Exhibit 10.5 - Business Loan Agreement between Bank of the Cascades
and Lion Golf of Oregon, Inc., dated December 16, 1994
BANK OF THE CASCADES
BUSINESS LOAN AGREEMENT
Principal $1,000,000.00 Loan Date 01-30-1996
Maturity 10-31-1996 Loan No ▇▇▇▇▇▇▇▇
Call 4 Collateral 16
Account L099900 Officer PLM Initials
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: LION GOLF OF OREGON INC Lender: BANK OF THE CASCADES
63026 00 ▇▇▇▇▇ AD #▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇
P 0 Box 5879
BEND, OR 977M
THIS BUSINESS LOAN AGREEMENT between LION GOLF OF OREGON INC
("Borrower") and BANK OF THE CASCADES ("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."
Borrower 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 January 30, 1996, 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 Business Loan Agreement,
as this Business Loan Agreement may be amended or modified from time
to time, together with all exhibits and schedules attached to this
Business Loan Agreement from time to time.
Borrower. The word "Borrower" means LION GOLF OF OREGON INC. The
word "Borrower" also includes, as applicable, all subsidiaries and
affiliates of Borrower as provided below in the paragraph titled
"Subsidiaries and Affiliates."
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 word "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.
Debt. The word "Debt" means all of Borrower's liabilities excluding
Subordinated Debt.
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."
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 be otherwise
unenforceable.
Lender. The word "Lender" means BANK OF THE CASCADES, its successors
and assigns.
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' means: (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, warehouseman, 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 Borrower'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,
understandings or other agreements, whether created by law, contract,
or otherwise, evidencing, governing. representing, or creating a
Security Interest.
Security Interest. The words "Security Interest" mean 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.
Tangible Net Worth. The words "Tangible Net Worth" mean Borrower's
total assets excluding all intangible assets (i.e., 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.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make
the initial Loan Advance and each subsequent Loan Advance under this
Agreement shall be subject to the fulfillment to Lender's
satisfaction of all of the conditions set forth in this Agreement and
in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form
satisfactory to Lender the following documents for the Loan; (a) the
Note, (b) Security Agreements granting to Lender security interests
in the Collateral. (c) Financing Statements perfecting Lender's
Security Interests; (d)evidence of insurance as required below; and
(e) any other documents required under this Agreement or by Lender or
its counsel, including without limitation any assignments of life
insurance described below, any guaranties described below and any
subordinations described below.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note
and the Related Documents, and such other authorizations and other
documents and instruments as Lender or its counsel, in their sole
discretion, may require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all
fees, charges, and other expenses which are then due and payable as
specified in this Agreement or any Related Document.
Representations and Warranties. The representations and warranties
set forth in this Agreement, in the Related Documents, and in any
document or certificate delivered to Lender under this Agreement are
true and correct.
No Event of Default. There shall not exist at the time of any
advance a condition which would constitute an Event of Default under
this Agreement.
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
Oregon 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 affect on its businesses or financial
condition.
Authorization. The execution, delivery, and performance of this
Agreement and all Related Documents by Borrower, to the extent to be
executed, delivered or performed by Borrower, have been duly
authorized by all 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 Borrower supplied
to Lender truly and completely disclosed Borrower'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 Borrower when delivered
will constitute, legal, valid and binding obligations of Borrower
enforceable against Borrower in accordance with their respective
terms.
Properties. Except as contemplated by this Agreement or as
previously disclosed in Borrower's financial statements or in writing
to Lender and as accepted by Lender, and except for property tax
liens for taxes not presently due and payable, Borrower owns and has
good title to all of Borrower's properties free and clear of all
Security Interests, and has not executed any security documents or
financing statements relating to such properties. All of Borrower's
properties are titled in Borrower's legal name, and Borrower 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 forth 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 or intended to protect human health or the environment
("Environmental Laws"). Except as disclosed to and acknowledged by
Lender in writing. Borrower 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 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
matters. (e) 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 Environmental Laws. Borrower authorizes
Lender and its agents to enter upon the properties to make such
inspections and tests as Lender, deem appropriate to determine
compliance of the properties with this section of the Agreement. Any
inspections or test made by Lender s 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 claim 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
indemnity and hold harmless Lender against any and all claims,
losses, liabilities, damages, penalties, and expenses which Lender
may directly or indirectly sustain or suffer resulting from a breach
of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened
release occurring prior to Borrower's ownership or interest in the
properties, whether or not the same was or should have been known to
Borrower, or as a result of a violation of any Environmental Laws.
The provisions of this section of the Agreement, including the
obligation to indemnity. 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
Lender in writing.
Taxes. To the best of Borrower'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.
Lien Priority. Unless otherwise previously disclosed to Lender in
writing, Borrower 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 Lender'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 Borrower's Loan and Note
and all of the Related Documents are binding upon Borrower as well as
upon Borrower'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 Borrower'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. Borrower understands and
agrees that Lender, without independent investigation, is relying
upon the above representations and warranties in extending Loan
Advances to Borrower. 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 Lender
that, while this Agreement is in affect, Borrower will:
Litigation. Promptly Inform Lender 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 Lender to examine and audit Borrower's books and
records at all reasonable times.
Financial Statements. Furnish Lender with, as soon as available, but
in no event later than ninety (90) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year
ended, reviewed by a certified public accountant satisfactory to
Lender, and, as soon as available, but in no event later then fifteen
(15) days after the end of each month, Borrower's balance sheet and
profit and loss statement for the period ended, prepared and
certified as correct to the best knowledge and belief by Borrower's
chief financial officer or other officer or person acceptable to
Lender, All financial reports required to be provided under this
Agreement shall be prepared in accordance with generally accepted
accounting principles, applied on a consistent basis, and certified
by Borrower as being true and correct.
Additional Information. Furnish such additional information and
statements, lists of assets and liabilities, agings of receivables
and payables, inventory schedules, budgets, forecasts, tax returns,
and other reports with respect to Borrower'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;
Net Worth Ratio. Maintain a ratio of Total Liabilities to Tangible
Net Worth of less than 3.00 to 1.00.
Current Ratio. Maintain a ratio of Current Assets to Current
Liabilities in excess of 1.25 to 1.00.
Income. Maintain not less than the following income level: not less
than $100,000.00 for the fiscal year of 1996. 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 Lender, 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 any 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 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.
Life Insurance. As soon as practical, obtain and maintain life
insurance in form and with Insurance companies reasonably acceptable
to Lender on the following individual in the amount indicated below
and at Lender's option, cause such insurance coverage to be pledged,
made payable to, or assigned to Lender on Lender's forms. Lender, at
its discretion, may apply the proceeds of any insurance policy to the
unpaid balances of any Indebtedness:
Name of Insured Amount
▇▇▇▇▇▇ ▇ ▇▇▇▇ $1,000,000.00
Guaranties Prior to disbursement of any Loan proceeds, furnish
executed guaranties of the Loans In favor of Lender, on Lender's
forms, and in the amount and by the guarantor named below,
Guarantor Amount
QUADRAX CORPORATION $1,000,000.00
Subordination. Prior to disbursement of any Loan proceeds, deliver
to Lender subordination agreements on Lenders forms, executed by
Borrower's creditors named below, subordinating all of Borrower's
indebtedness to such creditors, or such lesser amounts as may be
agreed to by Lender in writing, and any security interests in
collateral securing that indebtedness to the Loans and security
interests of Lender.
Name of Creditors Amounts
▇▇▇▇▇▇ ▇ ▇▇▇▇ $270,OOO.00
▇▇▇▇ FAMILY TRUST $270,000.00
▇▇▇▇▇▇ ▇ ▇▇▇▇ $1,250,000.00
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and
any other party and notify Lender immediately in writing of any
default in connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender
in writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every
kind and nature, imposed upon Borrower or its properties, income, or
profits, prior to the 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,
Borrower 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. Borrower, 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 Borrower'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 Borrower 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
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
Borrower's other properties and to examine or audit Borrower's books,
accounts, and records and to make copies and memoranda of Borrower'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 Lender, 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 Lender, provide
Lender at least annually and at the time of each disbursement of Loan
proceeds with a certificate executed by Borrower'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 M"
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
$25,000.00 or incur liability for rental of property (including both
real and personal property ) in an amount which, together with
capital expenditures, shall in any fiscal year ex 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 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.
Salaries. Make or permit any withdrawals or pay or contract to pay
any salaries, commissions, bonuses or other compensation for services
in excess of the following annual amounts for the persons indicated
below or to any other person or persons performing services of a
similar nature:
Names Amounts
▇▇▇▇▇▇ ▇. ▇▇▇▇ $100,000.00
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 55,000.00
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ (Plus 1% of Commissioned Sales) $ 52,000.00
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.
ADVANCE MARGINS ON COLLATERAL.
75% OF ELIGIBLE ACCOUNTS RECEIVABLE
45% OF RAW MATERIALS INVENTORY
45% OF FINISHED GOODS INVENTORY
0% OF WORK IN PROCESS INVENTORY
$500,000.00 CAP ON INVENTORY ADVANCES
$500,000.00 CAP ON LETTERS OF CREDIT
Eligible accounts mean all of borrower's accounts excluding all
accounts under which payment is not received within 60 days from
invoice date and not declared ineligible for any other reason,
including but not limited to accounts having more than 50% of the
amount due in excess of 60 days from date of invoice. Special
provisions will be made for seasonal dating on selected accounts.
ADDITIONAL PROVISIONS. CUSTOMER TO SUBMIT ON A MONTHLY BASIS WITHIN
15 DAYS AFTER EACH MONTH END, A LISTING OF ASSIGNED INVENTORY, AN
AGING OF OUTSTANDING ACCOUNTS RECEIVABLE, AND A LISTING OF ACCOUNTS
PAYABLE.
NO DIVIDENDS TO BE PAID TO QUADRAX WITHOUT PRIOR BANK APPROVAL.
NO MANAGEMENT FEES OR CASH REPAYMENTS TO QUADRAX WITHOUT PRIOR BANK
APPROVAL.
BORROWER TO SUBMIT A BORROWING CERTIFICATE WITH EACH ADVANCE, OR
MONTHLY IF NO ADVANCES ARE MADE, OR LETTER OF CREDITS ISSUED.
IF BORROWING CERTIFICATE RESULTS IN A NEGATIVE BORROWING BASE, CREDIT
LINE TO BE PAID DOWN TO CONFORM WITH BORROWING BASE.
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, Borrower'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 ▇▇▇ and ▇▇▇▇▇ accounts, and all
trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, 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 Grantor to comply with or
to perform when due any other term, obligation, covenant or condition
contained in this Agreement or if 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 Borrower's existence
as a going business, the insolvency of Borrower, the appointment of a
receiver for any part of Borrower'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
creditor 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
amounts 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
(26%) or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's
financial condition, or Lender 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 Lender 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 Lender'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 and 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 Lender in the State of Oregon. If there is a lawsuit,
Borrower agrees upon Lender's request to submit to the jurisdiction
of the courts of DESCHUTES County, the State of Oregon. Lender and
Borrower hereby waive the right to any jury trial in any action,
proceeding, or counterclaim brought by either Lender or Borrower
against the other. This Agreement shall be governed by and construed
in accordance with the laws of the State of Oregon.
Caption Holdings. 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; Corporals 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 Borrower's signing below is responsible for all obligations in
this Agreement.
Consent to Loan Participation. Borrower agrees and consents to
Lender'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, or
potential purchasers any information or knowledge Lender may have
about Borrower or about any other matter relating to the Loan, and
Borrower hereby waives any rights to privacy 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. Borrower 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 Borrower's obligation under the
Loans irrespective of the failure or insolvency of any holder of any
interest in the Loans. Borrower further agrees that the purchaser of
any such participation interests may enforce its interest
irrespective of any personal claims or defenses that Borrower may
have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of
Lender's expenses, including without limitation attorneys' 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. Lender 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, Lender's attorneys' fees and Lender's legal
expenses, whether or not there is a lawsuit, including attorneys'
fees for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower 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
Borrower'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 deem 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.
Subsidiaries and Affiliates of Borrower. To the extent the context
of any provisions of this Agreement makes it appropriate, including
without limitation any representation, warranty or covenant, the word
"Borrower" as used 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 shelf 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 Lender and will survive the
making of the Loan and delivery to Lender of the Related Documents,
regardless of any investigation made by Lender or on Lender's behalf.
Waiver. Lender shall not be deemed to have waived any rights under
this Agreement unless such waiver is given in writing and signed by
Lender. 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 Lender of a provision of this Agreement will 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 Lender, nor any course of dealing
between Lender 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
withhold in the sole discretion of Lender.
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
US (LENDER) AFTER OCTOBER 3,1989 CONCERNING LOANS AND OTHER CREDIT
EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES
OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN WRITING,
EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE ENFORCEABLE.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS
LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS
DATED AS OF JANUARY 30,1996.
BORROWER:
LION GOLF OF OREGON INC
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇ ▇▇▇▇, CEO
LENDER:
BANK OF THE CASCADES
By; /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
Authorized Officer