May 31, 1999
XXXXXXX BUSINESS SERVICES, INC.
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Gentlemen:
This letter amendment (this "Amendment") is to confirm the changes
agreed upon between Xxxxx Fargo Bank, National Association ("Bank") and Xxxxxxx
Business Services, Inc. ("Borrower") to the terms and conditions of that certain
letter agreement between Bank and Xxxxxxxx dated as of May 31, 1998, as amended
from time to time (the "Agreement"). For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree
that the Agreement shall be amended as follows to reflect said changes.
1. The Agreement is hereby amended (a) by deleting "May 31, 1999" as
the last day on which Bank will make advances under the Line of Credit, and by
substituting for said date "May 31, 2000," and (b) by deleting "Seven Million
Six Hundred Fifty Thousand Dollars ($7,650,000.00)" as the maximum principal
amount available under Line of Credit, and by substituting for said amount
"Twelve Million Dollars ($12,000,000.00)," with such changes to be effective
upon the execution and delivery to Bank of a promissory note substantially in
the form of Exhibit A attached hereto (which promissory note shall replace and
be deemed the Line of Credit Note defined in and made pursuant to the Agreement)
and all other contracts, instruments and documents required by Bank to evidence
such change.
2. The following is hereby added to the Agreement as Paragraph 3.:
"3. A term loan in the principal amount of Eight
Million Dollars ($8,000,000.00) ("Term Loan A"), the proceeds
of which shall be used for acquisition of other business
operations. Bank's commitment to grant the Term Loan A shall
terminate on June 30, 1999."
3. Paragraph I.1. (b) of the Agreement is hereby amended by deleting
"Seven Million Six Hundred Fifty Thousand Dollars ($7,650,000.00)" as the
aggregate undrawn amount of all
Xxxxxxx Business Services, Inc.
May 31, 1999
Page 2
outstanding Letters of Credit, and by substituting for said amount "Five Million
Dollars ($5,000,000.00)."
4. Paragraph I.3. is hereby renumbered to paragraph I.4.
5. The following is hereby added to the Agreement as Paragraph I.3:
"3. TERM LOAN A:
(a) Term Note X. Xxxxxxxx's obligation to repay the Term Loan A shall
be evidenced by a promissory note substantially in the form of Exhibit C
attached hereto ("Term Note A"), all terms of which are incorporated herein by
this reference.
(b) Repayment. The principal amount of the Term Loan A shall be repaid
in accordance with the provisions of the Term Note A.
(c) Prepayment. Borrower may prepay principal on the Term Loan A solely
in accordance with the provisions of the Term Note A."
6. Paragraph II.1. is hereby deleted in its entirety, and the following
substituted therefor:
"1. Interest. The outstanding principal balance of
the Line of Credit, Term Loan and Term Loan A shall bear
interest at the rates of interest set forth in the Line of
Credit Note, Term Note and Term Note A.
(a) Computation and Payment. Interest on the Line of
Credit and the Term Loan A shall be computed on the basis of a
360-day year, actual days elapsed. Interest on the Term Loan
shall be computed on the basis of a 366-day year, actual days
elapsed. Interest shall be payable at the times and place set
forth in the Line of Credit Note, Term Note and Term Note A."
7. Paragraph II.2. is hereby deleted in its entirety, and the following
substituted therefor:
"2. Unused Commitment Fee. Borrower shall pay to Bank
a fee equal to one hundred fifteen hundredths percent (0.150%)
per annum (computed on the basis of a 360-day year,
Xxxxxxx Business Services, Inc.
May 31, 1999
Page 3
actual days elapsed) on the average daily unused amount of the
Line of Credit, which fee shall be calculated on a quarterly
basis by Bank and shall be due and payable by Borrower in
arrears on the last day of each March, June, September and
December."
8. Paragraph V.8. is hereby deleted in its entirety, and the following
substituted therefor:
"8. Financial Condition. Maintain Borrower's
financial condition as follows using generally accepted
accounting principles consistently applied and used
consistently with prior practices (except to the extent
modified by the definitions herein):
(a) Working Capital as of end of each fiscal quarter
not less than $5,500,000 at 6/30/99, $6,500,000 at 9/30/99,
$7,500,000 at 12/31/99 and 3/31/00 and $8,000,000 at 6/30/00
and thereafter, with "Working Capital" defined as total
current assets minus total current liabilities.
(b) EBITDA not less than $8,000,000.00 as of each
fiscal quarter end, on a trailing four-quarters basis
including the current quarter then ended, with "EBITDA"
defined as net profit before tax plus interest expense (net of
capitalized interest expense), depreciation expense and
amortization expense.
(c) Funded Debt to EBITDA Ratio as of the end of each
fiscal quarter not more than 2.25 to 1.0, with "Funded Debt"
defined as all borrowed funds plus the amount of all
capitalized lease obligations of Borrower.
9. Paragraph V.9. is hereby deleted in its entirety, and the following
substituted therefor:
"9. Merger, Consolidation, Transfer of Assets. Not
merge into or consolidate with any other entity; nor make any
substantial change in the nature of Xxxxxxxx's business as
conducted as of the date hereof; nor acquire all or
substantially all of the assets of any other entity in any
transaction
Xxxxxxx Business Services, Inc.
May 31, 1999
Page 4
involving a purchase price of $20,000,000.00 or more without
the prior written approval of Bank, which approval shall not
be unreasonably withheld; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material portion
of Borrower's assets, except in the ordinary course of its
business."
10. Paragraph V.12. is hereby deleted in its entirety, and the
following substituted therefor:
"12. Pledge of Assets. Not mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or
any portion of Borrower's assets now owned or hereafter
acquired, except any of the foregoing in favor of Bank or
which are existing as of, and disclosed to Bank in writing
prior to, the date hereof, and except security interests for
the purchase or lease of assets up to an aggregate principal
amount of $25,000.00."
11. The following is hereby added to the Agreement as Paragraph V.14.:
"14. Other Indebtedness. Not create, incur, assume or
permit to exist any indebtedness or liabilities resulting from
borrowings, loans or advances, whether secured or unsecured,
matured or unmatured, liquidated or unliquidated, joint or
several, except (a) the liabilities of Borrower to Bank, (b)
any other liabilities of Borrower existing as of, and
disclosed to Bank prior to, the date hereof, and (c) the
unsecured liabilities of Borrower to sellers of companies
acquired by Borrower, the total of which shall not exceed
$3,500,000.00 at any point in time, without prior Bank
approval."
12. Borrower shall pay to Bank a non-refundable loan fee for the Term
Loan A equal to $10,000.00, which fee shall be due and payable in full upon the
execution of the documents.
13. Except as specifically provided herein, all terms and conditions of
the Agreement remain in full force and effect, without waiver or modification.
All terms defined in the
Xxxxxxx Business Services, Inc.
May 31, 1999
Page 5
Agreement shall have the same meaning when used herein. This Amendment and the
Agreement shall be read together, as one document.
14. Borrower hereby remakes all representations and warranties
contained in the Agreement and reaffirms all covenants set forth therein.
Borrower further certifies that as of the date of Xxxxxxxx's acknowledgment set
forth below there exists no default or defined event of default under the
Agreement or any promissory note or other contract, instrument or document
executed in connection therewith, nor any condition, act or event which with the
giving of notice or the passage of time or both would constitute such a default
or defined event of default.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.
Your acknowledgment of this Amendment shall constitute acceptance of
the foregoing terms and conditions.
Sincerely,
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Vice President
Acknowledged and accepted as of 6-1-99:
XXXXXXX BUSINESS SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Title: Vice President - Finance
Portland RCBO
1300 S.W. Fifth Ave. T-13
Portland, OR 97201
May 31, 1998
Xxxxxxx Business Services, Inc.
0000 XX Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Dear Sir:
This letter is to confirm that Xxxxx Fargo Bank, National Association
("Bank"), subject to all terms and conditions contained herein, has agreed to
make available to Xxxxxxx Business Services, Inc. ("Borrower") the following
described credit accommodations (each, a "Credit" and collectively, the
"Credits"):
1. A revolving line of credit under which Bank will make advances to
Borrower from time to time up to and including May 31, 1999, not to exceed at
any time the maximum principal amount of Five Million Six Hundred Fifty Thousand
Dollars ($5,650,000.00) ("Line of Credit"), the proceeds of which shall be used
for working capital requirements.
2. A term loan in the original principal amount of Six Hundred
Ninety-three Thousand Seven Hundred Fifty Dollars ($693,750.00) ("Term Loan"),
on which the outstanding principal balance as of the date hereof is $550,985.16.
Subject to the terms and conditions of this letter, Bank hereby confirms that
the Term Loan remains in full force and effect.
I. CREDIT TERMS:
1. LINE OF CREDIT:
(a) Line of Credit Note. Xxxxxxxx's obligation to repay advances under
the Line of Credit shall be evidenced by a promissory note substantially in the
form of Exhibit A attached hereto ("Line of Credit Note"), all terms of which
are incorporated herein by this reference.
(b) Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Xxxx agrees from time to time during the term thereof to issue standby
letters of credit for the account of
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 2
Borrower (each, a "Letter of Credit" and collectively, "Letters of Credit");
provided however, that the form and substance of each Letter of Credit shall be
subject to approval by Bank, in its sole discretion; and provided further, that
the aggregate undrawn amount of all outstanding Letters of Credit shall not at
any time exceed Five Million Six Hundred Fifty Thousand Dollars ($5,650,000.00).
Each Letter of Credit shall be issued for a term not to exceed 365 days, as
designated by Xxxxxxxx; provided however, that no Letter of Credit shall have an
expiration date more than ninety (90) days beyond the maturity date of the Line
of Credit. The undrawn amount of all Letters of Credit shall be reserved under
the Line of Credit and shall not be available for borrowings thereunder. Each
Letter of Credit shall be subject to the additional terms and conditions of the
Letter of Credit Agreement and related documents, if any, required by Bank in
connection with the issuance thereof. Each draft paid by Bank under a Letter of
Credit shall be deemed an advance under the Line of Credit and shall be repaid
by Borrower in accordance with the terms and conditions of this letter
applicable to such advances; provided however, that if advances under the Line
of Credit are not available, for any reason, at the time any draft is paid by
Bank, then Borrower shall immediately pay to Bank the full amount of such draft,
together with interest thereon from the date such amount is paid by Bank to the
date such amount is fully repaid by Borrower, at the rate of interest applicable
to advances under the Line of Credit. In such event Xxxxxxxx agrees that Bank,
in its sole discretion, may debit any demand deposit account maintained by
Borrower with Bank for the amount of any such draft.
(c) Borrowing and Repayment. Borrower may from time to time during the
term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. Notwithstanding the foregoing, Borrower shall maintain a zero balance on
advances under the Line of Credit for a period of at least 30 consecutive days
during each fiscal year.
2. TERM LOAN:
(a) Term Note. Xxxxxxxx's obligation to repay the Term Loan is
evidenced by a promissory note substantially in the form of Exhibit B attached
hereto ("Term Note"), all terms of which are incorporated herein by this
reference. Any reference in the
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 3
Term Note to any prior loan agreement between Bank and Borrower shall be deemed
a reference to this letter.
(b) Repayment. The principal and interest on the Term Loan shall
continue to be repaid in accordance with the provisions of the Term Note.
(c) Prepayment. Borrower may prepay principal on the Term Loan solely
in accordance with the provisions of the Term Note.
3. COLLATERAL:
As security for all indebtedness of Borrower to Bank under the Term
Loan, Borrower hereby grants to Bank a lien of not less than first priority on
that certain real property located at 0000 XX Xxxxxxx Xxxxxx, Xxxxxxxx, XX.
All of the foregoing shall be evidenced by and subject to the terms of
such security agreements, financing statements, deeds of trust and other
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall reimburse Bank immediately upon demand for
all costs and expenses incurred by Bank in connection with any of the foregoing
security, including without limitation, filing and recording fees and costs of
appraisals, audits and title insurance.
II. INTEREST/FEES:
1. Interest. The outstanding principal balance of the Line of Credit
and the Term Loan shall bear interest at the rates of interest set forth in the
Line of Credit Note and the Term Note.
a. Computation and Payment. Interest on the Line of Credit shall be
computed on the basis of a 360-day year, actual days elapsed. Interest on the
Term Loan shall be computed on the basis of a 366-day year, actual days elapsed.
Interest shall be payable at the times and place set forth in the Line of Credit
Note and the Term Note.
2. Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
one-eighth percent (0.125%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the Line of Credit,
which fee shall be calculated on a quarterly basis by Bank and shall be due and
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 4
payable by Xxxxxxxx in arrears on the last day of each March, June, September
and December.
3. Letter of Credit Fees. Borrower shall pay to Bank fees upon the
issuance of each Letter of Credit, upon the payment or negotiation by Bank of
each draft under any Letter of Credit and upon the occurrence of any other
activity with respect to any Letter of Credit (including without limitation, the
transfer, amendment or cancellation of any Letter of Credit) determined in
accordance with Bank's standard fees and charges then in effect for such
activity, but at any event not more than 90 basis points.
4. Collection of Payments. Borrower authorizes Bank to collect all
principal, interest and fees due under each Credit by charging Xxxxxxxx's demand
deposit account number 4159-583848 with Bank, or any other demand deposit
account maintained by Borrower with Bank, for the full amount thereof. Should
there be insufficient funds in any such demand deposit account to pay all such
sums when due, the full amount of such deficiency shall be immediately due and
payable by Borrower.
III. REPRESENTATIONS AND WARRANTIES:
Borrower makes the following representations and warranties to Bank,
which representations and warranties shall survive the execution of this letter
and shall continue in full force and effect until the full and final payment,
and satisfaction and discharge, of all obligations of Borrower to Bank subject
to this letter.
1. Legal Status. Borrower is a corporation, duly organized and existing
and in good standing under the laws of the state of Maryland, and is qualified
or licensed to do business in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.
2. Authorization and Validity. This letter, the Line of Credit Note,
the Term Note, and each other document, contract or instrument deemed necessary
by Bank to evidence any extension of credit to Borrower pursuant to the terms
and conditions hereof, or now or at any time hereafter required by or delivered
to Bank in connection with this letter (collectively, the "Loan Documents") have
been duly authorized, and upon their execution and delivery in accordance with
the provisions hereof will constitute legal, valid and binding agreements and
obligations of
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 5
Borrower or the party which executes the same, enforceable in accordance with
their respective terms.
3. No Violation. The execution, delivery and performance by Borrower of
each of the Loan Documents do not violate any provision of any law or
regulation, or contravene any provision of the Articles of Incorporation or
By-Laws of Borrower, or result in a breach of or constitute a default under any
contract, obligation, indenture or other instrument to which Borrower is a party
or by which Borrower may be bound.
4. Litigation. There are no pending, or to the best of Xxxxxxxx's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.
5. Correctness of Financial Statement. The financial statement of
Borrower dated March 31, 1998, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) is complete and correct and
presents fairly the financial condition of Borrower, (b) discloses all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles, whether liquidated or
unliquidated, fixed or contingent, and (c) has been prepared in accordance with
generally accepted accounting principles consistently applied. Since the date of
such financial statement there has been no material adverse change in the
condition or operation of Borrower, nor has Borrower mortgaged, pledged, granted
a security interest in or otherwise encumbered any of its assets or properties
except in favor of Bank or as otherwise permitted by Bank in writing.
6. Income Tax Returns. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.
7. No Subordination. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this letter to any other obligation of Borrower.
8. Permits, Franchises. Borrower possesses, and will hereafter possess,
all permits, consents, approvals, franchises and licenses required and all
rights to trademarks, trade names,
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 6
patents and fictitious names, if any, necessary to enable it to conduct the
business in which it is now engaged in compliance with applicable law.
9. ERISA. To the best of Borrower's knowledge, Borrower is in
compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time ("ERISA"); Borrower has not violated any provision of any defined
employee pension benefit plan (as defined in ERISA) maintained or contributed to
by Borrower (each, a "Plan"); no Reportable Event, as defined in ERISA, has
occurred and is continuing with respect to any Plan initiated by Borrower;
Borrower has met its minimum funding requirements under ERISA with respect to
each Plan; and each Plan will be able to fulfill its benefit obligations as they
come due in accordance with the Plan documents and under generally accepted
accounting principles.
10. Other Obligations. Borrower is not in default on any obligation for
borrowed money, any purchase money obligation or any other material lease,
commitment, contract, instrument or obligation.
11. Environmental Matters. Except as disclosed by Borrower to Bank in
writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable federal or state environmental, hazardous waste,
health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.
12. Real Property Collateral. Except as disclosed by Xxxxxxxx to Bank
in writing prior to the date hereof, with respect to any real property
collateral required hereby:
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 7
(a) All taxes, governmental assessments, insurance premiums, and water,
sewer and municipal charges, and rents (if any) which previously became due and
owing in respect thereof have been paid as of the date hereof.
(b) There are no construction or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that under
law could give rise to any such lien) which affect all or any interest in any
such real property and which are or may be prior to or equal to the lien thereon
in favor of Bank.
(c) None of the improvements which were included for purpose of
determining the appraised value of any such real property lies outside of the
boundaries and/or building restriction lines thereof, and no improvements on
adjoining properties materially encroach upon any such real property.
(d) There is no pending, or to the best of Xxxxxxxx's knowledge
threatened, proceeding for the total or partial condemnation of all or any
portion of any such real property, and all such real property is in good repair
and free and clear of any damage that would materially and adversely affect the
value thereof as security and/or the intended use thereof.
IV. CONDITIONS:
1. Conditions of Initial Extension of Credit. The obligation of Bank to
grant any of the Credits is subject to fulfillment to Bank's satisfaction of all
of the following conditions:
(a) Documentation. Bank shall have received each of the Loan Documents,
duly executed and in form and substance satisfactory to Bank.
(b) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower, nor any material decline, as determined by Bank, in the market value
of any collateral required hereunder or a substantial or material portion of the
assets of Borrower.
(c) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required
by Bank, with loss payable endorsements in favor of Bank, including without
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 8
limitation, policies of fire and extended coverage insurance covering all real
property collateral required hereby, with replacement cost and mortgagee loss
payable endorsements, and such policies of insurance against specific hazards
affecting any such real property as may be required by governmental regulation
or Bank.
(d) Appraisals. Bank shall have obtained, at Borrower's cost, an
appraisal of all real property collateral required hereby, and all improvements
thereon, issued by an appraiser acceptable to Bank and in form, substance and
reflecting values satisfactory to Bank, in its discretion.
(e) Title Insurance. Bank shall have received an ALTA Policy of Title
Insurance, with such endorsements as Bank may require, issued by a company and
in form and substance satisfactory to Bank, in such amount as Bank shall
require, insuring Bank's lien on the real property collateral required hereby to
be of first priority, subject only to such exceptions as Bank shall approve in
its discretion, with all costs thereof to be paid by Borrower.
2. Conditions of Each Extension of Credit. The obligation of Bank to
make each extension of credit requested by Xxxxxxxx hereunder shall be subject
to the fulfillment to Bank's satisfaction of each of the following conditions:
(a) Compliance. The representations and warranties contained herein and
in each of the other Loan Documents shall be true on and as of the date of the
signing of this letter and on the date of each extension of credit by Bank
pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
default hereunder, and no condition, event or act which with the giving of
notice or the passage of time or both would constitute such a default, shall
have occurred and be continuing or shall exist.
(b) Documentation. Bank shall have received all additional documents
which may be required in connection with such extension of credit.
V. COVENANTS:
Borrower covenants that so long Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 9
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto, Borrower shall,
unless Bank otherwise consents in writing:
1. Punctual Payment. Punctually pay all principal, interest, fees or
other liabilities due under any of the Loan Documents at the times and place and
in the manner specified therein.
2. Accounting Records. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same and inspect the
properties of Borrower.
3. Financial Statements. Provide to Bank all of the following, in form
and detail satisfactory to Bank:
(a) not later than 95 days after and as of the end of each fiscal year,
an audited financial statement of Xxxxxxxx, prepared by an independent certified
public accountant acceptable to Bank, to include balance sheet, income
statement, statement of cash flow, and source and application of funds
statement, and a copy of Borrower's Form 10-K report filed with the Securities
and Exchange Commission;
(b) not later than 50 days after and as of the end of each fiscal
quarter, a copy of Borrower's Form 10-Q report filed with the Securities and
Exchange Commission;
(c) from time to time such other information as Bank may reasonably
request, including without limitation, copies of rent rolls and other
information with respect to any real property collateral required hereby.
4. Compliance. Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of a governmental agency applicable to Borrower and/or its business.
5. Insurance. Maintain and keep in force insurance of the types and in
amounts customarily carried in lines of business
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 10
similar to that of Borrower, including but not limited to fire, extended
coverage, public liability, flood, property damage and workers' compensation,
with all such insurance carried with companies and in amounts satisfactory to
Bank, and deliver to Bank from time to time at Bank's request schedules setting
forth all insurance then in effect.
6. Facilities. Keep all properties useful or necessary to Borrower's
business in good repair and condition, and from time to time make necessary
repairs, renewals and replacements thereto so that such properties shall be
fully and efficiently preserved and maintained.
7. Taxes and Other Liabilities. Pay and discharge when due any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.
8. Financial Condition. Maintain Borrower's financial condition as
follows using generally accepted accounting principles consistently applied and
used consistently with prior practices (except to the extent modified by the
definitions herein):
Total Liabilities divided by Net Worth not at any time greater than 1.5
to 1.0, with "Total Liabilities" defined as the aggregate of current liabilities
and non-current liabilities, and with "Net Worth" defined as the aggregate of
assets minus liabilities.
9. Merger, Consolidation, Transfer of Assets. Not merge into or
consolidate with any other entity; nor make any substantial change in the nature
of Xxxxxxxx's business as conducted as of the date hereof; nor acquire all or
substantially all of the assets of any other entity in any transaction involving
$20,000,000.00 or more without the prior written approval of Bank, which
approval shall not be unreasonably withheld; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material portion of Borrower's
assets except in the ordinary course of its business.
10. Guaranties. Not guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 11
instruments for deposit or collection in the ordinary course of business),
accommodation endorser or otherwise for, nor pledge or hypothecate any assets of
Borrower as security for, any liabilities or obligations of any other person or
entity, except any of the foregoing in favor of Bank.
11. Loans, Advances, Investments. Not make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of,
and disclosed to Bank prior to, the date hereof, or any loans or advances or
investments made in the normal course, such as short term advances to employees
or investments of excess cash.
12. Pledge of Accounts. Borrower shall give Bank at least fifteen (15)
days prior notice of any intent by Xxxxxxxx to pledge, grant or permit to exist
a security interest in, or lien upon, any of its accounts, general intangibles
that constitute payment of rights, and other rights to payment, (the foregoing,
together with the proceeds thereof being, collectively, "Receivables
Collateral") in favor of any party other than Bank (an "Other Lender"). Borrower
agrees that in such event, Borrower shall grant to Bank a security interest and
lien in the Receivables Collateral to secure all of Borrower's obligations to
Bank under the Line of Credit, and Bank and any such Other Lender's rights and
interests in and to the Receivables Collateral shall be of equal priority, with
each of Bank and such Other Lender to share the Receivables Collateral on a
pro-rata basis, based on the maximum principal amount of, respectively the loan
from the Other Lender and the maximum principal amount of the Line of Credit.
Further, in such event, borrower agrees to execute, and any such pledge of
receivables collateral to an Other Lender would be made subject to the execution
by such other lender of, appropriate documents to effectuate the foregoing.
13. Year 2000 Compliance. Perform all acts reasonably necessary to
ensure that (a) Borrower and any business in which Borrower holds a substantial
interest, and (b) all customers, suppliers and vendors that are material to
Borrower's business, become Year 2000 Compliant in a timely manner. Such acts
shall include, without limitation, performing a comprehensive review and
assessment of all of Borrower's systems and adopting a detailed plan, with
itemized budget, for the remediation, monitoring and testing of such systems. As
used herein, "Year 2000 Compliant" shall mean, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 12
shall, immediately upon request, provide to Bank such certifications or other
evidence of Borrower's compliance with the terms hereof as Bank may from time to
time require.
VI. DEFAULT, REMEDIES:
1. Default, Remedies. Upon the violation of any term or condition of
any of the Loan Documents, or upon the occurrence of any default or defined
event of default under any of the Loan Documents: (a) all indebtedness of
Borrower under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank's option and without notice become immediately
due and payable without presentment, demand, protest or notice of dishonor, all
of which are expressly waived by Borrower; (b) the obligation, if any, of Bank
to extend any further credit under any of the Loan Documents shall immediately
cease and terminate; and (c) Bank shall have all rights, powers and remedies
available under each of the Loan Documents, or accorded by law, including
without limitation the right to resort to any or all security for any of the
Credits and to exercise any or all of the rights of a beneficiary or secured
party pursuant to applicable law. All rights, powers and remedies of Bank may be
exercised at any time by Bank and from time to time after the occurrence of any
such breach or default, are cumulative and not exclusive, and shall be in
addition to any other rights, powers or remedies provided by law or equity.
2. No Waiver. No delay, failure or discontinuance of Bank in exercising
any right, power or remedy under any of the Loan Documents shall affect or
operate as a waiver of such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude, waive or otherwise
affect any other or further exercise thereof or the exercise of any other right,
power or remedy. Any waiver, permit, consent or approval of any kind by Bank of
any breach of or default under any of the Loan Documents must be in writing and
shall be effective only to the extent set forth in such writing.
VII. MISCELLANEOUS:
1. Notices. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
letter must be in writing delivered to each party at its address first set forth
above, or to such other address as any party may designate by written notice to
all other parties. Each such notice, request and demand shall be deemed
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 13
given or made as follows: (a) if sent by hand delivery, upon delivery; (b) if
sent by mail, upon the earlier of the date of receipt or three (3) days after
deposit in the U.S. mail, first class and postage prepaid; and (c) if sent by
telecopy, upon receipt.
2. Costs, Expenses and Attorneys' Fees. Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
letter and the other Loan Documents, Bank's continued administration hereof and
thereof, and the preparation of amendments and waivers hereto and thereto, (b)
the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to any Borrower
or any other person or entity.
3. Successors, Assignment. This letter shall be binding upon and inure
to the benefit of the heirs, executors, administrators, legal representatives,
successors and assigns of the parties; provided however, that Borrower may not
assign or transfer its interest hereunder without Bank's prior written consent.
Bank reserves the right to sell, assign, transfer, negotiate or grant
participations in all or any part of, or any interest in, Bank's rights and
benefits under each of the Loan Documents. In connection therewith Bank may
disclose all documents and information which Bank now has or hereafter may
acquire relating to any of the Credits, Borrower or its business, or any
collateral required hereunder.
4. Entire Agreement; Amendment. This letter and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to the Credits and supersede all prior negotiations, communications, discussions
and correspondence concerning the subject matter hereof. This letter may be
amended or modified only in writing signed by each party hereto.
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 14
5. No Third Party Beneficiaries. This letter is made and entered into
for the sole protection and benefit of the parties hereto and their respective
permitted successors and assigns, and no other person or entity shall be a third
party beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this letter or any other of the Loan Documents to which it is
not a party.
6. Severability of Provisions. If any provision of this letter shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
letter.
7. Governing Law. This letter shall be governed by and construed in
accordance with the laws of the State of Oregon.
8. Arbitration.
(a) Arbitration. Upon the demand of any party, any Dispute shall be
resolved by binding arbitration (except as set forth in (e) below) in accordance
with the terms of this letter. A "Dispute" shall mean any action, dispute, claim
or controversy of any kind, whether in contract or tort, statutory or common
law, legal or equitable, now existing or hereafter arising under or in
connection with, or in any way pertaining to, any of the Loan Documents, or any
past, present or future extensions of credit and other activities, transactions
or obligations of any kind related directly or indirectly to any of the Loan
Documents, including without limitation, any of the foregoing arising in
connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be administered by
the American Arbitration Association ("AAA") or such other administrator as the
parties shall mutually agree upon in accordance with the AAA Commercial
Arbitration Rules. All Disputes submitted to arbitration shall be resolved in
accordance with the Federal Arbitration Act (Title 9 of the United States Code),
notwithstanding any conflicting choice of law provision in any of the Loan
Documents. The arbitration shall be conducted at a location in Oregon selected
by the AAA or other administrator. If there is any inconsistency between the
terms hereof and any
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 15
such rules, the terms and procedures set forth herein shall control. All
statutes of limitation applicable to any Dispute shall apply to any arbitration
proceeding. All discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon any award
rendered in an arbitration may be entered in any court having jurisdiction;
provided however, that nothing contained herein shall be deemed to be a waiver
by any party that is a bank of the protections afforded to it under 12 U.S.C.
ss.91 or any similar applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and Foreclosure. No
provision hereof 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,
including without limitation injunctive relief, sequestration, attachment,
garnishment or the appointment of a receiver, from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of any such remedy shall not waive the right of any
party to compel arbitration hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators must be
active members of the Oregon State Bar or retired judges of the state or federal
judiciary of Oregon, with expertise in the substantive law applicable to the
subject matter of the Dispute. Arbitrators are empowered to resolve Disputes by
summary rulings in response to motions filed prior to the final arbitration
hearing. Arbitrators (i) shall resolve all Disputes in accordance with the
substantive law of the state of Oregon, (ii) may grant any remedy or relief that
a court of the state of Oregon could order or grant within the scope hereof and
such ancillary relief as is necessary to make effective any award, and (iii)
shall have the power to award recovery of all costs and fees, to impose
sanctions and to take such other actions as they deem necessary to the same
extent a judge could pursuant to the Federal Rules of Civil Procedure, the
Oregon Rules of Civil Procedure or other applicable law. Any Dispute in which
the amount in controversy is $5,000,000 or less shall be decided by a single
arbitrator who shall not render an award of greater than $5,000,000 (including
damages, costs, fees and expenses). By submission to a single arbitrator, each
party expressly waives any right or claim to recover more than $5,000,000. Any
Dispute in which the amount in controversy exceeds $5,000,000 shall be decided
by majority vote of a panel of three arbitrators; provided however, that all
three arbitrators must actively participate in all hearings and deliberations.
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 16
(e) Judicial Review. Notwithstanding anything herein to the contrary,
in any arbitration in which the amount in controversy exceeds $25,000,000, the
arbitrators shall be required to make specific, written findings of fact and
conclusions of law. In such arbitrations (i) the arbitrators shall not have the
power to make any award which is not supported by substantial evidence or which
is based on legal error, (ii) an award shall not be binding upon the parties
unless the findings of fact are supported by substantial evidence and the
conclusions of law are not erroneous under the substantive law of the state of
Oregon, and (iii) the parties shall have in addition to the grounds referred to
in the Federal Arbitration Act for vacating, modifying or correcting an award
the right to judicial review of (A) whether the findings of fact rendered by the
arbitrators are supported by substantial evidence, and (B) whether the
conclusions of law are erroneous under the substantive law of the state of
Oregon. Judgment confirming an award in such a proceeding may be entered only if
a court determines the award is supported by substantial evidence and not based
on legal error under the substantive law of the state of Oregon.
(f) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY BANK AFTER
OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT FOR
PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY BANK TO BE
ENFORCEABLE.
Xxxxxxx Business Services, Inc.
May 31, 1998
Page 17
Your acknowledgment of this letter shall constitute acceptance of the
foregoing terms and conditions. Bank's commitment to extend any credit to
Borrower pursuant to the terms of this letter shall terminate on June 19, 1998,
unless this letter is acknowledged by Xxxxxxxx and returned to Bank on or before
that date.
Sincerely,
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Vice President
Acknowledged and accepted as of 6-1-98:
XXXXXXX BUSINESS SERVICES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
Title: Vice President-Finance
