EXHIBIT 10.31
BUSINESS LOAN AGREEMENT
Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
$750,000.00 12-21-2001 12-30-2004 89000102 3025 307877 076
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any item above "***" has been omitted due to text length limitations.
Borrower: microHelix, Inc. Lender: WEST COAST BANK
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇ Portland Metro Business Banking
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS BUSINESS LOAN AGREEMENT dated December 21, 2001, is made and executed
between microHelix, Inc. ("Borrower") and WEST COAST BANK ("Lender") on the
following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for a commercial loan or loans or other
financial accommodations, Including those which may be described on any exhibit
or schedule attached to this Agreement ("Loan"). ▇▇▇▇▇▇▇▇ understands and agrees
that: (A) in granting, renewing, or extending any Loan, Lender is relying upon
Borrower's representations, warranties, and agreements as set forth in this
Agreement, and (B) all such Loans shall be and remain subject to the terms and
conditions of this Agreement.
TERM. This Agreement shall be effective as of December 21, 2001, and shall
continue in full force and effect until such time as all of Borrower's Loans in
favor of Lender have been paid in full, Including principal, interest, costs,
expenses, attorneys' fees, and other fees and charges, or until such time as the
parties may agree in writing to terminate this Agreement.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to ▇▇▇▇▇▇'s satisfaction of all of the conditions set forth in this
Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender the following documents
for the Loan: (1) the Note; (2) Security Agreements granting to Lender
security interests in the Collateral; (3) financing statements and all
other documents perfecting Lender's Security interests; (4) evidence of
insurance as required below; (5) together with all such Related Documents
as Lender may require for the Loan; all in form and substance satisfactory
to Lender and Lender's counsel.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement
or under any Related Document.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. Borrower is a corporation for profit which is, and at all
times shall be, duly organized, validly existing, and in good standing
under and by virtue of the laws of the State of Oregon. Borrower is duly
authorized to transact business in all other states in which Borrower is
doing business, having obtained all necessary filings, governmental
licenses and approvals for each state in which Borrower is doing business.
Specifically, Borrower is, and at all times shall be, duly qualified as a
foreign corporation in all states in which the failure to so qualify would
have a material adverse effect on its business or financial condition.
Borrower has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently
proposes to engage. Borrower maintains its principal office at ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇. Unless Borrower has designated otherwise in
writing, this is the prIncipal office at which Borrower keeps its books
and records Including its records concerning the Collateral. Borrower will
notify Lender prior to any change in the location of ▇▇▇▇▇▇▇▇'s state of
organization or any change in Borrower's name. Borrower shall do all
things necessary to preserve and to keep in full force and effect its
existence, rights and privileges, and shall comply with all regulations,
rules, ordinances, statues, orders and decrees of any governmental or
quasi governmental authority or court applicable to Borrower and
▇▇▇▇▇▇▇▇'s business activities.
Assumed Business Names. ▇▇▇▇▇▇▇▇ has filed or recorded all documents or
filings required by law relating to all assumed business names used by
▇▇▇▇▇▇▇▇. Excluding the name of ▇▇▇▇▇▇▇▇, the following is a complete list
of all assumed business names under which Borrower does business: None.
Authorization. ▇▇▇▇▇▇▇▇'s execution, delivery, and performance of this
Agreement and all the Related Documents have been duly authorized by all
necessary action by Borrower and do not conflict with, result in a
violation of, or constitute a
default under (1) any provision of Borrower's articles of Incorporation or
organization, or bylaws, or any agreement or other instrument binding upon
Borrower or (2) any law, governmental regulation, Court decree, or order
applicable to Borrower or to Borrower's properties.
Financial information. Each of ▇▇▇▇▇▇▇▇'s financial statements supplied to
▇▇▇▇▇▇ truly and completely disclosed ▇▇▇▇▇▇▇▇'s financial condition as of
the date of the statement, and there has been no material adverse change
in ▇▇▇▇▇▇▇▇'s financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
Borrower is required to give under this Agreement when delivered will
constitute legal, valid, and binding obligations of Borrower enforceable
against Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrowers financial statements or in writing to Lender and as
accepted by ▇▇▇▇▇▇, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has
not executed any security documents or financing statements relating to
such properties. All of Borrowers properties are titled in Borrower's
legal name, and ▇▇▇▇▇▇▇▇ has not used or filed a financing statement under
any other name for at least the last five (5) years.
Hazardous Substances. Except as disclosed to and acknowledged by ▇▇▇▇▇▇ in
writing, Borrower represents and warrants that; (1) During the period of
Borrower's ownership of Borrower's Collateral, there has been no use,
generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under,
about or from any of the Collateral. (2) Borrower has no knowledge of, or
reason to believe that there has been (a) any breach or violation of any
Environmental Laws; (b) any use, generation, manufacture, storage,
treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners or
occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters.
(3) Neither Borrower nor any tenant, contractor, agent or other authorized
user of any of the Collateral shall use, generate, manufacture, storage,
treat, dispose of or release any Hazardous Substance on, under, about or
from any of the Collateral; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, Including without limitation all
Environmental Laws. Borrower authorizes Lender and its agents to enter
upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of
the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or ability on the part of Lender to
Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating
the Collateral for hazardous waste and Hazardous Substances. Borrower
hereby (1) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup
or other costs under any such laws, and (2) agrees to indemnity and hold
harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal,
release or threatened release of a hazardous waste or substance on the
Collateral, or as a result of a violation of any Environmental Laws. The
provisions of this section of the Agreement. Including the obligation to
indemnify, shall survive the payment of the indebtedness and the
termination, expiration or satisfaction of this Agreement and Shall not be
affected by Lender's acquisition of any interest in any of the Collateral,
whether by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (Including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by ▇▇▇▇▇▇ in writing.
Taxes. To the best of ▇▇▇▇▇▇▇▇'s knowledge, all of Borrowers tax returns
and reports that are or were required to be filed, have been filed, and
all taxes, assessments and other governmental charges have bean paid in
full, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves
have been provided,
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
▇▇▇▇▇▇▇▇ has not entered into or granted any Security Agreements. or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to ▇▇▇▇▇▇'s Security interests and rights in and to such
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements (if
any), and all Related Documents are binding upon the signers thereof, as
well as upon their successors, representatives and assigns, and are
legally enforceable in accordance with their respective terms.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with ▇▇▇▇▇▇ that, so long
as this Agreement remains in effect, Borrower will:
Notices of Claims and Litigation. Promptly inform ▇▇▇▇▇▇ in writing of (1)
all material adverse changes in Borrower's financial condition, and (2)
all existing and all threatened litigation, claims, investigations,
administrative proceedings or similar actions affecting Borrower or any
Guarantor which could materially affect the financial condition of
Borrower or the financial condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with GAAP,
applied on a consistent basis, and permit ▇▇▇▇▇▇ to examine and audit
Borrowers books and records at all reasonable times.
Financial Statements. Furnish Lender with the following:
Additional Requirements.
1) Borrower to provide CPA audited financial statements within 120
days after each fiscal year end.
2) Borrower to provide Company prepared consolidated, monthly
financial statements within 30 days after the end of each month.
3) Borrower to provide tax returns within 15 days of filing date.
All financial reports required to be provided under this Agreement shall be
prepared to accordance with GAAP, applied on a consistent basis, and certified
by Borrower as being true and correct.
Additional information. Furnish such additional information and statements, as
▇▇▇▇▇▇ may request from time to time.
Financial Covenants and Ratios. Comply with the following covenants and ratios:
Other Requirements.
1) Borrower must maintain a minimum Tangible Net Worth of $7,000,000.
"Tangible Net Worth" shall be defined as the financial statement Net Worth
of the Borrower prepared according to generally accepted accounting
prInciples less intangible assets, plus indebtedness fully subordinated to
the debt due to the Bank.
2) Borrower must maintain a Minimum Quick Ratio of 1.25 to 1.00. "Quick
Ratio" shall be defined as the financial statement Cash and Cash
Equivalents plus accounts receivable divided by Current Liabilities.
3) Borrower must maintain a minimum Liquidity Ratio of 2.00 to 1.00.
"Liquidity" shall be defined as the financial statement Cash and Cash
Equivalents plus 75% of eligible accounts receivable less any outstandings
under the Line, divided by total outstandings under the Loan.
4) The Liquidity covenant may be replaced with a Debt Service covenant of
1.50 to 1.00 upon ▇▇▇▇▇▇▇▇'s ability to meet the Debt Service covenant for
six consecutive months. "Debt Service" shall be defined as Earnings Before
Interest, Taxes, Depreciation, and Amortization, (EBITDA), divided by
total interest expense plus Current Portion of Long Term Debt.
Except as provided above, all computations made to determine compliance
with the requirements contained in this paragraph shall be made in
accordance with generally accepted accounting prInciples, applied on a
consistent basis, and certified by Borrower as being true and correct.
Insurance. Maintain fire and other risk insurance, public liability insurance,
and such other insurance as Lender may require with respect to Borrower's
properties and operations, in form, amounts, coverages and with insurance
companies acceptable to Lender. Borrower, upon request of ▇▇▇▇▇▇, will deliver
to Lender from time to time the policies or certificates of insurance in form
satisfactory to Lender, Including stipulations that coverages will not be
cancelled or diminished without at least ten (10) days prior written notice to
Lender. Each insurance policy also shall Include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act, omission
or default of Borrower or any other person. In connection with ail policies
covering assets in which Lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such Lender's loss payable or other
endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, Including without limitation the following: (1) the name of the
insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties
insured; (5) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (6) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements,
whether now or hereafter existing, between Borrower and any other party and
notify Lender immediately in writing of any default in connection with any other
such agreements.
Loan Proceeds. Use all Loan proceeds solely for ▇▇▇▇▇▇▇▇'s business operations,
unless specifically consented to the contrary by ▇▇▇▇▇▇ in writing.
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and
obligations, Including without limitation all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower or
its properties, Income, or profits, prior to the ▇▇▇▇ on which penalties would
attach, and all lawful claims that, if unpaid, might become a lien or charge
upon any or Borrower's properties, Income, or profits.
Performance. Perform and comply, in a timely manner, with all terms, conditions,
and provisions set forth in this Agreement, in the Related Documents, and in all
other instruments and agreements between Borrower and Lender. Borrower shall
notify ▇▇▇▇▇▇ immediately in writing of any default in connection with any
agreement.
Operations. Maintain executive and management personnel with substantially the
same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct its business affairs in a reasonable and prudent
manner.
Environmental Studies. Promptly conduct and complete, at Borrower's expense, all
such investigations, studies, samplings and testings as may be requested by
Lender or any governmental authority relative to any substance, or any waste or
by-product of any substance defined as toxic or a hazardous substance under
applicable federal, state, or local law, rule, regulation, order or directive,
at or affecting any property or any facility owned, leased or used by Borrower.
Compliance with Governmental Requirements. Comply with all laws, ordinances, and
regulations, now or hereafter in effect, of all governmental authorities
applicable to the conduct of Borrower's properties, businesses and operations,
and to the use or occupancy of the Collateral, Including without limitation, the
Americans With Disabilities Act. Borrower may contest in good faith any such
law, ordinance, or regulation and withhold compliance during any proceeding,
Including appropriate appeals, so long as Borrower has notified Lender in
writing prior to doing so and so long as, in ▇▇▇▇▇▇'s sole opinion, Lenders
interests in the Collateral are not jeopardized. Lender may require Borrower to
post adequate security or a surety bond, reasonably satisfactory to Lender, to
protect ▇▇▇▇▇▇'s interest.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and ▇▇▇▇▇▇▇▇'s other
properties and to examine or audit ▇▇▇▇▇▇▇▇'s books, accounts, and records and
to melee copies and memoranda of ▇▇▇▇▇▇▇▇'s books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (Including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of ▇▇▇▇▇▇, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.
Compliance Certificates, Unless waived in writing by ▇▇▇▇▇▇, provide Lender at
least annually, with a certificate executed by Borrowers chief financial
officer, or other officer or person acceptable to Lender, certifying that the
representations and warranties set forth in this Agreement are true and correct
as of the date of the certificate and further certifying that, as of the date of
the certificate, no Event or Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects with
any and all Environmental Laws; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on Borrower's part or on the
part of any third party, on properly owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or omission
on Borrower's part in connection with any environmental activity whether or not
there is damage to the environment and/or other natural resources. Assignments,
financing statements, instruments, documents and other agreements as Lender or
its attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
▇▇▇▇▇▇'S EXPENDITURES. If any action or proceeding is commenced that would
materially affect Lender's interest in the Collateral or if Borrower fails to
comply with any provision of this Agreement or any Related Documents, Including
but not limited to Borrower's failure to discharge or pay when due any amounts
Borrower is required to discharge or pay under this Agreement or any Related
Documents, Lender on Borrower's behalf may (but shall not be obligated to) take
any action that Lender deems appropriate, Including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances, and
other claims, at any time levied or placed on any Collateral and paying all
costs for insuring, maintaining and preserving any Collateral, All such
expenditures Incurred or paid by Lender for such purposes will then bear
interest at the rate charged under the Note from the date Incurred or paid by
Lender to the date of repayment by Borrower. All such expenses will become a
part of the indebtedness and, at Lender's option, will (A) be payable on demand;
(B) be added to the balance of the Note and be apportioned among and be payable
with any installment payments to become due during either (1) the term of any
applicable insurance policy; or (2) the remaining term of the Note; or (C) be
treated as a balloon payment which will be due and payable at the Note's
maturity.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens, (1) Except for trade debt Incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, Incur or assume indebtedness for borrowed money,
Including capital leases, (2) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets
(except as allowed as Permitted Liens), or (3) sell with recourse any of
Borrowers accounts, except to Lender.
Continuity of Operations. (1) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(2) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (3) pay any
dividends on Borrower's stock (other than dividends payable in its stock),
provided, however that notwithstanding the foregoing, but only so long as
no Event of Default has occurred and is continuing or would result from
the payment of dividends, if Borrower is a "Subchapter S Corporation" (as
defined in the internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay Income taxes and make
estimated Income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of
Borrower's stock, or purchase or retire any of Borrower's outstanding
shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (1) Loan, invest in or advance money
or assets, (2) purchase, create or acquire any interest in any other
enterprise or entity, or (3) Incur any obligation as surety or guarantor
other than in the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if,
(A) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes
Incompetent or becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
Guarantor, or in the value of any Collateral securing any Loan; or (D) any
Guarantor seeks, claims or( otherwise attempts to limit, modify or revoke such
Guarantor's guaranty of the Loan or any other loan with Lender; or (E) Lender in
good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure, even though no Event of Default shall have
occurred.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This Includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not Include any IRA or ▇▇▇▇▇ accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorizes ▇▇▇▇▇▇, to the
extent permitted by applicable law, to charge or setoff all sums owing on the
indebtedness against any and all such accounts.
DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement:
Payment Default. Borrower falls to make any payment when due under the
Loan.
Other Defaults, Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Agreement or in
any of the Related Documents or to comply with or to perform any term,
obligation, covenant or condition contained in any other agreement between
Lender and Borrower.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this
Agreement or the Related Documents is false or misleading in any material
respect, either now or at the time made or furnished or becomes false or
misleading at any time thereafter,
Insolvency. The dissolution or termination of ▇▇▇▇▇▇▇▇'s existence as a
going business, the insolvency of ▇▇▇▇▇▇▇▇, the appointment of a receiver
for any part of ▇▇▇▇▇▇▇▇'s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Defective Collateralization. This Agreement or any of the Related
Documents ceases to be in full force and effect (Including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the Loan, This
Includes a garnishment of any of Borrower's accounts, Including deposit
accounts, with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by ▇▇▇▇▇▇▇▇ as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and it Borrower gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its safe discretion, as being an adequate reserve
or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor dies
or becomes Incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the indebtedness. In the event of a
death, Lender, at its option, may, but shall not be required to, permit
the Guarantor's estate to assume unconditionally the obligations arising
under the guaranty in a manner satisfactory to Lender, and, in doing so,
cure any Event of Default.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or ▇▇▇▇▇▇ believes the prospect of payment or performance of
the Loan is impaired.
Insecurity. Lender in good faith believes itself insecure.
Right to Cure. If any default, other than a default on indebtedness. Is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (12) months, it
may be cured (and no Event of Default will have occurred) if Borrower Or
Grantor, as the case may be, after receiving written notice from ▇▇▇▇▇▇
demanding cure of such default. (1) cure the default within fifteen (15)
days; or (2) it the cure requires more than fifteen (15) days, immediately
initiate steps which Lender dooms in Lender's sole discretion to be
sufficient to cure the default and thereafter continue and complete all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical,
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (Including any obligation to make
further Loan Advances or disbursements), and, at Lender's option, all
indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by ▇▇▇▇▇▇ to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect ▇▇▇▇▇▇'s
right to declare a default and to exercise its rights and remedies.
CHOICE OF VENUE. If there is a lawsuit, you (borrower) agree upon our request to
submit to the jurisdiction of the courts of the State of Oregon in Multnomah
County, and that venue is proper in such courts.
SUBORDINATED DEBT. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ to formally subordinate to Bank shareholder
loans between the Borrower and ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ in the original amounts of
$383,855, $160,000 and $675,000 dated December 15, 1999, February 1, 2000 and
August 1, 2000 respectively. Current balance of $1,000,830 to be subordinated.
BORROWING FORMULA. Loan: Full amount of credit facility shall be made available
to Borrower at the close of definitive Bank loan documentation.
ADDITIONAL COVENANTS.
1) ▇▇▇▇▇▇▇▇'s primary banking accounts to be maintained at Bank,
2) Without Bank's prior approval, which shall not be unreasonably withheld,
Borrower shall not:
a) Enter into any mergers or acquisitions or major debt agreements.
b) Repurchase stock or pay cash dividends except as required to cover
personal tax liabilities of shareholders.
c) Hypothecate assets.
d) Loan money or guarantee loans of others.
3) Borrower shall notify Bank in writing of any legal action commenced against
it that may result in damages over $50,000. Borrower shall provide Bank with
such notice immediately upon ▇▇▇▇▇▇▇▇'s receipt of notice of such legal action.
4) Borrower shall provide Bank proof of insurance on all tangible corporate
assets and a Lender's Loss Payable Clause with Bank listed as loss payee. 5) All
reasonable expenses of Bank for legal fees, documentation fees, UCC searches and
filing fees, and all other costs involved with documenting shall be borne by the
Borrower whether or not the Credit Facilities close.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
Arbitration. Borrower and Lender agree that all disputes, claims and
controversies between them whether individual, joint, or class in nature,
arising from this Agreement or otherwise, Including without limitation
contract and tort disputes, shall be arbitrated pursuant to the Rules of
the American Arbitration Association in effect at the time the claim is
filed, upon request of either party: No act to take or dispose of any
Collateral shall constitute a waiver of this arbitration agreement or be
prohibited by this arbitration agreement. This Includes, without
limitation, obtaining injunctive relief or a temporary restraining order;
foreclosing by notice and sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising
any rights relating to personal property, Including taking or disposing of
such property with or without judicial process pursuant to Article 4 of
the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of any
right, concerning any Collateral, Including any claim to rescind, reform,
or otherwise modify any agreement relating to the Collateral, shall also
be arbitrated, provided however that no arbitrator shall have the right or
the power to enjoin or restrain any act of any party. Judgment upon any
award rendered by any arbitrator may be entered in any court having
jurisdiction. Nothing in this Agreement shall preclude any party from
seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall
be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for
these purposes. The Federal Arbitration Act shall apply to the
construction, interpretation, and enforcement of this arbitration
provision.
Attorneys' Fees; Expenses. ▇▇▇▇▇▇▇▇ agrees to pay upon demand all of
▇▇▇▇▇▇'s costs and expenses, Including ▇▇▇▇▇▇'s attorneys' fees and
▇▇▇▇▇▇'s legal expenses, Incurred in connection with the enforcement of
this Agreement. Lender may hire or pay someone else to help enforce this
Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses Include ▇▇▇▇▇▇'s attorneys' fees and legal
expenses whether or not there is a lawsuit, Including attorneys' fees and
legal expenses for bankruptcy proceedings (Including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower also shall pay all court costs
and such additional fees as may be directed by the court.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Consent to Loan Participation. ▇▇▇▇▇▇▇▇ agrees and consents to ▇▇▇▇▇▇'s
sale or transfer, whether now or later, of one or more participation
interests in the Loan to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan. and Borrower hereby waives any rights' to
privacy Borrower may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation
interests. ▇▇▇▇▇▇▇▇ also agrees that the purchasers of any such
participation interests will be considered as the absolute owners of such
interests in the Loan and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against under or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrowers obligation under the
Loan irrespective of the failure or insolvency of any holder of any
interest in the Loan. ▇▇▇▇▇▇▇▇ further agrees that the purchaser of any
such participation interests may enforce its interests irrespective of any
personal Claims or defenses that Borrower may have against ▇▇▇▇▇▇.
Governing Law. This Agreement will be governed by, construed and enforced
in accordance with federal law and the laws of the State of Oregon. This
Agreement has been accepted by Lender in the State of Oregon.
No Waiver by ▇▇▇▇▇▇. Lender shall not be deemed to have waived any rights
under this Agreement unless such waiver is given in writing and signed by
▇▇▇▇▇▇. No delay or omission on the part of Lender in exercising any right
shall operate as a waiver of such right or any other right. A waiver by
▇▇▇▇▇▇ of a provision of this Agreement shall not prejudice or constitute
a waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
▇▇▇▇▇▇, nor any course of dealing between ▇▇▇▇▇▇ and Borrower, or between
Lender
and any Grantor, shall constitute a waiver of any of Lender's rights or of
any of Borrower's or any Grantor's obligations as to any future
transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent to subsequent instances where such
consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
Notices. Any notice required to be given under this Agreement shall be
given in writing, and shall be effective when actually delivered, when
actually received by telefacsimile (unless otherwise required by law),
when deposited with a nationally recognized overnight courier, or, if
mailed, when deposited in the United States mail, as first class,
certified or registered mail postage prepaid, directed to the addresses
shown near the beginning of this Agreement. Any party may change its
address for notices under this Agreement by giving formal written notice
to the other parties. specifying that the purpose of the notice is to
change the party's address. For notice purposes, ▇▇▇▇▇▇▇▇ agrees to keep
▇▇▇▇▇▇ informed at all times of ▇▇▇▇▇▇▇▇'s current address. Unless
otherwise provided or required by law, if there is more than one Borrower,
any notice given by Lender to any Borrower is deemed to be notice given to
all Borrowers.
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be illegal, invalid, or unenforceable as to any
circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified,
it shall be considered deleted from this Agreement. Unless otherwise
required by law, the illegality, invalidity, or unenforceability of any
provision of this Agreement shall not affect the legality, validity or
enforceability of any other provision of this Agreement.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, Including without
limitation any representation, warranty or covenant, the word "Borrower"
as used in this Agreement shall Include all of Borrower's subsidiaries and
affiliates. Notwithstanding the foregoing however, under no circumstances
shall this Agreement be construed to require Lender to make any Loan or
other financial accommodation to any of Borrower's subsidiaries or
affiliates.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind ▇▇▇▇▇▇▇▇'s successors and assigns and shall
inure to the benefit of Lender and its successors and assigns. Borrower
shall not, however, have the right to assign Borrowers rights under this
Agreement or any interest therein, without the prior written consent of
Lender.
Survival of Representations and Warranties. ▇▇▇▇▇▇▇▇ understands and
agrees that in making the Loan, ▇▇▇▇▇▇ is relying on all representations,
warranties, and covenants made by Borrower in this Agreement or in any
certificate or other instrument delivered by borrower to Lender under this
Agreement or the Related Documents. ▇▇▇▇▇▇▇▇ further agrees that
regardless of any investigation made by ▇▇▇▇▇▇, all such representations,
warranties and covenants will survive the making of the Loan and delivery
to Lender of the Related Documents, shall be continuing in nature, and
shall remain in full force and effect until such time as ▇▇▇▇▇▇▇▇'s
indebtedness shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
DEFINITIONS. The following capitalized words and terms shall have the following
meanings when used in this Agreement. Unless specifically stated to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall Include
the plural, and the plural shall Include the singular, as the context may
require. Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. Accounting
words and terms not otherwise defined in this Agreement shall have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date of this Agreement:
Advance. The Word "Advance" means a disbursement of Loan funds made, or to
be made, to Borrower or on Borrower's behalf on a line of credit or
multiple advance basis under the terms and conditions of this Agreement.
Borrower. The word "Borrower" means microHelix, Inc., and all other
persons and entities signing the Note in whatever capacity.
Collateral. The word "Collateral" means all property and assets granted as
collateral security for a Loan, whether real or personal property, whether
granted directly or indirectly, whether granted now or in the future, and
whether granted in the form of a security interest, mortgage, collateral
mortgage, deed of trust, assignment, pledge, crop pledge, chattel
mortgage, collateral chattel mortgage, chattel trust, factor's lien,
equipment trust, conditional sale, trust receipt, lien, charge, lien or
title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created
by law, contract, or otherwise.
Environmental Laws. The Words "Environmental Laws" mean any and all state,
federal and local statutes, regulations and ordinances relating to the
protection of human health or the environment, Including without
limitation the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 ("▇▇▇▇"), the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801, et. seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et. seq., or other applicable state or federal
laws, rules, or regulations adopted pursuant thereto or intended to
protect human health or the environment.
Event of Default. The words "Event of Default" mean any of the events of
default set forth in this Agreement in the default section of this
Agreement.
GAAP. The word "GAAP" means generally accepted accounting principles
Grantor. The word "Grantor" means each and all of the persons or entities
granting a Security interest in any Collateral for the Loan, Including
without limitation all Borrowers granting such a Security Interest,
Guarantor. The word "Guarantor" means any guarantor, surety, or
accommodation party of any or all of the Loan.
Guaranty. The word "Guaranty" means the guaranty from Guarantor to Lender,
Including without limitation a guaranty of all or part of the Note.
Hazardous Substances. The Words "Hazardous Substances" mean materials
that, because of their quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential
hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise
handled, The words "Hazardous Substances" are used in their very broadest
sense and Include without limitation any and all hazardous or toxic
substances, materials or waste as defined by or listed under the
Environmental Laws. The term "Hazardous Substances" also Includes, without
limitation, petroleum and petroleum by-products or any fraction thereof
and asbestos.
Indebtedness. The word "Indebtedness" means the indebtedness evidenced by
the Note or Related Documents, Including all principal and interest
together with all other indebtedness and costs and expenses for which
Borrower is responsible under this Agreement or under any of the Related
Documents.
Lender. The word "Lender" means WEST COAST BANK, its successors and
assigns.
Loan. The word "Loan" means any and all loans and financial accommodations
from Lender to Borrower whether now or hereafter existing, and however
evidenced, Including without limitation those loans and financial
accommodations described herein or described an any exhibit or schedule
attached to this Agreement from time to time.
Note. The word "Note" means the Note executed by microHelix, Inc. In the
principal amount of $750,000.00 dated December 21, 2001, together with all
renewals of, extensions of, modifications of, refinancings of,
consolidations of, and substitutions for the note or credit agreement.
Permitted Liens, The words "Permitted Liens" mean (1) liens and security
interests securing indebtedness owed by Borrower to Lender; (2) liens for
taxes, assessments, or similar charges either not yet due or being
contested in good faith; (3) liens of materialmen, mechanics,
warehousemen, or carriers, or other like liens arising in the ordinary
course of business and securing obligations which are not yet delinquent;
(4) purchase money liens or purchase money security interests upon or in
any properly acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date of this Agreement
or permitted to be Incurred under the paragraph of this Agreement titled
"Indebtedness and Liens"; (5) liens and security interests which, as of
the date of this Agreement, have been disclosed to and approved by the
Lender in writing; and (6) those liens and security interests which in the
aggregate constitute an immaterial and insignificant monetary amount with
respect to the net value of Borrower's assets.
Related Documents. The words "Related Documents" mean all promissory
notes, credit agreements, loan agreements, environmental agreements,
guaranties, security agreements, mortgages, deeds of trust, security
deeds, collateral mortgages, and all other instruments, agreements and
documents, whether now or hereafter existing, executed in connection with
the Loan.
Security Agreement. The words "Security Agreement" mean and Include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean, without limitation,
any and all types of collateral security, present and future, whether in
the form of a lien, charge, encumbrance, mortgage, deed of trust, security
deed, assignment, pledge, crop pledge, chattel mortgage, collateral
chattel mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention contract, lease
or consignment intended as a security device, or any other security or
lien interest whatsoever whether created by law, contract, or otherwise.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE
ENFORCEABLE.
▇▇▇▇▇▇▇▇ ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT AND ▇▇▇▇▇▇▇▇ AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS
DATED DECEMBER 21, 2001.
BORROWER.
MICROHELIX, INC.
By: /s/ By: /s/
---------------------------------------------- ---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President of microHelix, Inc. ▇▇▇▇ ▇. ▇▇▇▇▇▇, Treasurer of microHelix, Inc.
LENDER:
WEST COAST BANK
By: /s/
-----------------------------
Authorized Signer
