information which Bank may have or receive about Borrower's financial
condition or business operations, the condition or uses of the Property, or
any other circumstances bearing on Borrower's ability to perform.
________________________________________________________________________________
-3-
________________________________________________________________________________
9. Subordination. Any rights of Guarantor, whether now existing or later
-------------
arising, to receive payment on account of any indebtedness (including
interest) owed to it by Borrower or any subsequent owner of the Property,
or to withdraw capital invested by it in Borrower, or to receive
distributions from Borrower, shall at all times be subordinate as to lien
and time of payment and in all other respects to the full and prior
repayment to Bank of the Loan. Guarantor shall not be entitled to enforce
or receive payment of any sums hereby subordinated until the Loan has been
paid and performed in full and any such sums received in violation of this
Guaranty shall be received by Guarantor in trust for Bank. The foregoing
notwithstanding, Guarantor is not prohibited from receiving (a) such
reasonable management fees or reasonable salary from Borrower as Bank may
find acceptable from time to time, and (b) distributions from Borrower in
an amount equal to any income taxes imposed on Guarantor which are
attributable to Borrower's income from the Property.
10. Financial Information. Guarantor shall keep true and correct financial
---------------------
books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as Bank in its
reasonable judgment may find acceptable from time to time. Guarantor shall
provide Bank Guarantor's annual CPA-audited financial statements, including
------
a year-end balance sheet and annual profit and loss statement within 90
days of fiscal year-end and shall provide copies of its 10K annually within
30 days of filing. Guarantor shall promptly provide Bank with any
additional audited financial information that Guarantor may obtain, as well
as signed copies of any tax returns and such other information concerning
its affairs and properties as Bank may reasonably request.
Guarantor represents and warrants that:
(a) all financial statements and other financial information furnished or
to be furnished to Bank are or will be true and correct and do or will
fairly represent the financial condition of Guarantor (including all
contingent liabilities);
(b) all financial statements were or will be prepared in accordance with
generally accepted accounting principles, or such other accounting
principles as may be acceptable to Bank at the time of their
preparation, consistently applied; and
(c) there has been no material adverse change in Guarantor's financial
condition since the dates of the statements most recently furnished to
Bank.
11. Events of Default. Bank may declare Guarantor to be in default under this
-----------------
Guaranty upon the occurrence of any of the following events ("Events of
Default"):
(a) Guarantor fails to perform any of its obligations under this Guaranty;
or
(b) Guarantor revokes this Guaranty or this Guaranty becomes ineffective
for any reason; or
(c) Any representation or warranty made or given by Guarantor to Bank
proves to be false or misleading in any material respect; or
(d) Guarantor becomes insolvent or the subject of any Insolvency
Proceeding; or
(e) Guarantor dissolves or liquidates, or any of these events happens to
any of Guarantor's general partners or to its chief executive or
majority shareholder.
________________________________________________________________________________
-4-
________________________________________________________________________________
12. Reference and Arbitration.
-------------------------
(a) Judicial Reference. In any judicial action between or among the
------------------
parties, including any action or cause of action arising out of or
relating to this Guaranty or the Loan Documents or based on or arising
from an alleged tort, all decisions of fact and law shall at the
request of any party be referred to a referee in accordance with
California Code of Civil Procedure Sections 638 et seq. The parties
-- ---
shall designate to the court a referee or referees selected under the
auspices of the American Arbitration Association ("AAA") in the same
manner as, arbitrators are selected in AAA-sponsored proceedings. The
presiding referee of the panel, or the referee if there is a single
referee, shall be an active attorney or retired judge. Judgment upon
the award rendered by such referee or referees shall be entered in the
court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.
(b) Mandatory Arbitration. After the Deed of Trust has been released,
---------------------
fully reconveyed or extinguished, any controversy or claim between or
among the parties, including those arising out of or relating to this
Guaranty or the Loan Documents and any claim based on or arising from
an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the
United States Arbitration Act (Title 9, U.S. Code), notwithstanding
any choice of law provision in this Guaranty, and under the Commercial
Rules of the AAA. The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the
arbitrator(s). Judgment upon the arbitration award may be entered in
any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary
remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial
relief.
(c) Real Property Collateral. Notwithstanding the provisions of subsection
------------------------
12(b), no controversy or claim shall be submitted to arbitration
without the consent of all parties if, at the time of the proposed
submission, such controversy or claim arises from or relates to an
obligation by Guarantor or Borrower to Bank which is secured by real
property collateral. If all parties do not consent to submission of
such a controversy or claim to arbitration, the controversy or claim
shall be determined by reference as provided in subsection 12(a).
(d) Provisional Remedies, Self-Help and Foreclosure. No provision of this
----------------------------------- -----------
Section 12 shall limit the right of any party to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or
ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding.
The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At Bank's option, foreclosure
under a deed of trust or mortgage may be accomplished either by
exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
13. Authorization; No Violation. Guarantor is authorized to execute, deliver
---------------------------
and perform under this Guaranty, which is a valid and binding obligation of
Guarantor. No provision or obligation of Guarantor contained in this
Guaranty violates any applicable law, regulation or ordinance, or any order
or ruling of any court or governmental agency. No such provision or
obligation conflicts with, or constitutes a breach or default under, any
agreement to which Guarantor is a party.
14. Additional and Independent Obligations. Guarantor's obligations under this
--------------------------------------
Guaranty are in addition to its obligations under any other existing or
future guaranties, each of which shall remain in full force and effect
until it is expressly modified or released in a writing signed by Bank.
Guarantor's obligations under this Guaranty are independent of those of
Borrower on the Loan. Bank may bring a separate action, or commence a
separate reference or arbitration proceeding against Guarantor without
first proceeding against Borrower, any other person or any security that
Bank may hold, and without pursuing any other remedy. Bank's rights under
this Guaranty shall not be exhausted by any action by Bank until the Loan
has been paid and performed in full.
________________________________________________________________________________
-5-
________________________________________________________________________________
15. No Waiver; Consents; Cumulative Remedies. Each waiver by Bank must be in
----------------------------------------
writing, and no waiver shall be construed as a continuing waiver. No waiver
shall be implied from Bank's delay in exercising or failure to exercise any
right or remedy against Borrower, Guarantor or any security. Consent by
Bank to any act or omission by Borrower or Guarantor shall not be construed
as a consent to any other or subsequent act or omission, or as a waiver of
the requirement for Bank's consent to be obtained in any future or other
instance. All remedies of Bank against Borrower and Guarantor are
cumulative.
16. No Release. Guarantor shall not be released from its obligations under this
----------
Guaranty except by a writing signed by Bank.
17. Heirs, Successors and Assigns; Participations. The terms of this Guaranty
---------------------------------------------
shall bind and benefit the heirs, legal representatives, successors and
assigns of Bank and Guarantor; provided, however, that Guarantor may not
assign this Guaranty, or assign or delegate any of its rights or
obligations under this Guaranty, without the prior written consent of Bank
in each instance. Bank in its sole discretion may sell or assign
participations or other interests in the Loan and this Guaranty, in whole
or in part, all without notice to or the consent of Guarantor and without
affecting Guarantor's obligations under this Guaranty. Also without notice
to or the consent of Guarantor, Bank may disclose any and all information
in its possession concerning Guarantor, this Guaranty and any security for
this Guaranty to any actual or prospective purchaser of any securities
issued or to be issued by Bank, and to any actual or prospective purchaser
or assignee of any participation or other interest in the Loan and this
Guaranty.
18. Notices. All notices given under this Guaranty must be in writing and shall
-------
be effectively served upon delivery, or if mailed, upon the first to occur
of receipt or the expiration of forty-eight hours after deposit in
certified United States mail, postage prepaid, sent to the party at its
address given at the end of this Guaranty. Those addresses may be changed
by Bank or Guarantor by written notice to the other party. Service of any
notice on any one Guarantor signing this Guaranty shall be effective
service on Guarantor for all purposes.
19. Rules of Construction. In this Guaranty, the word "Borrower" includes both
---------------------
the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations
of the named Borrower on the Loan. The word "person" includes any
individual, company, trust or other legal entity of any kind. If this
Guaranty is executed by more than one person, the word "Guarantor" includes
all such persons. The word "include(s)" means "include(s), without
limitation," and the word "including" means "including, but not limited
to." When the context and construction so require, all words used in the
singular shall be deemed to have been used in the plural and vice versa. No
listing of specific instances, items or matters in any way limits the scope
or generality of any language of this Guaranty. All headings appearing in
this Guaranty are for convenience only and shall be disregarded in
construing this Guaranty.
20. Governing Law. This Guaranty shall be governed by, and construed in
-------------
accordance with, the laws of the State of California.
21. Costs and Expenses. If any lawsuit, reference or arbitration is commenced
------------------
which arises out of, or which relates to this Guaranty, the Loan Documents
or the Loan, the prevailing party shall be entitled to recover from each
other party such sums as the court, referee or arbitrator may adjudge to be
reasonable attorneys' fees (including allocated costs for services of in-
house counsel) in the action or proceeding, in addition to costs and
expenses otherwise allowed by law. In all other situations, including any
Insolvency Proceeding, Guarantor agrees to pay all of Bank's costs and
expenses, including attorneys' fees (including allocated costs for services
of Bank's in-house counsel) which may be incurred in any effort to collect
or enforce the Loan or any part of it or any term of this Guaranty. From
the time(s) incurred until paid in full to Bank, all sums shall bear
interest at the default rate provided in the Note.
22. Consideration. Guarantor acknowledges that it expects to benefit from
-------------
Bank's extension of the Loan to Borrower because of its relationship to
Borrower, and that it is executing this Guaranty in consideration of that
anticipated benefit.
________________________________________________________________________________
-6-
________________________________________________________________________________
23. Integration; Modifications. This Guaranty (a) integrates all the terms and
--------------------------
conditions mentioned in or incidental to this Guaranty, (b) supersedes all
oral negotiations and prior writings with respect to its subject matter,
and (c) is intended by Guarantor and Bank as the final expression of the
agreement with respect to the terms and conditions set forth in this
Guaranty and as the complete and exclusive statement of the terms agreed to
by Guarantor and Bank. No representation, understanding, promise or
condition shall be enforceable against any party unless it is contained in
this Guaranty. This Guaranty may not be modified except in a writing signed
by both Bank and Guarantor.
24. Miscellaneous. The death or legal incapacity of any Guarantor shall not
-------------
terminate the obligations of such Guarantor or any other Guarantor under
this Guaranty, including its obligations with regard to future advances
under the Loan Documents. The liability of all persons who are in any
manner obligated under this Guaranty shall be joint and several. The
illegality or unenforceability of one or more provisions of this Guaranty
shall not affect any other provision. Any Guarantor who is married agrees
that Bank may look to all of his or her community property and separate
property to satisfy his or her obligations under this Guaranty. Time is of
the essence in the performance of this Guaranty by Guarantor.
GUARANTOR: Notices for Guarantor:
Prolong International Corporation. 6 Xxxxxx
a Nevada corporation Xxxxxx, XX 00000
By: /s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx, Notices for Bank:
President
By: /s/ Xxxxxx Xxxxxxxxx X.X. Xxx 0000
------------------- Xxxxxx Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxxx
Secretary
_______________________________________________________________________________
-7-
===============================================================================
SECURED AND UNSECURED
[LOGO OF BANK OF AMERICA APPEARS HERE] INDEMNITY AGREEMENT
________________________________________________________________________________
This Secured and Unsecured Indemnity Agreement ("Agreement") is made as of April
1, 1998, by Prolong Super Lubricants, Inc., a Nevada corporation ("Indemnitor")
in favor of Bank of America Community Development Bank and its successors and
assigns ("Bank").
Factual Background
------------------
A. Indemnitor is executing this Agreement to induce Bank to make a standing
loans the "Loan") to Indemnitor in the principal amount of One Million Six
Hundred Ninety Two Thousand and No/100 Dollars ($1,692,000.00). The Loan
is being made under the Standing Loan Agreement (the "Loan Agreement")
entered Into as of April 1, 1998, between Bank and Indemnitor.
B The Loan is evidenced by a promissory note (the "Note") made payable to
Bank in the principal amount of the Loan. The Loan is secured by a deed of
trust ("Deed of Trust") and may also be secured by other collateral, as
more fully explained in the Loan Agreement.
C. Because Bank is making the Loan and obtaining the Deed of Trust, Bank may
potentially become subject to certain costs, risks and liabilities. Among
other things, Bank may become subject to liabilities or alleged liabilities
relating to environmental conditions as an "owner" or "operator" under
applicable environmental law. These costs and liabilities may arise before
or after may arise before or after repayment of the loan, and before or
after foreclosure under the Deed of Trust. Because these costs and
liabilities, if they occur, will be the best result of Bank's agreement to
make the Loan, and in consideration of that agreement, Bank and Indemnitor
have agreed as set forth below.
I. Definitions
-----------
In addition to any terms defined elsewhere in this Agreement, as used in
this Agreement:
1.1 "Hazardous Substance" means any substance, material or waste
(including petroleum and petroleum products) which is or becomes
designated, classified or regulated as being "toxic" or "hazardous" or
a "pollutant," or which is or becomes similarly designated, classified
or regulated, under any federal, state or local law, regulation or
ordinance.
1.2 "Indemnified Costs" means all actual or threatened liabilities,
claims, actions, causes of action, judgments, orders, damages
(including foreseeable and unforeseeable consequential damages),
costs, expenses, fines, penalties and losses (including sums paid in
settlement of claims and all consultant, expert and legal fees and
expenses of Bank's counsel), including those incurred in connection
with any investigation of site conditions or any clean-up, remedial,
removal or restoration work (whether of the Property, as defined
below, or any other property), or any resulting damages, harm or
injuries to the person or property of any third parties or to any
natural resources.
1.3 "Indemnified Parties" means and includes Bank, its parent, subsidiary
and affiliated companies, assignees of any of Bank's interest in the
Loan or the Loan Documents, owners of participation or other interests
in the Loan or the Loan Documents, any purchasers of the Property at
any foreclosure sale or from Bank or any of its affiliates, and the
officers, directors, employees and agents of each of them.
1.4 "Loan Documents" means the agreements, instruments and documents
defined and designated as such in the Loan Agreement. This Agreement
is one of the Loan Documents.
1.5 "Property" means all property that is or was at any time encumbered by
the Deed of Trust, which may later include any and all property
previously released from it.
1.6 "Note Rate" means the rate of interest defined as such in the Note.
________________________________________________________________________________
-1-
________________________________________________________________________________
II. Secured Indemnity Agreement
---------------------------
2.1 Claims Under Secured Agreement
-------------------------------
No Indemnified Party shall make any claim under this Article II
(except any rights asserted in a complaint for a deficiency judgment
in a then-pending judicial foreclosure action) after the earliest to
occur of:
(a) full and final repayment of the Loan; or
(b) the completion of a judicial or nonjudicial foreclosure sale
under the Deed of Trust; or
(c) the acquisition of the Property by Bank or an affiliate of Bank
by a conveyance in lieu of foreclosure.
2.2 Secured Recourse Obligation
---------------------------
All of the rights of the Indemnified Parties under this Article II
shall be secured by the Deed of Trust. Notwithstanding any provision
of the Loan Documents, the rights of the Indemnified Parties under
this Article II shall not be affected by any provision of the Loan
Documents limiting Bank's recourse or limiting indemnitor's liability
for the Loan.
2.3 Indemnity Regarding Hazardous Substances
----------------------------------------
Indemnitor Indemnifies and holds the Indemnified Parties harmless from
and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from any Hazardous Substances being
present or released in, on or around any part of the Property, or in
the soil, groundwater or sell vapor on or under the Property,
including:
(a) any claim for such Indemnified Costs asserted by any federal,
state or local govermental agency, including the United States
Environmental Protection Agency and the California Department of
Health Services, and including any claim that any Idemnified
Party is liable for any such Indemnified Costs as an "owner" or
"operator" of the Property under any law relating to Hazardous
Substances; and
(b) any such Indemnified Costs claimed against any indemnified Party
by any such person other than a governmental agency, including
any person who may purchase or lease all or any portion of the
Property from Indemnitor, from any Indemnified Party, or from
any other purchaser or lessee; any person who may at any time
have any interest in all or any portion of the property; any
person who may at any time be responsible for any clean-up costs
or other indemnified Costs relating to the Property; and any
person claiming to have been injured in any way as a result of
exposure to any Hazardous Substance; and
(c) any such Indemnified Costs which any Indemnified Party
reasonably believes at any time must be incurred to comply with
any law, judgment, order, regulation or regulatory directive
relating to Hazardous Substances, or which any Indemnified Party
reasonably believes at any time must be incurred to protect the
public health or safety; and
(d) any such Indemnified Costs resulting from currently existing
conditions in, on or around the Property, whether known or
unknown by Indemnitor or the Indemified Parties at the time this
Agreement is executed, and any such Indemnified Costs resulting
from the activities of Indemnitor, Indemnitor's tenants, or any
other person in, on or around the Property.
2.4 Indemnity Regarding Construction and Other Risks
------------------------------------------------
Indemnitor Indemnifies and holds the Indemnified Parties harmless from
and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from construction of any Improvements on
the Property, including any defective workmanship or materials; or any
failure to satisfy any requirements of any laws, regulations,
ordinances, govermental policies or standards, reports, subdivision
maps or development agreements that apply or pertain to the Property;
or breach of any representation or warranty made or given by
Indemnitor to any of the indemnified Parties or to any prospective or
actual buyer of all or any portion of the Property; or any claim or
cause of action of any kind by any party that any Indemnified Party is
liable for any act or omission of Indemnitor or any other person or
entity in connection with the ownership, sale, operation or
development of the Property.
________________________________________________________________________________
-2-
________________________________________________________________________________
2.5 Defense of Indemnified Parties
------------------------------
Upon demand by any Indemnified Party, Indemnitor shall defend any
investigation, action or proceeding involving any Indemnified Costs
which is brought or commenced against any Indemnified Party, whether
alone or together with Indemnitor or any other person, all at
Indemnitor's own cost and by counsel to be approved by the Indemnified
Party in the exercise of its reasonable judgment. In the alternative,
any Indemnified Party may elect to conduct its own defense at the
expense of Indemnitor.
2.6 Representation and Warranty Regarding Hazardous Substances
----------------------------------------------------------
Before signing this Agreement, Indemnitor researched and inquired into
the previous uses and owners of the Property. Based on that due
diligence, Indemnitor represents and warrants that to the best of its
knowledge, no Hazardous Substance has been disposed of or released, or
otherwise now exists, in, on, under or around the Property, except as
Indemnitor has disclosed to Bank in writing.
2.7 Compliance Regarding Hazardous Substances
-----------------------------------------
Indemnitor has complied, and shall comply and cause all tenants and
any other persons who may come upon the Property to comply, with all
laws, regulations and ordinances governing or applicable to Hazardous
Substances, including those requiring disclosures to prospective and
actual buyers of all or any portion of the Property. Indemnitor also
has complied and shall comply with the recommendations of any
qualified environmental engineer or other expert which apply or
pertain to the Property.
2.8 Notices Regarding Hazardous Substances
--------------------------------------
Indemnitor shall promptly notify Bank if it knows, suspects or
believes there may be any Hazardous Substance in or around the
Property, or in the soil, groundwater or soil vapor on or under the
Property, or that Indemnitor or the Property may be subject to any
threatened or pending investigation by any governmental agency under
any law, regulation or ordinance pertaining to any Hazardous
Substance.
2.9 Site Visits, Observations and Testing
-------------------------------------
The Indemnified Parties and their agents and representatives shall
have the right at any reasonable time to enter and visit the Property
for the purposes of observing the Property, taking and removing soil
or groundwater samples, and conducting tests on any part of the
Property. The Indemnified Parties have no duty, however, to visit or
observe the Property or to conduct tests, and no site visit,
observation or testing by any Indemnified Party shall impose any
liability on any Indemnified Party. In no event shall any site visit,
observation or testing by any Indemnified Party be a representation
that Hazardous Substances are or are not present in, on or under the
Property, or that there has been or shall be compliance with any law,
regulation or ordinance pertaining to Hazardous Substances or any
other applicable governmental law. Neither Indemnitor nor any other
party is entitled to rely on any site visit, observation or testing by
any Indemnified Party. The Indemnified Parties owe no duty of care to
protect Indemnitor or any other party against, or to inform Indemnitor
or any other party of, any Hazardous Substances or any other adverse
condition affecting the Property. Any Indemnified Party shall give
Indemnitor reasonable notice before entering the Property. The
Indemnified Party shall make reasonable efforts to avoid interfering
with Indemnitor's use of the Property in exercising any rights
provided in this Section.
2.10 Costs and Expenses
------------------
Indemnitor agrees to pay all of the Indemnified Parties' costs and
expenses, including attorneys' fees, which may be incurred in any
effort to enforce any term of this Agreement, including all such costs
and expenses which may be incurred by any Indemnified Party in any
legal action, reference or arbitration proceeding. From the time(s)
incurred until paid in full to the Indemnified Party, those sums shall
bear interest at the Note Rate.
III Unsecured Indemnity Agreement
-----------------------------
3.1 Claims Under Unsecured Agreement
--------------------------------
No Indemnified Party shall make any claim under this Article III for
indemnity against any Indemnified
Cost:
________________________________________________________________________________
-3-
________________________________________________________________________________
(a) which was actually known to the Indemnified Party prior to the
first to occur of:
(i) full and final repayment of the Loan; or
(ii) the completion of a judicial or nonjudicial foreclosure
sale under the Deed of Trust; or
(iii) the acquisition of the Property by Bank or an affiliate of
Bank by a conveyance in lieu of foreclosure; and
(b) which could have been lawfully and properly included as part of
the secured indebtedness under the Deed of Trust in proceedings
for a deficiency judgment following a judicial foreclosure sale
of the Property.
3.2 Not Secured By Deed of Trust
----------------------------
Notwithstanding any provision of the Loan Agreement, the Deed of Trust
or any of the Loan Documents, the rights of the Indemnified Parties
under this Article III shall not be secured by the Deed of Trust.
Notwithstanding any provision of the Loan Documents, the rights of the
Indemnified Parties under this Article III shall not be affected by
any provision of the Loan Documents limiting Bank's recourse or
limiting Indemnitor's liability for the Loan.
3.3 Indemnity Regarding Hazardous Substances
----------------------------------------
Indemnitor indemnifies and holds the Indemnified Parties harmless from
and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from any Hazardous Substance being present
or released in, on or around any part of the Property, or in the soil,
groundwater or soil vapor on or under the Property, including:
(a) any claim for such Indemnified Costs asserted by any federal,
state or local governmental agency, including the United States
Environmental Protection Agency and the California Department of
Health Services, and including any claim that any Indemnified
Party is liable for any such Indemnified Costs as an "owner" or
"operator" of the Property under any law relating to Hazardous
Substances; and
(b) any such Indemnified Costs claimed against any Indemnified Party
by any person other than a governmental agency, including any
person who may purchase or lease all or any portion of the
Property from Indemnitor, from any Indemnified Party, or from
any other purchaser or lessee; any person who may at any time
have any interest in all or any portion of the Property; any
person who may at any time be responsible for any clean-up costs
or other Indemnified Costs relating to the Property; and any
person claiming to have been injured in any way as a result of
exposure to any Hazardous Substance; and
(c) any such Indemnified Costs which any Indemnified Party
reasonably believes at any time must be incurred to comply with
any law, judgment, order, regulation or regulatory directive
relating to Hazardous Substances, or which any Indemnified Party
reasonably believes at any time must be incurred to protect the
public health or safety; and
(d) any such Indemnified Costs resulting from currently existing
conditions in, on or around the Property, whether known or
unknown by Indemnitor or the Indemnified Parties at the time
this Agreement is executed, and any such Indemnified Costs
resulting from the activities of Indemnitor, Indemnitor's
tenants, or any other person in, on or around the Property.
3.4 Indemnity Regarding Construction and Other Risks
------------------------------------------------
Indemnitor indemnifies and holds the Indemnified Parties harmless from
and against any and all Indemnified Costs directly or indirectly
arising out of or resulting from construction of any improvements on
the Property, including any defective workmanship or materials; or any
failure to satisfy any requirements of any laws, regulations,
ordinances, governmental policies or standards, reports, subdivision
maps or development agreements that apply or pertain to the Property;
or breach of any representation or warranty made or given by
Indemnitor to any of the Indemnified Parties or to any prospective or
actual buyer of all or any portion of the Property; or any claim or
cause of action of any kind by any party that any Indemnified Party is
liable for any act or omission of Indemnitor or any other person or
entity in connection with the ownership, sale, operation or
development of the Property.
________________________________________________________________________________
-4-
________________________________________________________________________________
3.5 Defense of Indemnified Parties
------------------------------
Upon demand by any Indemnified Party, Indemnitor shall defend any
investigation, action or proceeding involving any Indemnified Costs
which is brought or commenced against any Indemnified Party, whether
alone or together with Indemnitor or any other person, all at
Indemnitor's own cost and by counsel to be approved by the Indemnified
Party in the exercise of its reasonable judgment. In the alternative,
any Indemnified Party may elect to conduct its own defense at the
expense of Indemnitor.
3.6 Representation and Warranty Regarding Hazardous Substances
----------------------------------------------------------
Before signing this Agreement, Indemnitor researched and inquired into
the previous uses and owners of the Property. Based on that due
diligence, Indemnitor represents and warrants that to the best of its
knowledge, no Hazardous Substance has been disposed of or released, or
otherwise now exists, in, on, under or around the Property, except as
Indemnitor has disclosed to Bank in writing.
3.7 Compliance Regarding Hazardous Substances
-----------------------------------------
Indemnitor has complied, and shall comply and cause all tenants and
any other persons who may come upon the Property to comply, with all
laws, regulations and ordinances governing or applicable to Hazardous
Substances, including those requiring disclosures to prospective and
actual buyers of all or any portion of the Property. Indemnitor also
has complied and shall comply with the recommendations of any
qualified environmentaI engineer or other expert which apply or
pertain to the Property.
3.8 Notices Regarding Hazardous Substances
--------------------------------------
Indemnitor shall promptly notify Bank if it knows, suspects or
believes there may be any Hazardous Substance in or around the
Property, or in the soil, groundwater or soil vapor on or under the
Property, or that Indemnitor or the Property may be subject to any
threatened or pending investigation by any governmental agency under
any law, regulation or ordinance pertaining to any Hazardous
Substance.
3.9 Site Visits, Observations and Testing
-------------------------------------
The Indemnified Parties and their agents and representatives shall
have the right at any reasonable time to enter and visit the Property
for the purposes of observing the Property, taking and removing soil
or groundwater samples, and conducting tests on any part of the
Property. The Indemnified Parties have no duty, however, to visit or
observe the Property or to conduct tests, and no site visit,
observation or testing by any Indemnified Party shall impose any
liability on any Indemnified Party. In no event shall any site visit,
observation or testing by any Indemnified Party be a representation
that Hazardous Substances are or are not present in, on or under the
Property, or that there has been or shall be compliance with any law,
regulation or ordinance pertaining to Hazardous Substances or any
other applicable governmental law. Neither Indemnitor nor any other
party is entitled to rely on any site visit, observation or testing by
any Indemnified Party. The Indemnified Parties owe no duty of care to
protect Indemnitor or any other party against, or to inform Indemnitor
or any other party of, any Hazardous Substances or any other adverse
condition affecting the Property. Any Indemnified Party shall give
Indemnitor reasonable notice before entering the Property. The
Indemnified Party shall make reasonable efforts to avoid interfering
with Indemnitor's use of the Property in exercising any rights
provided in this Section.
3.10 Costs and Expenses
------------------
Indemnitor agrees to pay all of the Indemnified Parties' costs and
expenses, including attorneys' fees, which may be incurred in any
effort to enforce any term of this Agreement, including all such costs
and expenses which may be incurred by any Indemnified Party in any
legal action, reference or arbitration proceeding. From the time(s)
incurred until paid in full to the Indemnified Party, those sums
shall bear interest at the Note Rate.
________________________________________________________________________________
-5-
________________________________________________________________________________
IV. General Provisions
------------------
4.1 Events of Default
-----------------
Bank may declare Indemnitor to be in default under this Agreement upon
the occurrence of any of the following events ("Events of Default"):
(a) Indemnitor fails to perform any of its obligations under this
Agreement; or
(b) Indemnitor revokes this Agreement or this Agreement becomes
ineffective for any reason.
4.2 Reservation of Other Rights and Remedies
----------------------------------------
Nothing in this Agreement shall be construed to limit any claim or
right which any Indemnified Party may otherwise have at any time
against Indemnitor or any other person arising from any source other
than this Agreement, including any claim for fraud, misrepresentation,
waste or breach of contract other than this Agreement, and any rights
of contribution or indemnity under federal or state environmental law
or any other applicable law, regulation or ordinance.
4.3 Delay; Cumulative Remedies
--------------------------
If any Indemnified Party delays in exercising or fails to exercise any
right or remedy against Indemnitor, that alone shall not be construed
as a waiver of such right or remedy. All remedies of any Indemnified
Party against Indemnitor are cumulative.
4.4 Rules of Construction
---------------------
In this Agreement, the word "person" includes any individual, company,
trust or other legal entity of any kind. If this Agreement is executed
by more than one person, the word "Indemnitor" includes all such
persons. The word "include(s)" means "include(s), without limitation,"
and the word "including" means "including, but not limited to." When
the context and construction so require, all words used in the
singular shall be deemed to have been used in the plural and vice
versa. All headings appearing in this Agreement are for convenience
only and shall be disregarded in construing this Agreement.
4.5 Reference and Arbitration
-------------------------
(a) Judicial Reference
------------------
In any judicial action between or among the parties, including
any action or cause of action arising out of or relating to this
Agreement or the Loan Documents or based on or arising from an
alleged tort, all decisions of fact and law shall at the request
of any party be referred to a referee in accordance with
California Code of Civil Procedure Sections 638 et seq. The
-- ---
parties shall designate to the court a referee or referees
selected under the auspices of the American Arbitration
Association ("AAA") in the same manner as arbitrators are
selected in AAA-sponsored proceedings. The presiding referee of
the panel, or the referee if there is a single referee, shall be
an active attorney or retired judge. Judgment upon the award
rendered by such referee or referees shall be entered in the
court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.
(b) Mandatory Arbitration
---------------------
After the Deed of Trust has been released, fully reconveyed or
extinguished, any controversy or claim between or among the
parties, including those arising out of or relating to this
Agreement or the Loan Documents and any claim based on or
arising from an alleged tort, shall at the request of any party
be determined by arbitration. The arbitration shall be conducted
in accordance with the United States Arbitration Act (Title 9,
U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the AAA. The
arbitrator(s) shall give effect to statutes of limitation in
determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court
having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for
judicial relief.
________________________________________________________________________________
-6-
________________________________________________________________________________
(c) Real Property Collateral
------------------------
Notwithstanding the provisions of subsection 4.5(b), no
controversy or claim shall be submitted to arbitration without
the consent of all parties if, at the time of the proposed
submission, such controversy or claim arises from or relates to
an obligation to Bank which is secured by real property
collateral. If all parties do not consent to submission of such
a controversy or claim to arbitration, the controversy or claim
shall be determined by reference as provided in subsection
4.5(a).
(d) Provisional Remedies, Self-Help and Foreclosure
-----------------------------------------------
No provision of this Section 4.5 shall limit the right of any
party to this Agreement to exercise self-help remedies such as
setoff, foreclosure against or sale of any real or personal
property collateral or security, or to obtain provisional or
ancillary remedies from a court of competent jurisdiction
before, after, or during the pendency of any arbitration or
other proceeding. The exercise of a remedy does not waive the
right of either party to resort to arbitration or reference. At
Bank's option, foreclosure under a deed of trust or mortgage may
be accomplished either by exercise of power of sale under the
deed of trust or mortgage or by judicial foreclosure.
4.6 Severability
------------
Every provision of this Agreement is intended to be severable. In the
event any term, provision, section or subsection of this Agreement is
declared to be illegal or invalid, for any reason whatsoever, by a
court of competent jurisdiction, such illegality or invalidity shall
not affect the other terms, provisions, sections or subsections of
this Agreement, which shall remain binding and enforceable.
4.7 In-House Counsel Fees
---------------------
Whenever Indemnitor is obligated to pay or reimburse any Indemnified
Party for any attorneys' fees, those fees shall include the allocated
costs for services of in-house counsel.
4.8 Integration; Modifications
--------------------------
The Loan Documents, including this Agreement, (a) integrate all the
terms and conditions mentioned in or incidental to this Agreement, (b)
supersede all oral negotiations and prior writings with respect to
their subject matter, and (c) are intended by the parties as the final
expression of the agreement with respect to the terms and conditions
set forth in the Loan Documents and as the complete and exclusive
statement of the terms agreed to by the parties. No representation,
understanding, promise or condition shall be enforceable against any
party unless it is contained in the Loan Documents. This Agreement may
not be modified except in a writing signed by both Bank and
Indemnitor.
________________________________________________________________________________
-7-
________________________________________________________________________________
4.9 Miscellaneous
-------------
The provisions of this Agreement shall bind and benefit the heirs,
executors, administrators, legal representatives, successors and
assigns of Indemnitor and the Indemnified Parties; provided, however,
that Indemnitor may not assign this Agreement, or assign or delegate
any of its rights or obligations under this Agreement, without the
prior written consent of Bank in each instance. The liability of all
persons who are in any manner obligated under this Agreement shall be
joint and several. Any lndemnitor who is married agrees that any
Indemnified Party may look to all of his or her community property and
separate property to satisfy his or her obligations under this
Agreement. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
Indemnitor:
Prolong Super Lubricants, Inc.
a Nevada Corporation
By: /s/ Xxxxx Xxxxxxxx
------------------
Xxxxx Xxxxxxxx,
President
By: /s/ Xxxxxx Xxxxxxxxx
--------------------
Xxxxxx Xxxxxxxxx,
Secretary
Address where notices to lndemnitor are to be sent:
6 Xxxxxx
Xxxxxx, XX 00000
________________________________________________________________________________
-8-
