LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this "Agreement") dated
April 24, 2000 is between ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ Computer Corporation, a Utah
corporation (the "Borrower") and Zions First National Bank ("Bank"). In
consideration for Bank issuing irrevocable letters of credit during the term
provided in Section 2.6 of that certain Loan Agreement dated March 31, 2000 by
and between Borrower and Bank (the "Loan Agreement") in an amount not to exceed
$ 7,000,000.00 (the "Letters of Credit"), Borrower and Bank agree to the
following provisions:
1. Reimbursement. Borrower shall reimburse Bank, at Bank's office in
immediately available United States currency, the amount paid or to be paid by
Bank or Bank's agent, or any party on Bank's behalf on each draft or other
order, instrument or demand drawn or presented under the Letters of Credit (an
"Item"). Items shall be reimbursed on demand. Upon full and timely reimbursement
according to the terms of this Agreement and the Loan Agreement, the full face
amount of the Letters of Credit shall be available to Borrower throughout the
remainder of the stated term of the Letters of Credit.
2. Commission and Charges. Borrower agrees to pay Bank an issuance fee
in the amount set forth in Section 2.6 of the Loan Agreement, payable on the
date of the issuance of such Letter of Credit and any subsequent anniversary of
the date of issuance. Borrower also agrees to pay Bank (i) a negotiation fee in
the amount of 1/8% of the amount of each draw under each Letter of Credit,
payable on the date of such drawing, and (ii) an amendment fee in the amount of
$35.00 for each amendment to each Letter of Credit, payable on the effective
date of each such amendment.
3. Interest. Borrower shall pay Bank on demand interest at a
fluctuating rate (equal to the rates set forth in Section 2.2 of the Loan
Agreement) on any reserved amount of the proceeds of the Loan extended pursuant
to the Loan Agreement which bears interest in accordance with Section 2.6 of the
Loan Agreement, until such drawn amount is fully repaid pursuant to Section 1
above.
4. Set Off. Borrower authorizes Bank to charge any account or
other funds in Bank's possession for the payment of the Liabilities (as defined
in Section 8 of this Agreement).
5. Continuation of Liability. Regardless of the expiration date of any
Letter of Credit, Borrower shall remain liable hereunder for any draw or payment
made by Bank under the Letter of Credit, (i) timely received but paid by the
Bank within ten (10) days after the expiration date of the Letter of Credit; or
(ii) paid by Bank pursuant to an order of a court of competent jurisdiction; or
(iii) as otherwise authorized by Borrower.
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6. Documentation. Unless specified to the contrary in any Letter of
Credit application, or any amendment to any Letter of Credit, Borrower agrees
that Bank and Bank's correspondents may receive and accept (a) any Items or
documents otherwise in order, issued or purportedly issued by an agent,
executor, trustee in bankruptcy, receiver or other representative of the party
who is authorized under such Letter of Credit to issue such items or other
documents, as complying with the terms of such Letter of Credit and (b)
documents which comply with the UCP (as defined in Section 19 of this
Agreement). The provisions of clause (a) above shall in no way be deemed to
preclude the beneficiary of any Letter of Credit from issuing and presenting
Items or documents under the terms of such Letter of Credit.
Borrower agrees to indemnify and hold Bank harmless from each and every
claim, demand, liability, loss, cost or expense (including, but not limited to,
reasonable attorneys' fees and legal costs) which may arise or be created by
Bank's acceptance of telecommunication instructions in connection with any
Letter of Credit, including, but not limited to, telephonic instructions in
connection with any waiver of discrepancies.
7. Increased Cost/Taxes. If, as a result of any governing law,
regulation, treaty or directive, or any change therein, or in the interpretation
or application thereof or compliance with any request or directive (whether or
not having the force of law) from any court or governmental authority, agency or
instrumentality, any reserve, premium, special deposit, special assessment or
similar requirements against Bank's assets, deposits with Bank or for Bank's
account, or credit extended by Bank, are imposed, modified or deemed applicable
and Bank reasonably determines that, by reason thereof, the cost to Bank of
issuing or maintaining the Letters of Credit is increased, Borrower agrees to
pay Bank upon demand (which demand shall be accompanied by a statement setting
forth the basis for the calculation thereof) such additional amount or amounts
as will compensate Bank for such additional cost. Determinations by Bank for
purposes of this Section of the additional amounts required to compensate Bank
in respect of the foregoing shall be conclusive, absent manifest error. Borrower
further agrees to pay any applicable levies or other taxes imposed in connection
with the Letters of Credit other than net income taxes payable by Bank, and
otherwise comply with all domestic and foreign laws and regulations applicable
to all transactions under or in connection with the Letters of Credit.
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8. Collateral. As security for the performance of all obligations of
this Agreement, Borrower has conveyed security interests in certain real and
personal property described in and evidenced by those instruments executed
concurrently with the Loan Agreement as set forth in Section 2.4 therein. In
addition thereto, Borrower hereby pledges (a) all balances, credits, deposits,
accounts or moneys now or hereafter held by Bank which Borrower owns or in which
Borrower may have an interest, (b) all Items, all shipping documents, warehouse
receipts, policies or certificates of insurance and other documents accompanying
or relating to any Items, and all property covered by any such documents or
shipped or stored under or in connection with any Letter of Credit or any Items
(whether or not such documents or property is released to Borrower or upon
Borrower's request), and (c) all dividends, distributions and other right in or
with respect to, and substitutions for and products and proceeds of, any of the
foregoing (being referred to collectively as the "Collateral").
In addition, Borrower hereby incorporates all of Borrower's covenants
and obligations concerning the collateral as set forth in the Loan Agreement and
the other Loan Documents identified The security interest granted by this
Section shall continue, and the provisions of any this Agreement, the Loan
Agreement, and any other instrument or document which secures the Liabilities in
favor of Bank shall continue, until such time as all Liabilities have been paid
in full and discharged and this Agreement has been terminated.
9. Risks/Indemnification. Borrower agrees that any action or omission
by Bank under or in connection with any Letter of Credit or any Items, documents
or property shall, unless in breach of good faith, be binding on Borrower and
shall not put Bank under any resulting liability to Borrower. Borrower will
indemnify Bank and hold Bank harmless from and against each and every claim,
demand, liability, loss, cost or expense (including, but not limited to,
reasonable attorneys' fees and legal costs) to which Bank may be subjected or
which Bank may incur by reason of any such action or omission, or by reason of
any action taken pursuant to this Agreement (including, but not limited to, by
reason of (i) Bank honoring Borrower's request not to make payment under any
Item or (ii) Borrower's actions to restrain Bank from making payment under any
Item), unless in breach of good faith. In no event shall Bank be liable for
incidental, consequential or special damages. The indemnities and obligations of
Borrower contained in this Section shall survive the payment in full of amounts
payable to Sections 1 through 3 hereof and termination of the Letters of Credit.
10. Discrepancies. Borrower will promptly examine the copy of each
Letter of Credit (and any amendments thereto) sent to Borrower by Bank, as well
as any and all instruments and documents delivered to Borrower from time to
time, and, in the event Borrower has any claim of non-compliance with Borrower's
instructions or of discrepancies or other irregularity, Borrower will
immediately notify Bank thereof in writing, and Borrower will conclusively be
deemed to have waived any such claim against Bank unless such notice is given
within two business days.
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11. Exculpation. In addition to the exculpatory provisions contained in
the UPC (as defined hereafter in Section 19), Bank or its correspondents shall
not be responsible for, and Borrower's obligation to reimburse Bank shall not be
affected by: (a) compliance with any laws, customs or regulations in effect in
countries of negotiation or payment of any Letter of Credit; (b) failure of any
Item to refer adequately to any Letter of Credit, or failure of documents to
accompany any Item at negotiation/payment, or failure to note the amount of any
Item on the reverse of such Letter of Credit or to surrender or to take up such
Letter of Credit or to forward required documents with Items, each of which
provisions, if contained in such Letter of Credit itself, it is agreed may be
waived by Bank, (c) any refusal by Bank to honor Items because of an applicable
law, regulation or ruling of any governmental agency whether valid or invalid,
or now or hereafter in effect, (d) acts or the failure to act of Bank's agents
or correspondents including, but not limited to, their failure to pay Items
because of any law, decree, regulation, ruling or interpretation of any
governmental agency (domestic or foreign), (e) the identity of any transferee of
any Letter of Credit or the sufficiency of the transfer if such Letter of Credit
is transferable, (f) the use which may be made of any Letter of Credit or any
acts or omissions by any beneficiary of transferee in connection therewith, or
(g) the validity, sufficiency or genuineness of documents, or of any
endorsements thereon, even if such documents should prove to be in any or all
respects invalid, insufficient, fraudulent or forged.
In furtherance of, and not in limitation of the foregoing, Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
Bank shall not be liable or responsible for (a) the time, place, manner
or order in which shipment is made or partial or incomplete shipment, (b)
insurance of any property or any risk connected with insurance, (c) delay in
arrival or failure to arrive of any property or any documents relating thereto,
(d) delay in giving or failure to give notice of arrival or any other notice,
(e) the validity, form, sufficiency, accuracy, genuineness, falsification or
legal effect of any documents, or the validity, genuineness, falsification or
legal effect of any Items, (f) general or particular conditions stipulated in
documents or superimposed thereon, (g) the description, existence, character,
quantity, weight, quality, condition, packing, shipment, arrival, delivery or
value of any property purportedly represented by any documents, or any
difference therein from that expressed in the documents, (h) the acts or
omissions, good faith, solvency, performance or standing of any vendor, shipper,
issuer, consignor, carrier, insurer, user of the Letter of Credit, correspondent
or other bank (whether or not selected by Bank) or anyone else, (i) loss of, or
errors, omissions, interruptions or delays in transmission or delivery of, any
messages, letters or documents by mail, cable, telegraph, telex, facsimile or
otherwise and whether or not in cipher, (j) the translation of, or errors in
translation or interpretation of, credit or technical terms, (k) transmission of
credit terms without translating them, or (l) consequences arising out of acts
of God, interruptions of communication facilities, war disturbances, abnormal or
emergency conditions, or other causes beyond Bank's control, or out of strikes
or lockouts and none of the foregoing shall affect or impair, or prevent the
vesting of any of Bank's rights and remedies or Borrower's obligations
hereunder.
12. Costs and Expenses. Borrower agrees to pay on demand all reasonable
costs and expenses (including, but not limited to, reasonable attorney's fees
and legal costs) in connection with (i) the Letters of Credit or this Agreement
or its enforcement or (ii) any action or proceeding restraining or seeking to
restrain Bank from paying, or seeking to compel Bank to pay, any amount under
any Letter of Credit.
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13. Amendments and/or Modification of Letters of Credit. If Borrower
requests Bank to increase the amount of any Letter of Credit, extend or renew
any Letter of Credit, or otherwise modify the terms of any Letter of Credit,
Borrower agrees that this Agreement shall continue to bind Borrower with respect
to any action taken by Bank or any of its correspondents in accordance with such
increase, extension, renewal or other modification.
14. Events of Default. The occurrence of any of the following events
shall constitute an "Event of Default" hereunder: (a) Borrower shall fail to pay
any amount payable under this Agreement when due; (b) Borrower shall fail to
perform or observe any other term, covenant or agreement contained in this
Agreement; (c) the filing by or against Borrower or any guarantor of the
Liabilities ("Guarantor") of a request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as a bankrupt,
relief as debtor or other relief under the bankruptcy, insolvency or similar
laws of the United States or any state or territory thereof or any foreign
jurisdiction, now or hereafter in effect; (d) the making of any general
assignment by Borrower or any Guarantor for the benefit of creditors; the
appointment of a receiver or trustee for Borrower or any Guarantor, or for any
assets of Borrower or any Guarantor including, without limitation, the
appointment of or taking possession by a "custodian", as defined in the federal
Bankruptcy Code or otherwise; the making of any, or sending notice of any
intended bulk sale; or the institution by or against Borrower or any Guarantor
of any other type of insolvency proceeding under the federal Bankruptcy Code or
otherwise, or of any formal or informal proceeding for the dissolution or
liquidation or settlement of claims against or winding up of affairs of Borrower
or any Guarantor; (e) any provision of this Agreement shall at any time for any
reason cease to be valid and binding on Borrower, or shall be declared to be
null and void, or the validity or enforceability thereof shall be contested by
Borrower, or a proceeding shall be commenced by any governmental agency or
authority having jurisdiction over Borrower seeking to establish the invalidity
or unenforceability thereof, or Borrower shall deny that it has any or further
liability or obligation under this Agreement; or (f) any default shall occur
under any agreement by and among Borrower and Bank.
If any Event of Default shall have occurred and be continuing, Bank
may: (a) by written notice to Borrower direct Borrower to pay immediately to
Bank an amount equal to Bank's potential liability under all Letters of Credit,
whether or not any Item shall have been presented thereunder; (b) offset any
funds of Borrower held by Bank; (c) pursue any other remedy available to it
under this Agreement, the Loan Agreement or pursuant to the terms of any other
documents executed in accordance herewith; or (d) take any and all actions with
respect to the Collateral as allowed by applicable law.
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15. Documents. Borrower agrees that (a) Bank may accept as "bills of
lading" under Letters of Credit any documents issued or purportedly issued by or
on behalf of any carrier which acknowledge receipt of property for
transportation, whatever the specific provisions of such documents, (b) Bank may
accept as documents of insurance either insurance policies or insurance
certificates, (c) Bank may accept as sufficient and controlling the description
of any property contained in any invoice notwithstanding that any bills of
lading, insurance or other documents (which Bank may also accept) may contain a
description different from that contained in such invoice, and (d) Bank may
accept any document containing stamped, written or typewritten provisions
thereon, whether or not signed or initialed, and may assume conclusively that
the same were placed with authority on the document at the time of its issuance
by the carrier or other issuer or any agent thereof.
16. Release of Documents or Property. In the event that Bank receives
some but not all of the documents against which drawings may be made and, at
Borrower's request, Bank delivers such documents to Borrower or to anyone else,
or in the event that Bank, at Borrower's request, releases or consents to the
release of some or all of the property shipped or purported to have been shipped
under any Letter of Credit prior to the presentation of the relative Item,
Borrower agrees to pay Bank on demand the amount of any claim made against Bank
by reason thereof and authorizes Bank to honor such Item when it is presented
regardless of whether or not such Item or any document which may accompany it
complies with the terms of such Letter of Credit.
17. Delay and Waiver. No delay in the exercise of Bank's rights or
remedies shall be deemed a waiver, and no partial exercise of Bank's rights or
remedies shall preclude the further exercise of any right or remedy. No waiver
shall be effective unless in writing and then only as to the specific subject
waived.
18. Notice. All Notices to required shall be given to the parties
shall be delivered in accordance with the provisions of Section 9.6 of the
Loan. "Notice" shall include any request, demand or
other communication.
19. Construction and Interpretation. The Letters of Credit and this
Agreement shall be governed by the laws of the State of Utah, including the
Uniform Commercial Code. Unless inconsistent with Utah law, the Letters of
Credit and this Agreement are subject to the terms of the Uniform Customs and
Practice for Documentary Credits (1993 Revision), the International Chamber of
Commerce Publication No. 500 ("UCP"), as hereby expressly incorporated by
reference.
20. Assigns. This Agreement is binding upon the parties hereto
and their respective successors and assigns.
21. Severability. If any term or provision set forth in this Agreement
shall be invalid or unenforceable, the remainder of this Agreement, or the
application of such terms or provisions to persons or circumstances, other than
those to which it is held invalid or unenforceable, shall be construed in all
respects as if such invalid or unenforceable term or provision were omitted.
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22. ARBITRATION DISCLOSURES:
A. ARBITRATION IS FINAL AND BINDING ON BORROWER AND BANK
(COLLECTIVELY, THE "PARTIES") AND SUBJECT TO ONLY VERY LIMITED
REVIEW BY A COURT.
B. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
C. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.
D. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL
REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK
MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED.
E. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS
AFFILIATED WITH THE BANKING INDUSTRY.
F. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR
THE AMERICAN ARBITRATION ASSOCIATION.
(a) Any claim or controversy ("Dispute") between or among the Parties
and their assigns, including but not limited to Disputes arising out of or
relating to the Letters of Credit, this Agreement, this arbitration provision
("arbitration clause"), or any related agreements or instruments relating hereto
or delivered in connection herewith ("Related Documents"), and including but not
limited to a Dispute based on or arising from an alleged tort, shall at the
request of any Party be resolved by binding arbitration in accordance with the
applicable arbitration rules of the American Arbitration Association ("the
Administrator"). The provisions of this arbitration clause shall survive any
termination, amendment, or expiration of this Agreement or the Related
Documents. The provisions of this arbitration clause shall supersede any prior
arbitration agreement between or among the Parties. If any provision of this
arbitration clause should be determined to be unenforceable, all other
provisions of this arbitration clause shall remain in full force and effect.
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(b) The arbitration proceedings shall be conducted in Salt Lake City,
Utah, at a place to be determined by the Administrator. The Administrator and
the arbitrator(s) shall have the authority to the extent practicable to take any
action to require the arbitration proceeding to be completed and the
arbitrator(s)' award issued within one-hundred-fifty (150) days of the filing of
the Dispute with the Administrator. The arbitrator(s) shall have the authority
to impose sanctions on any Party that fails to comply with time periods imposed
by the Administrator or the arbitrator(s), including the sanction of summarily
dismissing any Dispute or defense with prejudice. The arbitrator(s) shall have
the authority to resolve any Dispute regarding the terms of this Agreement, this
arbitration clause or the Related Documents, including any claim or controversy
regarding the arbitrability of any Dispute. All limitations periods applicable
to any Dispute or defense, whether by statute or agreement, shall apply to any
arbitration proceeding hereunder and the arbitrator(s) shall have the authority
to decide whether any Dispute or defense is barred by a limitations period and,
if so, to summarily enter an award dismissing any Dispute or defense on that
basis. The doctrines of compulsory counterclaim, res judicata, and collateral
estoppel shall apply to any arbitration proceeding hereunder so that a Party
must state as a counterclaim in the arbitration proceeding any claim or
controversy which arises out of the transaction or occurrence that is the
subject matter of the Dispute. The arbitrator(s) may in the arbitrator(s)'
discretion and at the request of any Party: (1) consolidate in a single
arbitration proceeding any other claim or controversy involving another Party
that is substantially related to the Dispute where that other Party is bound by
an arbitration clause with the Bank, such as borrowers, guarantors, sureties,
and owners of collateral; (2) consolidate in a single arbitration proceeding any
other claim or controversy that is substantially similar to the Dispute; and (3)
administer multiple arbitration claims or controversies as class actions in
accordance with the provisions of Rule 23 of the Federal Rules of Civil
Procedure.
(c) The arbitrator(s) shall be selected in accordance with the rules of
the Administrator from panels maintained by the Administrator. A single
arbitrator shall have expertise in the subject matter of the Dispute. Where
three arbitrators conduct an arbitration proceeding, the Dispute shall be
decided by a majority vote of the three arbitrators, at least one of whom must
have expertise in the subject matter of the Dispute and at least one of whom
must be a practicing attorney. The arbitrator(s) shall award to the prevailing
Party recovery of all costs and fees (including attorneys' fees and costs,
arbitration administration fees and costs, and arbitrator(s)' fees). The
arbitrator(s), either during the pendency of the arbitration proceeding or as
part of the arbitration award, also may grant provisional or ancillary remedies
including but not limited to an award of injunctive relief, foreclosure,
sequestration, attachment, replevin, garnishment, or the appointment of a
receiver.
(d) Judgment upon an arbitration award may be entered in any court
having jurisdiction, subject to the following limitation: the arbitration award
is binding upon the Parties only if the amount does not exceed Four Million
Dollars ($4,000,000.00); if the award exceeds that limit, any Party may demand
the right to a court trial. Such a demand must be filed with the Administrator
within thirty (30) days following the date of the arbitration award; if such a
demand is not made within that time period, the amount of the arbitration award
shall be binding. The computation of the total amount of an arbitration award
shall include amounts awarded for attorneys' fees and costs, arbitration
administration fees and costs, and arbitrator(s)' fees.
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(e) No provision of this arbitration clause, nor the exercise of any
rights hereunder, shall limit the right of any Party to: (1) judicially or
non-judicially foreclose against any real or personal property collateral or
other security; (2) exercise self-help remedies, including but not limited to
repossession and setoff rights; or (3) obtain from a court having jurisdiction
thereover any provisional or ancillary remedies including but not limited to
injunctive relief, foreclosure, sequestration, attachment, replevin,
garnishment, or the appointment of a receiver. Such rights can be exercised at
any time, before or during initiation of an arbitration proceeding, except to
the extent such action is contrary to the arbitration award. The exercise of
such rights shall not constitute a waiver of the right to submit any Dispute to
arbitration, and any claim or controversy related to the exercise of such rights
shall be a Dispute to be resolved under the provisions of this arbitration
clause. Any Party may initiate arbitration with the Administrator; however, if
any Party initiates litigation and another Party disputes any allegation in that
litigation, the disputing Party--upon the request of the initiating Party--must
file a demand for arbitration with the Administrator and pay the Administrator's
filing fee. The Parties may serve by mail a notice of an initial motion for an
order of arbitration.
(f) Notwithstanding the applicability of any other law to this
Agreement, the arbitration clause, or Related Documents between or among the
Parties, the Federal Arbitration Act, 9 U.S.C.ss.1 et seq., shall apply to the
construction and interpretation of this arbitration clause.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers or representatives
thereto duly authorized as of the date first above written.
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇ ZIONS FIRST NATIONAL BANK
COMPUTER CORPORATION,
a Utah corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Vice President & Treasurer Title: Vice President
