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EXHIBIT 10.5
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PRINCIPAL LOAN DATE MATURITY LOAN NO. CALL COLLATERAL ACCOUNT OFFICER INITIALS
$8,000,000.00 08-06-1997 2071228480 2071228480 69772
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References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
BORROWER: DAW TECHNOLOGIES, INC. LENDER: U.S. BANK
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
THIS LOAN AGREEMENT BETWEEN DAW TECHNOLOGIES, INC. ("BORROWER") AND U.S. BANK
("LENDER") IS MADE AND EXECUTED ON THE FOLLOWING TERMS AND CONDITIONS. BORROWER
HAS RECEIVED PRIOR COMMERCIAL LOANS FROM LENDER OR HAS APPLIED TO LENDER FOR A
COMMERCIAL LOAN OR LOANS AND OTHER FINANCIAL ACCOMMODATIONS, INCLUDING THOSE
WHICH MAY BE DESCRIBED ON ANY EXHIBIT OR SCHEDULE ATTACHED TO THIS AGREEMENT.
ALL SUCH LOANS AND FINANCIAL ACCOMMODATIONS, TOGETHER WITH ALL FUTURE LOANS AND
FINANCIAL ACCOMMODATIONS FROM LENDER TO BORROWER, ARE REFERRED TO IN THIS
AGREEMENT INDIVIDUALLY AS THE "LOAN" AND COLLECTIVELY AS THE "LOANS." ▇▇▇▇▇▇▇▇
UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING ANY LOAN,
LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS,
AS SET FORTH IN THIS AGREEMENT; (B) THE GRANTING, RENEWING, OR EXTENDING OF ANY
LOAN BY LENDER AT ALL TIMES SHALL BE SUBJECT TO LENDER'S SOLE JUDGMENT AND
DISCRETION; AND (C) ALL SUCH LOANS SHALL BE AND SHALL REMAIN SUBJECT TO THE
FOLLOWING TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of AUGUST 6, 1997, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
AGREEMENT. The word "Agreement" means this Loan Agreement, as this Loan
Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Loan Agreement from time to time.
ACCOUNT. The word "Account" means a trade account, account receivable, or
other right to payment for goods sold or services rendered owing to Borrower
(or to a third party grantor acceptable to Lender).
ACCOUNT DEBTOR. The words "Account Debtor" mean the person or entity
obligated upon an Account.
ADVANCE. The word "Advance" means a disbursement of Loan funds under this
Agreement.
BORROWER. The word "Borrower" means DAW TECHNOLOGIES, INC.. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
BORROWING BASE. The words "Borrowing Base" mean, as determined by Lender
from time to time, the lesser of (a) $8,000,000.00; or (b) 75.000% of the
aggregate amount of Eligible Accounts.
BUSINESS DAY. The words "Business Day" mean a day on which commercial banks
are open for business in the State of Utah.
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
CASH FLOW. The words "Cash Flow" mean net income after taxes, and exclusive
of extraordinary gains and income, plus depreciation and amortization.
COLLATERAL. The "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise. The
work "Collateral" includes without limitation all collateral described below
in the section titled "COLLATERAL."
DEBT. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
ELIGIBLE ACCOUNTS. The words "Eligible Accounts" mean, at any time, all of
Borrower's Accounts which contain selling terms and conditions acceptable to
Lender. The net amount of any Eligible Account against which Borrower may
borrow shall exclude all returns, discounts, credits, and offsets of any
nature. Unless otherwise agreed to by ▇▇▇▇▇▇ in writing, Eligible Accounts
do not include:
(a) Accounts with respect to which the Account Debtor is an officer, an
employee or agent of ▇▇▇▇▇▇▇▇.
(b) Accounts with respect to which the Account Debtor is a subsidiary
of, or affiliated with or related to Borrower or its shareholders,
officers, or directors.
(c) Accounts with respect to which goods are placed on consignment,
guaranteed sale, or other terms by reason of which the payment by the
Account Debtor may be conditional.
(d) Accounts with respect to which Borrower is or may become liable to
the Account Debtor for goods sold or services rendered by the Account
Debtor to Borrower.
(e) Accounts which are subject to dispute, counterclaim, or setoff.
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(f) Accounts with respect to which the goods have not been shipped or
delivered, or the services have not been rendered, to the Account
Debtor.
(g) Accounts with respect to which ▇▇▇▇▇▇, in its sole discretion, deems
the creditworthiness or financial condition of the Account Debtor to be
unsatisfactory.
(h) Accounts of any Account Debtor who has filed or has had filed
against it a petition in bankruptcy or an application for relief under
any provision of any state of federal bankruptcy, insolvency, or
debtor-in-relief acts; or who has had appointed a trustee, custodian, or
receiver for the assets of such Account Debtor; or who has made an
assignment for the benefit of creditors or has become insolvent or fails
generally to pay its debts (including its payrolls) as such debts become
due.
(i) Accounts with respect to which the Account Debtor is the United
States government or any department or agency of the United States.
(j) Accounts which have not been paid in full within 90 DAYS from the
invoice date. The entire balance of any Account of any single Account
debtor will be ineligible whenever the portion of the Account which has
not been paid within 90 DAYS from the invoice date is in excess of
25.000% of the total amount outstanding on the Account.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
EXPIRATION DATE. The words "Expiration Date" mean the date of termination of
▇▇▇▇▇▇'s commitment to lend under this Agreement.
GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all Borrowers
granting such a Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any Indebtedness.
INDEBTEDNESS. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or
hereafter existing, voluntary or involuntary, due or not due, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be obligated as a
guarantor, surety, or otherwise; whether recovery upon such Indebtedness may
be or hereafter may become barred by any statute of limitations; and whether
such Indebtedness may be or hereafter may become otherwise unenforceable.
LENDER. The word "Lender" means U.S. Bank, its successors and assigns.
LINE OF CREDIT. The words "Line of Credit" mean the credit facility
described in the Section titled "LINE OF CREDIT" below.
LIQUID ASSETS. The words "Liquid Assets" mean Borrower's cash on hand plus
Borrower's readily marketable securities.
LOAN. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time.
NOTE. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
PERMITTED LIENS. The words "Permitted Liens" mean: (a) liens and security
interests securing Indebtedness owed by Borrower to Lender; (b) liens for
taxes, assessments, or similar charges either not yet due or being contested
in good faith; (c) liens of materialmen, mechanics, warehousemen, or
carriers, or other like liens arising in the ordinary course of business and
securing obligations which are not yet delinquent; (d) purchase money liens
or purchase money security interests upon or in any property acquired or
held by Borrower in the ordinary course of business to secure indebtedness
outstanding on the date of this Agreement or permitted to be incurred under
the paragraph of this Agreement titled "Indebtedness and Liens"; (e) liens
and security interests which, as of the date of this Agreement, have been
disclosed to and approved by the Lender in writing; and (f) those liens and
security interests which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of ▇▇▇▇▇▇▇▇'s
assets.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understanding
or other agreements, whether created by law, contract, or otherwise,
evidencing, governing, representing, or creating a Security Interest.
SECURITY INTEREST. the words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
▇▇▇▇. The word "▇▇▇▇" means the Superfund Amendments and Reauthorization Act
of 1986 as now or hereafter amended.
SUBORDINATED DEBT. The words "Subordinated Debt" mean indebtedness and
liabilities of Borrower which have been subordinated by written agreement to
indebtedness owed by Borrower to Lender in form and substance acceptable to
Lender.
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TANGIBLE NET WORTH. The words "Tangible Net Worth" mean Borrower's total
assets excluding all intangible assets (ie., goodwill, trademarks, patents,
copyrights, organizational expenses, and similar intangible items, but
including leaseholds and leasehold improvements) less total Debt.
WORKING CAPITAL. the words "Working Capital" mean Borrower's current assets,
excluding prepaid expenses, less Borrower's current liabilities.
LINE OF CREDIT ▇▇▇▇▇▇ agrees to make Advances to Borrower from time to time from
the date of this Agreement to the Expiration Date, provided the aggregate amount
of such Advances outstanding at any time does not exceed the Borrowing Base.
Within the foregoing limits, Borrower may borrow, partially or wholly prepay,
and reborrow under this Agreement as follows:
CONDITIONS PRECEDENT TO EACH ADVANCE. ▇▇▇▇▇▇'s obligation to make any
Advance to or for the account of Borrower under this Agreement is subject to
the following conditions precedent, with all documents, instruments,
opinions, reports, and other items required under this Agreement to be in
form and substance satisfactory to Lender:
(a) Lender shall have received evidence that this Agreement and all
Related Documents have been duly authorized, executed, and delivered by
▇▇▇▇▇▇▇▇ to Lender.
(b) ▇▇▇▇▇▇ shall have received such opinions of counsel, supplemental
opinions, and documents as ▇▇▇▇▇▇ may request.
(c) The security interests in the Collateral shall have been duly
authorized, created, and perfected with first lien priority and shall be
in full force and effect.
(d) All guaranties required by Lender for the Line of Credit shall have
been executed by each Guarantor, delivered to Lender, and be in full
force and effect.
(e) Lender, at it option and for its sole benefit, shall have conducted
an audit of ▇▇▇▇▇▇▇▇'s Accounts, books, records, and operations, and
Lender shall be satisfied as to their condition.
(f) Borrower shall have paid to Lender all fees, costs, and expenses
specified in this Agreement and the Related Documents as are then due
and payable, including without limitation the following loan fees:
OPERATING LINE: .25% NON-USAGE FEE BASED ON THE UNUSED PORTION OF THE
LINE COMMITMENT, ACCRUING MONTHLY AND PAID QUARTERLY IN ARREARS;
INDIVIDUAL STANDBY LETTER OF CREDIT FEE: 1.5% PER ANNUM.
(g) There shall not exist at the time of any Advance a condition which
would constitute an Event of Default under this Agreement, and Borrower
shall have delivered to Lender the compliance certificate called for in
the paragraph below titled "Compliance Certificate."
MAKING LOAN ADVANCES. Advances under the Line of Credit may be requested
either orally or in writing subject to the limitations set forth below.
Lender may, but need not, require that all oral requests be confirmed in
writing. Each Advance shall be conclusively deemed to have been made at the
request of and for the benefit of Borrower (a) when credited to any deposit
account of ▇▇▇▇▇▇▇▇ maintained with Lender or (b) when advanced in
accordance with the instructions of an authorized person. Lender, at its
option, may set a cutoff time, after which all requests for Advances will be
treated as having been requested on the next succeeding Business Day.
MANDATORY LOAN REPAYMENTS. If at any time the aggregate principal amount of
the outstanding Advances shall exceed the applicable Borrowing Base,
Borrower, immediately upon written or oral notice from Lender, shall pay to
Lender an amount equal to the difference between the outstanding principal
balance of the Advances and the Borrowing Base. On the Expiration Date,
Borrower shall pay to Lender in full the aggregate unpaid principal amount
of all Advances then outstanding and all accrued unpaid interest, together
with all other applicable fees, costs and charges, if any, not yet paid.
LOAN ACCOUNT. Lender shall maintain on its books a record of account in
which Lender shall make entries for each Advance and such other debits and
credits as shall be appropriate in connection with the credit facility.
Lender shall provide Borrower with periodic statements of ▇▇▇▇▇▇▇▇'s
account, which statements shall be considered to be correct and conclusively
binding on Borrower unless Borrower notifies Lender to the contrary within
thirty (30) days after ▇▇▇▇▇▇▇▇'s receipt of any such statement which
Borrower deems to be incorrect.
COLLATERAL. To secure payment of the Line of Credit and performance of all other
Loans, obligations and duties owed by Borrower to Lender, Borrower (and others,
if required) shall grant to Lender Security Interests in such property and
assets as Lender may require (the "Collateral"), including without limitation
Borrower's present and future Accounts and general intangibles. Lender's
Security Interests in the Collateral shall be continuing liens and shall include
the proceeds and products of the Collateral, including without limitation the
proceeds of any insurance. With respect to the Collateral, ▇▇▇▇▇▇▇▇ agrees and
represents and warrants to ▇▇▇▇▇▇.
PERFECTION OF SECURITY INTERESTS. ▇▇▇▇▇▇▇▇ agrees to execute such financing
statements and to take whatever other actions are requested by ▇▇▇▇▇▇ to
perfect and continue ▇▇▇▇▇▇'s Security Interests in the Collateral. Upon
request of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Borrower will note
▇▇▇▇▇▇'s interest upon any and all chattel paper if not delivered to Lender
for possession by ▇▇▇▇▇▇. Contemporaneous with the execution of this
Agreement , ▇▇▇▇▇▇▇▇ will execute one or more UCC financing statements and
any similar statements as may be required by applicable law, and will file
such financing statements and all such similar statements in the appropriate
location or locations. Borrower hereby appoints ▇▇▇▇▇▇ as its irrevocable
attorney-in-fact for the purpose of executing any documents necessary to
perfect or to continue any Security Interest. Lender may at any time, and
without further authorization from Borrower, file a carbon, photograph,
facsimile, or other reproduction of any financing statement for use as a
financing statement. Borrower will reimburse Lender for all expenses for the
perfection, termination, and the continuation of the perfection of ▇▇▇▇▇▇'s
security interest in the Collateral. Borrower promptly will notify Lender of
any change in ▇▇▇▇▇▇▇▇'s name including any change to the assumed business
names of ▇▇▇▇▇▇▇▇. Borrower also promptly will notify Lender of any change
in Borrower's social Security Number or Employer Identification Number.
▇▇▇▇▇▇▇▇ further agrees to notify ▇▇▇▇▇▇ in writing prior to any change in
address or location of ▇▇▇▇▇▇▇▇'s principal governance office or should
Borrower merge or consolidate with any other entity.
COLLATERAL RECORDS. Borrower does now, and at all times hereafter shall,
keep correct and accurate records of the Collateral, all of which records
shall be available to Lender or ▇▇▇▇▇▇'s representative upon demand for
inspection and copying at any reasonable time. With respect to the Accounts,
▇▇▇▇▇▇▇▇ agrees to
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keep and maintain such records as Lender may require, including without
limitation information concerning Eligible Accounts and Account balances and
agings. The following is an accurate and complete list of all locations at
which Borrower keeps or maintains business records concerning ▇▇▇▇▇▇▇▇'s
Accounts: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
COLLATERAL SCHEDULES. Concurrently with the execution and delivery of this
Agreement, ▇▇▇▇▇▇▇▇ shall execute and deliver to Lender a schedule of
Accounts and Eligible Accounts in form and substance satisfactory to the
Lender. Thereafter Borrower shall execute and deliver to Lender such
supplemental schedules of Eligible Accounts and such other matters and
information relating to ▇▇▇▇▇▇▇▇'s Accounts as Lender may request.
Supplemental schedules shall be delivered according to the following
schedule: MONTHLY.
REPRESENTATIONS AND WARRANTIES CONCERNING ACCOUNTS. With respect to the
Accounts, Borrower represents and warrants to Lender: (a) Each Account
represented by Borrower to be an Eligible Account for purposes of this
Agreement conforms to the requirements of the definition of an Eligible
Account; (b) All Account information listed on schedules delivered to Lender
will be true and correct, subject to immaterial variance; and (c) Lender,
its assigns, or agents shall have the right at any time and at Borrower's
expense to inspect, examine, and audit ▇▇▇▇▇▇▇▇'s records and to confirm
with Account Debtors the accuracy of such Accounts.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the state of Borrower's
incorporation and is validly existing and in good standing in all states in
which Borrower is doing business. Borrower has the full power and authority
to own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage. Borrower also is duly
qualified as a foreign corporation and is in good standing in all states in
which the failure to so qualify would have a material adverse effect on its
businesses or financial condition.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
and all Related documents by ▇▇▇▇▇▇▇▇, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not conflict
with, result in a violation of, or constitute a default under (a) any
provision of its articles of incorporation or organization, or bylaws, or
any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of ▇▇▇▇▇▇▇▇ supplied to
Lender truly and completely disclosed ▇▇▇▇▇▇▇▇'s financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by ▇▇▇▇▇▇▇▇ when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
PROPERTIES. Except for Permitted Liens, ▇▇▇▇▇▇▇▇ owns and has good title to
all of Borrower's properties free and clear of all Security Interests and
has not executed any security documents or financing statements relating to
such properties. All of ▇▇▇▇▇▇▇▇'s properties are titled in Borrower's legal
name, and ▇▇▇▇▇▇▇▇ has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set in the "CERCLA," "▇▇▇▇," the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., or other
applicable state or Federal laws, rules, or regulations adopted pursuant to
any of the foregoing. Except as disclosed to and acknowledged by ▇▇▇▇▇▇ in
writing, ▇▇▇▇▇▇▇▇ represents and warrants that: (a) During the period of
Borrower's ownership of the properties, there has been no use, generation,
manufacture, storage, treatment, disposal, release or threatened release of
any hazardous waste or substance by any person on, under, about or from any
of the properties. (b) Borrower has no knowledge of, or reason to believe
that there has been (i) any use, generation, manufacture, storage,
treatment, disposal, release, or threatened release of any hazardous waste
or substance on, under, about or from the properties by any prior owners or
occupants of any of the properties, or (ii) any actual or threatened
litigation or claims of any kind by any person relating to such matter. (c)
Neither Borrower nor any tenant, contractor, agent or other authorized user
of any of the properties shall use, generate, manufacture, store, treat,
dispose of, or release any hazardous waste or substance on, under, about or
from any of the properties; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations,
and ordinances, including without limitation those laws, regulations and
ordinances described above. Borrower authorizes Lender and its agents to
enter upon the properties to make such inspections and tests as Lender may
deem appropriate to determine compliance of the properties with this section
of the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be construed
to create any responsibility or liability on the part of Lender to Borrower
or to any other person. The representations and warranties contained herein
are based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for indemnity or contribution in the
event Borrower becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Lender against any and
all claims, losses, liabilities, damages, penalties, and expenses which
Lender may directly or indirectly sustain or suffer resulting from a breach
of this section of the Agreement or as a consequence of any use, generation,
manufacture, storage, disposal, release or threatened release occurring
prior to Borrower's ownership or interest in the properties, whether or not
the same was or should have been known to Borrower. The provisions of this
section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any
interest in any of the properties, whether by foreclosure or otherwise.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which may
materially adversely affect Borrower's financial condition or properties,
other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by ▇▇▇▇▇▇ in writing.
TAXES. To the best of ▇▇▇▇▇▇▇▇'s knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith in
the ordinary course of business and for which adequate reserves have been
provided.
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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 directly
or indirectly securing repayment of ▇▇▇▇▇▇▇▇'s Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon ▇▇▇▇▇▇▇▇'s
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, (iii) no steps have been taken to terminate any
such plan, and (iv) there are no unfunded liabilities other than those
previously disclosed to Lender in writing.
LOCATION OF BORROWER'S OFFICES AND RECORDS. Borrower's place of business, or
▇▇▇▇▇▇▇▇'s Chief executive office, if Borrower has more than one place of
business, is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
Unless Borrower has designated otherwise in writing this location is also
the office or offices where Borrower keeps its records concerning the
Collateral.
INFORMATION. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be true and accurate in every material respect on the date as of which such
information is dated or certified; and none of such information is or will
be incomplete by omitting to state any material fact necessary to make such
information not misleading.
SURVIVAL OF REPRESENTATIONS AND WARRANTIES. ▇▇▇▇▇▇▇▇ understands and agrees
that ▇▇▇▇▇▇, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower.
▇▇▇▇▇▇▇▇ further agrees that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and effect
until such time as Borrower's Indebtedness shall be paid in full, or until
this Agreement shall be terminated in the manner provided above, whichever
is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with ▇▇▇▇▇▇ that, while
this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform ▇▇▇▇▇▇ in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit ▇▇▇▇▇▇ to examine and audit ▇▇▇▇▇▇▇▇'s books and records at all
reasonable times.
ADDITIONAL INFORMATION. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivable and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to ▇▇▇▇▇▇▇▇'s financial condition and business operations as Lender
may request from time to time.
FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and
ratios:
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of not less
than $20,000,000.00
NET WORTH RATIO. Maintain a ratio of Total Liabilities to Tangible Net
Worth of less than 1.25 TO 1.00.
CURRENT RATIO. Maintain a ratio of Current Assets to Current Liabilities
in excess of 1.30 TO 1.00.
CASH FLOW REQUIREMENTS. Maintain Cash Flow at not less than the
following level: BORROWER TO MAINTAIN A DEBT SERVICE COVERAGE OF 1.25X.
DEBT SERVICE COVERAGE IS DEFINED AS: NET PROFIT AFTER TAX PLUS
DEPRECIATION EXPENSE PLUS INTEREST EXPENSE MINUS STOCK REPURCHASES
DIVIDED BY PRIOR PERIOD CURRENT PORTION LONG TERM DEBT PLUS INTEREST
EXPENSE.
The following provisions shall apply for purposes of determining compliance
with the foregoing financial covenants and ratios: CAPITAL EXPENDITURE,
CURRENT RATIO, NET WORTH RATIO AND TANGIBLE NET WORTH TO BE MEASURED
QUARTERLY BASED ON BORROWER'S QUARTER END; DEBT SERVICE COVERAGE TO BE
MEASURED ANNUALLY BASED ON BORROWER'S FISCAL YEAR END. Except as provided
above, all computations made to determine compliance with the requirements
contained in this paragraph shall be made in accordance with generally
accepted accounting principles, applied on a consistent basis, and certified
by Borrower as being true and correct.
INSURANCE. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request
of ▇▇▇▇▇▇, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be canceled or diminished without at
least ten (10) days' prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of Lender
will not be impaired in any way by an act, omission or default of Borrower
or any other person. In connection with all policies covering assets in
which Lender holds or is offered a security interest for the Loans, Borrower
will provide Lender with such loss payable or other endorsements as Lender
may require.
INSURANCE REPORTS. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the name
of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the
properties insured; (e)the then current property values on the basis of
which insurance has been obtained, and the manner of determining those
values; and (f) the expiration date of
6
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 FEES AND CHARGES. In addition to all other agreed upon fees and
charges, pay the following: OPERATING LINE: .25% NON-USAGE FEE BASED ON THE
UNUSED PORTION OF THE LINE COMMITMENT, ACCRUING MONTHLY AND PAID QUARTERLY
IN ARREARS; INDIVIDUAL STANDBY LETTER OF CREDIT FEE: 1.5% PER ANNUM.
LOAN PROCEEDS. Use all Loan proceeds solely for the following specific
purposes: LINE OF CREDIT FOR OPERATING PURPOSES AND TO SUPPORT THE ISSUANCE
OF STANDBY LETTER OF CREDIT.
TAXES, CHARGES AND LIENS. Pay and discharge when due all of its indebtedness
and obligations, including without limitation all assessments, taxes,
governmental charges, levies and liens, of every kind and nature, imposed
upon Borrower or its properties, income, or profits, prior to the date on
which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Borrower's properties, income or
profits. Provided however, ▇▇▇▇▇▇▇▇ will not be required to pay and
discharge any such assessment, tax, charge, ▇▇▇▇, ▇▇▇▇ or claim so long as
(a) the legality of the same shall be contested in good faith by appropriate
proceedings, and (b) Borrower shall have established on its books adequate
reserves with respect to such contested assessment, tax, charge, levy, lien,
or claim in accordance with generally accepted accounting practices.
▇▇▇▇▇▇▇▇, upon demand of Lender, will furnish to Lender evidence of payment
of the assessments, taxes, charges, levies, liens and claims and will
authorize the appropriate governmental official to deliver to Lender at any
time a written statement of any assessments, taxes, charges, levies, liens
and claims against ▇▇▇▇▇▇▇▇'s properties, income, or profits.
PERFORMANCE. Perform and comply with all terms, conditions and provisions
set forth in this Agreement and in the Related documents in a timely manner,
and promptly notify Lender if ▇▇▇▇▇▇▇▇ learns of the occurrence of any event
which constitutes an Event of Default under this Agreement or under any of
the Related Documents.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including without
limitation, compliance with the Americans With Disabilities Act and with all
minimum funding standards and other requirements of ERISA and other laws
applicable to Borrower's employee benefit plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and ▇▇▇▇▇▇▇▇'s other
properties and to examine or audit ▇▇▇▇▇▇▇▇'s books, accounts, and records
and to make copies and memoranda of ▇▇▇▇▇▇▇▇'s books, accounts, and records.
If Borrower now or at any time hereafter maintains any records (including
without limitation computer generated records and computer software programs
for the generation of such records) in the possession of a third party,
Borrower, upon request of ▇▇▇▇▇▇, shall notify such party to permit Lender
free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's expense.
COMPLIANCE CERTIFICATE. Unless waived in writing by ▇▇▇▇▇▇, provide Lender
at least annually and at the time of each disbursement of Loan proceeds with
a certificate executed by ▇▇▇▇▇▇▇▇'s chief financial officer, or other
officer or person acceptable to 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 of Default exists under this Agreement.
ENVIRONMENTAL COMPLIANCE AND REPORTS. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part
of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless
such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice, summons,
lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.
ADDITIONAL ASSURANCES. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all
Security Interests.
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:
CAPITAL EXPENDITURES. Make or contract to make capital expenditures,
including leasehold improvements, in any fiscal year in excess of
$2,500,000.00 or incur liability for rentals of property (including both
real and personal property) in an amount which, together with capital
expenditures, shall in any fiscal year exceed such sum.
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) except as allowed as a Permitted Lien, sell,
transfer, mortgage, assign, pledge, lease, grant a security interest in, or
encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c) pay
any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under
7
federal and state law which arise solely from their status as Shareholders
of a Subchapter S Corporation because of their ownership of shares of stock
of Borrower, or (d) purchase or retire any of Borrower's outstanding shares
or alter or amend Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise
or entity, or (c) incur any obligation as surety or guarantor other than in
the ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure, even
though no Event of Default shall have occurred.
ACCESS LAWS. Without limiting the generality of any provision of this agreement
requiring Borrower to comply with applicable laws, rules and regulations,
Borrower agrees that it will at all times comply with applicable laws relating
to disabled access including, but not limited to, all applicable titles of the
Americans with Disabilities Act of 1990.
CONTROLS AND MONITORING.
1. BORROWER TO PROVIDE LENDER WITH ANNUAL CPA AUDITED FINANCIAL STATEMENT ON
DAW TECHNOLOGIES, INC.
2. BORROWER TO PROVIDE LENDER WITH QUARTERLY FORM 10-Q STATEMENTS.
3. NO DIVIDENDS WITHOUT PRIOR WRITTEN CONSENT OF THE BANK.
4. BORROWER TO PROVIDE LENDER WITH QUARTERLY COMPLIANCE CERTIFICATE.
5. DOMESTIC LETTERS OF CREDIT UNDER THE LETTER OF CREDIT FACILITY ARE DEDUCTED
FROM THE BORROWING BASE. ADVANCES TO BE 50% AGAINST RETENTION AND UNDERBILLINGS
LESS OVERBILLINGS WITH A $2,000,000.00 CAP. INVENTORY IS TAKEN AS COLLATERAL BUT
IS NOT ADVANCED AGAINST.
6. BORROWER TO PROVIDE LENDER WITH MONTHLY BORROWING BASE CERTIFICATE.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, ▇▇▇▇▇▇▇▇'s accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and ▇▇▇▇▇ accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. ▇▇▇▇▇▇▇▇ authorizes ▇▇▇▇▇▇, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due on
the Loans.
OTHER DEFAULTS. Failure of Borrower or any Guarantor to comply with to
perform when due any other term, obligation, covenant or condition contained
in this Agreement or in any of the Related Documents, or failure of Borrower
to comply with or to perform any other term, obligation, covenant or
condition contained in any other agreement between Lender and Borrower.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property or Borrower's or any
Grantor's ability to repay the Loans or perform their respective obligations
under this Agreement or any of the Related Documents.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished or becomes false or misleading at any
time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and
for any reason.
INSOLVENCY. The dissolution or termination of ▇▇▇▇▇▇▇▇'s existence as a
going business, the insolvency of ▇▇▇▇▇▇▇▇, the appointment of a receiver
for any part of ▇▇▇▇▇▇▇▇'s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any credit of
any Grantor against any collateral securing the Indebtedness, or by any
governmental agency. this includes a garnishment, attachment, or levy on or
of any of Borrower's deposit accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
8
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or ▇▇▇▇▇▇ believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by ▇▇▇▇▇▇ to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect ▇▇▇▇▇▇'s right to
declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AMENDMENTS. This Agreement, together with any Related Documents, constitutes
the entire understanding and agreement of the parties as to the matters set
forth in this Agreement. No alteration of or amendment to this Agreement
shall be effective unless given in writing an signed by the party or parties
sought to be charged or bound by the alteration or amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY
▇▇▇▇▇▇ IN THE STATE OF UTAH. IF THERE IS A LAWSUIT, ▇▇▇▇▇▇▇▇ AGREES UPON
▇▇▇▇▇▇'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF SALT LAKE
COUNTY, THE STATE OF UTAH. SUBJECT TO THE PROVISIONS ON ARBITRATION, THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF UTAH.
ARBITRATION. ▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS AGREEMENT OR OTHERWISE, INCLUDING WITHOUT LIMITATION
CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE
AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to
take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to
Article 9 of the Uniform Commercial Code. Any disputes, claims, or
controversies concerning the lawfulness or reasonableness of any act, or
exercise of any right, concerning any Collateral, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no arbitrator
shall have the right or the power to enjoin or restrain any act of any
party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Agreement shall preclude any
party from seeking equitable relief from a court of competent jurisdiction.
The statute of limitations, estoppel, waiver, laches, and similar doctrines
which would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for
these purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the persons
signing below is responsible for all obligations in this Agreement.
CONSENT TO LOAN PARTICIPATION. ▇▇▇▇▇▇▇▇ agrees and consents to ▇▇▇▇▇▇'s sale
or transfer, whether now or later, of one or more participation interests in
the Loans to one or more purchasers, whether related or unrelated to Lender.
Lender may provide, without any limitation whatsoever, to any one or more
purchasers, of potential purchasers, any information or knowledge Lender may
have about borrower or about any other matter relating to the Loan, and
Borrower hereby waives any rights to privacy it may have with respect to
such matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. ▇▇▇▇▇▇▇▇ also agrees that the purchasers of any
such participation interests will be considered as the absolute owners of
such interests in the Loans and will have all the rights granted under the
participation agreement or agreements governing the sale of such
participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce ▇▇▇▇▇▇▇▇'s obligation under the
Loans irrespective of the failure or insolvency of any holder of any
interest in the Loans. ▇▇▇▇▇▇▇▇ further agrees that the purchaser of any
such participation interests may enforce its interests irrespective of any
personal claims or defenses that Borrower may have against ▇▇▇▇▇▇.
COSTS AND EXPENSES. ▇▇▇▇▇▇▇▇ agrees to pay upon demand all of ▇▇▇▇▇▇'s
expenses, including without limitation reasonable attorney's fees, incurred
in connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. ▇▇▇▇▇▇ may pay someone else to help collect the Loans and
to enforce this Agreement, and Borrower will pay that amount. This includes,
subject to any limits under applicable law, ▇▇▇▇▇▇'s reasonable attorneys'
fees and ▇▇▇▇▇▇'s legal expenses, whether or not there is a lawsuit,
including reasonable attorneys' fees for bankruptcy proceedings (including
efforts to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. ▇▇▇▇▇▇▇▇ also will pay
any court costs, in addition to all other sums provided by law.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage
prepaid, addressed to the party to whom the notice is to be given at the
address shown above. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party's address. To the
extent permitted by applicable law, if there is more than one Borrower,
notice to any Borrower will constitute notice to all Borrowers. For notice
purposes, Borrower will keep Lender informed at all times of ▇▇▇▇▇▇▇▇'s
current address(es).
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of this
Agreement in all other respects shall remain valid and enforceable.
9
SUBSIDIARIES AND AFFILIATES OF BORROWER. To the extent the context of any
provision of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodation to any subsidiary or affiliate of Borrower.
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SURVIVAL. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by ▇▇▇▇▇▇ and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
▇▇▇▇▇▇ or on ▇▇▇▇▇▇'s behalf.
TIME IS OF THE ESSENCE. Time is of the essence in the performance of this
Agreement.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by ▇▇▇▇▇▇. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by ▇▇▇▇▇▇ of
a provision of this Agreement shall not prejudice or constitute a waiver of
Lender's right otherwise to demand strict compliance with that provision or
any other provision of this Agreement. No prior waiver by ▇▇▇▇▇▇, nor any
course of dealing between ▇▇▇▇▇▇ and Borrower, or between Lender and any
Grantor, shall constitute a waiver of any of Lender's rights or of any
obligations of Borrower or of any Grantor as to any future transactions.
Whenever the consent of lender is required under this Agreement, the
granting of such consent by Lender in any instance shall not constitute
continuing consent in subsequent instances where such consent is required,
and in all cases such consent may be granted or withheld in the sole
discretion of Lender.
FINAL AGREEMENT. ▇▇▇▇▇▇▇▇ understands that this Agreement and the related loan
documents are the final expression of the agreement between ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇
and may not be contradicted by evidence of any alleged oral agreement.
▇▇▇▇▇▇▇▇ ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND
▇▇▇▇▇▇▇▇ AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF AUGUST 6, 1997.
BORROWER:
DAW TECHNOLOGIES, INC.
BY:__________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇, CFO/EVP/SECRETARY
BY:__________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇, PRESIDENT
BY:__________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, SR. VICE PRESIDENT OF MANUFACTURING
LENDER:
U.S. BANK
BY:__________________________________________
AUTHORIZED OFFICER
10
[U.S. BANK LOGO]
CONTINUING AGREEMENT FOR
COMMERCIAL LETTERS OF CREDIT
DATED AS OF:
APPLICANT: Daw Technologies, Inc.
CORRESPONDENT BANK:
(if applicable)
From time to time, any person signing this Agreement as Applicant or
Correspondent Bank (either or both, "Applicant") may request U.S. Bank to issue
or to request one of its affiliates to issue one or more irrevocable commercial
letters of credit (each, a "Credit") substantially in accordance with the terms
of any application (each, an "Application") submitted to U.S. Bank by Applicant.
In consideration of the issuance by U.S. Bank or an affiliate of U.S.
Bank (each such affiliated issuer, an "Other Issuer") of one or more Credits,
each Applicant agrees that the following terms shall apply to each Application
and each Credit issued by U.S. Bank or any Other Issuer (either or both,
"Bank").
1. OBLIGATIONS
a. Applicant promises to pay Bank on demand at U.S. Bank's International
Banking Office,Salt Lake City, Utah:
i. The amount of each draft or other demand for payment ("draft") drawn
under the Credit, provided, however, (a) if the draft is drawn in
currency other than United States currency, Applicant shall pay an
equivalent amount in United States currency, at Bank's then current
selling rate for telecommunications transfer of such other currency
to the place the draft is payable, or at Bank's option, in any other
currency, place, form and manner acceptable to Bank, and (b) if the
draft is a time draft, Applicant shall make such payment without
demand sufficiently in advance of its maturity date to enable Bank
to arrange for cover to reach the place of payment no later than one
business day prior to its maturity.
ii. In advance, all commissions at the rate fixed by Bank, and all
expenses Bank may pay or incur in connection with the Credit.
iii. All taxes, levies, imposts, duties, charges, fees, deductions or
withholdings of any nature whatsoever paid or incurred by Bank in
connection with this Agreement, the Credit or any related
transactions and any liability with respect thereto (including but
not limited to interest, penalties and expenses).
iv. Interest on all amounts due under this Agreement from the applicable
due date until paid at a per annum rate equal to the sum of U.S.
Bank's prime rate, as that rate may vary from time to time, plus 5%.
Interest shall be calculated on the basis of a 360-day year and the
actual number of days elapsed. U.S. Bank's prime rate is the rate
which U.S. Bank from time to time establishes as its prime rate and
is not, for example, the lowest rate of interest which U.S. Bank
collects from any borrower or class of borrowers.
b. Without limiting Applicant's obligations to any Other Issuer, but
without duplication, Applicant promises to pay to U.S. Bank on demand,
at U.S. Bank's International Banking Office in Salt Lake City, Utah, an
amount equal to all amounts which U.S. Bank pays or becomes obligated to
pay to any Other Issuer with respect to the Credit, whether as a
participant in the Credit or otherwise.
c. Notwithstanding any other provision of this Agreement, Applicant's
obligation to make any payment hereunder to any Other Issuer shall, to
the extent of such payment, be satisfied by payment to U.S. Bank as set
forth in this Agreement.
d. Applicant hereby authorizes U.S. Bank to automatically deduct from its
account with U.S. Bank specified on attached Schedule 1, all amounts
which become due to Bank under this Agreement. If there are insufficient
funds in the account to pay the automatic deduction in full, Bank may
allow the account to become overdrawn, or Bank may reverse the automatic
deduction. Applicant will pay all fees on the account which result from
the automatic deductions, including any overdraft/NSF charges. If for
any reason U.S. Bank does not charge the
Page 1 of 6
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account for any amount due, or if an automatic deduction is reversed,
the amount due is still owing to Bank as set forth herein. If the
account is a Money Market Account, the number of withdrawals from that
account is limited as set out in the agreement. U.S. Bank may cancel the
automatic deduction at any time in its discretion.
2. CERTAIN WARRANTIES Applicant warrants that the execution, delivery and
performance of this Agreement are within its authority and are not in
contravention of law, of any terms of any agreement, instrument, order or
judgment to which Applicant is a party or by which it or its property may be
bound or of any provision of its charter documents or bylaws, and that it
has obtained all necessary approvals and consents therefor.
3. THE CREDIT
a. U.S. Bank may either issue the Credit or request one of its affiliates
to issue the Credit. Bank may sell, assign or participate all or any
part of its rights and obligations under this Agreement, the Application
and the Credit. Without limiting the foregoing, any Other Issuer may
sell a participation in all or any part of its rights and obligations
under this Agreement and the Credit to U.S. Bank.
b. Bank hereby is authorized to set forth in the Credit the terms appearing
on the Application, with such modifications as Bank in its discretion
may determine are appropriate or necessary and are not materially
inconsistent with such terms. Any such determination shall be binding on
Applicant.
c. All communications relating to the Credit will be sent at Applicant's
risk. Bank shall have no responsibility for any inaccuracy of
translation, or any interruption, error or delay in transmission or
delivery by mail, telecommunication or any other method. Bank shall not
be liable for any error, neglect or default of any of Bank's
correspondents.
d. Neither Bank nor its correspondents shall be in any way responsible for
the performance of any beneficiary's obligations to Applicant or for the
form, sufficiency, accuracy, genuineness, authority of person signing,
falsification or legal effect, of any document required by the Credit if
such document appears in order on its face. Whether the documents
conform to the terms of the Credit and whether any demand is timely and
in proper form shall be determined by Bank in its sole discretion, which
determination shall be final and binding on Applicant. Without limiting
the foregoing, if a unit price is not required on documents accompanying
the draft(s), Bank may honor draft(s) in any amount(s) not to exceed the
amount then available under the Credit.
e. Notwithstanding any other term of this Agreement, if Bank at any
Applicant's request agrees to indemnify any shipper, including but not
limited to any vessel, its owner, operators and agents from any
liability, loss or expense incurred in connection with release of any
goods covered by the Credit without surrender of the applicable bill of
lading or other shipping documents, Applicant hereby (i) authorizes Bank
without limitation or condition to either or both pay or accept, as the
case may be, any and all drafts presented in connection with such goods;
and (ii) agrees to make payment to Bank as specified in Section 1, even
though any required documents may be omitted, incorrect, defective or
otherwise not in conformity with the terms of the Credit.
f. Subject to Section 7b, Bank may at Applicant's request increase the
amount of the Credit, extend the time for making and honoring of demands
under the Credit and otherwise modify the terms and conditions governing
the Credit. As so modified, all provisions of the Credit, and all action
taken by Bank or Bank's correspondents in connection therewith, shall be
binding upon Applicant.
g. Applicant will promptly examine the Credit, any amendments thereto and
all information, documents and instruments delivered to Applicant from
time to time by Bank and shall notify U.S. Bank within five U.S. Bank
banking days after receipt if Applicant claims that Bank has failed to
comply with Applicant's instructions or Bank's obligations with respect
to the Credit, has wrongfully honored or dishonored any presentation
under the Credit or claims any other irregularity. If Applicant does not
so notify U.S. Bank within such time period, Applicant shall be
conclusively deemed to have waived and shall be precluded from asserting
such claim(s).
h. Bank may receive, accept or pay as complying with the terms of the
Credit, any drafts or other documents, otherwise in order, which appear
on their face to be signed by or issued to the administrator, executor,
successor or trustee in bankruptcy of or the receiver for any of the
property of, or any other person or entity acting as the representative
or in the place of, the party in whose name the Credit provides that any
drafts or other documents should be drawn or issued.
4. SECURITY AND INSURANCE
a. As security for payment of any and all of Applicant's obligations to
U.S. Bank and any Other Issuer now or hereafter existing under or in
connection with this Agreement, the Credit, or any other indebtedness of
Applicant to U.S. Bank and any Other Issuer, Applicant hereby grants to
U.S. Bank and any Other Issuer a
Page 2 of 6
12
security interest in any and all bills of lading, other documents of
title, policies or certificates of insurance, chattel paper and general
intangibles accompanying or relative to the Credit or any drafts drawn
thereunder, and any and all inventory, goods and other property shipped
under, in connection with, or relative to the Credit or any drafts drawn
thereunder, together with any and all proceeds and products thereof (the
"Collateral"). At any time and from time to time, on demand of Bank,
Applicant will assign and deliver to Bank as security for such
obligations additional collateral of a type and value satisfactory to
Bank or make such cash payments as Bank may require. At Bank's request,
Applicant will execute any financing statements and other documents or
instruments as Bank may require to perfect the security interests
granted or contemplated hereunder and will pay the cost of any filings
in connection therewith.
b. Applicant shall keep any property described in the Credit covered by
insurance satisfactory to Bank, and authorizes Bank to collect and apply
the proceeds of any such insurance to any of Applicant's obligations.
5. DEFAULT AND REMEDIES
a. Time is of the essence of this Agreement. The occurrence of any of the
following shall be an Event of Default hereunder:
i. Default in payment or performance of any of Applicant's obligations
hereunder or under any promissory note or other agreement between
Bank and Applicant;
ii. Default under any security documents securing Applicant's
obligations hereunder, whether executed by Applicant or any other
person;
iii. ▇▇▇▇ or proceeding against any property of Applicant or any
guarantor of Applicant's obligations hereunder ("Guarantor");
iv. Death, dissolution, termination of existence, insolvency or
business failure of, appointment of a receiver for any part of the
property of, assignment for the benefit of creditors by,
commencement of any proceeding under any bankruptcy or insolvency
laws by or against, or entry of any judgment against, Applicant or
any Guarantor;
v. Any warranty, representation or statement made or furnished to Bank
by Applicant or any Guarantor proves to have been false in any
material respect when made or furnished;
vi. Any event which gives the holder of any debt obligation of
Applicant or any Guarantor the right to accelerate its maturity,
whether or not such right is exercised;
vii. Any guaranty of Applicant's obligations hereunder ceases to be, or
is asserted by any person not to be, in full force and effect; or
viii. Bank, for any reason in good faith, deems itself insecure.
b. Upon the occurrence of any Event of Default and at any time thereafter,
Bank at its option and in addition to all other rights of Bank under
this Agreement, any related agreement and applicable law, may (i)
without notice or demand, declare the amount for which the Credit was
issued and any other amounts owing hereunder immediately due and
payable; and (ii) exercise any and all rights and remedies of a secured
party under the Uniform Commercial Code and other applicable law. Any
required notice of sale of Collateral shall be deemed reasonable if sent
at least 10 days prior to the date of any public sale or the date after
which any private sale may be made.
6. CHANGES TO LAWS AND REGULATIONS If any adoption of or change in law or
regulation, or in the interpretation or administration thereof by any
official authority shall impose on Bank any tax, charge, fee, deduction or
withholding of any kind whatsoever, or shall impose or modify any reserve
requirements, standards regarding capital adequacy or any other conditions
affecting this Agreement or the Credit, and the result of any of the
foregoing shall be to increase the cost to Bank of issuing and maintaining
the Credit, reduce the amount of any sum receivable by Bank hereunder or
reduce the rate of return on Bank's capital, then Applicant shall pay to
Bank upon demand such additional amount or amount(s) as Bank may specify to
be necessary to compensate Bank for such additional costs incurred or
reduction suffered.
7. GENERAL
a. Each Application shall be subject to all terms and conditions of this
Agreement.
b. Notwithstanding any other term hereof, (i) the Credit can be revoked or
amended only with the consent of the beneficiary of the Credit, all
Applicants (including any Correspondent Bank signing this Agreement),
Bank and any confirming bank and (ii) instructions concerning
discrepancies must be given by all such Applicants.
Page 3 of 6
13
c. If the Account Party on the Application is not an Applicant hereunder,
the Account Party shall have no rights against Bank; and Applicant shall
deliver to U.S. Bank an agreement satisfactory to Bank executed by the
Account Party, providing that Bank without notice to or consent of the
Account Party, may deal with Applicant as if Applicant were the named
Account Party, and waiving any and all present and future claims and
defenses against Bank.
d. Applicant shall give U.S. Bank prior written notice of any change of
name, address or place of business. Any notice of any nature by
Applicant to Bank must be given at U.S. Bank's office where the
Application was submitted.
e. The singular includes the plural. If Applicant consists of more than one
person, the obligations of Applicant hereunder are joint and several and
are binding upon any marital community of which any Applicant is a
member. This Agreement shall be binding on Applicant's heirs, successors
and assigns.
f. Notwithstanding the title of any Credit instrument, the rights and
obligations of Bank and Applicant with respect to the Credit shall be as
set forth herein.
g. Except as otherwise provided herein or on the Application, the Uniform
Customs and Practice for Documentary Credits of the International
Chamber of Commerce ("UCP") as in effect on the date of issuance of the
Credit are fully incorporated herein and shall apply to the Credit. This
Agreement and the Credit shall be governed by the internal laws of the
State of Utah, United States of America (the "Governing Laws"), except
to the extent such laws are inconsistent with the UCP. If the Credit
provides that it is governed by laws, regulations or rules other than
the Governing Laws (the "Specified Laws"), Applicant agrees not to
assert any provisions of the Specified Laws as a defense to any of its
obligations hereunder.
h. Applicant hereby indemnifies and agrees to hold harmless the Bank, its
officers, directors, agents, successors and assigns, from and against
any and all liability, claims, demands, losses and expenses (including
without limitation legal costs and attorney fees incurred in any
appellate proceeding, proceeding under the bankruptcy code or
receivership), arising from or in connection with this Agreement, the
Credit or any related transaction, unless arising from Bank's gross
negligence or willful misconduct.
i. Applicant hereby authorizes Bank to issue Credits and amendments thereto
based upon, and to otherwise rely on and act in accordance with, any
oral or written communication, including but not limited to any
electronic communication and any facsimile transmission, reasonably
believed by Bank to have been or which purportedly has been, given by
one of the authorized persons specified on Schedule 1, even if such
communication proves not to have been given by an authorized person.
j. Bank's waiver of any right on any occasion or occasions shall not be
construed as a bar or waiver of any other right or of such right on any
other occasion. Applicant hereby waives and agrees not to assert any
defense under any applicable statute of limitations, to the fullest
extent permitted by law. In addition to all other rights which Bank may
have, Applicant hereby authorizes Bank to set off any and all deposits
or other moneys due from Bank at any of its offices against any and all
of Applicant's obligations hereunder, whether or not Bank shall have
made any demand under this Agreement.
k. Without notice to any Applicant and without affecting Bank's rights or
Applicant's obligations, Bank may deal in any manner with any person who
at any time is liable for, or provides any collateral for, any
obligations of Applicant to Bank. Without limiting the foregoing, Bank
may impair, release (with or without substitution of new collateral) and
fail to perfect a security interest in, any collateral provided by any
person; and sue, fail to sue, agree not to sue, release, and settle or
compromise with, any person.
l. Whether or not litigation or arbitration is commenced, Applicant
promises to pay all attorney fees and other costs and expenses incurred
by Bank in collecting overdue amounts or construing or enforcing any
provision of this Agreement or the Credit, including but not limited to
reasonable attorney fees at trial, in any arbitration, appellate
proceeding, proceeding under the Bankruptcy code, or receivership, and
post-judgment attorney fees incurred in enforcing any judgment.
m. Bank's issuance of the Credit shall constitute its Agreement to the
terms of this Agreement.
n. This Agreement is a continuing agreement and shall remain in effect
until terminated, amended or replaced. This Agreement may be terminated
by Applicant or U.S. Bank by giving notice of termination to the other
and may be amended or replaced by a written agreement signed by
Applicant and accepted by U.S. Bank; provided, however that no such
termination, amendment or replacement shall alter or affect the
undertaking of Applicant or Bank with respect to any Credit issued prior
to such termination, amendment or replacement.
Page 4 of 6
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o. Nothing in this Agreement shall be construed as imposing any obligation
on Bank to issue any Credit. Each Credit shall be issued by Bank in its
sole discretion and at its sole option.
p. Any Correspondent Bank signing this Agreement agrees that each
Application and Credit and this Agreement are subject to all terms and
conditions of the most recent Correspondent Bank Letter of Credit
Agreement between U.S. Bank and Correspondent Bank.
q. Bank is authorized to record electronically or otherwise any telephone
and other oral communications between Bank and Applicant.
r. All terms and conditions on the attached Schedule 1, and any replacement
Schedule 1 are hereby incorporated herein. Applicant may change the
provisions of Schedule 1 by executing and delivering a new Schedule 1 to
Bank.
s. From time to time, Applicant may submit Applications, applications for
amendments to Credits or other communications (each, a "Faxed Document")
to Bank by facsimile transmission. With respect to each such facsimile
transmission Applicant agrees: (i) each Faxed Document shall be deemed
to be an original document and shall be effective for all purposes as if
it were an original; (ii) Applicant shall retain the original of any
Faxed Document and shall deliver it to Bank upon request; (iii) if
Applicant sends Bank a manually signed confirmation of a Faxed Document
Bank shall have no duty to compare it to the previously received Faxed
Document nor shall it have any liability nor duty to act should the
contents of the written confirmation differ therefrom. Any manually
signed confirmation of a Faxed Document must be conspicuously marked
"Previously transmitted by facsimile." Bank will not be liable for
issuance of duplicate letters of credit or amendments thereto that
result from Bank's receipt of confirmations not so marked; (iv) Bank
cannot effectively determine whether a particular facsimile request is
valid. Therefore Applicant shall have sole responsibility for the
security of using facsimile transmissions and for any authorized or
unauthorized Faxed Document received by Bank, purportedly on behalf of
Applicant.
8. ARBITRATION
a. Any Bank or Applicant may require that all disputes, claims,
counterclaims, and defenses, including those based on or arising from
any alleged tort ("Claims") relating in any way to this Agreement, the
Credit or any transaction of which this Agreement or the Credit is a
part (the "Loan"), be settled by binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association
and Title 9 of the U.S. Code. All Claims will be subject to the statutes
of limitation applicable if they were litigated. This provision is void
if the Loan, at the time of the proposed submission to arbitration, is
secured by real property located outside of Oregon or Washington, or if
the effect of the arbitration procedure (as opposed to any Claims of
Applicant) would be to materially impair the Bank's ability to realize
on any collateral securing the Loan.
b. If arbitration occurs and each party's Claim is less than $100,000, one
neutral arbitrator will decide all issues; if any party's Claim is
$100,000 or more, three neutral arbitrators will decide all issues. All
Arbitrators will be active Utah State Bar members in good standing. All
arbitration hearings will be held in Salt Lake City, Utah. In addition
to all other powers, the arbitrator(s) shall have the exclusive right to
determine all issues of arbitrability. Judgment on any arbitration award
may be entered in any court with jurisdiction.
c. If any party institutes any judicial proceeding relating to the Loan,
such action shall not be a waiver of the right to submit any Claim to
arbitration. In addition each has the right before, during, and after
any arbitration to exercise any number of the following remedies, in any
order or concurrently: (i) setoff; (ii) self-help repossession; (iii)
judicial or non-judicial foreclosure against real or personal property
collateral; and (iv) provisional remedies, including injunction,
appointment of receiver, attachment, claim and delivery and replevin.
9. BY UTAH STATUTE (UCA 25-5-4) THE FOLLOWING DISCLOSURE IS REQUIRED: THIS
AGREEMENT IS A FINAL EXPRESSION OF THE AGREEMENT BETWEEN BANK AND APPLICANT
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.
APPLICANT ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS AGREEMENT
APPLICANT: CORRESPONDENT BANK: (IF APPLICABLE)
DAW TECHNOLOGIES, INC.
__________________________________ _____________________________________
By:_______________________________ By:__________________________________
Page 5 of 6
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Title:____________________________ Title:_______________________________
FOR BANK USE - SIGNATURE VERIFIED AND AUTHORITY TO SIGN CONFIRMED
--------------------------------------------------------------------------------
U.S. BANK
--------------------------------------------------------------------------------
AUTHORIZED SIGNATURE OFFICER NAME AND NUMBER COMPANY COST CENTER
--------------------------------------------------------------------------------
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[LOGO]
CONTINUING AGREEMENT FOR IRREVOCABLE
STANDBY LETTERS OF CREDIT
DATED AS OF:
APPLICANT: Daw Technologies, Inc.
CORRESPONDENT BANK:
(if applicable)
From time to time, any person signing this Agreement as Applicant or
Correspondent Bank (either or both, "Applicant") may request U.S. Bank to issue
or to request one of its affiliates to issue one or more irrevocable standby
letters of credit (each, a "Credit") substantially in accordance with the terms
of any application (each, an "Application") submitted to U. S. Bank by
Applicant.
In consideration of the issuance by U. S. Bank or an affiliate of U. S. Bank
(each such affiliated issuer, an "Other Issuer") of one or more Credits, each
Applicant agrees that the following terms shall apply to each Application and
each Credit issued by U. S. Bank or any Other Issuer (either or both, "Bank").
1. OBLIGATIONS
a. Applicant promises to pay Bank on demand at U. S. Bank's International
Banking Office,Salt Lake City, Utah:
i. The amount of each draft or other request for payment ("draft")
drawn under the Credit. For amounts payable in United States
currency, ▇▇▇▇▇▇▇▇▇ agrees to reimburse Bank in United States
currency. For amounts payable in other currency, Applicant agrees
to reimburse Bank an equivalent amount in United States currency at
Bank's then current selling rate for telecommunications transfer of
such other currency to the place the draft is payable, or at Bank's
option, in any other currency, place, form and manner acceptable to
Bank. If Bank so demands, Applicant promises to pay Bank in
advance, in United States currency, all sums necessary to put Bank
in funds to pay all such drafts whether payable in United States
currency or otherwise.
ii. Bank's fees, at the per annum rate fixed by Bank, for the period
from the date of issuance to the expiry date of the Credit. Such
fees shall be payable from time to time, in advance, at such
intervals as Bank may require and shall be nonrefundable, whether
or not the Credit is drawn upon, reduced in time or amount or
otherwise modified.
iii. The entire principal amount which has not been drawn under the
Credit, to be held by Bank as collateral for any draws. Any such
amount which is not applied to reimbursement of draws shall be
refunded to Applicant within thirty (30) days after the expiry date
of the Credit, with interest at U. S. Bank's lowest savings account
rate then in effect.
iv. All taxes, levies, imposts, duties, charges, fees, deductions or
withholdings of any nature whatsoever paid or incurred by Bank in
connection with this Agreement, the Credit or any related
transactions, and any liability with respect thereto (including but
not limited to interest, penalties and expenses).
v. Interest on all amounts due under this Agreement from the
applicable due date until paid at a per annum rate equal to the sum
of U. S. Bank's prime rate, as that rate may vary from time to
time, plus 5%. Interest shall be calculated on the basis of a
360-day year and the actual number of days elapsed. U. S. Bank's
prime rate is the rate which U. S. Bank from time to time
establishes as its prime rate and is not, for example, the lowest
rate of interest which U. S. Bank collects from any borrower or
class of borrowers.
b. Without limiting Applicant's obligations to any Other Issuer, but
without duplication, Applicant promises to pay to U.S. Bank on demand,
at U. S. Bank's International Banking Office in Salt Lake City, Utah, an
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17
amount equal to all amounts which U. S. Bank pays or becomes obligated
to pay to any Other Issuer with respect to the Credit, whether as a
participant in the Credit or otherwise.
c. Notwithstanding any other provision of this Agreement, Applicant's
obligation to make any payment hereunder to any Other Issuer shall, to
the extent of such payment, be satisfied by payment to U. S. Bank as set
forth in this Agreement.
d. Applicant hereby authorizes U. S. Bank to automatically deduct from its
account with U. S. Bank specified on attached Schedule 1, all amounts
which become due to Bank under this Agreement. If there are insufficient
funds in the account to pay the automatic deduction in full, Bank may
allow the account to become overdrawn, or Bank may reverse the automatic
deduction. Applicant will pay all fees on the account which result from
the automatic deductions, including any overdraft/NSF charges. If for
any reason U. S. Bank does not charge the account for any amount due, or
if an automatic deduction is reversed, the amount due is still owing to
Bank as set forth herein. If the account is a Money Market Account, the
number of withdrawals from that account is limited as set out in the
agreement. U. S. Bank may cancel the automatic deduction at any time in
its discretion.
2. CERTAIN WARRANTIES Applicant warrants that the execution, delivery and
performance of this Agreement are within its authority and are not in
contravention of law, of any terms of any agreement, instrument, order or
judgment to which Applicant is a party or by which it or its property may be
bound or of any provision of its charter documents or bylaws, and that it
has obtained all necessary approvals and consents therefor.
3. THE CREDIT
a. U. S. Bank may either issue the Credit or request one of its affiliates
to issue the Credit. Bank may sell, assign or participate all or any
part of its rights and obligations under this Agreement, the Application
and the Credit. Without limiting the foregoing, any Other Issuer may
sell a participation in all or any part of its rights and obligations
under this Agreement and the Credit to U. S. Bank.
b. Bank hereby is authorized to set forth in the Credit the terms appearing
on the Application, with such modifications as Bank in its discretion
may determine are appropriate or necessary and are not materially
inconsistent with such terms. Any such determination shall be binding on
Applicant.
c. All communications relating to the Credit will be sent at Applicant's
risk. Bank shall have no responsibility for any inaccuracy of
translation, or any error or delay in transmission or delivery by mail,
telecommunication or any other method. Bank shall not be liable for any
error, neglect or default of any of Bank's correspondents.
d. Neither Bank nor its correspondents shall be in any way responsible for
the performance of any beneficiary's obligations to Applicant or for the
form, sufficiency, accuracy, genuineness, authority of person signing,
falsification or legal effect, of any documents required by the Credit
if such documents appear in order on their face. Whether the documents
conform to the terms of the Credit and whether any demand is timely and
in proper form shall be determined by Bank in its sole discretion, which
determination shall be final and binding on Applicant.
e. Subject to Section 6b, Bank may at Applicant's request increase the
amount of the Credit, extend the time for making and honoring of demands
under the Credit and otherwise modify the terms and conditions governing
the Credit. As so modified, all provisions of the Credit, and all action
taken by Bank or Bank's correspondents in connection therewith, shall be
binding upon Applicant.
f. Applicant will promptly examine the Credit, any amendments thereto and
all information, documents and instruments delivered to Applicant from
time to time by Bank and shall notify U. S. Bank within five U. S. Bank
banking days after receipt if Applicant claims that Bank has failed to
comply with Applicant's instructions or Bank's obligations with respect
to the Credit, has wrongfully honored or dishonored any presentation
under the Credit or claims any other irregularity. If Applicant does not
so notify U. S. Bank within such time period, Applicant shall be
conclusively deemed to have waived and shall be precluded from asserting
such claim(s).
g. Bank may receive, accept or pay as complying with the terms of the
Credit, any drafts or other documents, otherwise in order, which appear
on their face to be signed by or issued to the administrator, executor,
successor or trustee in bankruptcy of or the receiver for any of the
property of, or any other person or
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entity acting as the representative or in the place of, the party in
whose name the Credit provides that any drafts or other documents should
be drawn or issued.
4. DEFAULT AND REMEDIES
a. Time is of the essence of this Agreement. The occurrence of any of the
following shall be an Event of Default hereunder:
i. Default in payment or performance of any of Applicant's obligations
hereunder or under any promissory note or other agreement between
Bank and Applicant;
ii. Default under any security documents securing Applicant's
obligations hereunder, whether executed by Applicant or any other
person;
iii. ▇▇▇▇ or proceeding against any property of Applicant or any
guarantor of Applicant's obligations hereunder ("Guarantor");
iv. Death, dissolution, termination of existence, insolvency or
business failure of, appointment of a receiver for any part of the
property of, assignment for the benefit of creditors by,
commencement of any proceeding under any bankruptcy or insolvency
laws by or against, or entry of any judgment against, Applicant or
any Guarantor;
v. Any warranty, representation or statement made or furnished to Bank
by Applicant or any Guarantor proves to have been false in any
material respect when made or furnished;
vi. Any event which gives the holder of any debt obligation of
Applicant or any Guarantor the right to accelerate its maturity,
whether or not such right is exercised;
vii. Any guaranty of Applicant's obligations hereunder ceases to be, or
is asserted by any person not to be, in full force and effect; or
viii. Any material adverse change in the financial condition or
management of Applicant or any Guarantor, or Bank for any reason in
good faith, deems itself insecure.
b. Upon the occurrence of any Event of Default and at any time thereafter,
Bank at its option and in addition to all other rights of Bank under
this Agreement, any related agreement and applicable law, may without
notice or demand declare the amount for which the Credit was issued and
any other amounts owing hereunder immediately due and payable.
5. CHANGES TO LAWS AND REGULATIONS If any adoption of or change in law or
regulation, or in the interpretation or administration thereof by any
official authority shall impose on Bank any tax, charge, fee, deduction or
withholding of any kind whatsoever, or shall impose or modify any reserve
requirements, standards regarding capital adequacy or any other conditions
affecting this Agreement or the Credit, and the result of any of the
foregoing shall be to increase the cost to Bank of issuing and maintaining
the Credit, reduce the amount of any sum receivable by Bank hereunder or
reduce the rate of return on Bank's capital, then Applicant shall pay to
Bank upon demand such additional amount or amounts as Bank may specify to be
necessary to compensate Bank for such additional costs incurred or reduction
suffered.
6. GENERAL
a. Each Application shall be subject to all terms and conditions of this
Agreement.
b. Notwithstanding any other term hereof, (i) the Credit can be revoked or
amended only with the consent of the beneficiary of the Credit, all
Applicants (including any Correspondent Bank signing this Agreement),
the Bank issuing the Credit and any confirming bank, and (ii)
instructions concerning discrepancies must be given by all such
Applicants.
c. If the Account Party on the Application is not an Applicant hereunder,
the Account Party shall have no rights against Bank; and Applicant shall
deliver to U. S. Bank an agreement satisfactory to Bank executed by the
Account Party, providing that Bank without notice to or consent of the
Account Party, may deal with Applicant as if Applicant were the named
Account Party, and waiving any and all present and future claims and
defenses against Bank.
d. Applicant shall give U. S. Bank prior written notice of any change of
name, address or place of business. Any notice of any nature by
Applicant to Bank must be given at U. S. Bank's office to which the
Application was submitted.
e. The singular includes the plural. If Applicant consists of more than one
person, the obligations of Applicant hereunder are joint and several and
are binding upon any marital community of which any Applicant is a
member. This Agreement shall be binding on Applicant's heirs, successors
and assigns.
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f. Notwithstanding the title appearing on any Credit instrument, the rights
and obligations of Bank and Applicant with respect to the Credit shall
be as set forth herein.
g. Except as otherwise provided herein or on the Application, the Uniform
Customs and Practice for Documentary Credits of the International
Chamber of Commerce ("UCP") as in effect on the date of issuance of the
Credit are fully incorporated herein and shall apply to the Credit. This
Agreement and the Credit shall be governed by the internal laws of the
State of Utah, United States of America (the "Governing Laws"), except
to the extent such laws are inconsistent with the UCP. If the Credit
provides that it is governed by laws, regulations or rules other than
the Governing Laws (the "Specified Laws"), Applicant agrees not to
assert any provisions of the Specified Laws as a defense to any of its
obligations hereunder.
h. Applicant hereby indemnifies and agrees to hold harmless Bank, its
officers, directors, agents, successors and assigns, from and against
any and all liability, claims, demands, losses and expenses (including
without limitation legal costs and attorney fees incurred in any
appellate proceeding, proceeding under the bankruptcy code or
receivership and post-judgment attorney fees incurred in enforcing any
judgment), arising from or in connection with this Agreement, the Credit
or any related transaction, unless arising from Bank's gross negligence
or willful misconduct.
i. Applicant hereby authorizes Bank to issue Credits and amendments thereto
based upon, and to otherwise rely on and act in accordance with, any
oral or written communication, including but not limited to any
electronic communication and any facsimile transmission, reasonably
believed by Bank to have been or which purportedly has been, given by
one of the authorized persons specified on Schedule 1, even if such
communication proves not to have been given by an authorized person.
j. Bank's waiver of any right on any occasion or occasions shall not be
construed as a bar or waiver of any other right or of such right on any
other occasion. Applicant hereby waives and agrees not to assert any
defense under any applicable statute of limitations, to the fullest
extent permitted by law. In addition to all other rights which Bank may
have, Applicant hereby authorizes Bank to set off any and all deposits
or other monies due from Bank at any of its offices against any and all
of Applicant's obligations hereunder, whether or not Bank shall have
made any demand under this Agreement.
k. Without notice to any Applicant and without affecting Bank's rights or
Applicant's obligations, Bank may deal in any manner with any person who
at any time is liable for, or provides any collateral for, any
obligations of Applicant to Bank. Without limiting the foregoing, Bank
may impair, release (with or without substitution of new collateral) and
fail to perfect a security interest in, any collateral provided by any
person; and sue, fail to sue, agree not to sue, release, and settle or
compromise with, any person.
l. Whether or not litigation or arbitration is commenced, Applicant
promises to pay all attorney fees and other costs and expenses incurred
by Bank in collecting overdue amounts or construing or enforcing any
provision of this Agreement or the Credit, including but not limited to
reasonable attorney fees at trial, in any arbitration, appellate
proceeding, proceeding under the bankruptcy code or receivership and
post-judgment attorney fees incurred in enforcing any judgment.
m. Bank's issuance of the Credit shall constitute its agreement to the
terms of this Agreement.
n. This Agreement is a continuing agreement and shall remain in effect
until terminated, amended or replaced. This Agreement may be terminated
by Applicant or U. S. Bank by giving notice of termination to the other
and may be amended or replaced by a written agreement signed by
Applicant and accepted by U. S. Bank; provided, however that no such
termination, amendment or replacement shall alter or affect the
undertaking of Applicant or Bank with respect to any Credit issued prior
to such termination, amendment or replacement.
o. Nothing in this Agreement shall be construed as imposing any obligation
on Bank to issue any Credit. Each Credit shall be issued by Bank in its
sole discretion and at its sole option.
p. Any Correspondent Bank signing this Agreement agrees that each
Application and Credit and this Agreement are subject to all terms and
conditions of the most recent Correspondent Bank Letter of Credit
Agreement between U. S. Bank and Correspondent Bank.
q. Bank is authorized to record electronically or otherwise any telephone
and other oral communications between Bank and Applicant.
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20
r. All terms and conditions on the attached Schedule 1, and any replacement
Schedule 1 are hereby incorporated herein. Applicant may change the
provisions of Schedule 1 by executing and delivering a new Schedule 1 to
U. S. Bank.
s. From time to time, Applicant may submit Applications, applications for
amendments to Credits or other communications (each, a "Faxed Document")
to Bank by facsimile transmission. With respect to each such facsimile
transmission Applicant agrees: (i) each Faxed Document shall be deemed
to be an original document and shall be effective for all purposes as if
it were an original; (ii) Applicant shall retain the original of any
Faxed Document and shall deliver it to Bank upon request; (iii) if
Applicant sends Bank a manually signed confirmation of a Faxed Document
Bank shall have no duty to compare it to the previously received Faxed
Document nor shall it have any liability nor duty to act should the
contents of the written confirmation differ therefrom. Any manually
signed confirmation of a Faxed Document must be conspicuously marked
"Previously transmitted by facsimile." Bank will not be liable for
issuance of duplicate letters of credit or amendments thereto that
result from Bank's receipt of confirmations not so marked; (iv) Bank
cannot effectively determine whether a particular facsimile request is
valid. Therefore Applicant shall have sole responsibility for the
security of using facsimile transmissions and for any authorized or
unauthorized Faxed Document received by Bank, purportedly on behalf of
Applicant
7. ARBITRATION
a. Any Bank or Applicant may require that all disputes, claims,
counterclaims, and defenses, including those based on or arising from
any alleged tort ("Claims") relating in any way to this Agreement, the
Credit or any transaction of which this Agreement or the Credit is a
part (the "Loan"), be settled by binding arbitration in accordance with
the Commercial Arbitration Rules of the American Arbitration Association
and Title 9 of the U. S. Code. All Claims will be subject to the statues
of limitation applicable if they were litigated. This provision is void
if the Loan, at the time of the proposed submission to arbitration, is
secured by real property located outside of Oregon or Washington, or if
the effect of the arbitration procedure (as opposed to any Claims of
Applicant) would be to materially impair Bank's ability to realize on
any collateral securing the Loan.
b. If arbitration occurs and each party's Claim is less than $100,000, one
neutral arbitrator will decide all issues; if any party's Claim is
$100,000 or more, three neutral arbitrators will decide all issues. All
arbitrators will be active Utah State Bar members in good standing. All
arbitration hearing will be held in Salt Lake City, Utah. In addition to
all other powers, the arbitrator(s) shall have the exclusive right to
determine all issues of arbitrability. Judgment on any arbitration award
may be entered in any court with jurisdiction.
c. If any party institutes any judicial proceeding relating to the Loan,
such action shall not be a waiver of the right to submit any Claim to
arbitration. In addition, each has the right before, during, and after
any arbitration to exercise any number of the following remedies, in any
order or concurrently: (i) setoff; (ii) self-help repossession; (iii)
judicial or non-judicial foreclosure against real or personal property
collateral; and (iv) provisional remedies, including injunction,
appointment of receiver, attachment, claim and delivery and replevin.
BY UTAH STATUTE (UCA 25-5-4) THE FOLLOWING DISCLOSURE IS REQUIRED: THIS
AGREEMENT IS A FINAL EXPRESSION OF THE AGREEMENT BETWEEN BANK AND APPLICANT AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT.
APPLICANT ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS AGREEMENT
APPLICANT: CORRESPONDENT BANK: (IF APPLICABLE)
DAW TECHNOLOGIES, INC.
__________________________________ _____________________________________
By:_______________________________ By:__________________________________
Title:____________________________ Title:_______________________________
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FOR BANK USE - SIGNATURE VERIFIED AND AUTHORITY
TO SIGN CONFIRMED.
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AUTHORIZED SIGNATURE
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OFFICER'S NAME AND NUMBER (PLEASE PRINT)
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U.S. BANK
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COMPANY COST CENTER
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